We know that the pressure for increasingly more stringent fuel economy and lower vehicle emission standards will continue in every market throughout the world.
Even as we move to quickly introduce new, advanced technologies like those on the Volt, the world's first extended-range electric vehicle, we continue to make significant investments in internal combustion engines and technologies to make them more efficient. We expect internal combustion engines to continue to play a significant role in powering vehicles for years to come, so making continuous efficiency improvements can have far-reaching benefits in reducing fuel consumption and emissions on a global basis. To that end, we strive to lead in delivering new fuel-saving technologies in vehicles customers want to buy, and we leverage our global footprint so economies of scale can help to make the technologies even more affordable. We also focus on mass reduction, aerodynamic improvements, lightweight materials, tire construction and other efficiency technologies to make our vehicles more sustainable. An example of all of these efforts coming together is the Chevrolet Cruze, which is sold all over the world. More information on the Cruze and other efficiency-improving technologies like Active Fuel Management (AFM), Variable Valve Timing (VVT) and direct injection can be found throughout this report.
Advances in vehicle emission controls have provided significant contributions to improved air quality. In developed markets, such as the U.S., Canada, Europe and South Korea, we meet aggressive standards for a variety of different pollutants, including hydrocarbons (HC) or, more specifically, non-methane organic gases (NMOG), oxides of nitrogen (NOx), carbon monoxide (CO) and particulate matter (PM). New GM cars and light-duty trucks in the U.S., for example, have reduced the amount of NMOG and NOx emitted per mile driven by 99 percent based on the Federal Test Procedure (FTP), compared to vehicles of the mid-1960s.
We have developed sophisticated systems for our vehicles that control emissions under the various operating modes encountered in the real world, including exhaust emissions under both moderate and aggressive driving, evaporative emissions encountered during hot summer days and cold-start emissions in wintertime temperatures. To ensure all of these emission-control systems operate as designed, we have advanced on-board diagnostics (OBD) that monitor their performance and alert the driver to take the vehicle in for service in the event that any of the emission controls are not performing as designed.
Even so, many metropolitan areas in the U.S. still do not meet air-quality standards at some time during the year, not only because these standards have become more stringent but also because some of the progress in reducing vehicle emissions has been offset by continued growth in vehicle use. With a forecast for ongoing growth in vehicle miles traveled, new, even more stringent vehicle emission standards are being developed to maintain continued progress in improving air quality. In developed markets outside the U.S., we have made similarly impressive progress and face similar challenges.
In developing markets such as Brazil, Russia, India and China, poor air quality — especially in urban areas — is a concern due to brisk growth in the number of vehicles on the road and vehicle miles traveled. This growth is driving the rapid adoption of stringent vehicle emission standards, quickly closing the gap with those standards currently in force in North America and Europe.
We continue to work proactively with regulatory agencies in all markets to leverage our knowledge and global experience. Our goal is to help shape regulations that are truly sustainable — environmentally sound, technically feasible and fiscally responsible. The best practices we have established in mature markets to meet the stringent emissions and diagnostic requirements enable us to quickly develop vehicles to meet the evolving emission requirements in other markets around the world. We are also actively involved in efforts to improve fuel quality, since actual vehicle emissions are inextricably linked with in-use fuel quality. We are working with governments around the world that are creating new policies to address these societal issues.
The Australian federal government implemented a carbon tax on July 1, 2012, a first step in transitioning to a market-based emissions trading scheme in 2015. The carbon price will start at $23 per tonne, with annual incremental increases.
While we support reducing CO2 emissions and believe carbon pricing should be a market-based mechanism, we will review the carbon tax impacts on our business and our industry, considering:
The Canadian government has issued vehicle GHG emission regulations that are aligned with the U.S. EPA 2012–2016 vehicle GHG emission regulations. On February 4, 2011, U.S. President Obama and the Canadian Prime Minister publicly stated their intention to have aligned product standards, with a focus on vehicle standards. The Canadian Minister of Environment has released a regulatory notice of intent which identifies the Canadian government's intent to establish additional Canadian vehicle regulations that will be aligned with the U.S. EPA 2017–2025 Vehicle GHG Emissions Final Rule that was released in August 2012.
China's Phase 3 fuel economy standards are still under development. GM, with its partners and joint ventures in China, is working in a collaborative manner with the Chinese government in the development of China's Phase 3 fuel economy standards. These new standards are expected to be challenging, but GM is fully committed to the sustainable development of China's automotive industry.
With its partner, Shanghai Automotive Industry Corporation (SAIC), GM is developing new powertrains and cooperating in the development of new energy vehicles (e.g., electric vehicles). GM remains on track to introduce 12 new, more efficient engines between 2010-2015.
Discussions on China's Phase 4 fuel economy standards are anticipated to commence immediately following the publication of Phase 3 standards. Phase 4 standards would likely become effective in 2016 with full compliance required by 2020. GM stands ready to participate in these discussions in a collaborative manner when they commence.
GM Europe has been a part of a voluntary agreement to contribute to the European Union's Kyoto Protocol objectives signed in 1998. Through technology and other improvements, GM Europe has reduced CO2 emissions from its passenger cars by over 16 percent between 2000 and 2011. Currently, we are focused on achieving 2012–2019 targets for our vehicles.
The European Union has targeted a new vehicle fleet average of 95g of CO2/km for 2020, with the requirements for each manufacturer based on the weight of the vehicles it sells. Additional measures have been adopted in Europe to regulate features such as tire-rolling resistance, vehicle air conditioners, tire-pressure monitors, gearshift indicators and others.
We believe the 2020 target is an ambitious one that will require technology breakthroughs, a new refueling infrastructure and a swift renewal of the vehicle fleet currently on European roads to achieve the EU policy goals. All stakeholders, including those in the fuel and energy sectors, must work together in order to overcome challenges. While we work toward this new emissions benchmark, we will remain committed to developing technologies that can gain widespread consumer acceptance and that offer affordable vehicle choices as well.
In September 2010, new South Korean fuel economy/CO2 targets for 2012 through 2015 were announced as part of the government's low-carbon/green growth strategy. The phasing in of new standards began this year and will be completed by 2015, with manufacturers having the option to certify either on a fuel-consumption basis or a CO2-emissions basis.
Each manufacturer will have a corporate target to meet, based on an overall industry fleet fuel economy/CO2 average. GM Korea's 2012 CO2 target will be approximately 132g/km.
In addition, the South Korean government is proposing a carbon emission-trading program and hopes to implement it in 2015. South Korea's policy- and legislation-setting body, the National Assembly, is currently reviewing it. At this time, it is unclear when the Assembly will make a decision on it.
On July 29, 2011, President Obama announced an agreement among 13 major automakers, the U.S. federal government and the state of California to implement the next phase in the harmonized federal program to regulate fuel economy and greenhouse gases. The Environmental Protection Agency (EPA) and the Department of Transportation (DOT) will now work together to create standards through joint rulemaking for control of emissions of greenhouse gases and for fuel economy covering the 2017-2025 model years. These regulatory standards are targeted to achieve greenhouse gas levels equivalent to an industry average of 54.5 miles per gallon for all new cars, light trucks and medium-duty passenger vehicles by the 2025 model year. We and other major automobile manufacturers joined the president in support of this effort, just as we did in May 2009, when the first phase of this program was announced, covering 2012-2016 models.
On August 9, 2011, President Obama announced that the EPA and DOT had established a separate joint program to regulate greenhouse gas emissions and fuel economy for medium- and heavy-duty trucks beginning in the 2014 model year. The California Air Resources Board also has a program to reduce greenhouse gas emissions, although it has thus far agreed to treat compliance with the new federal program as compliance with its program. Thirteen additional states also have adopted the California greenhouse gas standards and accepted compliance with the federal requirements as compliance with their programs. Going forward, we have agreed to work with the EPA, DOT, state regulators and other stakeholders in support of a strong national program to reduce oil consumption, improve energy security and address global climate change.
On August 28, 2012, the EPA and DOT released their joint Final Rule for the 2017-2025 fuel economy and greenhouse gas programs. This action finalizes much of what was proposed in November 2011 and keeps in place the framework of a single national program. GM has been supportive of EPA and DOT throughout the regulatory development process and is currently going through the details of the new rule. GM will include a more detailed response on this rulemaking in our next report.