Govenrment and Business Environment Case Study

Kyoto Protocol and Auto-emissions (A) - a prelude

OR

Abstract:
This is the first of a two-case series that deals with divergent emission control regulations faced by auto-makers in different countries prior to ratification of Kyoto Protocol. The fuel economy standards enforced by the policy makers varied from the ‘command and control’ systems (only for domestic products) of the US to the voluntary agreements and consensus approach in Europe, Canada and Japan. The case talks about different corporate responses from the automobile industry in the light of growing uncertainties in global harmonisation of regulations, costs involved and the potential market for low emission vehicles. In the US, frequent conflicts are surfacing between the state government and federal government regarding fuel economy standards while in Europe uniform standards exist. The case explores the contrasting scenario prevailing between the market-pull strategies of the US auto-makers and the technology-push approach of European auto-makers. A broad-based consensus approach adopted by the political machinery in Japan has helped auto-companies to have the first mover advantage in tapping the market potential for fuel efficient hybrid vehicles which are eco-friendly. The Japanese auto-makers seem to be better positioned as far as compliance cost is concerned. The potential use of a market based Kyoto mechanism like emissions trading is expected to help auto companies to reduce their compliance costs.

Pedagogical Objectives:

• To discuss about different corporate responses from the automobile industry in the light of growing uncertainties in global harmonisation of regulations, costs involved and the potential market for low emission vehicles.
• To discuss the contrast between US and European auto makers.

Keywords : Government and Business Environment Case Study,Kyoto Protocol, Automobile Emissions, Corporate Strategy, Regulatory system, Corporate Average Fuel Economy, Global, Climate Location, Partnership for a New Generation of Vehicles, Company Average Fuel Consumption, Voluntary Standards, Mandatory standards, Fuel Economy, Compliance costs, Command and control systems, United Nations Framework, Convention on Climate Change, Emissions Trading