Green Habits of Singapore Drivers

Transcription

1 Green Habits of Singapore Drivers A whitepaper commissioned by Prepared by October 2011 OCTOBER 2011

2 1. Background Regulatory Outlook for Environment Sources of Carbon Emission Exhaust Emission Standards Tax and Incentives for Green Vehicles Infrastructure Development for Green Vehicles Regulation and Practices for Non-vehicle Products Transportation and Emission Analysis Vehicle Population Annual Mileage Carbon Emission Analysis Impact on Carbon Emission by Measure Customer Perceptions and Attitudes toward Environment Sample Specifications Customer Perceptions and Attitude toward Energy Label Customer Attitude toward Transport Modes Customer Attitude toward Cars Customer Attitude toward Tires Environment Policies of Fleet Operators Environment Policies of Fleet Operators Drivers and Restraints for Green Tire Conclusions and Recommendations Conclusions Recommendations for Stakeholders...27

3 1. Background There has been a growing public awareness on being environmentally-friendly globally as worsening environmental conditions have caused global warming and health problems. Governments, companies and individuals have been tackling environmental pollution issues through multiple approaches. In this whitepaper, Frost & Sullivan focuses on vehicle emissions in Singapore. The study covers regulations by the government, transport situation, customers perceptions and attitudes towards the environment and policies of fleet operators. The study also analyzes carbon emission from vehicles and looks at possible measures that can help to reduce carbon emission. Green tires, (A Green Tire is not only a low rolling resistance tire. Green Tires are better also in terms of durability, grip, and noise emissions) is one of the solutions that can improve fuel efficiency and reduce carbon emission. Frost & Sullivan will discuss the impact on carbon emissions and benefits of using green tires in this whitepaper. 2. Regulatory Outlook for Environment 2.1. Sources of Carbon Emission According to the International Energy Agency (IEA), Carbon Dioxide (CO 2 emission in Singapore had increased dramatically from 6.0 million tons in 1970 to 44.6 million tons in The vast economic growth and population increase are cited as reasons for this surge in carbon levels. However, CO 2 emission has been stagnant at 44 million tons-level since CO 2 emission per capita has also been declining since 2005 after peaking at 10.8 tons in (Figure 1)In 2008, the transportation sector contributed about 17 per cent or 7.4 million tons of CO 2 emission to the total 44.3 million tons recorded. Figure 1: CO 2 Emission in Singapore

4 2.2. Exhaust Emission Standards Exhaust emission standards refer to the limits of exhaust emissions permitted. Singapore is following the European Emission Standards, adopted among EU nations. Currently, Singapore is adopting Euro II for gasoline-powered vehicle and Euro IV for diesel-powered vehicle, while European countries have been adopting the stricter Euro V for both gasoline and diesel vehicles since (Figure 2) Other developed countries such as US, Japan and South Korea are adopting similar emission standards and the current standards are, in general, much stricter than those of Singapore. It is notable that although Singapore is as developed as the EU, US, Japan and South Korea in terms of economy, its emission standards still lag behind these countries. Figure 2: Comparison of Emission Standards The National Environment Agency (NEA) has introduced the Fuel Economy Labeling Scheme (FELS) in April The scheme provides clearly-labeled fuel economy information which informs buyers of the fuel consumption of the vehicle which they are considering for purchase. The FELS is mandatory for suppliers of registrable vehicles, and under the scheme, registered suppliers supplying vehicles must affix a Fuel Economy Label (FEL) visibly (most commonly on the windscreen) on a vehicle. The FEL should mention fuel consumption, make, model, engine capacity, fuel type, test standard, disclaimer and registration number. (Figure 3)

5 Figure 3: Fuel Economy Label 2.3. Tax and Incentives for Green Vehicles The NEA introduced the Green Vehicle Rebate (GVR) program in January The introduction aimed to promote green vehicles which emit less air pollutants than conventional vehicles. The GVR also aims to narrow price gaps between green vehicles and conventional vehicles. The GVR applies to green vehicles which include electric and petrol-electric hybrid, CNG and bi-fuel vehicles. The owners are able to get a rebate of 40 per cent of the Open Market Value (OMV) for passenger cars, 5 per cent of the OMV for buses and commercial vehicles and 10 per cent of the OMV for motorcycles. The rebate can be used to offset the Additional Registration Fee (ARF) which is currently 100 per cent of OMV. The GVR is applicable until 31 December 2012 for electric and petrol-electric hybrid vehicles but it is expected to expire on 31 December 2011 for CNG and bi-fuel vehicle. In 2001 when the scheme was introduced, there were only 3 petrol-electric hybrid vehicles on the road. As of 2010, the population reached 3,305 units Infrastructure Development for Green Vehicles Green vehicles such as electric, plug-in petrol-electric hybrid and CNG vehicles need dedicated infrastructure. Infrastructure plays a critical role for these vehicles to penetrate into the market. Currently there are about 5,500 CNG vehicles in Singapore, about a half are passenger cars and the other half are taxis. However, there are only 5 CNG stations and they are mostly located in remote locations which are inconvenient for refuel. Electric vehicle (EV) is still at its launching stage. As of 2010, there are only 2 electric passenger cars in Singapore. The Singapore government, led by the Energy Market Authority (EMA) and Land Transport Authority (LTA), is promoting the set up of EV charging stations across Singapore. By the end of 2011, 63 EV charging stations are expected to be built.

6 2.5. Regulation and Practices for Non-vehicle Products The awareness of being environmental-friendly would be high for non-vehicle products such as home electrical appliances. Consumers are likely to buy more energy saving home electrical appliances by referring to the Energy Label. (Figure 4) The Energy Labeling scheme was implemented in January Currently, room air conditioners, refrigerators and cloth dryers are carrying Energy Label. Green Label, or Eco Label, representing environmentally-friendly products are applied to most products except for food, drinks and pharmaceuticals. These labeling schemes help Singapore consumers to identify and select more energy efficient and more environmentally friendly products. Figure 4: Energy Label and Green Label 3. Transportation and Emission Analysis 3.1. Vehicle Population According to the LTA, in 2010, the total vehicle population in Singapore has increased by 19 per cent to 932,046 units in 2010 from 787,392 units in 2006, thanks to the economic expansion and increasing income level. (Figure 5) Passenger cars account for 64 per cent of total vehicle population in 2010 followed by motorcycles at 16 per cent. Figure 5: Vehicle Population in Singapore

7 Population of passenger cars has increased more than total vehicle population. The passenger car population has increased by 26 per cent from 472,308 units in 2006 to 595,185 units in Fifty six per cent of them are cc cars. (Figure 6) Figure 6: Passenger Car Population In terms of vehicle population by fuel type in Singapore, 80 per cent of vehicles are powered by petrol and 19 per cent powered by diesel. Alternate fuel vehicles such as CNG and hybrid vehicles account for less than 1 per cent of the total vehicle population. (Figure 7) When analyzed by vehicle-type, 99 per cent of passenger cars and motorcycles are powered by petrol. There were 3,305 petrol-electric hybrid cars, 2,706 petrol-cng hybrid cars and only 2 EVs in Taxis, goods vehicles and buses show a different picture. About 89 per cent of taxis, 93 per cent of goods vehicles and 98 per cent of private buses in Singapore use diesel due to fuel efficiency. Petrol-CNG powered taxis are becoming more popular, accounting for nearly 10 per cent of total taxis in Figure 7: Vehicle Population by Fuel Type

8 3.2. Annual Mileage Public transport such as taxis and buses has a higher mileage as compared to private vehicles. On average, a taxi runs more than 100,000 kilometers annually, while a public bus runs more than 90,000 kilometers. However, the annual mileage for taxis and buses has reduced in 2009 as compared to One of the reasons would be that more MRT lines have started operations and people make shorter journey by taxis and buses. (Figure 8) On average, a passenger car has an annual mileage of about 20,000 kilometers, while a motorcycle has a mileage of about 13,000 kilometers annually. As there are 595,185 passenger cars on the road in 2010, total mileage of passenger cars amounted to 11.6 billion kilometers. Figure 8: Annual Mileage by Vehicle Type 3.3. Carbon Emission Analysis There are mainly 6 types of exhaust emissions from vehicles: Carbon Monoxide (CO), Hydrocarbon (HC), Nitrogen Oxide (NOx), Particulate Matter (PM), Sulphur Oxides (SOx) and Carbon Dioxide (CO 2 ). (Figure 9) Some emissions such as CO, HC and PM are harmful to human health. CO is very toxic and reduces the blood s ability to carry oxygen. HC and PM cause respiratory problems. NOx and SOx cause air pollution and acid rain. CO 2 is not harmful to human health directly but it causes global warming. Governments, companies and individuals around the world are struggling to reduce carbon footprint by reducing CO 2 emission. CO 2 is estimated to account for 98.9 per cent of total exhaust emissions from vehicles.

9 Figure 9: Exhaust Emission Frost & Sullivan estimates that 7.1 million tons of CO 2 were emitted from vehicles in 2010, and passenger cars contributed 3.2 million tons, or 45 per cent of the total CO 2 emission. (Figure 10) Figure 10: Estimated CO 2 Emission by Vehicle Type 3.4. Impact on Carbon Emission by Measure CO 2 emission is reduced by improving fuel consumption as combustion of any carbon-based fuel produces carbon dioxide. There are multiple measures to reduce fuel consumption and subsequently CO 2 emission. (Figure 11 and 12)

10 Figure 11: Measures to Reduce CO 2 Emission Figure 12: Costs and Impacts on CO 2 Emission Powertrain (engines & transmission) is the source of CO 2 emission and impacts on the emission directly. Fuel efficient engines consume less fuel, and thanks to automakers efforts, vehicles are becoming more fuel efficient, which is helping users to save fuel costs. Hybrid and CNG vehicles can reduce fuel consumption more dramatically. Some hybrid vehicles consume 50 per cent less fuel as compared to conventional vehicles. Due to the GVR scheme, vehicles are more affordable. Electric vehicle (EV) is a desirable vehicle choice in combating CO 2 emissions as it does not emit CO 2 when moving. However, EVs are not highly popular yet due to the high vehicle costs, technical limitation such as driving distance and lack of charging infrastructure. Continuously Variable Transmission (CVT) reduces power loss of shifting gears which happens for conventional automatic and manual transmission, which can help to reduce fuel consumption.

11 In addition to powertrain, weight reduction on vehicle body helps to reduce CO 2 emission as lighter vehicle body consumes less fuel. Automakers have been studying how to reduce body weight such as reducing number of parts or replacing materials from steel to aluminium or even plastic. Tires are the only parts of vehicles which have contact on road. Rolling resistance between tires and road affects fuel consumption. Green Tires are made of special synthetic rubbers to reduce rolling resistance without compromising safety such as road grip. Less rolling resistance means less fuel consumption and less CO 2 emission. Furthermore, green tires can be used for any types of vehicles; therefore the total impact on CO 2 emission is significant. Changing ways of driving and maintenance improve fuel consumption and reduce CO 2 emission without additional cost. Lower tire air pressure significantly increase rolling resistance and worsen fuel consumption. Drivers should check their tire air pressure regularly. The Tire Pressure Monitoring System (TPMS) helps drivers to monitor tire air pressure. Avoiding sudden acceleration and brake also improve fuel consumption. Among these measures, Frost & Sullivan analyzed the impacts on CO 2 emission by 2 measures: Electric Vehicles and Green Tires. EVs emit no CO 2 while driving but a challenge is its penetration into the market. As of 2010, there were only 11 EVs (2 passenger cars, 7 motorcycles and 2 buses) in Singapore. This accounts for about per cent of the total vehicle population in the country. Based on the uptake of EVs recorded in Singapore, it could take years before EVs become more prominent on the roads in Singapore. Based on projections, if there are 1,000 units (which is about 100 times more than the current population), of EVs on the roads, the impact on CO 2 emission is estimated to be 0.06 per cent, or 4,499 tons. Should EV population reach 10,000 units, CO 2 emission will be reduced only by 0.64 per cent, or 40,572 tons. (Figure 13) Figure 13: CO 2 Emission Reduction by Electric Vehicles While the choice of converting to an EV is one way of contributing to the environment as a responsible driver, changing car features that could reduce CO 2 pollution is another move towards responsible driving. Tires can influence fuel consumption by about per cent due to the tires rolling resistance. Tires that have less rolling resistance can help reduce fuel consumption. According to research conducted, green tires have 20 per cent less rolling resistance, resulting in a 5 per cent fuel savings.

12 As the change in tires can be applied across all types of vehicles (including EVs), the combined impact on CO 2 emission through the use of green tires in all vehicles on Singapore roads (based on vehicle population recorded as of 2010) will likely reduce CO 2 emission by 5 per cent (144 million liters) to 6.7 million tons from 7.1 million tons. (Figure 14) Figure 14: CO 2 Emission Reduction by Green Tire 4. Customer Perceptions and Attitudes toward Environment 4.1. Sample Specifications Frost & Sullivan conducted a consumer survey with a total of 250 respondents to understand customer s perceptions and attitudes towards the environment. The respondents consist of males and females who own and drive vehicles. The 250 respondents are grouped into three categories: 100 owners of small conventional car with engine size below 1,600cc; 120 owners of large conventional car with engine size 1,600cc and above; and 30 owners of hybrid vehicles Customer Perceptions and Attitude toward Energy Label The respondents stressed the importance of labeling on products. 88 per cent of the respondents agree that it is important that environmentally friendly products are labeled clearly so that consumers can easily choose the products. And 84 per cent of the respondents agree that energy conservation is a priority. 47 per cent of the respondents say that their lifestyles have minor impacts on the environment. (Figure 15)

13 Figure 15: Attitudes toward Environment Nearly 90 per cent of the respondents are actively trying to reduce their energy consumption at home by switching off air conditioning and lights whenever unnecessary. And 59 per cent of the respondents say that they are more mindful of the impact of emission on the environment and try to drive less. (Figure 16) Figure 16: Behavior toward Environment The Energy Label Scheme has been made mandatory in Singapore since 1 January 2008 under the Environmental Protection and Management Act. 97 per cent of the respondents interviewed are familiar with the Energy Label and 85 per cent of them said that the Energy Label is helpful when they are purchasing home electric appliances. 77 per cent of them said that most of the home appliances are energy efficient. (Figure 17)

14 Figure 17: Awareness of Energy Label Ninety per cent of the respondents agree that enforcing the Energy Label scheme on a wider range of products would increase the use of energy efficient products and reduce energy consumption, and 87 per cent of them said that the label would influence their decision on purchases. (Figure 18) Figure 18: Attitudes toward Energy Label for a Wider Range of Products 4.3. Customer Attitude toward Transport Modes Although the respondents are concerned about environment and trying to reduce energy consumption at home, 70 per cent of them said that they frequently use a private vehicle when they travel. Only 18 per cent of the respondents that own a vehicle use public transport frequently. Cost is cited as the main reason for the vehicle owners to use public transport, followed by convenience. (Figure 19)

15 Figure 19: Attitude toward Mode of Transport 4.4. Customer Attitude toward Cars More than 80 per cent of the respondents said that reliability, safety, vehicle price and fuel economy are important when purchasing new vehicles. Large vehicle buyers see performance and design as more important than small vehicle buyers do. (Figure 20) Figure 20: Vehicle Purchasing Criteria As for current vehicles that they have, price and fuel economy were the main reasons cited for selecting the vehicles. Price plays an important factor for buyers of small vehicles but not for hybrid buyers. Fuel-efficiency of the vehicles plays an equally important factor for both buyers of small vehicles and hybrids. However, fuel-efficiency does not play an important factor for buyers of large vehicles. (Figure 21)

16 Figure 21: Vehicle Purchasing Criteria for Current Vehicles The respondents prefer vehicles with petrol engines over 1.6 liters as compared to vehicles with smaller petrol engines and diesel engines in terms of safety, comfort, driving dynamics, performance and design. In general, diesel engine vehicles are not popular among the respondents. (Figure 22) Compared to conventional vehicles, green vehicles (hybrid and electric vehicles) are generally more popular but ratings on its performance, reliability and convenience lag behind conventional vehicles. Figure 22: Vehicle Preference by Engine Type

17 Eighty-two per cent of the respondents agree that electric and hybrid vehicles are environmentally friendly but 77 per cent of them said electric vehicles have a very limited range and the technology needs to be improved. (Figure 23) Figure 23: Attitudes toward Electric and Hybrid Vehicles To improve fuel efficiency, 82 per cent of the respondents said that maintenance of vehicles is important. 84 per cent and 76 per cent of the respondents surveyed said they accelerate smoothly and keep tire pressure at optimum level respectively to improve fuel efficiency. (Figure 24)

18 Figure 24: Actions to Increase Fuel Efficiency Eighty-two per cent of the respondents understand that tire pressure has a direct impact on fuel consumption, while 45 per cent of them agree that rolling resistance of tires affect fuel consumption. Hybrid owners have a higher awareness on what impacts fuel consumption as compared to conventional vehicle owners. (Figure 25) Figure 25: Awareness of Fuel Consumption 4.5. Customer Attitude toward Tires Tires are relatively well maintained by vehicle owners in Singapore. 80 per cent of the respondents check tire pressure at least once a month, and 43 per cent of them check it at least twice a month. Twenty per cent of the respondents change tires every 40,000 kilometers or less and 39 per cent of them change tires between 40,000 and 60,000 kilometers. (Figure 26)

19 Figure 26: Tire Maintenance When purchasing new tires, good road grip is the most important factor cited by the respondents, followed by low rolling resistance and low road noise. Low rolling resistance is especially important for hybrid owners. 94 per cent of hybrid owners agreed that low rolling resistance is important as compared to 71 per cent of conventional vehicle owners. (Figure 27) Figure 27: Tire Purchase Criteria Consumers understand that rolling resistance impact on the performance of a vehicle. 62 per cent of the respondents think that low rolling resistance reduces fuel consumption. The respondents also understand that low rolling resistance improve road handling and increase durability of tires. (Figure 28)

20 Figure 28: Attitude toward Rolling Resistance When purchasing tires, 58 per cent of the respondents refer to manufacturers websites followed by recommendations of dealers and mechanics to get information about rolling resistance. 65 per cent of the respondents say that it is easy to find the information and 84 per cent of them say it is easier to select tires if they can find the information easily. (Figure 29) Figure 29: Access to Tire Information on Rolling Resistance The respondents also expect tire manufacturers to provide information about rolling resistance (87 per cent of the respondents) on the website (80 per cent), product brochures (72 per cent) and label on product (52 per cent). (Figure 30)

21 Figure 30: Location of Tire Information Consumers will refer to the tire labeling which includes information about road grip, rolling resistance and tire noise if it is available. One-third of the respondents said that they will always consult tire labeling when purchasing tires. Only 5 per cent of the respondents said that they would not consult tire labeling. (Figure 31) Figure 31: Attitude toward Tire Labeling As for labeling scheme, a simple scheme is preferred for road grip, while a rating scheme is preferred for rolling resistance and tire noise. (Figure 32)

22 Figure 32: Tire Labeling Scheme If there are 2 types of tires: one with label and another without label, consumers prefer to purchase labeled tires. 91 per cent of the respondents said that they prefer tires with information of road grip, rolling resistance and road noise, and 71 per cent of them said that they would recommend labeled tires to friends and family members. (Figure 33) Figure 33: Attitudes toward Labeled Tire Not only consumers prefer labeled tires, they would pay premium for them. 57 per cent of the respondents said that they would pay 5 per cent more for labeled tires and 26 per cent of them would even pay 15 per cent more. Only 16 per cent of them said that they would not pay 5 per cent more for labeled tires. (Figure 34)

23 Figure 34: Interest to Pay Premium on Labeled Tire The government s regulation on the display of tire information would be preferred by consumers. 80 per cent of the respondents agree that regulation on display of information on road grip, rolling resistance and road noise would help them make an informed choice. 82 per cent of them agreed that the regulation would encourage tire manufacturers to produce better products. On the other hand, the respondents are skeptical for voluntary labeling scheme among tire manufacturers. 17 per cent of the respondents disagree that tire manufacturers will voluntarily display information of their tires. (Figure 35) Figure 35: Introduction of Tire Labeling Scheme

24 5. Environment Policies of Fleet Operators 5.1. Environment Policies of Fleet Operators Fleet operators such as bus and taxi operators and logistics companies operate many vehicles on road in Singapore. As seen in Figure 3.2, a taxi has a mileage of more than 100,000 kilometers annually, a bus has a mileage of more than 90,000 kilometers and a truck has a mileage of more than 40,000 kilometers. These vehicles have a much higher mileage as compared to passenger cars, at 20,000 kilometers annually and these vehicles emit a larger amount of CO 2 in the air. Fleet operators, especially public transport operators and large logistics companies, have their environment policies and are trying to reduce the impact on environment. These companies are trying to save energy consumption and reduce impact on the environment at multiple levels. At the corporate level, measures such as adjusting temperature of air conditioning, energy saving lighting, utilization of energy saving mode and employee training are implemented As for lighting, companies switch off lights when not in use, change to energy saving fuel bulbs and use natural light whenever possible. Lifts, escalators and photo copy machines are set on energy saving mode. Fleet operators train their employees to increase awareness about environmental protection. Employees are encouraged to recycle, to switch off light when not in use and not to print unless necessary. Fleet operators are also taking several measures at an operational level to reduce their carbon foot print. For example, a bus operator in Singapore revealed that the company is using 400 Euro V compliant buses which produce less exhausts. These buses are European Enhanced Environmentally Friendly Vehicles (EEVs), which reduces the emission of sunburnt hydrocarbon by 46 per cent as compared to standard Euro V buses. It also employs exhaust gas re-circulation technology to cleanse fumes. For their taxi operation, the company is operating 4,400 Euro IV compliant diesel taxis. Another bus and taxi operator interviewed is also using Euro V buses to reduce emission of particulate matters. The company is currently using low-floor Euro V buses, which are lighter by 1 ton than current Euro V buses and consume 7 per cent less fuel, on a trial basis. For its taxi operation, the company is using CNG taxis that do not emit PM2.5. Another taxi operator also uses CNG taxis and educates its drivers to reduce engine-idling. The company encourages its drivers to use more durable tires in a move to reduce tire replacement. A logistics company is regularly replacing older vehicles with newer and more fuel efficient vehicles. The company is also introducing new vehicle technologies and renewable fuels. Another logistics company interviewed plans its delivery routes to minimize time spent on the road to save fuel consumption. The company also trains its drivers to reduce engineidling time and monitor fuel consumption. As discussed above, fleet operators have their environmental policies and are taking actions at the corporate and operational level to save energy consumption. These companies are actively adopting more environmentally friendly vehicles such as Euro V compliant buses and CNG taxis. However, they are not very environmentally conscious when it comes to tires. For fleet operators, tires used for their fleet are costs. Taxis and buses which have a mileage of nearly 100,000 kilometers annually may need to replace tires twice a year and trucks which have a mileage of over 40,000 kilometers annually may need to change tires

25 once a year. When a taxi operator has a fleet of 5,000 taxis, the company may need to purchase 40,000 tires annually. The main criteria of selecting tires for fleet operator are pricing and durability to reduce operation expenses in addition to quality and safety as basic requirements. Most of the fleet operators interviewed are not aware of green tires. Even if they are aware of green tires, they have not recognized the benefits of using green tires and understand its benefits on energy saving. They are also concerned about the price, durability and availability of green tires. As a result, the fleet operators do not have a plan to adopt green tires for their fleet at this moment. However, some of them are willing to adopt green tires if it is financially and environmentally beneficial Drivers and Restraints for Green Tire There are drivers and restraints for fleet operators to adopt green tires. (Figure 36) As shown in Figure 2.1, 17 per cent of CO 2 emission is caused from vehicles. The government supports or takes initiatives to make transportation more environmentally-friendly. The government may encourage fleet operators, especially public transport operators to use green tires to reduce CO 2 emission from vehicles. Green tires consume less fuel so that fleet operators are able to enjoy fuel cost saving. The additional costs for Green Tires amortizes within two years if a car owner travels km per year based on 5% fuel saving, 10 liters consumption on 100 km and 1,40 Euro /per liter fuel.) As green tires are also more durable and available at reasonable cost, there is no reason for fleet operators not to use green tires. Fuel prices have been increasing recently. Fuel costs are one of the major operation costs for fleet operators and they are struggling to reduce operation costs. Green tires help to offset fuel prices. Awareness of environmental protection has been enhanced among consumers as well. Consumers demand fleet operators to be greener and consumers tend to select services provided by companies which actively employ greener measures. On the other hand, there are restraints for fleet operators to use green tires. Low awareness of green tires and the benefits are obviously restraining fleet operators from using green tires. Many fleet operators are not aware of green tires and they do not recognize the benefits even if they are aware of green tires. Lack of promotion of green tires by tire manufacturers and distributors can be a reason. Lack of availability of green tires is another restraint. Fleet operators need a lot of tires; therefore the availability of tire is critical for them. If green tires are not easily available in the market, fleet operators will not be willing to use them. Green tires can save fuel consumption by 5 to 7 per cent, but the impact of using green tires is not very obvious as compared to other measures such as hybrid and CNG vehicles. The small fuel saving by green tires may not be noticeable as it will depend on driving situation. Although there are these restraints for green tires as of now, these restraints will be diminished in the near future once green tires are more recognized in Singapore. Countries in EU, South Korea and Japan either have started or are going to start tire labeling schemes. The labeling will help enhance the benefits of green tires.

26 Figure 36: Drivers and Restraints for Green Tires 6. Conclusions and Recommendations 6.1. Conclusions Singapore is one of the most developed countries in the world and has been taking comprehensive environment protection initiatives. Regarding transportation, Singapore is controlling vehicle population on the road by implementing the Certificate of Entitlement (COE) which adjusts vehicle acquisition cost. Road traffic is controlled by Electric Road Pricing System (ERP) which eases traffic flow to central business district during peak hours. In terms of exhaust emission regulations, Singapore does not implement the strictest standards but is well in line with the standards in other developed countries in Europe, US, Japan and South Korea. CNG infrastructure has already been put in place, which services more than 5,000 CNG vehicles, and 63 EV charging stations are planned to be built in 2011, well ahead of the mass introduction of electric vehicles. Labeling scheme such as Energy Label is well accepted among consumers, and consumers refer to the information when deciding on their purchase. The Fuel Efficiency Label has also been introduced for new purchase of vehicles, which provides useful information to vehicle buyers. Although the Singapore government is taking initiatives to make transportation more environmentally friendly, vehicle population has been increasing due to economic growth and it is still challenging to reduce exhaust emissions, particularly CO 2. Currently more than 900,000 vehicles on the road are estimated to emit a total of 7.1 million tons of CO 2 annually. While Electric vehicles (EV) have long have been considered as an ultimate solution to reduce CO 2 emissions, it has been challenging to get it adopted widely due to its high cost and technical limitations. Green tires on the other hand, allow all drivers regardless of their choice of vehicle to contribute to carbon savings. With its fuel saving and carbon emitting properties, it will likely be given the thumbs-up from both environment conservationists who would likely

27 convert to EVs and automotive enthusiasts who would like to be environmentally friendly without compromising on their dream cars. Frost & Sullivan estimates that green tires can reduce CO 2 emission by 5 per cent, or 352,600 tons. Consumers are concerned about environment and are actively taking actions to reduce energy consumption. When buying home electrical appliances, 85 per cent of the respondents said that the Energy Label is useful. Fuel efficiency is one of the top criteria for consumers when purchasing vehicles and consumers are aware of impact on fuel consumption by tire pressure and rolling resistance of tires. However, currently there is no such labeling scheme to indicate rolling resistance of tires, and consumers would welcome a labeling scheme which provides tire information such as rolling resistance and road grip. Fleet operators understand the importance of environment protection and most do have a corporate environment guideline. They are taking several measures to reduce energy consumption at corporate and operation levels such as using more environmentally friendly vehicles but many of them are not aware of green tires and do not recognize the benefits. Developed countries under the European Union have introduced tire labelling scheme, while Japan & South Korea will be introducing the scheme to raise awareness of green tires and to provide information to consumers when purchasing tires. Frost & Sullivan foresees that tire labeling scheme will be well accepted among consumers and fleet operators should it be introduced in Singapore, and believes it is time for Singapore to study introducing the scheme to enhance awareness of green tires and to encourage consumers and fleet operators to adopt green tires to reduce energy consumption and CO 2 emission Recommendations for Stakeholders Green tires can provide benefits to all stakeholders without compromising other factors such as financial, safety, comfort and convenience. Frost & Sullivan analyses the benefits and make recommendations for each stakeholders in Singapore as follows. Reducing CO 2 emission is one of key objectives for the government amid growing number of vehicles on the road which accounts for 17 per cent or 7.1 million tons of the total CO 2 emission in Singapore. To make Singapore s transportation more environmental friendly, the government is taking initiatives to encourage people to use more public transport and setting up EV charging stations. However, these initiatives need huge budget to implement and need people s understanding to sacrifice convenience to use private cars to some extent. Introducing green tires would be more cost and time efficient to reduce CO 2 emission. The government may introduce a mandatory tire labeling scheme as introduced in Europe, Japan and South Korea. Consumers are already familiar with labeling schemes such as Energy Label for home electrical appliances and Fuel Economy Label for vehicles. About 90 per cent of the respondents surveyed agree that a government controlled energy label for a wide range of products would increase usage of energy efficient products. It would not be costly to legalize a tire labeling scheme and the scheme may reduce CO 2 emission quickly as public transport such as taxis and busses tires are replaced twice a year, while passenger cars tires are replaced 2-3 times a year. If all vehicles on road use green tires, CO 2 emission will be reduced by 352,600 tons or 5 per cent from the current level. Fuel efficiency is one of the major criteria for consumers in shaping their decision on which vehicles to buy. Automakers and car dealers emphasize fuel efficiency of vehicles mainly by engine performances. Green tires will add another appealing point for consumers. Some vehicle models may already have green tires without consumers knowledge. By informing

28 consumers that vehicles are fitted with green tires, awareness of green tires among consumers will be improved significantly, and it will enhance customer satisfaction. Tire manufacturers may think that it is costly to introduce tire labels, but it will help distributors and dealers to add a green tire series to the product lines, which can be sold at a higher price. Consumers are aware of impacts on fuel efficiency by tire pressure and rolling resistance, and will welcome a tire labeling system as it will help them in selecting tires based on price and brand. Tire makers, distributors and dealers should proactively introduce and promote green tires in the market so that it improves availability and enhance awareness of green tires. Based on Frost & Sullivan s analysis, green tires also help businesses and individual s to save on fuel costs so that the higher costs for purchasing green tires amortize. (Figure 37) Figure 37: Financial Benefits of Using Green Tires Public transport operators costs come from fuel and tires. A public transport operator which has 15,000 taxis and 3,000 buses will be able to enjoy about SGD 25 million fuel savings yearly by using green tires. It is a win-win situation for public transport operators to achieve environment protection and cost savings at the same time. Public transport operators are under strong pressure to provide greener transport and green tire would be a feasible option without huge investments in expensive environmentally friendly vehicles. Logistics companies will also enjoy similar benefits by using green tires. It would be very important for margin-thin logistics businesses to save operation costs. A logistics company which has 30 heavy trucks will enjoy about SGD 20,000 fuel savings yearly by using green tires. On average, individual passenger car users who drive about 20,000 kilometers annually will be able to save about SGD 250 per year if they start using green tires. If a driver spends SGD 4.00 every day for the ERP, the SGD 250 saving will offset nearly 3-month usage of the ERP. Although green tires can be slightly more expensive than basic tires, fuel savings will offset the tire prices. Also green tires may have longer tire life than normal tires so that tire replacement cycle can be extended which resulted in further cost savings. In conclusion, green tires provide a win-win situation to all stakeholders, and the adoption of a tire labeling scheme could aid the penetration of green tires quickly and smoothly into the Singapore market.

29 About LANXESS LANXESS is a leading specialty chemicals company with sales of EUR 7.1 billion in 2010 and currently around 15,800 employees in 30 countries. The company is at present represented at 46 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals. LANXESS is a member of the leading sustainable indices Dow Jones Sustainability Index (DJSI) World and FTSE4Good. About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit