tyre energy regulation advisory v8 0

8/2/2019 Tyre Energy Regulation Advisory v8 0

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2010Emergent Ventures

India (EVI)

& Indian Technical

Tyre AdvisoryCommittee (ITTAC)

[TYRE INDUSTRY- EU LABELING/ CERTIFICATION

REGULATION: COMPLIANCE & PLANNING ROADMAP]Maximizing value within a changing global tyre industry


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Tyre Industry- EU Labeling/ Certification Regulation: Compliance & Planning

Roadmap

2010

E m e r g e n t V e n t u r e s I n d i a ( E V I ) &

I n d i a n T r e T e c h n i c a l A d v i s o r C o m m i t t e e I T T A C Page 2

Tyre Industry Labeling/Certification Regulation Compliance & Planning roadmap


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ContentsForeword .......................................................................................................................... 4

1. Introduction: Regulatory & Market landscape ........................................................ 6

2. Indian tyre industry & exports ................................................................................. 7

3. European emission reduction goals & tyre labeling regulation ............................... 9

3.1. Noise Pollution Regulation ............................................................................... 9

3.2. Wet Grip Regulation ......................................................................................... 9

3.3. Rolling Resistance ........................................................................................... 10

4. Compliance: EU tyre labeling ................................................................................. 10

4.1. Scope of the regulation .................................................................................. 10

4.2. Compliance timelines ..................................................................................... 11

4.3. Certification procedure .................................................................................. 11

4.4. Verification & Enforcement ........................................................................... 11

4.5. Testing procedures ......................................................................................... 12

4.5.1. Noise Pollution ....................................................................................... 12

4.5.2. Rolling Resistance Test ........................................................................... 12

4.5.3. Wet Resistance test ................................................................................ 12

4.6. Compliance cost & Options ............................................................................ 13

4.7. Additional Requirements & Fuel Savings calculator ...................................... 13

4.8. Overall Action Plan: 3C ................................................................................... 13

4.8.1. Compliance > .......................................................................................... 14

4.8.2. Communication > ................................................................................... 14

4.8.3. Capacity > ............................................................................................... 15

5. Case in point: How are automobile & tyre manufacturers acting on the issue ..... 16


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Foreword

I am delighted to present this Tyre Industry Labeling/ Certification Regulation: Compliance & planning Roadmap.

Transportation is a very dynamic sector of economy. It is ever evolving and therefore requires all related industries like tyre industry

to adapt to the changing dynamics. Today there is a growing global movement to make transport industry more fuel efficient and

safe at the same time. These standards are increasingly being adopted in various geographies of the world and will converge

towards a common global standard. The recent European tyre labeling regulation is a case in point.

Indian Tyre industry appreciates the developments and therefore looks forward to upgrade its capacity to address such issues. They

are increasingly focusing on international markets like Europe and are interested to upgrade themselves to fully comply with global

standards. European tyre regulations would be important for the industry in this context.

This report gives an introduction to the recent European tyre regulation. It lays down basic requirements of the regulation and aims

at giving the reader a basic understanding of this regulation. I believe that these regulations would also help the manufacturerscommunicate to the consumer effectively about the quality of their products

Lastly, Industry level cooperation to build capacity within industry to comply with these new regulations will also help the exporters

keep the costs of compliance low. I hope that this guide will be of value to tyre industry to take further action.

T. Chakravarty,

Secretary General

Indian Tyre Technical Advisory Committee

The recent economic growth in India has fuelled the growth of auto industry, of which tyre industry is an integral part. The Indian

auto and tyre industry are increasingly competing at the global level. In that backdrop, the recent EU regulations on fuel efficiency

and safety have emerged as important driver for the tyre industry to adopt better standards for manufacturing the tyres for

European markets. While the report presents a basic understanding about the regulations, it also discusses that how EU regulations

can help in setting higher standards for the tyre industry in developing and developed world. The European Union has passed these

regulations as part of policy initiatives on environmental sustainability in transportation sector. These regulations need

contemplation from the tyre industry.

I have had an extensive involvement in the development of energy efficiency labelling programs for consumer appliances and to

me the auto sector seems to be a natural next step in achieving better energy standards. Our team has been tracking the EU tyre

regulations since the onset of their formulation and I hope that this report should not only be helpful in highlighting the key facets

of the regulations but will also help the tyre industry in setting targets to comply with new EU regulations.

Sanjay Dube

Vice President,

Sustainability & Climate Value Advisory, Emergent Ventures International


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Executive SummaryToday our global economic markets are undergoing rapid integration and tyre industry

is no exception. The Indian tyre manufacturers are increasingly exploring internationa

markets and the European market has emerged as an important export market. Globa

markets in transportation and related goods are also witnessing increasing regulations

to address environmental and fuel efficiency concerns. Europe is at the forefront of

such regulatory initiatives. Compliance with such market regulations and appealing to

consumers in these countries would require that exporters to these markets upgrade

themselves accordingly.

Recently, European tyre labelling regulation has been introduced in European markets

The regulation aims to lower carbon emissions, noise pollution and save fuel through

use of quality tyres. Initially the program only requires that manufacturers benchmark

and certify their tyres on three performance parameters: Noise Pollution, Rolling

Resistance and Wet Grip. The minimum quality standards based on these would be

made more stringent over time.

Along with labeling, the regulation also requires that the supplier makes such

information available to the consumer easily and hence requires the manufacturer to

communicate its status on these parameters too. This is expected to add a new

dimension to the regulation, wherein the regulation takes the program beyond just

labeling and encourages suppliers to engage with consumers on these issues.

Therefore the issue of labeling regulation requires attention beyond the technica

adherence on softer issues of communication and consumer engagement. This pape

focuses on the EU labeling regulation issues. It describes what the new EU regulations

are. It briefly discusses the Low Carbon Transport policy goal that forms the

background for this regulation. It also describes what kind of tyres is covered and

which types are exempted. What parameters are required to be reported on the tyre

label, what types of test would be required to quantify these parameters. It also briefly

mentions the cost that could be incurred to undergo for these tests.

Finally, the paper suggests three step procedure based on 3Cs that exporters can

adopt to successfully comply with the compliance and effectively communicate to

consumers to benefit from the compliance.


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1.Introduction: Regulatory & Market

landscape

Changing Global Business Environment

Today business environment around the world is undergoing a slow metamorphosis

The metamorphosis is being brought about by a set of forces around the world. In a

recent global survey-The great rebalancing & Pricing the planet emerged as the two

among the five most important factors that will change our global business

environment and hence bring this metamorphosis1. Great rebalancing refers to the

growing prominence of the Asian economies, mainly India and China . Pricing the

planet refers to the fact that environment sustainability is increasingly assuming

importance in business strategy & policy planning around the world. Without doubt

these factors will have a profound effect on the global transport sector also.

Transport Industry: changing regulatory & market environment

Transport industry emitted 18% of the global green house gas emissions in 20052

Additionally the rapid economic growth in India and China is also leading to a massive

growth of transport industry in these countries. India alone is adding roughly 2 million

vehicles per year on its road3 & China several times that figure. Shooting oil prices &

growing environmental concerns represent an enormous challenge for transport

industry. Increasingly this is resulting in policy initiatives and market developments

around the world that are looking forward to address such challenges. These

developments are also translating into regulatory changes for the tyre industry.

In March 2010, European Union introduced its mandatory tyre labeling regulation4

that would make tyres more energy efficient and safer. The regulation aims to reduce

environmental impact of the tyres by reducing the noise produced and fuel consumed

by the use of tyres while keeping the tyres safe at the same time.

1web.rollins.edu/~tlairson/asiabus/globalforces.pdf

2http://www.treasury.gov.au/lowpollutionfuture/report/html/03_Chapter3.asp

3http://asiancorrespondent.com/indianomics/is-india-waiting-for-its-longest-traffic-jam

4http://news.bbc.co.uk/2/hi/uk_news/7936534.stm


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In United States, National Highway Traffic Safety Administration (NHTSA) is also going

ahead with its own tyre labeling program. It is holding stakeholder consultations and

seeking information towards establishing a fuel efficiency standard for tyres5.

Additionally US Environmental Protection Agency (EPA) has already introduced the US

EPA Smart Way. Smart Way is a certification given by EPA based on the

manufacturers products environmental performance in transport sector including

tyres. EPA is also providing visibility to car and tyre manufacturers on their website

based on their Smart Way certification. Tyre manufactures have already started

getting themselves smart way certified.

These developments indicate that environmental performance is poised to emerge as

an indicator that would shape the future of the industry and therefore requires action

from the industry.

Beyond the environmental performance, most of these developments would alsousher into market advanced technology. It would necessitate technology

improvements within tyre industry and therefore shape the competitive landscape of

tyre industry.

2.Indian tyre industry & exports

Indian tyre industry exports stood at $ 834 million in 2008 showing a growth CAGR of

15.1% during 2005 to 20086. Indian tyre manufacturers remain bullish about the

export prospects of the industry. Indian manufacturers plan to increase their European

footprint through both organic and inorganic growth strategies.

Other important markets for Indian tyres are Middle-East, Africa and US. While African

share of Indian exports averaged at 17% of the market, US averaged at only 5% during

2005 to 2008. However the growth of Indian exports in European market has been

5

http://www.tirebusiness.com/subscriber/headlines2.phtml?cat=1204552929&headline=NHTSA+explains+information+

requests+for+tire+fuel-efficiency+rule&id=12857006696EVI analysis based on data from international trade center


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very quick as compared to US and African markets. European markets remain high on

the radar of Indian tyre manufacturers7.

The developments in European market will therefore have an important bearing on

the Indian tyre manufacturers.

There are developments on this front beyond European and American markets also

Possible adoption of standards similar to EU standards by UN GTR (Global Technica

Regime) is also likely. UN GTR for wheeled vehicles, equipments and parts is a globaforum that aims to standardize global technical standards to facilitate trade. This

development would further increase the necessity of adapting to the EU technica

standards.

EU standards compliance needs a manufacturer to convey full information about

some aspects of his product to the consumer. This doesnt necessitate that a

manufacturer upgrades his manufacturing technology also, although it would be

advisable in the wake of the labeling development. The presence of such information

in market would lead to increased competitiveness in the market place based on this

information which may lead to technology upgradation needs also.

One of the possible effects of this regulation would be that the low cost manufacturers

or non compliant manufacturers would now focus more on the markets that do not

have such regulations. This could shift some exporters from Europe to African or

middle-eastern regions. This could possibly create some market space for the

compliant tyre manufacturers within European or US markets.

7http://www.tirereview.com/article/80024/apollo_readies_for_massive_growth_in_europe.aspx

513,618

602,913678,264

834,973

2005 2006 2007 2008

Tyre Exports

Exports

Source: InternationalTrade Map


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3.European emission reduction goals& tyre labeling regulation

Europe considers Sustainable Mobility as a major challenge facing the European

Community in the light of climate change and it intends to reduce the total European

energy consumption by 20 % by 2020 by means of a list of targeted actions including

the labelling of tyres8. The European Parliament in March 2010 passed the tyre

labeling regulation in that direction. The aim of this Regulation is to increase the

safety and the economic and environmental efficiency of road transport by promotingfuel-efficient and safe tyres with low noise levels.

9

The regulation would be administered by Director General Transport & Energy

European Commission. The regulation plans to introduce mandatory tyre labels on al

tyres to be sold in Europe that will enable consumers to choose the best tyres in terms

of fuel efficiency, wet grip and noise. The label shall be applied to car (C1) and light

commercial vehicle (C2) tyres by means of a sticker and shall be included on technica

promotional documents and websites for heavy duty vehicles (C3) tyres.7

The label will carry information about the fuel efficiency, noise pollution and wet gripof the tyre as shown in the image on the left.

3.1. Noise Pollution RegulationThe label would require that the manufacturer quantify and display the noise pollution

that a vehicle makes as it moves. The label would show the noise intensity generated

in decibels (dB) as well as with the number of blue stripes representing sound. Three

stripes would indicate more sound as compared to a single stripe.

3.2. Wet Grip RegulationTyre wet grip is the tyre's ability to keep in contact with the road in the presence of a

water layer on the road; this is a key property to ensure driving safety. In order to

ensure safety performance of tyres under wet road conditions a minimum wet grip

8http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:342:0046:01:EN:HTML

9http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:342:0046:01:EN:HTML


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index should be guaranteed.Tires with excellent grip in the wet have shorter brakingdistances on wet roads, which is an important safety benefit when driving in rainy

weather.

The label will display the wet grip performance of a tyre with a grade between A to G

Grade A will display the best performance while grade G the least.

3.3. Rolling ResistanceRolling resistance is a measure of the force that it takes to move your tires forward on

the road. As you travel along, the weight of your vehicle deforms your tire tread

where the rubber meets the road. The resulting deformity generates heat between the

tire and the road, which is then wasted in the form of heat as the tire rotates.10

The regulation requires the labels to display the rolling resistance performance with a

grade ranging from A to G. With the A being the best grade or tyre with very low

rolling resistance while vice versa for grade G. Lower rolling resistance leads to lower

fuel consumption.

A nearly 40% difference in rolling resistance transforms into an approximately 6%

difference in fuel consumption11.

4.Compliance: EU tyre labeling

The following section details what options a tyre manufacture in India can exercise. It

also explains some key questions concerning the legislation

4.1. Scope of the regulationThe regulation will apply to C1 (Cars), C2 (Light Commercial vehicle) & C3 (Heavy

Commercial vehicle) type of tyres.

The regulation will not be applicable on the following types of tyres:

1. Retreaded tyres10

http://www.metronews.ca/vancouver/life/article/654282--low-rolling-resistance-tires-boost

fuel-mileage11

http://www.nokiantires.com/rolling-resistance


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2. Off-Road professional tyres3. Tyres designed to be fitted to vehicles registered before October 1, 19904. T-type temporary use-spare tyres5. tyres whose speed rating is less than 80 km/h;6.

tyres whose nominal rim diameter does not exceed 254 mm or is 635 mm ormore;

7. tyres fitted with additional devices to improve traction properties, such asstudded tyres;

8. Tyres designed only to be fitted on vehicles intended exclusively for racing.

4.2. Compliance timelines

4.3. Certification procedureThe certification will be a self certification process; therefore manufacturer is free to

choose his options for certification procedure.

4.4. Verification & EnforcementTyre suppliers need to provide technical documentation of compliance as and when

required. This means that the tyre manufacturers would be required to supply

technical documentation of compliance along with their products.

However veracity of the claims would be verified by market surveillance. The test

procedure will be:

(i) A single tyre is tested first. If the measured value meets the declared classor external rolling noise measured value, the test is passed;

And

(ii) If the measured value does not meet the declared class or external rollingnoise measured value, three more tyres are tested. The average

2010 2011 2012 2012 2016

Labeling Regulations

passed in European

parliament

Last date for

compliance

Review of

scheme

Testing & labelling

capacity building


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measurement value stemming from the four tyres tested are used to

assess conformity with the declared information;

Market surveillance will be carried by national authorities in each country.

4.5. Testing proceduresQuantification of the three parameters: Noise, Rolling resistance & Wet grip would

require the manufacturers to use a set of approved methods. Test methods for each

parameter have been suggested.

4.5.1. Noise PollutionNoise performance test can be carried out as prescribed under the UNECE

Regulation 117. It requires a specialized track and arrangements with

construction as laid down in the adjoining image.

4.5.2. Rolling Resistance TestA type approval test laid out in Europe had earlier laid out the maximum

allowed values of rolling resistance allowed for each type of tyre. This test is

carried out as prescribed under EC Regulation 661/2009.

However for rolling resistance grading level in conformance with labelingrequirement testing has to be carried out as under EC regulation 1222/2009

ISO 28580 is under improvement for this purpose.

4.5.3. Wet Resistance testThe method currently under UNECE regulation 117 is currently under

improvement. Improved testing procedures are expected to make the test

more reliable and consistent. The official publication on the test method is

expected to be available by 2011.


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4.6. Compliance cost & OptionsCompliance would require that tyre manufacturers (i) Quantify the required

parameters for labeling (ii) Technical improvements in tyre to qualify the minimum

criteria.

The manufacturer need to benchmark their products in order to plan for future

business operations as the minimum criteria are expected to get stringent with time in

European region.

Moreover the indirect effect of the regulation would be the increased competition in

the market place based on information on performance parameters. This would also

require the manufacturers to continuously upgrade their technical capabilities.

Overall cost for outsourced testing Estimated to be 2000-2500 per tyre

Cost for certification Estimated to be 350- 400

4.7. Additional Requirements & Fuel Savings calculatorAdditionally the tyre manufacturers would be required to make available the

information also through their websites and publicity materials. The information

should include the amount of fuel, CO2 emissions and costs that are saved. Therefore

a fuel saving calculator must be made available. The calculator must also show CO2

emissions and cost saved. This would require the manufacturers to assess the fue

savings of their tyres.

Although not mandatory, this kind of communication must ideally go beyond the

technical specification and must be easy for the consumer to understand. Along with

the green house gas impact reduction should also be carried out for the tyres.

4.8. Overall Action Plan: 3COverall action plan for tyre manufacturers must be divided into 3 Cs

1. Compliance2.

Communication

3. Capacity


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4.8.1. Compliance >Tyre manufacturers must comply with the labeling requirements. This would

require them to either develop the testing facilities inhouse or get their tyres

tested externally. The least cost solution for Indian manufacturers would be to

get together and outsource their testing requirements in a collective manner

Pooling together of testing would get them a better pricing from the testingagencies. This could be easily taken at the level of ITTAC. This would keep their

cost down as well as prove more convenient and time effective for them.

4.8.2. Communication >The regulations also require the manufacturers to communicate the

information to the consumer in a very understandable manner. Right

communication in this case would be very important as more and more buyers

would use the information in their buying decision. Any incomplete or

ineffective communication could result in loss of sales.

Secondly Green Branding has emerged as a very important concept both in

India and Europe. Green branding is an even more important issue to be

addressed in Europe. Therefore an effective communication also means that a

company prepares itself to market the green aspects of their products also

effectively.

Compliance Communication Capacity


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4.8.3. Capacity >By capacity we refer to the technology capability to manufacture higher

performance tyres. This would be a very important parameter on which the

manufacturers would have to assess where they stand, where the market wilstand in a few years from now and how they need to prepare themselves to

address the market as it emerges.

Information on the market development and dynamics would be a very

important input to their planning and capability enhancement. Therefore the

capacity enhancement planning will be dependent on the external condition.

Policy initiatives like the EU labeling regulation based on environmental and

energy will be a very important force that will shape the future markets and

hence are important to assess the future state of global tyre markets.


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5.Case in point: How are automobile& tyre manufacturers acting on the

issue

Both automobile & tyre manufacturers have been active on the issue and are looking

to gain competitive advantage by also building a right communication and action plan

around the labeling standards. Since the regulation is designed by EU authorities tosave both fuel and avoid CO2 emissions, some companies are also integrating this

within their overall corporate sustainability action.

#Case 1: Yokohoma Tyre receives AA-C labelingUnder the new

BluEarth conceptEasy on the Environment, People and Society

Yokohoma tires has got its AE-01 passenger radial tested for EU tyre labeling

standards. It has received AA-C rating for the tyre.

The tyre will be marketed under the campaign Blu Earth by the company. The

campaign Blu Earth is a marketing campaign based on the environmental theme. Its

tag line for the campaign is Easy on the Environment, People and Society

Yokohama endeavors to be environmentally friendly through excellent fuel-efficiency,

and easy on drivers and surrounding living environments through improvements in

safety and comfort, and reduction of noise outside the vehicle,As per the company12

12http://www.tirereview.com/Article/80597/yokohama_bluearth_receives_design_honor.aspx


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#Case 2: Ford Motors asking customers to buy Greener Tyres

From the Ford Motors website:

Weve all become more aware of the CO2 emissions our driving creates, and

tyre manufacturers are no exception. The latest tyre technologies have been

specifically developed to reduce those emissionsand these green tyres are

available from your Ford Dealer.

Under the tyres segment on its website Ford is asking customers to choose greener

tyres or tyres with lower rolling resistance as it saves CO2 emissions & fuel too. The

section also draws the consumer attention to how he can lower CO2 emissions

through other means by taking part in Target Neutral campaign jointly hosted by BP

and Ford to reduce emissions from vehicles.

Lowering Driving emissions

program being jointly done by

Ford & BP. The feature figures as

a part of the Fords overall

communication on Green Tyres

The Target Neutral programto lower emissions from motor

driving being jointly promoted

by BP & Ford is a part of the

Fords overall communication

on Green Tyres


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About Indian Tyre Technical Advisory Committee (ITTAC)

Formed in 1966, ITTAC is the Technical wing of the Indian Tyre Industry registered

under The Societies Act (Autonomous Body). The Committee consists of Technica

representative of Tyre, Tube, Valve and Rim manufacturing companies in India. Main

Tyre Committee has representatives from the nine major Tyre manufacturers.

ITTAC Establishes Standards in terms of common basic dimensions for tyres ensuring

interchangeability. ITTAC has Sub- Committees with Technical experts from member

companies along with representatives of major manufacturers of these components

ITTAC has been functioning on the lines of similar Organizations operating in the USA

(Tire and Rim Association of USA), Europe (European Tyre and Rim Technica

Organization) and Japan (Japan Automobile Tyre Manufacturers Association. ITTAC has

been representing the Industry in deliberations relating to International Tyre

Standards and Global Tyre Regulations under the internationally constituted Working

Group of WP.29 (GTR-TYRE)

ITTAC interacts locally with Government Organizations such as the Ministry of Surface

Transport, Defence, Association of State Road Transport Undertakings, Bureau of India

Standards, Central Institute of Road Transport, Controller of Quality Assurance

(Vehicles), Vehicle Research & Development Establishment and others.

About Emergent Venture International (EVI)

EVI is an integrated climate change company with operations across 15 countries

globally. EVI was founded in 2004, with a vision of developing commercially

sustainable ways to mitigate climate change.

EVI is led by people who realize that in order to move towards a 'low carbon' society,

we must find ways to integrate global finances and clean technologies. Our team

comprises of international finance, technology and strategy professionals with proven

experience in areas such as business sustainability and environmental strategy

advisory, renewable energy development, and carbon markets.

Leading thought in the climate change space, EVI is currently working on over 300

diverse projects, some of which are industry firsts. These span our expert service areas

of sustainability and climate value advisory, carbon advisory, carbon finance and

technology solutions and clean energy generation.

Contact:

Aloke Barnwal: [email protected], +91-9717799415

Yash Saxena: [email protected], +91-9711377727
mailto:[email protected]:[email protected]:[email protected]:[email protected]

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