This chapter serves to introduce the subject of bio plastics - the circumstances surrounding their emergence, the issues surrounding their application in the automotive industry. Bio plastics are examined from a global perspective and then from a European perspective and finally from a UK perspective. Finally, the aims and objectives as well as the scope of the project are outlined.
BACKGROUND
A major challenge facing the automotive industries in the world today is that of sustainable manufacturing. With government regulations concerning greenhouse gas emission and increased demand for environment friendly products, as well the challenge of plastic waste management, auto manufacturers are now increasingly developing and adopting products that impact the environment less. One group of such environment friendly materials being explored are bio plastics, which are expected to substitute traditional petroleum based plastics. [1].
Around 150 million tonnes of plastic is consumed globally, the automotive industry consumes about 2.5 million tonnes of plastic annually thus making it a potential growth area for bio plastics. Toyota and Goodyear Tyre, have made significant strides in the development and use of bio plastics; Toyota already uses an auto grade bio-plastic (Ecoplasatic), made from polylactic Acid, they are also installing a new plant in Japan to manufacture polylactic Acid from sugar cane. Good Year has also been very successful with its Eco- tyre series, made from Novamont's Mater Bi (Pervais and Sain, 2006). In the automotive sector Novamont has embarked upon an important collaboration with Goodyear, one of the largest manufacturers of tyres in the world. Thanks to Goodyear, Novamont has developed a bio filler made from corn starch which substitute's part of the carbon black and silica usually used to produce tyres. [2]
The new tyre, made with BioTRED technology (developed at Novamont) and sold by Goodyear, makes it possible to achieve a series of objectives in terms of environmental protection and prevention, as well as ensuring the highest levels of automotive performance. It enables substantial reductions in rolling resistance (and therefore in the vehicle's fuel consumption), in noise (noise pollution), CO2 emissions (atmospheric pollution) and the energy required for production. And these benefits are achieved using a renewable raw material. [2]
Currently annual bio plastic consumption in North America stands at about 45000 tonnes [4]. Global annual bio plastic production stands at 750,000 tonnes [3]. There is currently a vibrant bio plastic market in the EU - consuming about 40% of the total world output. In Europe, biodegradable polymers and bio plastics have been developed by major chemical companies such as BASF, DuPont, and Eastman Chemicals. These companies have invested in excess of US$28 million in producing branded biopolymers and bio plastics such as 'Eastar', 'Ecoflex' and 'Biomax'.[4].
Plastics play an important role in manufacturing and modern society- from poly-vinyl chloride (PVC) pipes to disposable bottles; several modern products contain plastic components. Plastics have become a common fixture in industrial applications today due to their versatility; plastics are flexible, rigid, brittle or resilient, clear or coloured. Plastics also possess other useful properties such as electrical conductivity and also make good insulators. Generally, plastics have a high strength to weight ratio making plastic products light and less bulky. Some common plastics used in the automotive sector are; Polypropylene (PP), Acrylonitrile Butadiene Styrene (ABS). While some common bio plastics used are; Polylactic Acid (PLA), Polyhydroxybutyrate (PHB) etcetera.
THE EUROPEAN UNION AND THE AUTOMOBILE
The EU is driving forward greener cars through measures such as its Green Cars initiative and European clean transport facility [ ].Legislations mandating improved fuel economy in new passenger cars will reduce the amount of greenhouse gas emissions from automobiles [ ], a Paris based research institute studying the impact of the current economic crisis on the auto sector among other findings found that ; demand for both passenger and commercial cars had dropped significantly and that the European Green Cars initiative is a public research partnership covering a wide range of technologies and smart energy infrastructures essential in achieving advances in the use of renewable and non-polluting energy sources, safety and traffic flows [ ].
Dwindling oil reserves as well as growing global demand have combined to increase the volatility of fuel prices , the European transport sector is 98% dependent on fossil fuels and is currently responsible for about 21% of harmful greenhouse gas emissions (GHG), with more than half of these emissions due to passenger cars [ ].Technological advancements, an ever widening global market and increase and diversity in the movement of capital worldwide are transforming the EU auto industry from a traditional manufacturing based industry to a knowledge - based one. [ ]
As a result of these circumstances the EU automotive industry faces new challenges, opportunities and responsibilities. In meeting these challenges the EU had put in place new legislations and regulations aimed at further reducing the amount of harmful greenhouse gas emissions produced by cars [ ], in response EU auto manufacturers are developing new cleaner and fuel efficient models [ ]. New regulations which came into effect in April 2009 require an average carbon dioxide emission for new passenger cars of 130 grams per kilometre (gCO2/km) by 2015 [ ].This is all part of the EU's strategy geared towards reducing CO2 emissions of light duty vehicles to 120 g CO2/km by 2012 and 95 g CO2/km by 2020 [ ].
EUROPEAN GREEN CAR INITIATIVES
As part of the European Green Cars initiative by the European Commission to promote research across the technologies and smart energy infrastructure, an estimated €5 billion is to be invested [ ]. The European Investment Bank (EIB) is also providing loans to auto manufacturers and suppliers as a way of supporting innovations geared towards improving the environmental performance of cars [ ]. Another similar directive aiming to promote clean and energy efficient cars for public transportation, makes it a mandatory criteria for contract awards the inclusion of life costs for energy consumption, CO2 emission and pollutant emissions [ ].
THE UK AUTOMOBILE INDUSTRY
The UK automobile industry boasts of being `` Europe's most diverse and dynamic automotive industry '', ranked number 2 in the continent with UK customers alone accounting for 17% of Europe's vehicle registration [ ]. Looking at the 40 plus companies manufacturing vehicles in the UK plus the various major Tier 1 component manufacturers [ ], one is bound to agree. The industry is divided into two parts; the vehicle and components manufacture end and the motor trade (retail, distribution and after sale services) [ ].
The industry accounts for 12.4% of the UK's exports, providing over 221,000 jobs and contributes about £9 billion to the UK economy annually [ ]. The retail and service end of the industry is also highly vibrant, in 2005 it generated £22 billion to the UK economy [ ]. In 2008, 1.65 million vehicles and 3 million engines were built in the UK [ ].
STANDARD SETTER
The industry is renowned for being a standard setter, setting the pace for other sectors of the economy [ ]. Accounting for about 3% of global vehicle production and 9% of European production hence its ranking as number 4 in Europe and number 9 globally [ ]. The industry thus has a lot of history , heritage and diversity, which is now being challenged by the pressures of change in today's global economy; the pressures of regulation, environmental protection and safety will strongly influence the type of vehicles manufactured and the way they are manufactured [ ]. There is also the threat posed by emerging South East Asian auto-manufacturers, necessitating a more strategic vision for the UK automotive industry.
LOW CARBON VEHICLE PARTNERSHIP (LowCVP)
Amongst several UK government/ UK automobile industry initiatives geared at meeting the challenges facing the industry is the low carbon vehicle partnership [ ]. Established in January 2003 to support the shift to low carbon vehicles and fuels in the UK and to ensure that UK auto manufacturers benefit from this shift [ ]. The objective of this partnership is to define low carbon targets for 10% of new car sales and 20% of new buses in the UK by 2012 in line with the government's commitment to the Kyoto protocol [ ].
A further improvement on this policy is the CENEX (low carbon and fuel cells centres of excellence) initiative, aimed at fostering innovation in the key areas of telematics and low carbon propulsion technologies [ ]. The activities of these centres are expected to assist UK companies in developing low carbon automotive technologies and deliver them to the market [ ].
1.1 BIO PLASTICS:
According to Flieger et al (2003) [5], bio plastics are plastics made from bio mass as raw materials, broadly classified into three categories;
Those produced through fermentation by microbes;
Polyglycolic acid (PGC).
Polylactic acid (PLA).
Polycarprolactone (PCL).
Polyvinyl alcohol.
Those obtained by chemical synthesis;
Polyesters.
Natural polysaccharides (Gellan gum, pullalan, Laminarin and curdlan).
Those produced from chemically modified natural products.
Starch;
Starch composites with low amount of starch.
Starch composites with medium amount of starch.
Starch composites with high amount of starch.
Foamed starch.
Cellulose
Cellulose bio composites.
Cellulose acetate.
Chitin and chitosan.
Soy-based plastics.
Bio- plastics are an increasingly popular substitute for petro-plastics. They differ from petro plastics in that they are derived from biological sources rather than oil. (1).
AIMS AND OBJECTIVES
The aim of this research is to conduct a net present value analysis of bio-plastics and petro-plastics used in the automotive industry, review and analyse the current business challenges in the use of bio plastics in the UK automobile sector.
The objectives to be achieved in the course of this project are;
Carry out a NPV analysis of bio-plastics versus petro-plastics used in the automotive industry.
To conduct a review of literature on bio-plastics.
To identify the business challenges facing the use of bio plastics in the UK automobile sector.
Build a business case for /against the use of bio-plastics in the UK automotive industry.
SCOPE OF THE STUDY
This study will examine bio plastics generally, but focus basically on bio-plastics and petro- plastics used in the automotive industry globally but with particular focus on the situation in the UK. The study is limited to the use of plastics/bio plastics in medium sized vehicles.
CHAPTER 2:
2.0 RESEARCH DESIGN
This chapter deals with the research methods adopted for this project. It explains how the research was conducted, what approaches and tools were used for data gathering and analysis and the reason they were chosen. The chapter further explains the steps and stages involved in the conduct of the research. Finally, the project plan is outlined.
2.1 Objectives of the Research Study
The main objective of this study is to conduct a net present value analysis of bio-plastics and petro-plastics used in the automotive industry for automobile manufacturers. Other sub objectives are; to conduct a literature review of bio-plastics, to identify the business challenges facing the use of bio-plastics in the UK automotive industry and finally to build a business case for/against the use of bio-plastics in the UK automotive industry.
2.2 Method of Data Collection
Data collection during the course of the research was done basically through secondary research methods (qualitative approach) such as the literature review of books, journals, newspaper articles, government agency publications, company websites, websites of government regulatory agencies, and websites of other stakeholders. The nature of data required for this study made it difficult to obtain through primary research methods given the confidential nature of some of the information thus necessitating the use of data already collected by others and data available on government databases as well as those provided by companies on their websites and in publications.
2.3 Data Analysis
The data collected during the course of the research is to be used in conducting a net present value analysis of bio-plastics and petro-plastics, the essence of this, is to develop a business model for the use of bio-plastics in the UK automotive industry. The tool used in analysing the data for the model development is computer spread sheets; the choice of this tool is necessitated by their ability to incorporate a wide variety of mathematical and statistical functions for data analysis and evaluation as well as their considerable formatting and graphical functionality for impressive presentation [ ]. The limitations of spread sheets lie in the wide range of abilities among its users with novices operating them in an unstructured and detrimental manner, errors can easily be made and lie undetected in cell coordinates that are difficult to identify [ ].
Problem Formulation (key question)
Research objectives
Scope of Research
Data Collection (Qualitative Approach)
Literature Review
Database search
Data Analysis
Model Development
Scenario Development
Scenario Selection
Building the Model
Establishing model parameters
Testing Model
Result Analysis & Discussion
Fig. 1 Research Design Framework
2.4 PROJECT PLAN
ACTIVITY/MONTH
Nov'11
Dec'11
Jan'12
Feb'12
Mar'12
Apr'12
May'12
Jun'12
Jul'12
Aug'12
Sep'12
Supervisor /topic selection
Outline proposal
Data collection
Data Analysis
First Draft
Interim report submission
Corrections and additions
Final Draft
Conclusion and submission
CHAPTER 3
This chapter summarizes and analyzes the findings of various related literature. The chapter serves to summarize existing literature on plastic and bio plastic use in the automotive industry and other industries as well as also serving as a source of important data which will be used in analysing the net present value of discounted revenues of auto manufacturers for both petro plastics and bio plastics.
3.1 LITERATURE REVIEW
Gironi and Piemonte (2011) carried out a life cycle analysis (LCA) on the biodegradability of bio plastics compared to conventional plastics. (In this case Mater-Bi (a starch based plastic versus polyethylene) in order to highlight the strengths and weaknesses of bio plastics and conventional plastics. Their analysis was done using the Ecoindicator -99 methodology; grouping the environmental impact categories of; adiabatic depletion, global warming, human toxicity, fresh water aquatic exotoxicity, photo-chemical oxidation, acidification and eutrophication into three macro categories; human health, ecosystem quality and resources [3].
They found that bio plastics were superior to petro plastics in terms of consumption of non-renewable sources and emission of greenhouse gases but were inferior in terms of impact indices related to acidification and eutrophication, land and water consumption. They also analysed disposal scenarios and concluded that the recycling of conventional petro plastics was superior to the composting of bio plastics in terms of overall environmental impact [3].
Type of Plastic
Energy requirement
MJ/Kg
Global Warming
(kg CO2 eq/kg)
From non-renewable sources
HDPE
LDPE
Nylon 6
PET
PS
PVOH
PCL
From renewable sources
TPS
TPS +15% PVOH
TPS +60% PCL
PLA
PHA
80.0
80.6
120.0
77.0
87.0
102.0
83.0
25.4
24.9
52.3
57.0
57.0
4.84
5.04
7.64
4.93
5.98
2.70
3.10
1.14
1.73
3.60
3.84
Not Available
Table 3.1.1 Energy required from non-renewable sources and CO2 emission for different types of plastics currently in the market [3]
They however noted that their analysis did not consider advantages derived from the use of biodegradable products such as bags for collection of waste or disposable cutlery that can be processed directly with organic waste thus saving costs in energy and logistics of the processes of collection and sorting.(3). These findings were also supported by those of Andreas Detal and Martin Kruger of IFEU Heidelberg who did a life cycle assessment of polylactic acid and other alternative materials commissioned by nature works []
Pervaiz and Sain (4) reviewed the opportunities and barriers in bio refinery for petro chemical industries in Canada and the rest of the world. In their study they suggest factors responsible for the interest in bio-refining; the need for change from petroleum to bio-based plastics and composites fuelled by environmental impact of petro-plastics, energy consumption, the need to address tougher pollution laws and potential health risks during production and handling. They also examined the current market status of the biodegradable plastic industry outlining major developments in Europe and USA.
.
FIG.3.1.2 EU and World capacities of bio plastics. (Pervaiz and Sain, 2006)
Their study also examined the opportunities and challenges in bio plastics such as the very high material development costs and small production capacities which have resulted in non-competitive prices of raw materials for bio plastics compared to conventional plastics and as shown in table 2, there is an un-favourable ratio of 2.2 to 7.8 between average prices of similar bio plastics and petro plastics.
Traditional Polymers
Price Ratio
Foamed starch
Starch blends (film type)
Polyesters (synthetic BDP)
Polylactic acid (PLA)
Cellulose Acetate
Cellophane
HDPE(PE)
LDPE (PE)
PP
PS
PVC
PET
2.2
4.4
5.8
2.9
7.8
3.5
Table 3.1.2 Price ratio between average prices of biodegradable and traditional polymers in Europe [4]
Flieger et al (2003) did a study on biodegradable plastics from renewable sources. In their work, they summarised the works of others in the field of biodegradable polymers (5). They categorised biodegradable polymers based on the method of production and examined in detail specific biopolymers under each method; their preparation, properties, price analysis and degradation. They categorised biodegradable polymers into;
Biodegradable polymers obtained by chemical synthesis e.g. polyglycolic acid, polylactic acid.
Biodegradable polymers produced through fermentation by micro-organisms e.g polyesters, natural polysaccharides.
Biodegradable polymers from chemically modified natural products e.g starch, cellulose.
They concluded that the development of biodegradable polymers in the future will be driven to derive more carbon from chemical processes from renewable resources and to preserve the ecosystem. They also suggested the use of existing technologies (petro chemistry, fermentation) to allow for designing feasible cost effective ways of producing biodegradable polymers. Their study showed that considering economic and environmental factors, the commercialization of biodegradable polymers continues and shows an increasing market of products with a relatively short-use lifetime. (5)
Kawamoto (2007) reviewed trends in research and development on plastics of plant origin from the perspective of Nano-composite polylactic acid for automobile use. His report examined the trends in the research and development of polylactic acid, a bio polymer of plant origin presently attracting a lot of attention. He examined the properties of polylactic acid as an industrial material with focus on its application to interior and exterior materials in automobiles. Further, he considered the effect on worldwide sugar yield from bio mass if all plastics for automobile application are replaced with polylactic acid. (6)
He examines the advantages of polylactic among which are; its low energy requirement compared with petro plastics, the production process for petro plastics can be used in its production. He also notes that in applying polylactic acid in durable products further improvement of the material properties of heat resistance and mechanical strength is indispensable. He then examines the combination of polylactic acid and kenaf as a composite material used commercially in automobile parts such as wheel covers and floor carpets.(6) His report also shows a future concept car with interior components made of plant origin materials as shown in table 3.1.3
Component
Material
Material constitution and characteristics
Upper part of instrument panel, package tray
Polylactic acid
Transparent material
Inner lining (ceiling,pillar,trim), seat
Extra-fine polylactic acid fibre
Suede-touch skin material
Door trim ornament
Hemp
Japanese-paper- like skin material
Floor
Polylactic acid fibre
Carpet material
Seat back
Polylactic acid fibre
Meshed seat back material
Seat back board
Kenaf-fibre-reinforced polylactic acid
Board material
Table 3.1 .3 Future interior components made of plant origin materials in a concept car (6)
His report also shows the result of an izod impact strength test in which the kenaf- polylactic acid composite performed better than other conventional plastics (polypropylene, polylactic acid) in figure 3.The izod impact strength test is the American Society standard method of determining impact strength using a notched sample of the test material.
Fig.3.1.4 Izod impact strength of materials (6)
His report also analysed the cost of polylactic acid production and deduced that the cost of lactic acid fermentation and purification alone constituted 60-70% of the total cost of producing polylactic acid (6).
Rosentrater and Oteino (2006) examined the considerations for manufacturing bio plastic materials. In their study they examined the essential considerations for manufacturing plastic composites that contain biological material (7). The factors considered;
material selection:
shape and form of raw materials
quality of raw materials
supply of raw materials
cost of raw materials
physical properties of raw materials
selection of manufacturing process:
workability
formability
castability
machinability
cutability
joinability
hardenability
Manufacturing costs:
Raw material costs
Tooling costs
Facility fixed costs
Facility variable costs
Labour costs
Quality of final products
Physical properties
Density
Melting point/glass transition point
Specific heat
Thermal conductivity
Thermal expansion
Optical properties
Corrosion and chemical resistance
They also examined additional factors beyond those above;
Appearance
Surface integrity
Surface texture
Surface roughness
Reliability
Service life
Recyclability
Biodegradability
Brady and Brady (2008), in a report on the society of plastics engineers' third annual automotive engineering plastics conference (8) reported on various advances in materials, technology and applications for thermoplastic and thermoset engineering plastics and composites for the automotive industry. The report featured various presentations from companies in the fore front of bio plastic development for the automotive industry; General Motors, BASF, Du Pont. (8)
Guzman (2010) in an article titled 'Bio- plastics R&D intensifies', writes about current developments in the development of bio plastics for the durable plastics market . Several renewable chemical companies are targeting this $1.3 trillion global polymer market with chemical building blocks such as; succinic acid, acrylic acid,, levulinic acid, sorbitol, ethylene, ethylene glycol, glycerine. The article also reviews prices of bio plastics based on manufacturers and concludes that despite the gap between prices of conventional plastics and bio plastics, the demand for bio plastics continues to increase - global demand for bio-plastics is expected to increase fourfold to 900,000 tonnes by 2013.(9)
3.2 KEY DRIVERS IN THE BIOPLASTIC INDUSTRY
Certain drivers have been identified as being responsible for the rate of development of the bioplastic industry, the findings of several studies have established environmental laws/ government policies, cost of bioplastics/ petroplastics , technological advancements, the availability of biomass/renewable resources as well as increased demand for sustainable materials as key drivers in the bioplastic and plastic industry [ ]. Other studies identified food packaging, injection moulding and automotive components as the most interesting end applications for bioplastics [ ]
3.2.1 PRICE OF BIOPLASTICS AND PETROPLASTICS
Tables 3.2.1 and 3.2.2 give a breakdown of the prices of conventional petro plastics and bio plastics as recorded by the European plastics news between December 2011 and January 2012. (10)
Product
Dec'2011
High density polyethylene(HDPE)
Film( extrusion) grade
Blow moulding
1751.40-1804.72
1599.04-1665.39
1791.45-1844.53
Linear low density polyethylene
(LLDPE)
Film grade(butane-based)
1592.40-1645.48
Low density polyethylene (LDPE)
Film grade
1738.37-1791.45
Polypropylene (PP)
Raffia film
Homo injection
Copolymer injection
1731.74-1784.82
1718.47-1771.55
1771.55-1824.63
Polystyrene (PS)
General purpose
High impact injection
2036.95-2103.30
2202.82-2269.17
Polyvinyl chloride (PVC)
Pipe grade
High quality grade
1526.05-1579.13
1579.13-1632.21
Polyethylene Terephthalate (PET)
Bottle grade
1957-2033.68
Table 3.2.1 Plastic price Report ($/tonne) source: [10]
Renewable based
Manufacturer
Capacity
('000 tonne/year)
application
Price($/tonne)
Starch based polymers
Cereplast
Novamont
36
80
Films , moulding
extrusion
2140.45-5999.37
Polyhydroxylalkanoates (PHA)
Meridian/kanak
Telles
Tianan
ND
50
2
Moulding,films
4000.91-5500.42
Polylactic Acid (PLA)
Hi-sun
Inventafischet
Nature works
Purac
Teijin
others
5
60
140
75
5
7
Films , moulding, fibres
1699.89-5999.37
Green polyethylene
Braskem
Dow chemical
200
350
Films,injection,
Moulding
1600.36-3600.15
Table 3.2.2 Bio plastics supply and prices source [10]
as seen from tables3.2.1 and 3.2.2, there is a huge difference between the prices of petro-plastics and their bio-plastic alternatives, this supports the general view as demonstrated in table 3.1.2 which estimates this price difference to be within the range 2.2 -7.8, it has been well established by many reviews that bio-plastics currently cannot compete with petro-plastics in terms of price per kilogram. Analysts however agree that bio-plastics compensate for this in the cost saving advantage they offer in terms of lower system and life cycle costs (reduced energy cost and CO2 emissions [American chemistry council, 2009].
A report produced by the plastic division of the American chemistry council (ACC PD) titled "Plastics in Automotive Markets Technology Roadmap: A New vision for the Road Ahead" on plastics and polymer composites [ ].The report established plastics and polymer composites as consisting of a wide variety of materials possessing a wide range of properties; strength, durability and lightness; resistance to chemicals and harsh environments, excellent thermal and electrical insulators, they can be either transparent or opaque, soft ,flexible or hard in almost all applications and are recyclable.
The report summarised that all these benefits combined with their cost effectiveness have made plastics the preferred material in several commercial applications. The report also showed that in the last 40 years , the use of lightweight plastics in U.S automobiles have grown from an average of 27kg per vehicle to 150kg in 2007[ ]. They also show that more than 50% of a car volumes consists of plastics and polymer composites, they however only account for about 8-10% of total vehicle weight [ ].
The report also reviews the major challenges facing the automotive industry today; high volatile and rising energy prices, concerns about global climate change, changing global market dynamics , increasing demand from consumers for better performance and functionality at cheaper prices and finally societal demand for safety performance, environmental stewardship and economic development which are informing regulations that are creating additional challenges for automobile manufacturers [ ].
The chief aim of the report was to in conjunction with plastic producers, automotive original equipment manufacturers (OEMs), tier suppliers, universities, national laboratories, non-governmental organisations and government agencies, revise a vision and strategy for meeting the challenges of material and design facing the auto industry in the next 10 years. The three part strategy suggested for attaining this vision includes;
First, the development of a better integrated automobile value chain characterised by greater cooperation between tier firms and between tier firms and OEMs [ ]. The second strategy has to do with the steady improvement of the sustainability, performance and aesthetic benefits of vehicles through the effective utilisation of plastics and polymer composites [ ]. Finally, the third strategy involves the development of industry capability to sustain the current trends in vehicle sustainability, performance and aesthetics through embracing plastics and developing the infrastructure for designing and innovating new applications for plastics and polymer composites [ ].
3.3 Plastic Applications in Automobiles
Plastics and by extension bioplastics find application in several industries including the automobile industry, this is primarily due to the diverse properties exhibited by plastics and their ability to reduce the weight of components and replace more costly materials such as steel coupled with their low cost [ ]. In automobiles plastics are used in different parts the table below summarises the different ways plastics find application in automobiles;
Exterior-Plastic components resist dents, dings, stone chips, and corrosion. They allow modular assembly practices, lower production costs, and enable advanced exterior styling. Common applications include bumpers and fascia systems, body panels, grills, lighting systems, trim, and glazing.
Interior-Plastics are ideal for contributing to more comfortable, durable, and aesthetically pleasing interiors while reducing noise, harshness, and vibrations that disturb drivers and passengers. Plastic's design flexibility helps manufacturers create innovative, single piece components that lower costs. Common applications include airbags, seating, instrument panels, steering wheels, air ducts, trim, door panels, consoles, sound abatement, and head liners.
Electrical-As the demand for electrical and computer-aided devices increases, plastics are enabling their inclusion by providing lightweight, non-conductive, and flexible housing, mounts, and insulation. Common applications include component housings, switches and sockets, connectors, sensors, lighting systems, circuit boards, and wiring harnesses, as well as foils for capacitors and displays. Plastics enables thin-wall and ultrathin-wall insulation that reduces the size and mass of wire and cable, freeing up space for additional functionality. Using this material to replace traditional cable insulation also helps reduce weight by an average of 25% [ ].
Power train-the ability of certain plastics to withstand high temperatures and exposure to a variety of chemicals make it ideal for powertrain components. The use of additives, fillers, and reinforcements can vary the properties of plastics to meet specific needs. Plastics help minimize the number of parts needed to assemble complex components and reduce assembly costs. Applications include CV and U joint boots and internal transmission parts.
Chassis-Plastics are helping to make the chassis lighter, stronger, and more crash-sustainable, while reducing manufacturing costs. Plastics allow multiple components to be integrated into single units. They also help to reduce noise and vibration. Common applications include structure, support, suspension, load floors, front-end modules, fuel tanks, and brake components.
Engine-Plastics are making under-the-hood components easier to design and easier to assemble. Plastics such as nylon, polypropylene, polyethylene, and thermoset polyesters hold up well in the high-temperature, corrosive environment found in the engine compartment while reducing engine weight and noise, harshness, and vibration levels. Common engine applications include air-intake systems, fuel intake systems, cooling systems, fluid containers, and valve covers.
Table 3.3.1 Plastic application in automobiles [ ]
CHAPTER 4
4.0 RESULT EVALUATION & ANALYSIS
This chapter deals with the evaluation and analysis of the various data collected in the previous two chapters , a business model for determining the net present value of discounted future revenues is then developed using excel spread sheets for analysis.
4.1 Business Model development
4.1.1 Model Plan
The stages of the model development for the NPV analysis of bio-plastics versus petro-plastics are shown in figure 3. This plan basically outlines the various activities undertaken in the development of the model. First, the fundamental business question regarding both questions is asked "which of the projects is more strategically and economically viable and sustainable?", Next, the required outputs from the model are identified which answers the business question, in this case a Net Present Value of the future cash flows from each project plus additional information the decision maker would require in making a final decision.
Having identified the required outputs, a list of input variables is then identified and data collectability verified. The potential future behaviour of each variable is described followed by economic and financial relationships and logical flows between inputs and outputs. The final stage involves populating the model with the gathered data; the model is then used to answer the fundamental question asked in the beginning by subjecting it to a sensitivity test under different input assumptions. The final results and thus the model are then documented.
Start
Define the fundamental business question
Identify Outputs required from model
Revise outputs in light of data availability
Identify key variables that determine outputs
Describe how variables will behave over time
Data collection
Develop logical arguments explaining output -input relationships
Refine Data
Build spreadsheet model
Enter data assumptions
Test alternative scenarios and output sensitivities
Document and present findings
Fig.4.1.1 the business model planning and development process [Tennent and Friend, 2011]
The fundamental Business Question
The fundamental business question to be answered by the model is; which of the projects is more strategically and economically viable and sustainable? This question seeks to set the project selection criteria not just from a financial view point but from a strategic viewpoint taking into account developments and trends in government policies and environment concerns, as well as developments in alternative technologies.
The required Outputs from the Model
The required output from the model is the net present value of the future discounted cash flows expected from each project for auto-manufacturers as well as other additional critical information about current or future potentials of each project that sheds more light on the merits of each project and which could influence the final business decision.
4.1.4 Key Input Variables that determine the Outputs
The key input variables that would determine the model outputs were identified as;
Source of raw materials.
Prices of petro-plastics and bio-plastics.
Energy consumption of petro-plastics versus bio-plastics.
Carbon emission levels of petro-plastics and bio-plastics.
Composite materials used in the auto industry.
Recyclability.
Government policies.
Production levels of petro-plastics and bio-plastics.
Investments in research and development in the field of bio-plastics.
Market demand for green cars.
These input variables were further analysed using the business impact and uncertainty matrix below [ ] which helps the model focus on those variables with the highest degree of future uncertainty as well as the greatest impact on the business. Uncertainty relates to the ease of predicting a variables future behaviour while impact relates to the influence a variable has on business performance. From the impact /uncertainty matrix, those variables with high uncertainty and business impact are the focus of the model; they are further developed into scenarios for modelling.
BUSINESS IMPACT
LOW
HIGH
UNCERTAINTY
HIGH
Source of raw materials.
Recyclability.
Investments in research and development in the field of bio-plastics.
Prices of petro-plastics and bio-plastics.
Carbon emission levels of petro-plastics and bio-plastics.
Government policies.
Market demand for green cars
LOW
Production levels of petro-plastics and bio-plastics.
Energy consumption of petro-plastics versus bio-plastics.
Composite materials used in the auto industry.
Table 4.1.2 the impact/uncertainty matrix for the use of bio-plastics in the auto industry. [ ]
After defining the key input variables for determining the model output, scenarios were developed around the input variables.
4.1.5 SCENARIO DEVELOPMENT
The high impact / uncertainty input variables from the impact-uncertainty matrix are developed into scenarios by identifying alternative development paths for each item in the high impact/uncertainty quadrant. Two often diametrically opposed paths usually suffices in generating interesting scenarios [ ], however there should be no more than three.
INPUT/VARIABLE
PATH 1
PATH 2
Price of petro-plastics and bio-plastics
Oil prices go higher, thus the prices of bio-plastics can compete with petro-plastics.
Oil prices remain stable or lower, thus prices of bio-plastics are unable to compete with petro-plastics.
Government policies related to carbon emissions
UK Manufacturers meet the EU emission target of 130 CO2kg/km by 2015 and 95 CO2kg/km by 2020.
UK Manufacturers do not meet the EU emission target of 130 CO2kg/km by 2015 and 95 CO2kg/km by 2020.
Market demand for green cars
Market demand for green cars continues to rise (28% increase in 2010)
Market demand for green cars falls.
Table 4.1.3 Scenario development for the use of bio-plastics in the automotive industry.
4.2 Input Variable behaviour Over Time
4.2.1 Price of petro-plastics and bio-plastics
Under this input variable there are two paths;
Oil prices go higher, thus the prices of bio-plastics can compete with petro-plastics: under this scenario, the price of petroleum which is the feedstock for petro-plastics continue to rise above the current rate of $150/barrel [ ], thus making it possible for bio-plastics to compete favourably price - wise with petro-plastics, thus overcoming one of the chief obstacles to their usage by most manufacturers. Under this scenario bio-plastics would be sold at the same price or at a lesser price than bio-plastics. This in addition to their energy and Carbon emission savings would make them very attractive to manufacturers.
Oil prices remain stable or lower, thus prices of bio-plastics are unable to compete with petro-plastics: under this scenario and given the current state of the bio-plastic industry worldwide, bio-plastics would be unable to compete with petro-plastics price -wise and prices of bio-plastics would still remain at 2 - 7 times that of petro-plastics.[ ]
Under this scenario, the investment required annually for either bio-plastic or petro-plastic components used in cars is determined as follows;
Petro-plastics
Bio-plastics
% by weight of plastics used in cars = 16% []
Average weight of a car = 1400kg []
Therefore, average weight of plastics used in a car =224kg (16% of 1400)
At $1.75/kg [] , 224kg of petro-plastics will cost = $392 per car
For an average of 220000 cars produced annually [], amount needed is = $86,240,000
% by weight of plastics used in cars = 16% []
Average weight of a car = 1400kg []
Therefore, average weight of plastics used in a car =224kg (16% of 1400)
At $3.5/kg [], 224kg of bio-plastics will cost = $784 per car
For an average of 220000 cars produced annually [], amount needed is = $172,480,000
Table 4.1.4 Investment required for either bio-plastic or petro-plastic components in cars.
4.2.2 Government policies related to carbon emissions
UK Manufacturers to meet the EU emission target of 130 CO2g/km by 2015: a New EU carbon emission regulation proposes a limit of 130 g CO2 /km by 2015 and 95gCO2/km by 2020 [ ]. The current average CO2 output of cars sold in the UK is 166 g CO2 /km [ ]. Penalties for defaulting manufacturers who fail to meet this target by more than 3 grams as from 2012 will be €95 ($117) per excess gram per vehicle [ ]. For UK auto makers to meet these targets among several options is that of weight reduction of cars produced, it is estimated that that by every 100kg a vehicles weight is reduced , fuel consumption falls by 0.25litres/km giving a reduction in carbon emission approximately 7gCO2/km [ ]. This can be achieved through the use of bio-plastics to replace petro-plastics with the added benefits of lower system and life-cycle costs as compared to petro-plastics which generate about 4700kg/ton (split between raw materials production and components production)[ ].The use of bio-plastics can potentially halve this figure [ ].
UK Manufacturers do not meet the EU emission target of 130 CO2kg/km by 2015 and 95 CO2kg/km by 2020: under this scenario, UK manufacturers are unable to meet these targets and thus have to pay the penalty fee of €95 per excess gram of CO2 per car. This scenario is supported by tables 8, 9 and 10 below which shows the current position in terms of average CO2 emissions by class of cars.
Table 4.1.5 Average CO2 output per class of car [ ]
Segment
example model
Segment average
CO2 output g/km
A Mini
Ford Ka
128.56
B Supermini
Vauxhall Corsa
144.37
C Lower Medium
VW Golf
164.29
D Upper Medium
Ford Mondeo
168.01
D2 Compact Executive
BMW 3 Series
181.75
E Executive
Mercedes E Class
200.49
F Luxury
Jaguar XJ
256.94
G Small Sports
Vauxhall Tigra
199.10
H Luxury Sports
Porsche 911
255.67
I Off Road
Land Rover Freelander
230.20
J MPV
Ford Galaxy
189.29
Total Industry
Actual
166.00
Table 4.1.6 Best model range [ ]
Segment
Best model range
Average
CO2 output g/km
A Mini
Toyota Aygo/Peugeot 107/Citroen C1
109.00
B Supermini
Daihatsu Charade
120.58
C Lower Medium
Toyota Prius*
104.00
C Lower Medium
Kia Cee'd
137.77
D Upper Medium
Seat Toledo
155.93
D2 Compact Executive
Volvo S40
164.12
E Executive
BMW 5 Series
190.51
F Luxury
BMW 7 Series
224.63
G Small Sports
Daihatsu Copen
140.00
H Luxury Sports
Mercedes CLK
210.44
I Off Road
Suzuki SX4
173.02
J MPV
Ford Galaxy
171.07
Total Industry
If current best practice was the norm
140.85
Table 4.1.7 Worst model range [ ]
Segment
Worst model range
Model Average
CO2 output g/km
A Mini
VW Fox
149.90
B Supermini
Proton Satria Neo
161.90
C Lower Medium
Subaru Impreza
240.34
D Upper Medium
Subaru Legacy
216.72
D2 Compact Executive
Cadillac BLS
192.80
E Executive
Honda Legend
282.00
F Luxury
Bentley Azure
465.00
G Small Sports
Mazda RX-8
276.96
H Luxury Sports
Lamborghini Murcielago
500.00
I Off Road
Cadillac Escalade
383.00
J MPV
SsangYong Rodius
244.00
From the tables (4.1.5 and 4.1.6), we see that UK manufactured cars are amongst the worst in terms of CO2 emissions with luxury car brand Bentley Azure ranked amongst the very worst with a CO2 emission level of 465gCO2/km . The Jaguar XJ, land Rover Freelander and Vauxhall Tigre are not far behind with emission levels of 256.94gCO2/km, 230.20gCO2/km and 199.10gCO2/km all exceeding the EU target limit. The financial implication of this is shown in the table 11 below.
Table 4.1.8 financial implications of failing to meet the EU carbon emissions target
Model
Model Average
CO2 output g/km
Amount of excess
CO2 emission
(minus 130gCO2/km)
Emission charge per car*
($ Thousands)
Annual emission charge**
($ billions)
Vauxhall Corsa
144.37
14.37
1681.29
0.37
Vauxhall Tigre
199.10
69.10
8084.70
1.78
Jaguar XJ
256.94
126.94
14851.98
3.27
Land Rover Freelander
230.20
100.20
11723.40
2.58
Bentley Azure
465.00
335.00
39195.00
8.62
* Based on the EU Carbon emission penalty of €95 ($117) per excess gram of CO2 [ ].
** Based on figures of 220,000 cars-average annual car production volume of the top 5 UK auto manufacturers [guardian.co.uk].
Another general estimate based on the average current emission of cars manufactured in the UK of 138.1gCO2/km will give an annual carbon emission charge of around $0.21 billion [ ].
4.2.3 Market demand for green cars
Market demand for green cars continues to rise (28% increase in 2010) : under this scenario, the market demand for green cars is expected to continue rising as evident in a study conducted by motoring,co.uk which reports a 28% rise in demand for greener and less polluting cars in 2010 [ ]these findings were also corroborated by a recent capgemini cars online study which highlighted an increased demand for green vehicles , they found that 43% of respondents said they owned a fuel efficient or alternative fuel vehicle [ ]. Their figures showed an increase from 41% in 2009 and 36% in 2007 [ ]. This rise in demand for green cars has been attributed to an all-time fuel and diesel prices rise of 140p/litre, improvements in reliability and performance as well as motorists wanting to cut down on fuel consumption, motoring costs as well as qualifying for lower tax bands [ ].
On the other hand there is a possibility that the market demand for green cars will fall as some surveys reveal that the cost associated with going green is the major obstacle keeping the sale of green cars from rising [telegraph.co.uk/motoring/green-motoring…….]. 33% of respondents said the cost of green cars compared to regular models was the main obstacle to selecting green models. The survey found that the prices of the most popular green models were substantially higher than the basic models, it found that on the average , the green model costs £4760 more than the budget model.[ ]
4.2.4 Input Variable-Output Relationship
4.2.5 Spread sheet Model
