Memorandum submitted by Johnson Matthey
plc
JOHNSON MATTHEY
PLC
1. Johnson Matthey is a UK-headquartered
speciality chemicals company focused on its core skills in catalysts,
precious metals and fine chemicals. Johnson Matthey has operations
in 34 countries and employs around 7,500 people, including almost
3,000 at 19 sites in the UK. Its products are sold across the
world to a wide range of advanced technology industries. The company
has activities in a number of areas relating to clean fuels, pollution
control systems for automotive and other industries, and in fuel
cells and advanced technologies for the hydrogen economy.
MEMORANDUM OVERVIEW
2. Johnson Matthey believes that it is important
to view the issue of carbon emissions (and their reduction) from
transport within the context of other issues ranging from energy
security and diversity to local emissions. It is also important
to view short and medium term progress towards meeting targets
(such as Kyoto) in conjunction with progress towards longer term
goals.
3. Relating to carbon emissions, reductions
can be achieved by reducing the carbon output per vehicle mile,
reducing the distances travelled, increasing the number of passengers
per vehicle and/or changing the mode of transport. It is not in
Johnson Matthey's area of expertise to comment on the second,
third and fourth of these issues and this memorandum therefore
focuses on reducing carbon load per mile. We note, however, that
it is important to look not only at on-road vehicles but also
at carbon emissions from other transport sectors, including off-road
machinery and boats, where carbon dioxide emission reductions
can also be made.
CARBON REDUCTION
FROM TRANSPORT
4. In the short term, apart from demand
management, carbon emission reductions can be brought about by
greater use of more efficient engine technology, including lean
burn gasoline engines and clean diesel technology. Although these
engine variants typically produce less carbon dioxide per mile
travelled than conventional gasoline internal combustion engine
vehicles, they do produce other, regulated emissions (carbon monoxide,
oxides of nitrogen and particulate). Exhaust emission control
devices (including conventional catalysts) allow these vehicles
to be used cleanly meeting current and next generation environmental
standards, while also reducing carbon dioxide emissions.
5. Over the longer term, there will be other
technologies which can reduce the carbon emissions per mile travelled.
One current example would be from the increasing market penetration
of hybrid vehicles, which offer fuel efficiency benefits in urban
driving. Johnson Matthey also supports the increased use of an
appropriate amount of biofuels, the use of which gives reduced
lifecycle carbon emissions as well as increasing energy diversity
in the transport sector. The adoption of clean synthetic fuels
(gas to liquids) allows further diversification of supply and
enables further pollution control technologies which require ultra
low sulphur fuel.
6. Of course, as mentioned in the Prime
Minister's foreword to Powering Future Vehicles Strategy, hydrogen
and fuel cells will be increasingly important in the future. In
the 2010 timeframe the implementation of hydrogen fuel cells in
urban vehicles (eg buses) does offer the potential to introduce
vehicles that produce zero emissions at point of use as well as
to increase awareness of the technology. The ability of the technology
to contribute to carbon or GHG targets in 2010 or 2020 will however
be limited by its relatively low share of the vehicle parc. These
technologies nonetheless remain critical to meet longer term goals.
Continued work and support for development in this area remains
essential to move the UK closer towards a lower or zero carbon
emissions economy.
GOVERNMENT INTEGRATION
AND POLICY
FRAMEWORK
7. Addressing the specific question of which
organisations are involved and the coordination between them,
it is Johnson Matthey's view that it would be possible and desirable
to increase the coordination between different government departments
and other commercial and non-commercial organisations operating
in this area. This notwithstanding, the establishment of organisations
including the Low Carbon Vehicle Partnership, the Low Carbon and
Fuel Cell Knowledge Transfer Network and Cenex (the Centre of
Excellence for Low Carbon and Fuel Cell Technologies) was welcome
and has provided a focus for much of the work in this area in
the UK.
8. The scale of the environmental challenge
of reducing carbon dioxide emissions from transport is extremely
large and this presents correspondingly large opportunities for
UK industry. New technology can play an important role in delivering
lower carbon emissions without impacting on quality of life for
users. Support for development, demonstration and early stage
deployment of new technologies would provide direct benefits for
the UK both in terms of competitiveness and by reducing carbon
dioxide emissions.
9. For maximum effectiveness Johnson Matthey
believes a combination of financial and regulatory initiatives
are required. Johnson Matthey acknowledges the funding already
provided into the development of new technologies to reduce carbon
emissions. In many cases this is a critical enabler, particularly
in early stage work.
10. However, as important as financial support
is the contribution that government can make towards making more
certain a future market. Government regulation is of particular
importance in the environmental sector as market mechanisms cannot
always be relied upon. Environmental benefits are a social, rather
than an individual, good and consumers typically will not drive
development of the market alone.
11. As a result, there is a greater responsibility
placed on other government activities such as the introduction
of clear, long-term and progressive regulation in the environmental
sector. This is particularly important where innovative technology
is involved. For example, the US Federal Clean Air Acts and the
Californian Zero Emission Vehicle Mandate were instrumental in
creating the market for automotive emission control catalysts
and for automotive fuel cell development respectively. Comparable
regulation in Europe has been weaker and has retarded the development
of European adoption.
12. Although consultation with industry
is required to ensure that workable regulation is introduced,
tightening environmental regulation is not always viewed negatively
by industry. The Corporate Leaders Group co-ordinated the publication
of an open letter to the Prime Minister in June 2005 in which
the Chief Executives of twelve FTSE 100 companies (including Johnson
Matthey) gave their support to well-signposted and effective regulation.
FORWARD COMMITMENT
PROCUREMENT
13. A third element of government's contribution
to bringing low carbon technologies to market is that of intelligent
purchasing. The public sector has significant purchasing power
and this can be used to stimulate and facilitate the commercialisation
of new products. The Environmental Innovations Advisory Group
(Defra/dti) has been working on the development of a framework
for a "forward commitment" approach to procurement whereby
a prospective purchaser commits to buy an agreed number of new
products (which do not yet exist) at an agreed price at some point
in the future, provided that it meets an agreed specification.
The certainty of a future market allows the supplier to mobilise
his own and his supply chain's resources to develop fully engineered
products, rather than one-off prototypes for demonstration programmes.
SUMMARY
14. In summary, Johnson Matthey supports
the aims of the current enquiry and believes that continued innovation
in environmental technology presents opportunities both to meet
carbon reduction targets as well as to develop the UK as a centre
for low carbon technologies. Government programmes already play
a key role in helping with the development funding for technology
but this needs to be coupled within a policy framework that includes
well-signposted and progressive regulation and the facilitation
of forward commitment in procurement.
15. Johnson Matthey would be pleased to
elaborate any of the points raised here in oral evidence to the
Committee if so required.
February 2006
| 
