Introduction

The end of the 20th century has witnessed the globalization of the car industry and environmental issues. Leading firms in the car industry operate on several continents, typically having production facilities in each of their major markets. The result is the creation of global companies with the capital and human resources to compete in the automotive industry of the 21st century. Equally significant is the emergence of global environmental issues. Climate change has become a major policy issue as the emissions of major greenhouse gases (GHGs) continue to rise and changes are measured in the atmospheric concentration of these gases. The predicted warming of the planet is reinforced by warmer than average global temperatures during the 1990s and 1998 being the warmest year on record. The emergence of more extreme weather events has also resulted in record damage and insurance claims (Dotto 2000). Governments around the world have responded by signing the Framework Convention on Climate Change and the Kyoto Pr otocol which set targets for the reduction of GHG emissions. However, the Protocol has not been ratified by enough governments to bring it into force and even if the targets were achieved, they would only slow the rate of growth of global GHG emissions. Even stronger actions are required to restore the previous balance of atmospheric gases.

The automotive industry is a major source of GHG emissions, especially [CO.sub.2], because of the dominant role of oil as the fuel of choice. The potential for conflict between an automotive industry that seeks to expand by producing ever larger numbers of cars for a global population growing in numbers and affluence and governments who seek to reduce the risks of climate change by reducing [CO.sub.2] emissions is enormous. The conflict is also evident at the level of individuals. Many people want to increase their mobility and also protect the environment. No single country or company can resolve these conflicting objectives on its own. However, solutions need to be found and groups offering solutions are expected to gain a strategic advantage over those who ignore the needs of the future and simply try to continue current practices (Sanford and Olson, this volume).

This paper examines the role Japanese automakers have taken in bringing new technologies to market that will reduce the environmental impact of automobile use. These firms do not work in isolation, but carefully monitor market trends, consumer preferences and government policy both in Japan and overseas. Growing environmental problems are identified as causing changes in consumer attitudes and government priorities. Global climate change, smog and poor urban air quality, increased levels of noise and auditory pollution all highlight problems that need solutions. These trends are not unique to Japan as governments and people around the world recognise the growing environmental problems of the 21st century and the role of automobiles as a major source of these problems.

One solution is to develop and use new technologies that reduce emissions of greenhouse gases and smog precursors. This paper will review the tension caused by a growing global automobile industry and the environmental impact of increased automobile use. The global context is set by increased levels of integration among automobile firms, increased policy integration, and the global magnitude of environmental impacts. National governments may respond at different rates to these global trends, but generally changes such as higher air quality standards in one country are often adopted in other countries later. Firms with an eye on the global market thus respond to changes in other countries as well as those in their home market. For example, average fleet fuel efficiency standards in the USA or emission standards in California are of direct interest to all major car producers. Technologies are thus developed not just for application in a single market, but for their potential to be sold globally. Most major auto mobile producers have a range of prototype alternative fuel vehicles, however few of these vehicles are manufactured and sold. Particular attention is paid to the innovative fuel cell technology developed by Ballard Power Systems. The environmental performance of this technology is compared to the hybrid electric-gasoline vehicles developed and marketed by Honda and Toyota. In addition to developing and producing the technology, sales are essential to provide a revenue stream to the firm and to replace the older, more environmentally harmful technology.

This paper looks at some of the opportunities created by conflicting global transport and environmental objectives. Those firms and people who are able to design and produce systems compatible with conflicting future needs are expected to prosper. The Japanese automotive industry is examined with particular attention paid to the consistent policy setting created by government, industry associations and firms in their environmental policy objectives. Japanese automotive firms are not only among the largest in the world, they are also recognised as leaders for new technologies to meet environmental objectives and their global production capacity enables them to transfer the technologies developed in one area throughout their global operations (Romm 1999).

Interviews were held with automotive industry leaders in Canada, the United States and Japan (see Koshiba et al., this volume). The views expressed were supported with information from secondary sources (brochures, press releases and web-sites from corporate and government sources). Information was collected on the new technologies being developed for automobiles. These developments are set within the context of a broader car-and-the-environment debate. New environmental technologies introduced in Japan are expected to be transferred to the United States, Canada and other countries as in previous rounds of emerging technologies. The long-term view adopted by Japanese firms and the supporting policy environment created by government, industry associations and corporate plans are explored as factors that enable Japanese firms to deliver new technologies to the global market before their competitors. The result is a series of environmental awards for the leading firms while others seek to catch up.

Alternate models of technology development

The Japanese production system has been widely studied with automobile manufacturers identified as models of flexible production (Fujita and Hill 1995), however, the production system should be set in a wider context of societal relations (Parker et al. 2000) to explore how new technologies are developed and then promoted. Societal demands for improved environmental performance create pressures for new technologies. Bleviss (1990) reviewed international performance in the development of new technologies to identify policy options to encourage low emission/low fuel consumption vehicles. She concluded that prevailing practices differed markedly. In Europe, government and industry were argued to be successful at forming partnerships that created prototypes of new vehicle technologies, but that they typically failed to transfer the prototype to the mass production and marketing stage. In Japan, it was argued that government and industry had a long history of successful cooperation to develop new prototypes and th en transfer the ideas to the production stage for widespread sale in the market. In North America, it was concluded that government and industry had failed to cooperate and that innovation relied heavily on efforts by individual firms. As a result, it was argued that policy initiatives to promote innovation and new technology in North America through cooperative research programs should include suppliers and small innovative inventor businesses that have contributed many of the innovations now found in the automotive industry (Bleviss 1990).

The potential for new technologies to come from small North American firms is dramatically demonstrated by the fuel cell technology developed by Ballard Power Systems in Vancouver, B.C. The story of Ballard’s small operation being able to develop more efficient fuel cells than the development teams of large firms such as General Motors is well known. By 1999, seven out of ten prototype fuel cell vehicles displayed at major Auto trade shows were using Ballard fuel cell systems (Record 1999). With water as the principle emission during use, fuel cells were heralded as a solution to pressing environmental problems caused by the growing global car industry.