Thursday 18 December 2008

Car-makers face weaker emissions targets under EU deal

www.environmental-finance.com/onlinews
Paris, 4 December:

The European Parliament and EU member states have agreed a deal to cut carbon dioxide (CO2) emissions from cars, which weakens original proposals made by the European Commission and gives car manufacturers an extra two years to meet emissions targets.

The Commission had proposed a target of an average of 120g of CO2/km for the whole industry by 2012, compared to current levels of 160g/km. A target of 130g/km was to be reached by improvements to vehicle motor technology, and a further 10g/km reduction through technical improvements such as better tyres and the use of biofuels.

However, the compromise agreed during negotiations introduces interim targets, meaning only 65% of a manufacturer's fleet must reach these targets by January 2012, 75% by January 2013, 80% by January 2014 and 100% by 2015. Members of the European Parliament (MEPs) and member states also set a long-term target of an average of 95g CO2/km by 2020 for the new car fleet.

Manufacturers will face fines, or 'excess emissions premiums', for every gram by which their fleets miss the targets, multiplied by the number of vehicles sold. From 2012 until 2018, the fine will be of €5 ($6) for the first gram of CO2, €15 for the second gram of CO2, €25 for the third gram of CO2 and €95 from the fourth gram of CO2. From 2019, manufacturers will have to pay €95 for each gram exceeding the target.

Centre-right MEP Martin Callanan, who helped broker the deal, said it would "significantly cut car emissions without crippling Europe's downtrodden car industry". However, the deal was slammed by analysts and environmentalists. Eckhard Plinke, head of sustainability research at Bank Sarasin, said the compromise was "more or less good for industry, as the CO2 targets have to be met three years later than originally stated".

One analyst said the long-term objective of 95g CO2/km by 2020 was "incoherent" given the rest of the package and "unlikely" to be reached. She said the "industry was not really under any pressure to change its business model until at least until 2015" and suggested this could lead to problems as it needed an "important change of paradigm" if it were to survive.

Philipp Mettler, an analyst at Sustainable Asset Management, questioned whether car manufacturers would actually be forced to pay the penalties. He said the car industry "was aware it has to do something and is working on solutions, but it is still lobbying a lot" and was not convinced the penalties will be applied. Shadow rapporteur Chris Davies said the legislation was "totally lacking in ambition" and would see "European car manufacturers overtaken by Japanese and American rivals in terms of environmental innovation".

Jos Dings, director of green lobby group the European Federation for Transport and Environment, said Europe had sent "the wrong signal to the car industry. This is the story of special interests in industry and national governments preserving the status quo, at the expense of R&D firms, parts suppliers, car drivers and all those hit by the wider impacts of climate change and higher oil prices."

He warned that the US' success at "fending off fuel efficiency legislation" had contributed to the car industry's "terminal decline" in the region and suggested the EU's industry would follow suit. Tony Bosworth, Friends of the Earth's senior transport campaigner, said the legislation was "riddled with delays, loopholes and concessions".

The legislation will be voted on by all MEPs in a plenary session on 15-18 December.

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