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EUROPE: Europe Proposes Binding Limits on Auto Emissions

by James KanterNew York Times
December 20th, 2007

European Union officials told leading automakers on Wednesday to make deep cuts in tailpipe emissions of the cars they produce or face fines that could reach billions of euros.

The European environment commissioner, Stavros Dimas, outlined a rising penalty system to be phased in from 2012 to 2015.

Companies including Volkswagen and Renault immediately promised a fight to weaken the proposed legislation, saying that compliance would be difficult and that it would hurt their competitiveness around the world.

But European officials insisted that the legislation was necessary if the region was to continue leading global efforts to reduce greenhouse gases like carbon dioxide.

A tough law for car pollution “demonstrates that the European Union is committed to being a world leader in cutting CO2 emissions and the development of a low-carbon economy,” the president of the European Commission, José Manuel Barroso, said.

The European environment commissioner, Stavros Dimas, said the industry’s decade-old promises to meet emissions reduction targets voluntarily had not yielded the desired results, making the tougher action necessary.

The proposed steps are subject to approval by the European Parliament and the 27 member governments, and automakers promised months and possibly years of lobbying.

The announcement was the culmination of a year of fierce battles involving the commission, the union’s executive arm, and individual carmakers over how to meet a goal of reducing carbon dioxide emissions to 120 grams a kilometer, or 192 grams a mile, by 2012.

Ten grams of that reduction would come from the introduction of cleaner fuel and from parts like tires and air-conditioning systems.

The current average for cars sold in Europe is about 160 grams a kilometer. European carmakers had previously been asked to meet a voluntary target of 140 grams by 2008.

The rules would apply to new cars sold in the 200 billion euro ($288 billion) auto market, including those sold by manufacturers based in the United States, Japan and South Korea, like General Motors, Toyota and Hyundai.

None of the 17 major manufacturers selling cars in Europe, including producers of smaller vehicles like Fiat, currently meet the proposed targets.

Automotive industry specialists warned that the measures would come at a substantial cost and that manufacturers were likely to pass on some of those costs to buyers.

Compliance will cost producers an average of 1,500 euros ($2,157) to 3,000 euros ($4,314) for each car to pay for efficiency-enhancing technologies, said Sarwant Singh, director of the European automotive practice at the Frost & Sullivan consultancy in London.

“The result is that consumers are just going to have to dish out more money and change their driving behavior in the future,” Mr. Singh said.

Mr. Dimas said the average car price would increase about 1,300 euros ($1,870), but the costs would be more than offset by reduced fuel bills.

German manufacturers have lobbied most forcefully to dilute the legislation, saying they feared that the industry would face huge payouts to compensate for the sales of heavy and polluting cars like the Mercedes-Benz. The manufacturer furthest from meeting the new goal is Porsche, according to European officials.

But French companies including Renault and Peugeot, although they rely on lighter and less-polluting vehicles than the German makers, were also wary, saying they feared that the large numbers of cars they produced could incur big fines for even marginal violations of the limit.

In October, the European Parliament recommended a less stringent limit of 125 grams a kilometer and said the measures should be delayed until 2015, in part, members said, because of intense lobbying by the German auto industry.

A spokeswoman for Volkswagen, Ines Roessler, said the 2012 deadline was too early, partly because 60 percent of the company’s cars for sale that year were already in production.

On Wednesday, Mr. Dimas outlined details of the measures that he said should help carmakers adapt to the rules and become more globally competitive as consumers demand that products like automobiles become much more eco-friendly.

Fines would be phased in over four years rather than imposed at high levels, beginning in 2012. They would start at 20 euros for each excess gram and rise to 95 euros a gram in 2015.

“We think this scale of fines cumulatively will be a deterrent, and the correct incentive for the innovations to be done by 2012,” Mr. Dimas said.

And in a concession to the German manufacturers, heavier cars will be subject to less onerous fleet-average standards.

The rules would also allow manufacturers that exceeded the limits to pool their emissions with less-polluting manufacturers — a provision that could create the basis for an industrywide system of emissions trading.

The debate Wednesday sharply divided the European Commission. Johannes Laitenberger, a spokesman for Mr. Barroso, said a consensus had been reached, but that a number of commissioners were dissatisfied enough with the result to register their reservations in writing.

He declined to name the commissioners or describe their reservations, but the European industry commissioner, Günter Verheugen, a German, has been forcefully pushing for lower fines on vehicle makers so as not to jeopardize the health of the industry.

Environmental advocates say that transportation has been the worst-performing European sector regulated under the Kyoto Protocol, with emissions having steadily risen in the last two decades.



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