European automakers pooled together to show a unified front against EU proposals to limit CO2 emissions from new cars to 120 grammes per kilometre. But internal divisions remain as to how the burden of cuts should be shared between manufacturers.
Car manufacturers have so far reduced average emissions from 186g/km in 1995 to 163g/km in 2004, but only four European manufacturers (Fiat, Citroen, Renault and Peugeot) appear to be on track to meet the industry’s 2008 voluntary target.
ACEA says that the average retail price of a new car will increase by €3,650 if it has to meet a 120g/km target – although these figures are contested by environmentalists.
The Commission also notes that there are already cars on the market that have low CO2 emissions without any substantial price differences.
While ACEA conceded, at a business conference on 20 March 2007, that “some companies are better positioned than others to reach the target,” it stressed that the industry as a whole opposed the proposals.
Commission Vice-President Günther Verheugen, responsible for enterprise and industry, denied suggestions from the press that his position was to defend the German premium car industry. "My position was exactly to defend the mass producers of small and medium cars, because these are the ones under competitive pressure," he said.
He suggested that other means of reducing CO2 emissions could be more cost-effective than engine improvements. "Biofuels could reduce CO2 emissions for the whole fleet instead of just for different models," said Commissioner Verheugen, although he conceded that this could take time: "Biofuels of the first generation…do not offer a sustainable solution. On the contrary, they may lead to even bigger environmental problems…We have to concentrate on biofuels of the second generation," he said.
Sergio Marchionne, chief executive of Italian car maker Fiat and head of the ACEA (European Association of Automobile Manufacturers), told a business seminar that Commission proposals to achieve a 130g/km target through engine improvements alone would "cripple the ability of this industry to compete globally", even in new member states where production costs are lower. He said: "It is simple; we'll have to stop selling cars".
Instead, he urged the Commission to look at more "cost-effective" ways of reaching the target, for example, by improving infrastructure and making biofuels available. But, he added, the most effective way of reducing CO2 emissions from cars will be to renew car fleets in Europe and "systematically take old cars off the roads", as these produce much higher levels of CO2.
He said that Chinese and other manufacturers would find it easier to comply with the target – which would address all manufacturers that sell new cars in Europe – because they are "structurally different". The European industry, he said, would fail to adapt by 2012: "This is not a grocery store. Cars being sold in 2012 are being worked on now."
Marchionne stressed the opposition of the automotive industry, as a whole, to the proposals: "The timelines that have been imposed and the size of the reduction are not technologically feasible… It is not doable at Fiat, it is not doable as a whole for the European car industry." However, he refused to comment on how the burden of cuts would be shared out among different manufacturers, saying that an agreement was still to be reached within ACEA.
French and Italian car companies, which have lower average CO2 emissions because they sell mainly small cars, want each carmaker to take individual responsibility for meeting the target rather than the industry as a whole. "We do not want to subsidise German gas-guzzlers," an Italian industry source told a specialised automotive publication.
On the other hand, German automakers want the CO2 emissions limit to be based on vehicle classes and sizes. "Anything else is not physically possible and is not economically sound," BMW CEO Norbert Reithofer said.
Polish Socialist MEP Boguslaw Liberadzki told EurActiv, however, that carmakers tended to exaggerate the figures when talking of compliance costs. As rapporteur for the Parliament's Transport Committee on the Euro V Directive, which imposes other environmental standards on car manufacturers (see LinksDossier on Euro V), he said that carmakers claimed at the time that the proposals would cost them up to €1,000 per vehicle, whereas Parliament's estimates had put the figure at €150. "Industry is not in such trouble," he said.
He disagreed that China would find it so easy to comply with targets for larger cars, suggesting that the legislation could actually be an effective means of keeping Chinese cars out of Europe in the future.
Liberadzki also contested the idea of imposing fleet renewal, saying that people in new member states – where the average car last 13 years – want a car. "It is a dream for them. Age doesn’t matter. A car is a sign of success…You can’t tell people not to do it," he said. He said that the fleet would be replaced naturally as salaries in the EU-10 caught up with those in the old member states.
Green NGO T&E (European Federation for Transport and Environment) evaluates the increased cost of shifting from CO2 levels of 140g/km to 12g/km at €600 euros per car and says that any extra cost would be quickly recouped as a result of lower fuel consumption. It has accused industry of attempting to shirk off its responsibilities by calling for an "integrated approach".
Accusing automobile manufacturers of not doing enough to reduce CO2 emissions, the Commission has said that it will introduce binding legislation, in a proposal to be published by mid-2008 at the latest. The new law would replace a 1998 voluntary agreement signed with ACEA, the EU's Automobile Manufacturers Association, which committed carmakers to achieve a target of 140 grammes of CO2 per kilometre by 2008.
The new strategy would bind vehicle manufacturers to cutting average emissions from new cars to 130g/km by 2012 through vehicle-technology improvements, while asking other players, including tyre-makers, fuel suppliers, repairers, drivers and public authorities, to contribute to a further 10g/km reduction.
Concrete measures for realising these targets are yet to be decided upon. The Commission has said that it will announce proposals during 2007.
- Mid-2008 at the latest: The Commission will introduce legislation on reducing CO2 emissions from cars.
EU official documents
Business & Industry
- European Association of Automobile Manufacturers (ACEA):Speech of Sergio Marchionne: “Automotive Industry in the New Member States: Key to the EU Economy”(20 March 2007)
- European Association of Automobile Manufacturers (ACEA):The Automotive Industry in the New EU Member States - Key to the EU Economy(20 March 2007)
NGOs and Think-Tanks
- European Federation for Transport and Environment (T&E):Background Briefing on Cars CO2 Regulation