US, EU should fix tougher fuel efficiency standards by 2025

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

This article is part of our special report Greening aviation.

To tackle climate change the United States and Europe should set higher fuel efficiency standards for cars and work with regulatory agencies from other countries to create harmonised global standards, argues Eberhard Rhein.

This commentary was authored by Eberhard Rhein, a former senior European Commission official for external relations and a lecturer on economic policy at the Mediterranean Academy for Diplomatic Studies in Malta.

It was first published on blogactiv.eu.

This commentary was authored by Eberhard Rhein, a former senior European Commission official for external relations and a lecturer on economic policy at the Mediterranean Academy for Diplomatic Studies in Malta.

It was first published on blogactiv.eu.

"Passenger cars account for up to 10% of global CO2 emissions. In view of the rapidly growing global stock of motor cars, especially in Asia, it is urgent to tackle this source of climate change.

There are two complementary ways of addressing the issue: through gasoline taxation and fuel consumption/emission standards.

The USA has traditionally relied on standards. Starting in the 1970s it has imposed mandatory CO2 emission standards for cars and lightweight vehicles. These have forced the American car industry to change the design of its engines/cars and led to an increase in fuel efficiency of the American car fleet by about 70% during the last 40 years, thereby narrowing the once huge gap with European cars.

In contrast, Europe has traditionally favoured taxation as the main policy instrument. Very high excise taxes on gasoline have induced manufacturers to build small cars, consuming only half of US vehicles.

In 2009, the EU for the first time set legally-binding standards for CO2 emissions, the equivalent of fuel efficiency standards.

Fuel efficiency standards are a more effective instrument than gasoline taxes for reducing gasoline consumption and CO2 emissions: Consumers are insensitive to gasoline prices; they react only slowly, mainly when buying a new more fuel-efficient car. In contrast, fuel efficiency standards force manufacturers to develop cars with lower gasoline consumption.

The US government is presently preparing new standards applicable for 2025. In May 2010, President Obama had invited the two agencies in charge of standard-setting (EPA and NHTSA) to 'produce a new generation of clean vehicles'. Since then they have been in consultation with the industry and other stakeholders to explore the potential for substantially stricter standards.

Their most ambitious scenario envisaged goes for a standard of less than 5 litre/100 km consumption, compared to 8 litre/100 km presently. Reaching an average consumption of less than 5 litre/100km for all new US vehicles would constitute a revolution, achievable only through large-scale use of electric engines.

The Environmental Protection Agency intends to issue its final ruling by 1 July 2012, just in time before the beginning of the presidential election campaign.

The EU is in the process of implementing its 2015 standard of 120 g/km C02 emissions, which corresponds to a fuel efficiency of about 6 litres/100 km. By then, the entire new car fleet will have to comply or pay penalties.

For 2020, the EU has fixed an objective of 95 g/km, to be confirmed in 2013. This would be close to the most ambitious US scenario for 2025.

The EU should not wait until 2013 to confirm the 2020 standard and fix an objective for 2025-30. This will facilitate the tremendous adjustments that lie ahead for the European car industry. As it takes more than 10 years to fully incorporate fuel-efficiency standards into the entire car fleet, regulators and the industry need to work hand in hand with a long-term perspective.

Today, it should also be possible to strive for globally harmonised fuel efficiency standards among the main manufacturing countries. To that end, the Commission should invite the regulatory agencies from the USA, China, Japan, Korea, India and Brazil for an exchange of views on fuel emission standards beyond 2020. This would be a concrete contribution to the common challenge of climate change."

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