The 'integrated approach' - a compromise solution
The draft Regulation sets a binding target for new cars of 120g/km by 2012.
Nevertheless, the Commission is not asking automobile manufacturers to bear the full responsibility for this reduction, proposing instead an 'integrated approach' where average emissions are to be brought down to just 130g/km through vehicle-technology improvements. The remaining cuts (10g/km) are to be achieved by complementary measures, such as the further use of biofuels, fuel-efficient tyres and air conditioning, traffic and road-safety management and changes in driver behaviour (eco-driving). How this will be achieved concretely remains uncertain.
The European Parliament has backed a non-binding report by rapporteur Chris Davies (UK, ALDE), which insists that carmakers should bear more responsibility for cutting CO2 but be allowed more time to make the design changes. This would ensure that the objective is reached at the lowest possible cost so that cars remain affordable for consumers, MEPs argue. The report thus calls on the Commission to review its objective to 125g/km, through vehicle technology alone, by 2015.
Spreading the burden among carmakers
The Commission's 130g CO2/km objective is defined as the average of the new cars sold in a given year.
So far, just four European manufacturers (Fiat, Citroen, Renault and Peugeot) are currently on track to meet the 2008 target of 140 g/km, whereas carbon emissions of newly registered cars in Germany still averaged at 172.5 g/km in 2006 – just 0.5% lower than the previous year.
The discussion on how the new target will be translated into specific objectives for manufacturers has thus split the car industry in two, pitting French and Italian carmakers, which typically produce smaller, more fuel-efficient models, against manufacturers of large, high-performance vehicles such as Mercedes, Audi, Porsche, BMW, Jaguar and Land Rover.
The latter – mainly German and UK-based companies – claim that the new legislation will penalise them unfairly as they are simply responding to consumer demand for bigger, safer and more powerful cars. They say that the chances of them meeting the target within the next five years are virtually non-existent with present technologies.
In an attempt to spread the burden more evenly, the Commission's draft Regulation of 19 December 2007 proposes different caps according to vehicles' weight, enabling heavier cars, such as SUVs and luxury models – which it says respond to certain consumer demands – to exceed the 130g/km target, so long as manufacturers balance this production with smaller, less-polluting models.
For those manufacturers specialising in larger or more powerful vehicles, such as Porsche, whose average CO2 emissions currently stand at 282g/km, the Commission proposal leaves the door open to a "pooling" system, whereby manufacturing groups can team up in order to share the burden of meeting their goals.
Special purpose vehicles, such as those built to accommodate wheelchair access, are excluded from the scope of the legislation.
According to the Commission's proposal, manufacturers who overstep their CO2 limits will be subject to financial penalties. The fines would be phased in over four years following the entry into force of the legislation, starting at just €20 per gram of carbon dioxide that each car emits over the target in 2012, and rising to €35 in 2013, €60 in 2014 and, finally, €95 in 2015.
Any money raised from the scheme would go into EU funds.
According to an impact assessment by the Commission, the new rules would entail an average increase in car prices of €1,300, but this would be offset by average fuel savings of roughly €2,700 over the car's lifetime.
But carmakers say the issue of consumer behaviour and how to influence it is often overlooked in the Commission's strategy. Indeed, one of the reasons for the lack of progress on vehicle fuel efficiency is the fact that Europeans continue to buy and drive bigger and more powerful cars – and there are very few policies to dissuade them from doing so.
The Commission has also proposed:
To encourage member states to promote and stimulate the purchase of fuel-efficient vehicles, via car taxation (EURACTIV 13/03/07) and a review of labelling rules, to include indications about cars' annual running costs, fuel consumption and possible vehicle CO2 tax levels, in order to raise consumer awareness;
to invest in more research aimed at reducing emissions to an average of 95g CO2/km by 2020, and;
to require car manufacturers sign up to a voluntary EU-wide code of good practice on car marketing and advertising, aimed at shifting some of the focus away from vehicle performance towards more sustainable consumption patterns. Parliament says this will be ineffective and have called for binding rules on the display of information on environmental performance in all promotional materials, but media agencies immediately rejected this plan saying it would harm the audiovisual sector (EURACTIV 25/10/07).
The legislation needs to be approved by member states and the European Parliament before it can be implemented, but many details are still highly disputed.
Nevertheless, France and Germany - the two countries initially seen as diverging the most on the issue - seem to be converging, with President Nicolas Sarkozy and Chancellor Angela Merkel shaking hands in June 2008 over a backdoor deal that would give carmakers a "substantial" phasing-in period, as well as more leniency on fines for those deviating from the target by less than eight grammes (EURACTIV 10/06/08).
MEPs in the Parliament's Industry and Energy Committee went in a similar direction in September, voting that manufacturers should be granted an extra three years to fully implement the new caps and that fines should be set at just €40 per excess gramme of CO2 – less than half of the €95 penalty the Commission proposed (EURACTIV 02/09/08).
But Parliament's Environment Committee, which has the lead on the issue, later threw out the Industry Comittee amendments, voting in favour of the Commission's original plans and introducing a long term target for CO2 of 95g/km by 2020 (EURACTIV 26/09/08).
A compromise agreement to reduce CO2 emissions from new vehicles was adopted in December 2008, after a month of 'trialogue' discussions (EURACTIV 04/11/08).
It is a deal based on a French proposal to gradually limit CO2 emissions to 120 g/km for 65% of new cars in 2012, 75% in 2013, 80% in 2014 and 100% in 2015 (EURACTIV 01/10/08). A target of 130g/km is to be reached by improvements in vehicle motor technology. A further 10g/km reduction towards the 120g/km target should be obtained by other technical improvements, such as better tyres or the use of biofuels.
The deal also reduces proposed fines for carmakers that breach the limits. Between 2012 and 2018, the fines will be as follows: €5 for the first gram of CO2, €15 for the second gram, €25 for the third and €95 from the fourth gram of CO2 onwards. From 2019, manufacturers will have to pay €95 for each gram in excess of the target.
In the long term, the compromise sets an average emissions target of 95g of CO2/km for new car fleets by 2020.