EU reaches deal to cut automotive carbon emissions

Cars sit in traffic in Brussels, one of the most congested cities in Europe. [Reuters]

The European Union has agreed a compromise deal to enforce stricter rules on carbon dioxide emissions for all new EU automobiles from 2020.

The outline agreement on implementing a target of 95 grams of carbon dioxide per kilometre (g/km), agreed late Monday (24 June), still needs the official endorsement of EU member states.

German efforts to ensure that its luxury car makers, such as BMW and Daimler, can continue to produce more polluting, less fuel-efficient cars complicated the final stages of talks.

But Ireland, holder of the rotating EU presidency, which has brokered the deal, said the compromise struck the right balance between environmental ambition and economic considerations.

"This agreement clearly represents a win-win for climate, consumers, innovation and jobs and provides another important step towards a competitive, low-carbon economy," Irish Environment Minister Phil Hogan said in a statement.

Under the rules, each manufacturer is assigned an individual target to take account of the nature of their fleet and their past cuts.

But making less-polluting cars is costly and restricts profit margins, which is why Germany sought ways to delay meeting the stricter rules.

Member states last week rejected a German plan that would have allowed automakers to carry over credits to pollute accrued before the new rules kick in in 2020.

Known as supercredits, these permits are earned if manufacturers produce some very low emissions vehicles, such as electric cars, which German firms are making to meet a separate national target.

Germany then proposed another plan focused on another technical device, referred to as a multiplier.

As agreed on Monday, the multiplier still buys time for automakers because it increases the number of supercredits a manufacturer earns for each low emission vehicle.

Germany backs supercredits

Germany and its automakers have repeatedly defended supercredits, saying they encourage innovation.

The Commission, whose original proposal set a limit on supercredits, says the problem is that too many of them mean producers can carry on making higher emissions models and emissions levels will fail to meet the 2020 95 g/km target.

Germany as a whole is at the upper end of the EU emissions range, with 147 g/km in 2011, according to the International Council on Clean Transportation (ICCT).

The EU fleet average is around 132 g/km, so it should meet an existing goal of 130 g/km phased in between 2012 and 2015.

Environmental campaigners gave a cautious welcome to Monday's deal as a move in the right direction.

"It could have been even better for drivers, jobs and the EU economy if decision-makers had focused on the significant long-term benefits of more fuel efficient cars instead of the narrow, short-term interests of some carmakers," said Greg Archer of campaign group Transport & Environment, said.

"I welcome this agreement," said German MEP Matthias Groote (S&D), chairman of the Parliament's environment committee. "It goes in the right direction, although we could have wished for more. "The new test cycle will provide consumers with reliable data, and this is a real, concrete step forward."

A coalition of transport sector companies and organisations says in a new report that Europe could boost growth and create 500,000 to 1.1 million new jobs in 2030 through innovations in the auto sector. Increased technology to cut fuel consumption would allow the EU to reduce its dependence on foreign oil and deliver between €58 and €83 billion a year in fuel savings for the EU economy by 2030 says the new report, Fuelling Europe’s Future: How auto innovation leads to EU jobs. It says this shift would create jobs while helping to reduce carbon emissions.

The report was supported by Nissan, General Electric, Eurelectric, Transport and Environment, the European Climate Foundation, among others.

“The final results of the study demonstrate the many benefits zero-emission mobility could bring to the community at large, and how it goes well beyond sustainable mobility,” said Olivier Paturet, general manager of electric vehicle strategy at Nissan Europe. “The accelerated market penetration of electric vehicles in Europe would result in a significant step being made towards a better urban air quality, creation of new jobs and a stronger European economy. This would create jobs across Europe, not just in car manufacturing, but also in suppliers of electric vehicle infrastructure and support services.”

Hans ten Berge, secretary-general of Eurelectric, said: “Electrification of transport has clear benefits: it reduces CO2 emissions, saves energy and is the main instrument for overcoming oil dependence. Moreover, when managed intelligently, electric vehicles can contribute to grid stability by balancing increasing shares of variable and decentralised renewables. This report shows the advantages of electricity as the optimal alternative fuel solution.”

The Irish presidency said in a statement that the agreement would achieve the following:

  • Reduced CO2 emissions: The introduction of the 95gCO2/km CO2 emission target for new passenger cars represents a significant reduction in CO2 tailpipe emissions per vehicle km relative to doing nothing by 2020.
  • Net savings for consumer: Each new passenger car will produce substantial savings in fuel costs over the car's lifetime, as compared with the 2015 target.
  • Spurring innovation and competitiveness: The 2020 target offers a clear and stable legal environment for investment, and will further stimulate innovation by vehicle producers and component suppliers, further strengthening the EU industry's competitive advantage. The introduction of similar CO2 or fuel efficiency standards in third countries would increase demand for CO2-reducing technologies and more efficient cars made in Europe.
  • Keeping and creating jobs: The need for new technologies and improvements in fuel efficiency will have positive impacts on demand for components. Fuel efficiency is expected to have a beneficial effect on employment as fuel efficiency increases the value of cars manufactured and leads to proportionally higher labour demand since vehicle manufacturing is labour-intensive.

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