Report: Tough EU fuel economy rules could create 443,000 jobs

Five German car manufacturers are under pressure after the European Commission said it is investigating their involvement in a potential cartel.

Robust fuel efficiency standards for cars could create up to 443,000 new jobs by 2030 and add €16 billion per year to Europe’s GDP, according to the first economic study of the effects of CO2 legislation on the auto-industry.

Implementing the EU’s proposed 2020 auto-standard of 95 grams of CO2 per km (g/km) for automobiles and 147 g/km for vans – as a stand-alone measure – could result in 356,000 new jobs, says the report by Cambridge Econometrics and Ricardo-AEA.

But if the realised target were 90 g/km for cars and 141 g/km for vans with annual 3% (and not 1%) efficiency gains in the following years, the jobs harvest could top 443,000.

“Over-achieving on targets is a plausible scenario, because several automakers have already met their 2015 goals ahead of time,” the report says.

Around one-third of the forecast new jobs would be created in the auto-industry value chain, due to the labour intensity of the low-carbon car manufacturing process. The other two-thirds would result from a shift in spending away from fossil fuels to other areas. 

But the jobs gains would not accrue until 2030, due to the 10-year period it takes for an uptake of new cars to feed through to the economy.

The report also finds that efficiency improvements would add an extra €1,000-€1,100 to the cost of an average car in 2020, but that this would be offset for consumers by fuel savings in the long run.

Fiona Hall, the environment committee member tasked with managing the passage of the EU's legislation through the European Parliament, welcomed the paper.

"Cutting the CO2 emissions from cars not only helps tackle climate change, but it also creates new jobs in auto technology companies and gives a boost to Europe's economy by reducing our spending on expensive oil imports," the British MEP said.

Contradictory estimates

The European Automobile Manufacturers Association (ACEA), though, argues that increased prices of this type encourage customers to buy used high carbon-emitting cars, rather than greener but more expensive vehicles.

"There is no real proof that more stringent regulation leads to new jobs in Europe,” said Cara McLaughlin, a spokeswoman for ACEA. “The spillover effects are questionable and there are a number of contradictory estimates with no clear positive effects on the EU economy.”

The Cambridge Econometrics and Ricardo-AEA report was compiled using data from the auto-industry, models applied by the European Commission, and fuel projections from the International Energy Agency.

Some Industry groups like the European Aluminium Association (EAA) welcomed the paper, for the boost it could give to the use of lighter car manufacturing materials.

“Opting for lightweight solutions not only has a positive climate impact but also a real economic advantage,” said Gerd Götz, the EAA’s director general.

He added that it was “a must in the current economic situation.”

European Parliament vote

The report comes as the European parliament’s industry committee prepares to vote on an opinion of the EU’s proposed 2020 CO2 standard on Tuesday (19 March).  

The MEPs' opinion calls for delaying any decision on auto targets for 2025 and 2030 beyond the EU’s favoured 31 December 2014 deadline.

Several other amendments weakening the Commission’s proposals by widening exemptions and derogations in the legislation’s super-credits clauses have also been tabled by the centre-right European People’s Party.

The key vote on the proposed new legislation will take place on 25 April in the Parliament's environment committee, which has the lead on the legislation.

A statement by Eurobat, the European Storage Battery Manufacturers Association, said: "The intermediate results of this project are already valuable in confirming the economic benefits of increased vehicle hybridisation and electrification for the European automotive supply chain and EU society as a whole.

"EUROBAT considers that full support for Europe’s existing manufacturing base of automotive battery technologies will be essential to capitalise on these important opportunities for European job creation. With batteries of all technologies already improving fuel efficiency across the different levels of e-mobility, continued R&D prioritisation and the promotion of specialised electrochemical skill sets will encourage further innovation and strengthen the international position of our industry."

Passenger cars alone are responsible for around 12% of total EU emissions of carbon dioxide (CO2), the main greenhouse gas.

The EU proposed legislation, back in 2007, setting emission performance standards for new passenger cars. That legislation, adopted in 2009 by the European Parliament and the Council, is the cornerstone of the EU's strategy to improve the fuel economy of cars and ensure that average emissions from new passenger cars in the EU do not exceed 120 g CO2/km.

The much-anticipated White Paper on Transport, presented by the Commission in February 2011, flags measures to raise the €1.8 trillion which the EU says is needed for infrastructure investment in the next 20 years to build a competitive transport system that will increase mobility, remove major barriers in key areas and fuel growth and employment.

At the same time, the Commission said its proposals will dramatically reduce Europe's dependence on imported oil and cut carbon emissions in transport by 60% by 2050.

  • 24 April 2013: European Parliament’s environment committee to vote on CO2 in cars proposals
  • May 2013: European Parliament committee vote on CO2 in Vans
  • 2014: Proposed deadline for EU decision on 2025/2030 targets
  • 2015: 130 grams of CO2 per km target to be enforced across Europe
  • 2020: Proposed deadline for 95g/km target for cars
  • 2025: European Commission could impose another milestone on the road to decarbonsiation by 2050
  • 2030: European Commission could impose another milestone on the road to decarbonsiation by 2050

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