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EU May Allow German Carmakers Softer Emissions Targets
17 Apr 08
The German carmakers have been thrown an olive branch by the EU Environment Commissioner.
Global Insight Perspective | | Significance | EU Environment Minister Stavros Dimas has said that plans to curb CO2 emissions that would penalise German carmakers could be lifted if a pledge to keep the long-term blanket European target is made. | Implications | Dimas's language is conciliatory in the context of a debate which has become heated as EU member states Germany and France battle to gain advantages for their domestic automotive industries. His comments may signal a more flexible approach to how future CO2 targets are met. | Outlook | As a result of Dimas's comments it may be possible that some agreement maybe reached between the Germans and French on an automotive industry carbon trading framework. However, this will take detailed and complex negotiations which will further delay an already convoluted process. |
EU Environment Minister Makes Conciliatory Noises to German Industry The European Union (EU) Environment Commissioner Stavros Dimas has been quoted by the Handelsblatt German daily newspaper that the planned curbs on the CO2 emissions for the German automotive industry could be relaxed as long as the long-term CO2 target is met. Matthias Wissmann, president of the VDA association of German carmakers, told the newspaper that the commissioner's statement is a sign that a compromise solution could be agreed, which in itself constituted an "important signal". It has been up to the member states to agree a method of meeting the proposed EU regulations of reducing passenger car emissions to 120g/km by 2012, and this has been a cause of debate for some time now. It appears that Dimas is prepared to allow the German carmakers concessions as long as the overall figure is met. However, it appears that any concessions will have to be negotiated with fellow member states such as France and Italy, which tend to make less polluting cars, whereas the likes of BMW, Porsche and Mercedes-Benz make heavier, higher polluting and more powerful cars. Talks have been continuing between France and Germany over how to share out the burden of the EU-proposed mandatory target on carbon emissions from cars. Despite the previous lack of agreement Germany's Environment Minister Sigmar Gabriel speaking at the weekend at the EU environment ministers' meeting in Slovenia said it was vital that an equitable solution to the issue was reached "Of course this continues. It would be crazy if we just wouldn't come together in environmental policy. We have to set ambitious goals for small and medium sized cars as well, not only for the big ones, that's about it. We want to have a decision during the [EU] French presidency [from July]." The EU executive commission outlined plans last December that proposed a binding car emission limit across Europe of an average of 120 g/km across the vehicle fleet by 2012, compared to the current industry average of around 160 g/km (see Europe: 20 December 2007: New European Commission CO2 Emission Limits Cause Uproar within Auto Industry). The discussions between France, which takes the presidency of the EU in July, and Germany, have dominated the debate. Commenting on the situation in the Guardian newspaper the French Environment Minister Nathalie Kosciusko-Morizet said, "There has been progress in bilateral talks since December. We are keen to find agreement in the French presidency in the second half of the year... At the moment there is no perfect convergence of position." The EU is looking to finalise the regulatory framework of the CO2 limit, and it favours fines based on a system of CO2 emission per km, but using the weight of a vehicle for 60% of the calculation for penalties. This approach is another cause for division between France and Germany, with Germany wanting 80% of the overall penalty subject to a weight calculation, which would place less of a burden on heavier cars, while France wants to see a figure nearer 30%. The commission has already defined what it describes as a "limit value curve" of CO2 emissions whereby the emission caps become more lenient as the cars get heavier. This effectively means that manufacturers of heavier cars will have to reduce their emissions proportionately more than those of lighter cars, but smaller cars will have tougher absolute targets to meet than their larger counterparts. The average emissions of all of these cars is calculated to come out at 130 g/km, although manufacturers will be allowed to have vehicles with CO2 emissions above this level, as long as the average is met across the manufacturer's combined vehicle sales. Last October the European Parliament came out in support of the carmakers, following lobbying attempts to have the deadline for implementing the CO2 regulations delayed as a result of the average five-year development lead time of a modern passenger car. As a result the European Parliament has called for emissions to be reduced to 125 g/km in 2015 rather than 120 g/km in 2012, and some observers believe that this timeframe will eventually be introduced into legislation (see Europe: 25 October 2007: European Parliament Gives Auto Industry More Time in Return for Bigger Emission Cuts). Outlook and Implications In summary it appears that Dimas is happy to allow the German carmakers to have a larger share of the overall emissions pie, if this can be successfully negotiated with its fellow member states, most notably France. However, he has intimated that the overall target must still be met. This would indicate the likes of the French and the Italian manufacturers taking on a greater burden of reaching the emissions target, something that they will not agree to without winning significant concessions from Germany and its carmakers. As a result it is possible that some kind of automotive industry carbon trading agreement could be implemented that could see the German manufacturers effectively buying carbon credits from the manufacturers of smaller, more fuel efficient cars in France and Italy, such as PSA Peugeot-Citroën, Renault and Fiat. This solution at the moment is just speculative, but it could represent an elegant and more cost-effective answer to the problems of the German carmakers than developing a whole new generation of low-emission vehicles, or paying stringent EU fines. However, despite a deadline of the year's end (see Europe: 31 March 2008: European Commission and Parliament Agree to Year-End Deadline for CO2 Negotiations—Report) being imposed to end negotiations, it seems that any final agreement is still a long way off. Any final regulatory proposal will have to be given the go-ahead by the Council of Europe and by the European Parliament, which could take some considerable time. However, in the meantime the member states will continue to do everything in their power to protect the interests of their domestic motor industries.
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