Auto Regulations

Helping and punishing

Stau – Verkehr
Making room for cleaner air. Source: picture alliance

As politicians from around the globe gathered in Bonn, the capital of former West Germany, to discuss environmental protection, the European Commission in Brussels hit the car industry with new climate regulations.

From Mercedes-maker Daimler to VW and Peugeot to Ford, all carmakers in Europe now need to produce vehicles that emit 15 percent less carbon dioxide by 2025 compared with 2021 levels and 30 percent less by 2030. The EU’s executive body also earmarked €1 billion to expand the infrastructure of charging networks for alternative fuels such as electricity, hydrogen and natural gas, and to promote the production of batteries used in electric cars.

European carmakers have been slow to successfully bringing electric vehicles to market, whereas Japan’s Toyota, Silicon Valley-based Tesla and Chinese carmakers have built up sizeable positions in the hybrid and electric car markets. “The EU automotive industry risks losing its technological leadership in particular with respect to zero- and low-emission vehicles, with the US, Japan, South Korea and China moving ahead very quickly in this segment,” the EU’s executive body said in a statement.

In addition to pushing Europe’s carmakers to adapt new technologies quicker, the proposed regulations are part of the continent’s efforts to reduce overall CO2 emissions by at least 40 percent by 2030 compared with 1990 levels. Road transport contributes to 22 percent of the EU’s total greenhouse gas emissions, which Europe wishes to cut as part of the 2015 Paris Agreement on climate change.

European Commissioner Maros Sefcovic has warned the continent’s carmakers could face a “Kodak moment.”

The industry, already struggling to meet the 2021 target to cut a car’s emissions to 95 grams of CO2 per kilometer (153 grams/mile), has fiercely lobbied the Commission’s members to prevent regulations from becoming too strict. Volkswagen, which shocked the world in 2015 with diesel cars that flagrantly violated emissions regulations, was among the industry’s leading lobbyists, newspaper Süddeutsche Zeitung reported. Originally, the EU wanted to set a 35-percent reduction target by 2030 and considered forcing carmakers to adhere to binding quotas of electric cars as a percentage of total vehicle sales in Europe. China will introduce binding sales quotas for electric vehicles in 2019, while California and nine other US states promote the uptake of zero- or low-emission vehicles.

The European consumer rights group BEUC criticized the new car rules, saying they were half-hearted. New cars should emit 40 percent less CO2 by 2030 and carmakers should be forced to sell a minimum quota of electric cars, the group said.

Thanks to the car industry’s lobbying, the European Union will actually reward companies which sell a minimum amount of low-emission cars with more lenient CO2 targets in 2025 and 2030. The 28-nation bloc, however, kept in place a penalty system, forcing carmakers to pay €95 per gram of CO2 over the limit for each newly registered car.

08 p06 Gasoline and Diesel Cars Rule Europes Roads-01

The commission agreed to relax its original targets out of fear it could choke an industry that employs 12 million people, including suppliers and repair shops, and accounts for 4 percent of Europe’s economic output. But whether such leniency will pay off remains to be seen. Faced with the rise of electric carmakers in the US and Asia, European Commissioner Maros Sefcovic has warned the continent’s carmakers could face a “Kodak moment,” referring to the US photo film maker’s 2012 bankruptcy after it had failed to adapt to digital photography.

Despite the commission’s compromises, Germany’s car industry, home to the world’s largest carmaker VW and the two top luxury vehicle producers Mercedes and BMW, said the new targets posed “extreme” challenges. Angela Merkel’s caretaker government, historically a strong lobbyist on behalf of German carmakers, responded diplomatically to the EU proposals, saying Europe needed ambitious but realistic targets. Chancellor Merkel’s Christian Democrats are currently in coalition negotiations with the pro-business Free Democrats and the environmentally-minded Green Party. The latter prefers much more ambitious targets: 60 percent less CO2 emissions for new cars by 2030 and a binding electric car sales quota of 50 percent in 2025.

But the final policy is not yet approved. Depending on the upcoming negotiations in Berlin and Brussels, where member states and parliaments could amend the proposed rules before they turn into law, carmakers could still face tougher targets.

Clicke here for details of the European Commission’s proposals.

Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. Till Hoppe reports on politics for Handelsblatt, with a focus on defense, domestic policy and cyber issues. Gilbert Kreijger is an editor with Handelsblatt Global. To contact the authors: hoppe@handelsblatt.com, delhaes@handelsblatt.com and kreijger@handelsblatt.com

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