Global Economics

AutoMakers Cry Foul Over New C02 Rules


Proposed EU fines on car producers whose models exceed a certain level of CO2 emissions have manufacturers and German politicians upset

On Wednesday, European Commission President Jose Manuel Barroso announced new measures to combat CO2 emissions from cars—and the car lobby promptly hit back.

Under the new rules, which will be introduced in 2012, manufacturers will have to reach average maximum CO2 emissions of 120 grams per kilometers across their whole fleet of new cars.

Carmakers whose fleets exceed the centrally-mandated limits will face fines, beginning at €20 ($28.80) per gram of CO2 per kilometer over the target level in 2012 and increasing to €95 per gram per kilometer in 2015.

The new limits for average emissions will apply to all new cars sold in the EU as of 2012, no matter where they are produced, and are expected to push sticker prices up. The European Commission estimates that the average price of a new car will rise by 6 percent or around €1,300. However the Commission argues that this initial cost will be more than offset by estimated fuel savings of around €2,700 over the car's lifetime.

Individual targets will be set for different carmakers, depending on the weight of the vehicles they produce. Manufacturers of heavier cars will be allowed to pollute more under the new rules, which some critics suggest could lead to an "SUV arms race."

The announcement went down badly in Germany, home to a powerful car lobby. German Chancellor Angela Merkel, until now one of the world's most outspoken leaders on environmental issues, appeared to do an abrupt about-face when the interests of German carmakers were threatened, saying Wednesday that the new rules were "not economically favourable."

Carmakers themselves went much further. Peugeot called the plans "anti-ecological, anti-social, anti-economical and anti-competitive in relation to non-European Union carmakers."

German papers devoted lots of ink to the issue on Thursday.

Center-left Süddeutsche Zeitung was critical of the execution, if not the principle:

"When you criticize everything, you're guaranteed to be right about something. The EU Commission seems to depend on this principle for most of their successes."

"The EU has set itself some worthy goals for environmental protection.… That's why it's so important that the EU Commission makes sure everyone's on the same page. They need to listen to doubts and take alternative suggestions seriously. A few people made them this time around, and none of them were traitors to the environmental goals. It wasn't wise to just ignore them."

The left-leaning Die Tageszeitung thought the rules rewarded the wrong behavior:

"All that's left is an appeal to the mature consumer. When all is said and done, no one's being forced to buy heavy cars with low gas mileage. That's why these days climate-friendly hybrids are in fashion. But trends like this are easily ended. Good resolutions sometimes need to be helped along with strong political actions. EU commissioners seem to be lacking that bravery."

Far from the industry's southern German heartland, Berliner Zeitung had little sympathy for German automakers:

"The European Commission is making serious plans to restrict the output of carbon dioxide from automotive transportation. The auto industry, which for years has ignored their promises to voluntarily reduce car emissions, froths: "Unacceptable!" "Unfair!" cries the government, whose boss would like to be thought of as the guardian angel of the climate and who proposed her own ambitious climate protection goals in March. The reaction of Günter Verheugens, the EU commissioner, speaks volumes: Although he's responsible for industrial policy in Brussels, he ducked his head and said nothing."

"German auto manufacturers must do what they like least: think hard and come to terms with the new realities. No one's suddenly going to have to trade their Porsche in for a Fiat. The market won't be distorted, but rather guided for political purposes. When the EU takes its climate plans seriously, it needs to do just that."

The Financial Times Deutschland advocated a market-oriented approach:

"When it comes to a market-based pollution policy, then the issue would be totally clear: Whoever fuels their automobile with gasoline and emits CO2 as a result has to pay—just as power plants have to factor in the costs of their CO2 emissions certificates."

"Raising gas taxes, then, would be the best way to make drivers pay for auto emissions and damage to the climate the same way other polluters must. Old and new cars would be affected, and every driver would have to reckon which trips and which methods of transportation were worthwhile. And industry would have a serious incentive to offer efficient, low-emission vehicles."

"Unfortunately, that's not the path the EU chose. In Brussels they've long preferred a command economy-style solution: manufacturers will be told the precise CO2 emissions allowances for new cars. Anyone who goes over pays a penalty. This is extremely complicated, tedious and bureaucratic."

"The great danger is that the technological development and the competitive dynamic of the European automotive industry will come to depend wholly on the decisions of a distant bureaucracy."

Business daily Handelsblatt suggested the rules didn't have much hope:

"The CO2 limits for new cars announced yesterday in Brussels brings global warming policy into the swamps of everyday politics. It's been a long time coming: From the lofty goals of Merkel et al to a tough conflict of interest that will only get worse for Europe in the years to come."

"Nowhere is this more apparent than the automotive industry.… All the commissioners coming from countries with significant automotive industries met the new rules with massive resistance. That's a bad start for something as vital as climate protection. It's easy to see how this will proceed: national governments and the EU Parliament will pick the rules from Brussels to pieces."

"(EU Commission President Jose Manuel) Barroso's bad tactics are responsible for this debacle. He kept the central points—CO2 limits and penalties—secret until the last minute, making an open discussion of the consequences impossible. The results? No politicians with any power stand behind the rules as they are written now."


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