Manufacturers dismayed at tough EU penalties on CO2 targets

The European Union has announced proposals to fine European carmakers that breach carbon dioxide emissions targets by 2012 in a move that has incensed manufacturers and the German government.

Under the proposals manufacturers will face fines of €20 (£14.35) for every gramme of CO2 over the limit of 120g/km from a current average of 160g/km. In 2015 the penalty will rise to €95 (£60).

The fines, which have to be ratified by the European Parliament, will be levied according to a sliding scale that depends on the weight of the cars sold.

Manufacturers will have to reduce fuel consumption to 130g/km across their fleets, with the remaining 10g/km reduction coming from fuel and component producers.

EU environment commissioner Stavros Dimas said: "Passenger cars account for about 12% of overall EU carbon dioxide emissions and emissions from transport are continually increasing.

"The aim of the legislation is to reduce CO2 emissions from cars in order to help fight climate change."

The EU says improvements to gearboxes and air-conditioning systems, tyre-pressure monitoring and growing use of biofuels will account for reductions of 10g/km.

The Union wants to reduce emissions from CO2 - a main greenhouse gas - from cars by one fifth. A voluntary target of 140g/km by 2008 has not been deemed a success.

Opposition

German Chancellor Angela Merkel said the plans were ´not economically favourable´, claiming the move would hurt German manufacturers disproportionately. Car-makers Volkswagen, BMW, Porsche and Mercedes are based in Germany, and between them own a number of performance and luxury marques.

European carmakers have railed against the proposals, calling them biased in favour of small-car producers and anti-competitive.

BMW called the proposals ´naive´, Volkswagen replied that it had hoped for targets that could be ´implemented in time and which did not hit German manufacturers more than their Europe rivals´, while Peugeot called the plans ´anti-ecological, anti-social, anti-economical and anti-competitive in relation to non-European Union carmakers.´

The Society of Motor Manufacturers and Traders has voiced concern over the scale of the targets and fines, pointing out that the car industry has worked hard to reduce its emissions voluntarily and that the proposed fines are inconsistent with the market price of carbon.

Manufacturers have also suggested that the price of luxury cars will soar to ensure the sale of such cars remains profitable.

EU officials believe that the targets will raise the average cost of a new car by at least €1,300 (£935) because of the technological developments needed, though buyers would claw back €2,700 (£2,000) over the course of the car´s life through fuel savings.

Balancing emissions

The proposals of set fines for breaching emissions targets have sparked particular opposition in Germany because of the concentration of ownership of high emitters

Car-makers can offset the emissions of high-polluting marques with lower emissions from smaller marques. Volkswagen´s ownership of lower emitters SEAT and Skoda may help balance emissions across its fleet, with marques such as Lamborghini and Bentley emitting high levels of CO2.

Volkswagen has been seeking a partnership with Proton in a further attempt to reduce its across-the-board emissions, while Porsche is widely believed to be close to buying a majority share in Volkswagen for the same reasons.

BMW and Mercedes are likely to boost their MINI and smart small-car divisions accordingly, while developing their EfficientDynamics and Bluetec fuel efficiency programmes. In 2006 BMW had a fleet average of 184g/km, while Mercedes had the worst EU fleet average of 188g/km.

Inadequate penalties

Green campaigners are unimpressed by the targets, claiming that the sliding weight scale could favour manufacturers who build heavier cars:

"The European Commission´s plans would abandon a decade-old target for cutting emissions, give companies building heavier cars a favourable deal and impose inadequate penalties on manufacturers that do not meet their targets," said Friends of the Earth´s transport campaigner Tony Bosworth.

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