Are you sure?

EU urges CO2 cap for cars to encourage smaller models

European regulators recommended a cap on carbon-dioxide emissions from cars, setting up a clash with automakers as Europe extends a campaign against global warming.

The European Commission said it would seek to cut CO2 from cars in Europe by a quarter to an average of 120 grams a kilometer in 2012 compared with about 161 grams now. The commission said the industry is failing to meet voluntary reduction targets for CO2, the main greenhouse gas, and proposed engine emissions be cut to 130 grams and an extra 10-gram reduction come from improvements in car parts and fuels. „This gives the car industry an incentive to be innovative and will set an example for the world,” EU Environment Commissioner Stavros Dimas told reporters today in Brussels. The commission, the European Union's regulatory arm, plans in the coming months to propose a system to underpin the cap in a draft law that would need the backing of EU governments and the European Parliament. The 27-nation EU's initiative aims to prod carmakers including Volkswagen AG of Germany and PSA Peugeot Citroen of France to develop lighter, smaller and cleaner models. It may raise the price of vehicles, threaten some of the 2 million jobs in the EU auto industry and disadvantage producers of higher-emitting luxury cars such as Germany's Porsche AG and Bayerische Motoren Werke AG.

The EU is widening a push for tighter emissions standards to fulfill a pledge under the global Kyoto Protocol to cut greenhouse gases by 8% in 2008-2012 compared with 1990. The EU also wants to keep alive the idea of binding caps in any international accord that succeeds the Kyoto treaty. Last week, the commission proposed legislation that would force oil companies to reduce greenhouse gases by 1% a year over a decade. In 2005, the EU imposed CO2 quotas on power plants and factories as part of a system that requires companies exceeding their limits to buy permits from businesses that emit less - a regime also planned for airlines and one of the ideas being considered for regulating auto emissions. „The proposed goals are extremely ambitious, require massive investment and innovation, and create enormous and extreme challenges for all manufacturers,” Bernd Gottschalk, president of the VDA German automobile association, said in an e-mailed statement from Frankfurt. Cars account for more than a tenth of CO2 releases in the EU, where about 15 million autos are sold annually. The bloc has accords with European, Japanese and South Korean automakers that aim to reduce emissions in Western Europe to 140 grams of carbon dioxide a kilometer in 2008-2009. „By the end of 2008, we will be far away from the goal of 140 grams,” Industry Commissioner Guenter Verheugen said. The new system will cover „all manufacturers that sell new cars in Europe,” according to the commission.

A binding cap of 120 grams a kilometer in 2012 is too ambitious for carmakers alone, according to the European Automobile Manufacturers Association, which had pressed for others such as parts manufacturers, fuel producers and road planners to share the burden through an „integrated approach.” „We cannot make the 120 ourselves,” said Ivan Hodac, secretary general of the Brussels-based auto association. „That's totally out of the question. We accept it as a target that should be reached by the integrated approach.” To ease the burden on carmakers, the commission said improvements in tire, air-conditioning, gear-shift and fuel technologies should play a role in meeting the 2012 target. It also urged better traffic management and road planning. „It's extremely ambitious,” said Verheugen. „It's the most ambitious program in the world.” The commission said it would assess the impact of the planned law on the car industry before proposing a system for enforcing a binding limit. Lawmakers differ on how to regulate a 2012 target. Martin Callanan, a UK member of the European Parliament's largest political group, the Christian Democrats, said he favors creating an emissions-trading system for cars to enforce a common EU cap. He said such a system would make bigger cars costlier and smaller ones cheaper. „Those who produce smaller cars can sell their allowances to those who produce larger cars,” Callanan said. „That's one that particularly attracts me if we can come up with a workable system.”

The German government opposes emissions trading for cars, said Deputy Economy Minister Joachim Wuermeling. Echoing comments last month by Chancellor Angela Merkel, he also expressed opposition to any EU system based on a single cap and said limits should be set by vehicle type. „It would be better to have a certain% reduction on certain types of cars,” said Wuermeling. He said other approaches would be too bureaucratic. Dimas said introducing emissions trading for cars before 2013 was unrealistic. Verheugen, who comes from Germany, said a range of targets based on car class would have to underpin the common limit. „We'll have to have differentiated targets,” Verheugen said. „We need to take into account the diversity and security standards of European carmakers.” In any case, the commission says the EU risks missing its Kyoto goal and the European auto industry its competitive edge without a binding limit of 120 grams a kilometer in 2012. „We have to deliver this environmental objective,” said Dimas. „The world needs more efficient cars and someone will provide them. I hope it will be Europe's manufacturers who seize this opportunity first.” (Bloomberg)