Car industry behind on CO2 targets

Car manufacturers remain behind their voluntary commitments to reduce carbon dioxide emissions from new cars sold in the EU. European producers are not far short, but Japanese and Korean manufacturers will need major efforts to meet their targets. Meanwhile, a European Commission proposal for differentiated car taxation to help the CO2 abatement effort looks set to be opposed by the UK - the Member State which has the best taxation policy in the field.

The commitments were made by the European motor manufacturers association ACEA in 1998 and by its Japanese and Korean counterparts, JAMA and KAMA, a year later. They require average CO2 emissions to be reduced to 140g/km for new cars sold in 2008 - for the latter two associations, 2009.

The commitments are the most important voluntary environmental agreements signed at EU level so far. A progress report for 2001 published by the Commission in December shows that it is far from clear that they will work.

The progress achieved by the three associations is summarised in the table. Because they started from different baselines, they will need to make different levels of effort over the next few years.

  • ACEA has achieved an average annual reduction of 3.3gkm since 1995. It needs to increase this slightly to 3.6g/km. Nevertheless, it describes the 140g/km target as "extremely demanding".

  • JAMA's members have achieved a reduction of 2.85g/km per year. Because they started from a higher baseline, they need to increase the annual rate to 4.87g/km

  • KAMA faces the most challenging task. Its progress so far is an average of 1.65g/km. This needs to increase more than three-fold to around 5.87g/km.

    The Commission concludes that ACEA is making "good progress" while JAMA's is satisfactory, since it was always envisaged that faster improvements would be made later in the commitment period.

    However, KAMA's progress is rated as "unsatisfactory". There is a "real risk", the Commission believes, that the association will not meet its interim target of 165-170g/km for 2004. This "could put the whole approach in danger," the report warns - adding that the Commission has already been invited to make legislative proposals "immediately" should it become clear that targets are not being met.

    The poorer performance of Japanese and Korean manufacturers is not of huge significance overall because sales by ACEA's members accounted for 87% of the new car market in 2001. However, there is a possible dispute looming over how they are moving towards the 2008 target.

    Under their agreement with the Commission, the trade bodies promised to achieve their targets mainly by means of technological developments and market changes connected to them. In fact, much of the emissions improvement to date has stemmed from rising diesel sales.

    In 1995, diesel cars accounted for 22.2% of sales. By 2001, the figure had risen sharply to 36.4% - and stood at 39.4% among ACEA's members.

    The Commission notes this trend with restraint. It points out that Environment Ministers have voiced concern about the potential health effects of fine particle emissions from diesels. It also records that ACEA recently expressed uncertainties about the market prospects of gasoline direct injection technology, which was "supposed to break the strong trend towards diesel powered passenger cars."

    This issue could become a source of friction later this year, when manufacturers and the Commission are due to review progress so far. The industry has already complained that it is being hampered by "anti-diesel" tax policies in the UK and Sweden and by restrictions on some lighter materials effectively introduced by the Directive on end-of-life vehicles.

    A brighter note for ACEA is that it met another target to introduce some models in 2000 with emissions of 120g/km. Sales of these almost doubled in 2001 to reach 306,000 cars. Sales of vehicles with emissions of 140g/km accounted for 23% of the total sold by its members in 2001.

    The review due later this year is to consider ways of meeting the overall EU target of reducing CO2 emissions from new cars to an average of 120g/km by 2010.

    Last autumn, the Commission tabled a document which proposed a restructuring and harmonisation of car taxation - with differential taxes based on vehicles' CO2 emissions being an important component to help move towards this target. The paper said that the Commission "could" bring forward legislative proposals to this end following consultations.

    The UK is the only Member State with graduated vehicle excise duty based on cars' CO2 emissions. However, it appears most unlikely to support any move at EU level to require this form of taxation.

    In a memorandum on the Commission's paper, the Treasury says it will "examine carefully" any legislative proposals. But it adds: "The Government does not believe that it is necessary to introduce Community-wide legislation mandating Member States to adopt any specific environmental approach. Decisions on how to tax passenger cars should continue to rest with individual Member States, subject to the importance of ensuring the smooth functioning of the single market."

  • The latest US contribution to the vehicle efficiency effort came in December, with a new rule requiring the fuel consumption of sports utility vehicles and light trucks to be improved by 1.5mpg between 2005 and 2007. By the latter year, they will need to operate to a standard of 22.2mpg. Fuel efficiency standards for other passenger cars have remained unchanged since 1990, at 27.5mpg.

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