Car makers give ground on fuel efficiency agreement

Driven by the threat of EC legislation to limit carbon dioxide emissions, European car makers have offered to cut fuel consumption of new cars by 25% by 2008. The move is a significant advance on earlier proposals - but appears insufficient to allow Environment Ministers' target for fuel consumption to be met.

In 1996, EC Environment Ministers agreed a target to cut average CO2 emissions from new cars to 120g/km by 2005 - equivalent to a fuel consumption of 5.0 litres per 100 kilometres for petrol cars and 4.5l/100km for diesels. Ministers left scope for an extension of the deadline to 2010 if the target proved difficult to achieve (ENDS Report 257, pp 39-41 ).

A voluntary agreement to be drawn up between the European Commission and car manufacturers was expected to deliver the bulk of the improvement. But last autumn the Commission warned that discussions with the European trade association ACEA had stalled. It threatened to set binding targets unless the industry offered more impressive fuel efficiency improvements (ENDS Report 273, p 38 ).

The Commission had been deeply unimpressed by ACEA's offer to improve average CO2 emissions to 155g/km by 2005. This figure was based on an old EC test cycle - but the Commission insists that the 120g/km target should be based on a newer test cycle which is more representative of urban driving conditions. On this newer cycle, ACEA's offer represented a fuel consumption of 167g/km - just 10% better than the current average of 186g/km, and a long way short of the target.

The threat of legislation appears to have focused minds in the car industry. In March, ACEA presented a new proposal to cut average CO2 emissions from new cars to 140g/km by 2008 - not 2005 - based on the newer test cycle, or 128g/km on the old cycle. It also promised to have some 120g/km models available by 2000, and suggested a review in 2002/3 to evaluate the potential for further reductions by 2012.

Environment Ministers considered the proposal on 23 March. Michael Meacher, the UK Environment Minister who chaired the meeting, welcomed the offer as a "significant improvement." "We agreed that it was a good basis for negotiation," he said, "but we need to study all the terms and conditions before reaching a final decision. The Commission and ACEA will be discussing these urgently."

ACEA says it was able to agree a more ambitious offer by deferring the compliance date by three years. "People should be very clear on the lead times needed for such projects," a spokesman said. Furthermore, he said, prospects for efficient lean-burn engines had been enhanced greatly by the European Parliament's decision to hold out for tight controls on fuel sulphur levels under a new Directive (ENDS Report 277, p 44 ).

However, ACEA told ENDS that another key factor was that it has now made allowance for "non-technical" measures - including a considerable downsizing of vehicles in the fleet. The earlier offer excluded any change in market conditions - indeed, until now ACEA has expressed hostility to such a move. The Commission told ENDS that it had assumed that the new offer was based solely on technical improvements.

This important distinction could put the 120g/km target out of reach. The Council and the Commission have always assumed that "non-technical" measures - including fiscal incentives and labelling for fuel consumption - will also be needed to stimulate consumer demand for smaller, more efficient vehicles. As ACEA's proposal already makes allowance for a significant downsizing of vehicles, these other measures may have relatively little added effect.

ACEA also attached two key conditions to its offer. The first is that "no negative measures" should be taken against diesel cars, which it sees as having a major role in reducing fuel consumption despite concerns over particulate emissions. The second is that "full availability" of low-sulphur fuels should be ensured by 2005. However, the Commission is concerned that this could pre-empt negotiations with the European Parliament on the fuel quality Directive.

The Council also asked the Commission to explore the scope for intermediate targets, seen as an important check to ensure that the industry stays on course. It also faces the tricky task of ensuring that cars made by non-ACEA members - including imports - are covered by any agreement.

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