Germany makes new offer over EU-Daimler coolant spat -sources

Wed Mar 13, 2013 1:56pm EDT

* Commission has said will take action if law breached

* Honeywell says its product is safe, subject to extensive testing

By Barbara Lewis and Francesco Guarascio

BRUSSELS, March 13 (Reuters) - Germany has written to the EU executive with a new set of proposals aiming to break a deadlock over law requiring carmakers to stop using extremely potent greenhouse gases in air cooling systems, EU sources said.

The problem for Germany is that luxury car giant Daimler AG says the new, less polluting fluid on the market is dangerously flammable and is refusing to use it.

That has set it at odds not only with the European Commission, but with U.S. firm Honeywell International Inc. , which developed the coolant in partnership with Dupont and says it is safe.

"Germany has just sent us a new letter with proposals on how to comply with the directive. We are examining now this new offer. We cannot impose fines on Daimler, but we need to have the directive applied correctly in all member states," an EU official said on condition of anonymity.

Following an earlier exchange of letters, the Commission confirmed on Wednesday that it had received a letter dated March 5 from the German authorities and would "reply in due time".

While the Commission is relying on Germany to enforce EU law and cannot directly fine carmakers, it has said it will start infringement procedures against member states for breach of a new law that forbids the use of any air conditioning fluids with a global warming potential exceeding 150 times the impact of carbon dioxide.

The coolant produced by Honeywell named HFO-1234yf is only four times more potent than CO2 and does meet the EU requirement. It compares with the previous industry standard, which has a planet-warming power more than 1,000 times that of CO2.

In a Daimler test of HFO-1234yf last year involving a simulated leak, the new coolant burst into flames.

The Commission does not prescribe which coolant is used provided that it meets the criteria, but the problem is that any alternative Daimler can develop will take time.

"In principle, we have nothing against Daimler if it plans to develop a new refrigerant. The industry has already decided on a refrigerant, but if this is changed in respect of the new rules, we have no problem," the Commission official said.

Germany's letter makes certain suggestions, which the sources did not disclose. An EU diplomat, speaking on condition of anonymity, said Germany had in addition asked the Commission to grant more time to German authorities.

"We feel that the security concerns raised by some car producers should be taken very seriously. Therefore, we feel that it would not serve the desired purpose if we forced car producers to use 1234yf (the new coolant)," the diplomat said.

Honeywell says its coolant is highly efficient and safe and has been subject to comprehensive, independent testing.

"Daimler had six years to solve this issue. No other carmarker has reported any safety issues," Paul Sanders, a managing director at Honeywell, said in an interview.

"We continue to work with the Commission and member states authorities to enable the full implementation of the directive (EU law)."

Officials at Daimler could not immediately be reached for comment.