Germany works to weaken EU car emissions law

BRUSSELS Sun Jun 23, 2013 11:00am EDT

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BRUSSELS (Reuters) - Germany has put forward a new proposal to weaken EU draft rules on vehicle emission limits for carbon dioxide as it struggles to persuade other nations to help it protect its powerful car industry, EU sources said.

Talks on a legal text are in their final stages, but German efforts to ensure its luxury car makers, such as BMW and Daimler, can continue to produce more polluting, less fuel efficient cars, have complicated the debate.

Last week, Germany had to abandon another proposal it had made because it did not get enough support, the sources said.

"The latest German proposals are causing problems and really came very late. I'm not sure if we can get a deal," one EU diplomat said, speaking on condition of anonymity.

Ireland, holder of the EU presidency until the end of the month, has said it hopes to get a political agreement and will take part in what is meant to be a final set of talks on Monday.

The proposal from the Commission, the European Union's executive, sets a goal of 95 grams of carbon dioxide per kilometer (g/km) as an average for new vehicles sold in Europe from 2020.

Each manufacturer is assigned an individual target to take account of the nature of their fleet and their past cuts.

But making less-polluting cars is costly and restricts profit margins, which is why major German manufacturers want to delay the stricter rules.

The previous German plan, which member states rejected in a meeting last week, would have allowed carmakers to carry over credits to pollute accrued before the new rules kick in.

Known as supercredits, these permits are earned if manufacturers produce some very low emissions vehicles, such as electric cars, which German firms are making to meet a separate national target.

BANKING VERSUS MULTIPLYING

The new German proposal has replaced the unpopular idea of accruing supercredits, known as banking, with another technical device, referred to as a multiplier.

It would still buy time for German manufacturers because it would multiply the number of supercredits a manufacturer earns for each low emission vehicle. Talks on Monday will include haggling over the level of the multiplier.

Germany and its carmakers have repeatedly defended supercredits, saying they encourage innovation.

Another diplomat, who also asked not to be named, said the multiplier gave an incentive to produce very low emission vehicles.

The Commission, whose original proposal set a limit on supercredits, says the problem is that too many of them mean producers can carry on making higher emissions models and emissions levels will fail to meet the 2020 95 g/km target.

Germany as a whole is at the upper end of the EU emissions range, with 147 g/km in 2011, according to the International Council on Clean Transportation (ICCT).

The EU fleet average is around 132 g/km, so it should meet an existing goal of 130 g/km phased in between 2012 and 2015.

Independent research shows consumer appetite for vehicles that use less fuel and emit less carbon dioxide has grown as the economic slowdown has dragged on.

It also finds any increase in purchase costs because of improved technology is more than made up for in fuel savings. These help to curb dependence on costly oil imports and increase citizens' spending power, which feeds into the wider economy.

Analysis by British-based consultancies Ricardo-AEA and Cambridge Econometrics published on Monday studied various scenarios and found improved vehicle technology could deliver between 58 billion euros ($76.19 billion) and 83 billion euros a year in fuel savings by 2030 across the European Union.

It also found innovation could create between 500,000 and 1.1 million jobs by 2030. That takes into account jobs lost, for instance in the refining industry, during the transition. ($1 = 0.7612 euros)

(Editing by Greg Mahlich)

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