ANALYSIS-Europe car scrapping seen failing green test

* Europe Car scrap schemes boost small car sales

* Criticised as failing set green standards

OSLO, June 9 (Reuters) - European car scrapping schemes are aiding a shift to small, less polluting cars but environmental campaigners say they fall short of pledges to create a greener economy during the recession.

"It's definitely a missed opportunity. This is just doling out cash to the car industry," said Jos Dings, director of the European Federation for Transport and Environment, which campaigns for greener transport.

"The first goal is to help the economy," German Environment Minister Sigmar Gabriel said of a "cash for clunkers" subsidy that helped boost German car sales by 40 percent in May from the same 2008 month.

"The indirect effect is that you help the climate" by replacing old cars with cleaner vehicles, the minister told Reuters of the scheme that pays motorists 2,500 euros ($3,468) to scrap a car at least nine years old and buy a new vehicle.

By contrast, U.S. auto sales slumped 34 percent in May.

Only a few nations -- including France, Italy and Spain -- of a dozen in Europe offering scrappage incentives specify that the new car must have low carbon dioxide emissions, according to an overview by the European Automobile Manufacturers' Association (ACEA).

Others, such as Germany, Britain, Slovakia, Austria and the Netherlands, do not set emissions standards. And the countries setting carbon demands are generally those that make low-carbon vehicles, aiding local industry.


Environmentalists say many scrappage schemes undermine talk of a "Green New Deal" to lift economies out of recession, echoing the "New Deal" under U.S. President Franklin D. Roosevelt that helped end the depression of the 1930s.

Countries setting no demands for low carbon vehicles "have the approach that new cars are better than old ones", European Environment Commissioner Stavros Dimas told Reuters.

But he said he felt it would be "even better" for governments to spell out tough carbon standards.

Makers insist the shift is to greener transport, helping a goal of slowing global warming that a U.N. Climate Panel says will bring more food shortages, disruptions to water supplies, rising sea levels and extinctions of animal and plant species.

"Small cars are benefiting most," said Sigrid de Vries, spokeswoman of ACEA. "It's simply not right to say that there is no environmental benefit."

"And many of those 10-year-old cars would normally go to places such as eastern Europe, to Russia or to Africa. In these schemes they are scrapped. That's helping reduce pollution," she said. Up to 95 percent of a car can be recycled, she added.

But Dings noted that German motorists can in theory scrap an ageing gasoline-sipping Volkswagen


Lupo and use a 2,500 euro subsidy to buy a Porsche


Cayenne sport utility vehicle.

"Nobody with an old Volkswagen with the help of the state is buying a Cayenne," Gabriel said. "Consumers want smaller cars because they are cheaper in the petrol station."

Dings said he preferred, for instance, U.S. President Barack Obama's demands for tighter fuel standards.

The U.S. Senate is considering a proposal that would give up to $4,500 to trade in gas guzzlers for more efficient vehicles. "This is the way to go about it. If there is no alternative then deliver on public objectives," Dings said.

China has overtaken the United States as the top car market, with U.S. woes including bankruptcy for General Motors


and Chrysler LLC. Countries including China and Japan are also giving incentives to spur car sales.

But it is hard to judge the environmental impact of scrapping since manufacture of cars produces pollution.

Everything from mining metals to the energy used in assembly accounts for roughly 15 percent of the lifetime emissions of a typical vehicle, an EU Commission official said.