Exclusive: EU plans carbon credits, not quotas, for electric vehicles

BRUSSELS (Reuters) - A European Union proposal to promote electric cars will shy away from quotas and instead include carbon credits that carmakers can use to offset emissions targets, EU sources told Reuters.

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium June 14, 2017. REUTERS/Francois Lenoir - RC11288B9BD0

The proposal is expected on Nov. 8, the sources said, and will introduce new CO2 standards for cars and vans for beyond 2020 to help to achieve the bloc’s goal of cutting greenhouse gas emissions by at least 40 percent below 1990 levels by 2030.

The sources said the European Commission’s draft law will set a target for passenger car fleets of a 25-35 percent reduction in average CO2 emissions by 2030 and 30-40 percent for vans. The final figures within the ranges will be decided in a high-level discussion among EU commissioners closer to the date.

European carmakers have lobbied for a 20 percent cut and called for compliance to be conditional on consumer uptake of electric cars.

However, outrage over Volkswagen VOWG_p.DE cheating on emission tests in the United States has put pressure on EU regulators to seek tougher controls over car industry emissions.

In a nod to manufacturers’ concerns that infrastructure for electric vehicles is lacking, the proposal will include 800 million euros ($943 million) of EU funding for governments, regions and cities to build accessible charging points, plus 200 million euros for battery development between 2018 and 2020.

U.S. and EU sources said that the innovative carbon credit initiative was inspired by talks with regulators from California -- viewed by many in the sector as the leading laboratory for policy on electric vehicles.

Unlike California’s zero-emissions policy, the EU proposal includes no mandates and the carbon credits will not be tradable.

The credits will be based on automakers’ performance against a benchmark for sales of low-emission vehicles as a proportion of their fleets, the sources added.

Asked about the contents of next month’s proposal, Europe’s climate commissioner Miguel Arias Canete said: “Beyond setting a general emission-reduction target for cars and vans, we are considering, for the first time, different kinds of incentives to accelerate the penetration of clean vehicles ... Personally, I do not like mandates or quotas.”

A crediting system rather than production quotas would “allow a more flexible approach, which would provide a continuous incentive for innovation”, he added.

Reporting by Alissa de Carbonnel @AdeCar; Additional reporting by Peter Henderson in San Francisco; Editing by David Goodman