Carmakers muddy private sector’s COP green sheen

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FILE PHOTO: Cars drive in the city centre, on the day of closing session of the Chinese People's Political Consultative Conference (CPPCC), during a polluted day in Beijing, China, March 10, 2021. REUTERS/Thomas Peter/File Photo

GLASGOW, Nov 10 (Reuters Breakingviews) - Carmakers are flipping the COP26 script – not in an encouraging way. Thus far, the U.N. climate shindig in Glasgow has been characterised by lacklustre pledges from governments and more promising private-sector ones, notably from banks. Now $142 billion Volkswagen (VOWG_p.DE) and rivals like Toyota Motor (7203.T), Stellantis (STLA.MI) and BMW (BMWG.DE) have failed to back a car-industry green commitment of their own read more .

To keep global warming to 1.5 degrees Celsius above pre-industrial levels the world needs to cut annual energy-related carbon dioxide emissions from 34 billion tonnes to zero by 2050, according to the International Energy Agency. The global fleet of passenger cars belches out about 3 billion tonnes annually. To get rid of that, the IEA says no new internal combustion engines should be sold from 2035.

Hence the proposed COP pledge, which says the cut-off should happen from “leading markets” by 2035 and globally by 2040. Had it passed, it could have been an equally cheery counterpoint to last week’s Glasgow Financial Alliance for Net Zero. That saw Western banks pledge to restrict warming to 1.5 degrees, hinting that private industry might decarbonise even if countries can’t agree on tougher emissions-cut pledges.

The snub from VW and peers delivers a reality check. The group led by Herbert Diess is already a true electric-vehicle believer. It has invested more than any other large carmaker in EV technology and will – according to UBS – surpass Tesla (TSLA.O) for the number of battery vehicles sold by 2025. It’s also already promised to stop selling combustion engines in Europe by 2035. Yet carmakers’ propensity to go green depends on their individual competitive positions, and how aggressively governments have developed charging infrastructure or incentivised EV sales.

In that respect, it probably doesn’t help that China, a key VW market, has only committed to net zero by 2060 and didn’t support the COP pledge. U.S. manufacturers Ford Motor (F.N) and General Motors (GM.N) are probably heartened by President Joe Biden’s promise to halve emissions by 2030, even though he also didn’t back the pledge. The wider lesson is that private players can’t be relied on to stick their necks out if public action is absent.

In that respect, Wednesday’s draft COP26 agreement, which says that national signatories will “urgently” fast-track public-sector emission cuts, is a potential game-changer. If it gets signed off, the likes of VW may be more receptive to future private pledges.

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CONTEXT NEWS

- Carmakers including Volkswagen, Toyota Motor, BMW and Stellantis did not sign up to a joint declaration, unveiled at Glasgow’s COP26 summit, to end the sale of combustion engine vehicles, Reuters reported on Nov. 10.

- The pledge requires signatories to commit to work towards all sales of cars and vans being zero-emission vehicles by 2040. Groups including Ford Motor, General Motors, Volvo and Jaguar Land Rover will sign it, Reuters reported. The United States, China and Germany have not backed the pledge.

- VW is “fully committed to a rapid transformation of its portfolio to battery electric vehicles as the primary means to achieve zero emission vehicles,” the company said in a statement. “While the overall global goal of reaching zero emissions in line with the Paris Agreement is non-negotiable, regions developing at different speed combined with different local prerequisites need different pathways towards zero emissions.”

- VW in 2020 sold 3,844,679 vehicles in China, accounting for 42% of all sales, according to its annual report.

Column by George Hay in Glasgow and Neil Unmack in London. Editing by Rob Cox and Oliver Taslic

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