EU Panel Backs Tougher-Than-Expected CO2 Rules
By Dennis Haak
09.26.2008
Just as the tentative deal on the Wall Street bailout collapsed yesterday in the US, so did a tentative deal in Europe that had been agreed upon between the European Parliament’s main socialist and conservative parties on a series of carbon emission caps for new cars and lower penalties than originally sought for noncompliance. However, members of the Parliament’s Environment Committee rejected many key aspects of the proposal that had been crafted by members of their respective parties, and instead endorsed a proposal with stricter rules that had been created by the European Commission, which is the EU’s executive arm. This is bad news for both car enthusiasts, consumers, and in fact the economies of Europe and any other countries that might choose to model a carbon cap program from this idea.
Currently, there are only voluntary agreements from automakers to reduce their models’ CO2 emissions, but environmentalists say that the voluntary limits do not go far enough. The current proposal endorsed by the committee will require automakers to meet a fleet average CO2 emission target of 120 grams of CO2 per kilometer. The fleet averages are based upon European sales only. The fines under the new proposal for noncompliance are €95 ($139) per gram beyond 120 grams per kilometer per car.
The fate of the new proposal is far from certain, however, with auto producing countries such as Germany, France, and Italy having a big problem with the caps, correctly fearing that they will be harmful to their domestic auto industries. The EU Parliament must now work out an agreement with the EU Council (made of the heads of state of the EU’s 27 member states), where the aforementioned countries are sure to make their stance well-known to the others. The issue is a complicated one, and not just about the environment and global warming; the fact that auto industries are major employers and economic drivers in Germany, France, and Italy (among others), and that the world is in uncertain economic times doesn’t make these negotiations any easier.
The penalties will surely be borne by consumers in the end, but stiffer penalties on cheaper cars will be obviously a tougher sell. For comparison purposes, a Toyota Prius Hybrid (rated at 45 mpg by the US EPA on the highway cycle) emits 104 grams of CO2 per kilometer, while a Camry Hybrid (rated at 34 mpg highway) emits 119 grams of CO2 per kilometer, so it would just squeak away from the penalties. A Camry V6, however, at 28 mpg highway, emits 186 grams of CO2 per kilometer. That means that were the US to introduce such a system, the Camry V6’s 66 grams of “extra” CO2 beyond the limit would cost $9,174 (66 x $139). The Camry is a fine car, but it’s not hard to see how nearly all buyers would balk at a $9,174 penalty being added to its price. Even a Mini Cooper (37 mpg on the highway, 139 g/km CO2) would incur a $2,641 penalty.
On the true gas guzzlers – large trucks or high performance cars – the penalties are even bigger killers than they are with the Camry V6 (as if $10 per gallon gasoline wasn’t enough of a penalty to discourage their sale in Europe!). A Dodge Challenger SRT8 with the five-speed automatic (19 mpg highway, 288 g/km CO2) would incur a $23,352 penalty on its 168 “extra” grams of CO2 per kilometer. The least-efficient new vehicle on the EPA’s 2009 fuel economy guide is the Lamborghini Murcielago with a 6.5 liter V12 and six-speed manual. The Murcielago is rated at 8 mpg city/13 mpg highway, with a carbon footprint of 439 g/km. That means that the car would have a $44,341 penalty tacked onto the price. But when you’re talking about a car that starts at $323,300, the penalty represents a 13.7% price increase. On the Camry V6, which starts at $24,935, the $9,174 penalty would represents a 36.8% price increase.
Then the question to buyers would become whether they buy a new very small car (likely either a diesel or hybrid), keep their old jalopy running longer than planned, or buy a used car – none of which particularly helps the European auto industry, especially the latter two options. The result of such a plan, if implemented, would be that average consumers are faced with the choices above, the new car market in Europe completely collapses, and the rich who can afford a $323,300 Murcielago can also afford a $367,641 Murcielago and will continue to buy them. It’s not like there are a lot of Murcielago sales worldwide, let alone in Europe, to tip the balance one way or another on CO2 emissions, but a plan like this clearly penalizes the average consumer far more than the rich, who don’t really have to change their habits significantly. The economic disaster that this plan would create would result in far lower CO2 emissions, not because of the caps, but because the economy will collapse and nobody will be able to afford to drive, much less to buy a new car.
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