‘‘With our proposals we are not only protecting the climate and saving consumers money,” said Hedegaard.
As part of the proposal adopted yesterday by the European Commission to limit drastically CO2 emissions from cars and light commercial vehicles, there were claims made that it makes economic sense. The average additional manufacturing cost is estimated at around €450 per van and €1100 per car in 2020. Auto sales prices in the EU have been dropping about 1% annually during recent years as car sales continue to decline.
The regulations will be subject to much lobbying and political maneuvering in the months ahead. In what looks to be a preemptive strike against a possible public lobbying campaign by automakers against the new regulations, Connie Hedegaard, EU Commissioner for Climate Action, said, ”With our proposals we are not only protecting the climate and saving consumers money.”
The new EU regulations will cut average emissions from new cars to 95 grams of CO2 per km (g CO2/km) in 2020 from 135.7g in 2011 and a mandatory target of 130g in 2015. Emissions from vans will be reduced to 147g CO2/km in 2020 from 181.4g in 2010, the latest year for which figures are available, and a mandatory target of 175g in 2017. Cars and vans account for around 15% of EU CO2 emissions, including emissions from fueling and supply operations.
These controversial targets were previously outlined in existing legislation, but now they will be submitted to the European Parliament and the Council for discussion and adoption under the normal legislative procedure. The proposals would amend two existing Regulations establishing binding requirements for manufacturers to meet the 2015 mandatory target for cars and the 2017 target for vans.
The positive effects on the EU economy, of course, remain to be proven. The Commission’s analysis claims that the 2020 targets are achievable, economically sound and cost effective: the technology is readily available, its cost is substantially lower than previously thought and its implementation should boost employment and GDP and benefit consumers and industry.
For both cars and vans, the so-called ‘payback period’ or the time it takes for cumulative fuel cost savings to outweigh the additional cost of buying a more fuel-efficient vehicle is below five years. Net cost savings over a vehicle’s lifetime are estimated at around €2000 for cars and €2500 for vans.
If so, this is not the first time that automakers have overestimated the cost of compliance in an attempt to thwart new rules. It’s also not the first time regulators have claimed that consumers will benefit. Here is the EU math so you can decide if it is arithmetic or the new green math where the sums do not make sense:
- Each new car the EU estimates will save its owner an average of €340 in fuel costs in the first year, and an estimated total of €2904-3836 over the car’s lifetime of 13 years, as compared with the existing 2015 target. For vans the average fuel cost saving is estimated at around €400 in the first year and €3363-4564 over a 13-year lifetime.
- Overall, consumers will save around €30 billion per year in fuel costs and it is estimated that the targets could increase EU GDP by €12 billion annually and spending on employment by some €9 billion a year. The proposals would in total save 160 million tons of oil – worth around €70 billion at today’s prices – and around 420 million tons of CO2 in the period to 2030.
The EU claims that the introduction of similar CO2 or fuel efficiency standards in other countries would increase demand for CO2-reducing technologies and more efficient cars made in Europe.
Automakers are thus far not directly attacking the rules, saying instead that they are studying the new proposal.
“It is clear that CO2 levels from vehicles have to continue on their downward trend and the industry is committed to deliver on this,” claimed Ivan Hodac, the Secretary General of ACEA, the automakers trade group.
It is not at all clear if the European auto industry has the political influence to modify the regulations in the face of strong and apparently growing (at least among EU regulators and political parties) green sentiment in Europe.
More than 12 million European families depend on automobile employment, with 2.3 million direct jobs and another 10 million in related sectors. Roughly speaking, the car industry represents 6% of total European employment. Cars also represent a major source of income for the EU member states. Vehicle taxes contribute €360 billion yearly to government revenues.
“These are tough targets – the toughest in the world,” Hodac claimed. He said this would increase manufacturing costs in Europe, creating a competitive disadvantage for the region and further slowing the renewal of the fleet. (See European Makers Squeal over Tough CO2 Targets Just Announced)
