EU emission limits could save car owners’ money

By Paul Brown

Limits on carbon emissions from light-duty vehicles proposed by the European Union, and due to come into force by 2020, will create jobs and save car owners money as well as helping the climate and improving public health, according to academics and economists.

Their report, published today, is timed to influence the Industry, Research and Energy Committee of the European Parliament, which is meeting tomorrow, 19 March, to discuss the new proposals.

If adopted by the Parliament these new limits will force manufacturers to improve the efficiency of engines, something that they have failed to do voluntarily.

The key proposal by the European Commission is to cut average emissions from new cars from the current target of 130 grams of carbon dioxide (CO2) per kilometer in 2015 to 95 in 2020.  Emission averages were at 137.7 grams in 2011.

Some EU car manufacturers warn new regulations could make cars more expensive and affect their competitivity

Not every car has to meet the new limits; it is an average across all the models in any manufacturer’s fleet that is counted. Special provision is made for specialist low volume producers.

The report, An Economic Assessment of Low Carbon Vehicles, has been produced by a high-powered team from Cambridge Econometrics and a number of senior academics specializing in transport.

The study, which focuses on cars and vans, says that if a 95g limit were set it would force manufacturers to increase research and development and would create skilled jobs. It would also cut the cost of running Europe’s transport fleet and reduce oil imports, so helping the balance of payments.


At an individual level the cost of new technology to improve engine efficiency is around €1,000 to €1,100 per car by 2020. But this will be offset by savings of €400 a year on the fuel bill. This is in comparison to prices in 2010.

For the EU as a whole the extra capital cost of the car and van fleet will be €472 billion in 2030, €46 billion more than if limits had not been imposed.

However, excluding taxes, the EU fuel bill will drop to €166 billion in 2030, compared to €245 billion if nothing were done to improve standards. This represents a saving of €79 billion.

Overall the net gain to the EU of forcing new technology on the car manufacturers is about €33 billion.

The economists point out that as well as improving the balance of payments by reducing fossil fuel imports there are indirect benefits to households and businesses in lower costs, lower prices to consumers, and for households an increase in real incomes.

The whole package also improves the EU’s competitiveness against foreign firms, especially in the US where the Obama administration is proposing similar measures but over a longer timescale.

Depending on the model used, the focus on new technology in what in the EU as a whole is a vast manufacturing sector will create between 356,000 and 443,000 new jobs.

All-round winner

The report uses technological data from the car industry, figures from the EU and US governments and from the International Energy Agency, all of which are conservative. It points out that if there are oil price increases, or sudden spikes in price, the size of the savings will be far greater.

It backs up claims by Connie Hedegaard, EU Commissioner for Climate Action. She said: ”With our proposals we are not only protecting the climate and saving consumers money. We are also boosting innovation and competitiveness in the European automotive industry.

“And we will create substantial numbers of jobs as a result. This is a clear win-win situation for everyone. This is one more important step towards a competitive, low-carbon economy.”

Vehicle manufacturers have traditionally been opposed to mandatory rules to tighten emission standards, but experience has shown that “voluntary” improvements do not happen, at least not as fast.

The Industry, Research and Energy Committee is a key target for those seeking to influence the Parliament to adopt the new limits because it is more likely to side with the manufacturers than the Environment Committee, which considers the proposals later.

The whole issue goes before the Parliament on July 2.

his article was produced by the Climate News Network

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