U.S. and EU Join Forces in Cutting Car Emissions     Print
Friday, 11 January 2008

Despite continuing basic differences about how to combat climate change, Europe and the United States are now taking the same road on one important initiative: imposing cuts on CO2 emissions from passenger cars.

Congress has legislated an increase in fuel efficiency of 40 percent for cars by 2020, a move designed to eventually cut U.S. gasoline consumption by 20 percent. Similarly, the European Commission has moved to impose very strict ceilings on CO2 emissions on car makers in Europe even faster, by 2012.

Exact comparisons between the two approachs are elusive. The complicated rules involve averages over a manufacturer’s whole fleet of models, and there are differences about biofuels, diesel and some related issues. Essentially the U.S. “Energy Act” passed in December ratchets up the requirement for vehicles’ efficiency from 25 miles a gallon to 35 mpg. The Commission’s proposals, issued in January, offer a target of about 45 mpg. (In practice, the savings in carbon emissions will be about the same due to differences in vehicle fleets and driving habits that see Americans drive much longer distances each year than Europeans.)

The crucial point is that two programs have the same thrust toward fewer carbon emissions for the same distance driven, and this convergence on higher standards will affect all major car manufacturers (including Japanese) that want to sell their main models on both sides of the Atlantic. (California and other states, amounting to a major share of the U.S. market for new cars, are suing the U.S. government to permit them to raise their local clean-car standards even higher.)

It is the most important step so far toward the goal of transatlantic cooperation on fighting climate change - notably via cost-effective emission cuts and new technologies - proclaimed by European Comission President Jose Barroso in 2006 shortly after taking office.

Transatlantic disagreements remain. Boyden Grey, U.S. Ambassador to the European Union, has argued that the U.S. moves are more ambitious than European legislation. But Europeans stress that their plan sets the world’s strictest CO2-emission standards.

In the EU, road transport is second only to power generation as a source of greenhouse gas emissions in the EU, contributing about one-fifth of the EU’s total emissions of carbon dioxide (CO2). Passenger cars alone are responsible for around 12% of EU CO2 emissions, and road transport is one of the few sectors where emissions are still rising rapidly.

The proposed EU rules may still be adjusted to placate Berlin, which wants some leniency for German manufacturers - notably Mercedes - that favor big-engined cars. Although such vehicles comprise a tiny fraction of German sales, they account for big profits. But they could incur massive fines - up to $10,000 a car - unless they win a special concession on the proposed clean-up timetable.

The Commission’s plan excludes cars from the fledgling “cap-and-trade” system of buying and selling “carbon credits” as a way to create economic incentives for eliminating CO2 emissions. The hard cap imposes ceilings on carbon emissions for each industrial sector, and the trade involves selling licences to firms that are ready to pay to exceed the pollution limits. The Bush administration has resisted this mandatory approach, calling instead for voluntary cuts. But the EU is pressing Washington to join the EU in embracing a system that could become a global standard including countries such as China and India.

As John Bruton, the European Commission’s ambassador in Washington, puts it in his blog, “this approach uses market mechanisms under which countries which emitted above target amounts of greenhouse gases would have to pay hard cash for the privilege of doing so. This can incentivize the early adoption of carbon-saving technologies. I prefer the EU’s proposal because of its political realism…That is why I hope the United States will urgently come around to the European Union’s view on the matter.”