Low-carbon cars can boost Europe’s economy

The idea that making cars cleaner would be bad for jobs and competitiveness is a myth. That is the conclusion from a report launched by T&E that looks into the economic consequences for carmakers to meet strict carbon dioxide emissions limits from 2020 and beyond. T&E says it strengthens the argument for an 80g/km target for 2020 and a 60g target for 2025.

More than three years after the EU agreed to its first set of obligatory CO2 emissions limits for new cars, the bank of evidence about the effects of such standards is growing. With the Commission now looking to confirm its proposal for the average new car to emit no more than 95g/km by 2020, the Dutch consultancy CE Delft was asked to review 23 studies into the likely consequences of making cars cleaner.

CE Delft found clear evidence that cleaner cars would be good for jobs. One of the reviewed studies, undertaken by the business consultancy McKinsey in 2011, said cutting CO2 emissions from cars could create more than 100,000 high-quality engineering jobs in Europe.

T&E cars officer Greg Archer said: ‘This report not only dispels industry’s claims that reducing CO2 emissions from cars would have a negative impact on jobs and competitiveness, it makes the opposite point – that low-carbon cars can boost the sluggish EU economy. This will happen in various ways, ranging from investment in the development and manufacturing of fuel-efficient technologies, to leaving more money in the pockets of car owners thanks to lower fuel bills. This money could in turn be spent in ways that create extra jobs across the EU economy.’

The report examines and supports the Commission’s claims that the proposed 95g limit for 2020 would boost the EU economy by €12 billion per average year between 2020 and 2030, accompanied by a €9bn increase in expenditure on labour across the economy. It also says reducing fuel consumption will mean Europe will have to import less oil, making it less vulnerable to price shocks and improving its trade balance.

Yet the signals coming from the Commission have been as much about concern for Europe’s car makers as about opportunities presented by cleaner cars. In particular, in a letter to the head of Volkswagen Martin Winterkorn, energy commissioner Günther Oettinger suggested he had succeeded in weakening the draft proposals for 2020 so that industry could continue to produce large numbers of high fuel-consuming cars.

Oettinger’s letter said the revised proposals ‘reflected not insignificant changes compared with the initial plan’. Among these were adopting a base year of 2006 for judging CO2 reductions, as opposed to 2009, which would have meant greater efforts were needed; and the re-introduction of two flexibility mechanisms allowing for ‘supercredits’ as a reward for environmental innovations. He also says the Commission must review the emission limit values in 2014 but is under no obligation to set mandatory standards for any year after 2020 – which contradicts the text of the adopted proposal.

Archer added: ‘Oettinger’s job is to focus on improving European energy efficiency and reducing energy imports, not to protect the interests of German carmakers. Given that the industry commissioner, Antonio Tajani, wants a “regulatory holiday” for car manufacturers, we fear that this Commission lacks the vision and courage to be ambitious. We hope MEPs see this and seize the opportunity to propose a 2025 target now.’

T&E has calculated that a 95g target for 2020 will provide annual fuel savings of more than €500 compared with the 130g target that becomes obligatory in 2015. But it says those savings rise to €750 a year with a target of 80g, and while the technology would cost a little more, the fuel savings mean car owners would still be better-off within three years of buying a new vehicle.

The draft legislation is now with ministers, MEPs and government representatives. The European Parliament’s Environment Committee is expected to vote on it in April, with completion of the legislation due for next summer.