Everything you need to know about Wednesday’s car CO2 vote

October 1, 2018

Most regulatory fights on vehicle emission regulations ultimately boil down to one iconic number battle. A few technical disputes get less attention but have a much bigger impact on the stringency of the new rules than a few percent up or down on the headline target. The ongoing discussions over car and van CO2 regulations for 2030 follow this pattern.

The main fight is over the target for 2030 where the Commission proposed a miserly 30% cut (in new car and van CO2 from 2020 to 2030). Both the European Parliament and Council are finalising their positions in the next two weeks before the final law is agreed early next year. Both institutions are highly likely to strengthen the Commission proposal.

In Council the grouping of progressive member states calling for a 40% reduction has grown to 19 countries and accumulated 64.2% of the vote, just short of the 65% needed to secure majority. If Austria, which holds the Council presidency, chooses to vote with the progressives, 40% will be agreed. But for now Austria is instead proposing 35%, which has a majority.

40% would deliver less than half of the CO2 needed in transport for member states to achieve their Climate Action Regulation targets; the Commission proposal delivers just 29%. To meet their own 2030 emissions reduction targets, countries would therefore still need to adopt other radical policies to reduce their transport emissions, like raising fuel duty and banning cars from city centres.

The much delayed decision of Germany to support the Commission proposal is largely irrelevant as the debate is now about 35 or 40%. Germany twisted arms, or offered gifts in the past over the 95g/km car CO2 regulations, but only secured a one-year delay. It remains to be seen whether Mrs Merkel will pursue similar tactics in 2018. Environment ministers meet on 9 October to thrash out a deal. Will Paris, Madrid and Rome yield to the Autokanzler?

The German agreement certainly ends the pretence that the coalition is serious about meeting its 40-42% transport reduction target; with only a 30% cut in new cars’ CO2, it will even struggle to achieve its legally binding 2030 Climate Action Regulation target – or will need to make radical cuts in agriculture to do so.

Parliament’s showdown is on 3 October when the plenary votes. EPP shadow rapporteur Jens Gieseke has been saying “nein” to any compromises but after a furious row broke out within the EPP group he was forced to the negotiating table with S&D rapporteur Miriam Dalli. The talks quickly stalled, and there will be a face-off next week. Dalli has compromised on a 40% cut while the EPP has edged its proposal up to 35%.

The Commission, usually impartial, has been aggressively defending its proposal, making a series of misleading claims – that targets higher than 30% would lead to job losses and factory closures – which were not supported by its own impact assessment. This week, it released a new non-paper looking at the impact of a range of alternative scenarios.

The Commission modelling has been designed to make the outcome of the Environment Committee vote appear particularly bad (by mistaking a malus for a mandate and exaggerating the impact of meeting the target for low and zero-emissions vehicles, or ZLEVs). But despite attempting to discredit the Environmental Committee vote, the paper clearly demonstrates that the 40% target results in 92,000 additional jobs in Europe and 151,000 with the Environment Committee outcome. These figures include a tiny number of job losses (0.5%) within the automotive industry.

The current technical skirmishes are mainly over whether to include a penalty for companies that fail to supply sufficient numbers of ZLEVs – the so-called malus; and whether there should be some allowance for renewable fuels. The Commission’s upper echelons – in tandem with the car industry – seem implacably opposed to both although the the malus was originally part of the Commission proposal. It was dropped at the last minute after an intervention by the German car industry association. It would require carmakers that failed to achieve the proposed 30% target for ZLEVs (which include plug-in hybrid cars) to achieve up to a 5% higher CO2 reduction goal. Those companies overachieving the benchmark would be rewarded with a reduction target up to 5% lower. In Parliament there will be a close vote with the ALDE amendment for a 35% share of ZLEV the most likely to pass. The malus balances the Commission credit and discourages carmakers from trying to meet targets by selling diesels and manipulating tests.

Amendments have also been proposed that renewable fuels should count towards the emissions reductions target through a carbon correction factor. In effect this would mean all vehicles as all vehicles are capable of running on synthetic fuels or advanced biofuel blends. There are already mandates for renewable fuels in the recently revised Renewable Energy Directive, under which advanced biofuels can already count double. Their inclusion in the cars regulation would create a double incentive. It would also mean the car industry could claim it could not meet its targets in the future if other oil and gas companies failed to produce synthetic fuels. EPP amendments on fuels would effectively cut up to 5% of CO2 savings through the backdoor – making a mockery of the EPP’s proposed increase to 35%.

On the third technical fight, whether to include some form of real-world checks, the Commission appears to be more willing to compromise. It has already tabled new proposals to introduce fuel consumptions meters. It is also proposing other amendments after discovering the car industry was up to its old tricks manipulating the new WLTP test to reduce the stringency of the new regulation even before it has come into force. The current Commission proposal is to solely monitor using fuel consumption meters, but not use the data to prevent carmakers manipulating tests. But most groups in Parliament and some countries want to go further to fix the gap between test and real-world emissions to stop lab-test cheating. If the gap is not fixed and the WLTP manipulation is allowed to continue, CO2 emissions in the real world will go down by just 12% by 2030.

So after months of fierce discussions it now seems certain that both Parliament and Council will increase the level of ambition of the Commission’s inadequate car CO2 proposal to 35 or 40%. To be in line with Paris Climate commitments a 60% reduction in new car CO2 emissions was needed, so the proposals are far short of what is required to avert dangerous climate change.

Agreeing ambitious targets for new car emissions is tough – but other options to lower transport emissions or agriculture emissions won’t be easier to implement. The Intergovernmental Panel on Climate Change (IPCC) meets early in October with world leaders lining up to express their commitment to tackling climate change. It will be interesting to see if their rhetoric is matched by the ambition to cut emissions from cars and vans.

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