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  • Electric vehicles are gaining momentum – and China could be next

    The idea of an electric vehicle (EV) sales quota is gaining momentum. Recently the Netherlands' parliament voted to make 100 per cent of new car sales emissions-free by 2025. Dutch MPs also told the government to make this possible through EU policy - most likely in the form of an EV sales quota for carmakers as part of the next round of car CO2 standards.

    Also this month Norway’s parliament issued a plan calling for the phase-out of combustion engine cars from new sales by 2025. And while Germany is debating purchase incentive for electric vehicles, its environment minister recently suggested a three per cent sales quota for EVs and the economics ministry affirmed that in 2050 “the emissions of newly bought vehicles must … amount to zero”. At the COP21 conference in Paris, the UK government also confirmedthat almost all cars and vans must be zero emissions by 2050, joining the three aforementioned European countries, eight US states and Quebec in Canada in the Zero Emission Vehicle Alliance.

    But the real driver to accelerating electric vehicles sales in Europe could come from China. European and Chinese cities have a common problem; they are choked by polluted air. Two weeks into 2016, London hadalready breached NO2 air pollution limits more times than EU rules permit in one year. Some 43 other European cities struggle to meet air pollution limits and face fines. Smog is also at crisis levels in Beijing, where particulate matter levels were about 15 times beyond the recommended WHO exposure levels before Christmas. The Chinese have reacted with severe restrictions on vehicles’ access. 200 flights were cancelled due to low visibility and 17,000 companies were shut down to reduce emissions. The World Health Organisation said the world is confronting one of the “biggest public health issues” it has faced.

    In Europe the problem is fleets of dirty diesel cars. Diesels are permitted to emit 30 per cent higher levels of harmful nitrogen oxides (NOx) than gasoline engines but still breach the limits by on average four times. The ‘Dieselgate’ scandal exposed Volkswagen’s manipulation of tests, affecting 11 million cars globally. But this, we now see, was just the tip of the iceberg. Renault, Mercedes, Opel and Ford have since been implicated.

    The Beijing region has now decided to tackle emissions from internal combustion engines by setting strict on-road measurements with conformity factors (CFs) not exceeding 1.2 for light and heavy-duty vehicles – much more ambitious than the long term CFs in Europe of 1.5. There is a gradual move globally towards a US system of emission limits and procedures, showing how much Europe lags behind. If the EU, through the UN Economic Commission for Europe (UNECE), does not strengthen its testing procedures in vehicle type approval, it might lose its global leadership for other regulatory process that are proving to be more effectively enforced.

    On top of trying to make conventional cars less polluting, China wants to shift to electric vehicles. To accelerate the process, the Chinese government is actively considering implementing a zero-emissions vehicle mandate similar to that in operation in California. There, 12 per cent of cars sold have to be zero or partial-emission vehicles, and this target increases gradually until 2025. Carmakers can also trade credits for the production of accountable vehicles to meet the ZEV Quota more flexibly. The scheme has significantly increased zero emissions vehicle sales, but it’s also been a financial boost for new market entrants like Tesla. Now China’s industry ministry is proposing that car producers and importers will have to both meet corporate average fuel consumption targets and sell or import a percentage of electric vehicles as part of their total offer or trade the credits they receive for zero-emission vehicle sales. This would be a further step in China’s pro-electric vehicle policies towards fighting pollution and climate change. Tackling sales with an EV quota promises to have a major impact as China’s car market continues to grow rapidly.

    Beijing already promotes EV use: from this year onwards, 30 per cent of municipal fleets have to be battery electric vehicles or fuel cell cars. The scheme has contributed to China’s recent EV sales boost (180,000 EVs sold by end of 2015, up 300 per cent in one year). To build on this success, the city exempts small passenger EVs from rush hour restrictions for vehicles and supports electric taxi fleets. In Beijing, where licence plates cost more than a car and are hard to obtain (200 drivers apply for one plate), officials reserved about 30,000 licence plates for clean fuel vehicle owners in 2015. Further plans include the reservation of parking spaces for EVs in public and private buildings,, and a service fee for EV charging set at a fraction of the price of gasoline.

    While China invests in clean electric solutions, European carmakers obsess with selling diesels for as long as possible. One in two new cars sold here is a diesel compared to one in 20 in the rest of the world. That niche diesel market is likely to contract further after Dieselgate. “The diesel passenger car could sooner or later disappear from these markets,” Continental’s CEO has commented. Rather than risking the cost of being locked into an old technology, Europe should learn from California and Beijing and adopt an ultralow carbon vehicle mandate to drive the market for new technology.

    T&E has proposed a similar type of regulation as the zero emissions vehicle mandate for Europe. We suggest 15 per cent of carmakers’ sales in Europe should be ultralow carbon vehicles (including electric quadricycles). Companies that sell more, that overachieve, should be rewarded with an easier overall CO2 target. Those companies selling less ultralow carbon cars would have a tougher overall target. The proposal could feature in Europe’s next CO2 standards for cars and vans that should set limits for 2025, and in the process give EV sales a real push that’s urgently needed.

    The future will be electric, and Europe has no time to lose. The Chinese see electric as a solution to the polluted air in their cities and a key plank of their industrial policy. In Europe we persist with 20th century dirty diesel engines for our cars. If we don’t stimulate the market for EVs here too the Chinese will drive down the costs of the technology and quickly export vehicles to Europe – as they do with batteries already. If this happens, European Governments, the Commission and carmakers will only have themselves to blame for the demise of its car industry.