The real story behind why a win:win directive is in danger

It’s both simple and complicated. Everyone seems to agree that we need to tackle our dependence on oil and its contribution to climate change, and after many years talking about how we can reduce fuel consumption, we have a draft piece of legislation that creates lots of winners and really no losers. Yes, really – read on. And you won’t find many people objecting to what the EU cars/CO2 legislation is trying to achieve in principle.

The problem comes because the leading five EU car-producing nations want exemptions for their own branch of the car making industry. They will all feel they have a case, but together they are wrecking a potentially beneficial piece of legislation because of their own narrow self-interest. It is death by a thousand cuts to something that everyone stands to gain from.

NO LOSERS

Let’s get back to the idea that there are no losers from this legislation. Anyone following the debate could be forgiven for thinking it’s just industry v environment, with one side likely to gain and the other to lose. But the car industry stands to gain from a strong directive on CO2 reduction.
Firstly, car makers are only one part of the broader car industry.  About 70% of the value of a car comes from other suppliers: producers of stop-start devices and hybrid drive trains, specialist automotive engineering firms, informatics suppliers, makers of light-weight plastics and metals … the list goes on. Their voices are not heard because they’re afraid that if they speak out for their own interest they will upset their customers: the car makers. Yet they stand to get a massive boost from strict car fuel-efficiency standards.

One exception has been the boss of one of the biggest suppliers, Valeo, who asked a reporter last year, ‘Why isn’t the target 120g of CO2 per kilometre today, rather than in five years?’  He says Valeo has already developed systems capable of reducing current car emissions by 30-40%.  He is one exception – the rule is that car makers complain and their suppliers stay fearfully silent.

Overall, the proposed directive will lead to extra employment in the car industry as a whole, and boosting employment is supposed to be one of the guiding principles behind the EU’s economic strategy. Little wonder that the European association of trade unions ETUC has been supporting the legislation.

The positive impacts of a strong law on CO2 from cars law don’t stop with suppliers of advanced technology. CO2 emissions from cars are directly linked to fuel consumption. Therefore, this law doesn’t just have huge environmental benefits, but its implications for Europe’s energy needs are equally impressive and will reverberate around the world.

There’s a real paradox here. There is huge instability in the price of oil, something felt by all Europeans when they fill up their car or buy goods and services that depend on transport. In addition, the EU now spends €1 billion every day on oil imports, many from politically sensitive countries.

Meanwhile, a car that is 25% more fuel-efficient typically saves its owner €5000 over its lifetime. That makes this law the single most important measure the EU can take to help Europeans cope with their fuel bills and at the same time reduce concerns over potential rogue tactics by oil suppliers. Yet there are plenty of MEPs who worry about Russia and still resist tough standards for fuel efficiency! Don’t they see the contradiction?

Then there is climate change.  This law will send a signal to the rest of the world about whether or not Europe is serious about tackling greenhouse gas emissions, particularly those from transport, the only sector whose emissions are still rising (by on average 2% a year since 1990).

OBJECTIONS

So with our addiction to oil and the potential of this law to help reduce that addiction, why is there such opposition to the direct directive? Let’s break this down country-by-country.

Germany has campaigned hard for a weaker short-term target after its car makers said they needed more time.  Berlin also argued for credits for gadgets such as indicator lights that tell drivers when to change gear. Germany’s problem is that its manufacturers are heavily into the cars that guzzle most, but it has had enough warning that such cars have a limited future.

France should be in a strong position as its car makers are already on track to hit the 120 g/km target, but they don’t want to invest in the next-generation technologies such as hybrids that will be required for a longer-term goal.  The French government has fallen into line, and refused to give strong support for a longer-term target.

The UK government has agreed to take a back-seat role in exchange for clauses to exempt its smaller makers such as Land Rover from having to comply with the law. Similarly, Italy’s government wants to be seen to be protecting its Ferrari brand from the new rules.

In Sweden, the government has lobbied hard for so-called ‘flexfuel’ models to be considered as fuel-efficient under the legislation.  Sweden’s Saab (owned by General Motors) and Volvo (Ford) specialise in such cars, which can run on ethanol as well as conventional petrol. However, biofuels only offer environmental benefits in some cases, and can be more harmful than conventional fuels.  They are also only widely available within Sweden, but not the rest of Europe.  T&E has long argued that fuel policy should not be mixed up with fuel efficiency targets.

Every car-producing member state wants its own get-out clause in this law.  The trouble is that when you add up all the loopholes you get a totally ineffective law.  The MEPs on the European Parliament’s environment committee saw this and voted for the original Commission proposals. The media coverage of the vote viewed it, with great clarity, as a victory for the public interest over the narrow interests of a handful of politically powerful car makers. That is the way democracy is supposed to work.

So to put this in context, we have a draft directive with popular support and the rare potential of creating many winners in a single piece of legislation, but it is being threatened by five big countries. It’s now time for the other 22 member states to stand up and be counted. Europeans need fuel-efficient cars now – not in 10 or 20 years.