Germany and its luxury carmakers force drivers to spend more on fuel

European motorists will see their fuel bills increase by €775 over the lifetime of their cars because of weakened CO2 limits agreed today by the 28 European governments [1]. This additional fuel consumption will cause approximately 50 million tonnes of extra CO2 emissions.

The deal ratified today overturns a fairly-negotiated agreement struck in June by all European governments. Car-producing countries, led by Germany, unravelled the June agreement in a bid to appease car manufacturers, especially German luxury brands which wanted to keep selling highly-polluting gas guzzlers.
Commenting on the deal, Greg Archer of T&E said: “It is outrageous that EU countries, prompted by Merkel’s government, bent to the interests of luxury German carmakers at the expense of the environment, jobs and the wider economy. But it’s a hollow victory for Germany and its car manufacturers. The political cost of such heavy-handed lobbying is huge and people will rightly ask after this episode whether German luxury carmakers are really technology leaders.”
The new deal means that the effective CO2 target for 2020 will not be 95 g/km as proposed 4 years ago, but around 100 g/km. This means the EU will need to import an extra €25 billion worth of fuel – money that flows out of the stagnant European economy [2].
The agreement will also be a setback for Europe’s innovation edge in making fuel-efficient cars and will reduce its competitiveness in the global car industry.
Greg Archer added: “Europe’s leaders claim to want lower energy bills. But when this great opportunity comes along, a few pennies for carmakers are suddenly more important than motorists’ fuel bills. This short-sightedness of politicians is not only imposing huge additional costs on the EU economy and the environment but also jeopardising the competitive advantage of Europe’s cars in world markets.”
“Fuel economy standards are Europe’s single most effective policy to drive down fuel consumption and CO2 emissions. The outcome of this law could have been so much better, but at least we can start talking about the future. Europe should stay ahead in the race for efficient vehicles, so now we need an ambitious target for 2025, and fuel efficiency standards for trucks too,” Greg Archer concluded.
[1] €775 additional fuel costs assumes: cars average 15,000km pa with a lifetime of 15 years and fuel has a cost of €1.4/l with a 50:50 mix of petrol and diesel cars. Real-world emissions are assumed to be 23% higher than measured in tests. New cars sold in 2020 are assumed to average 100g/km.
[2] The estimate of €25 billion worth of additional fuel costs for the EU and 50 million tonnes of extra CO2 emissions additionally assume: in 2021 and 2022, average emissions of new cars of 97.5g/km. Both figures are compared to new cars on average achieving the 95g/km target in 2020.

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