• Commission publishes Q&A on proposed car C02 regulation
• SMMT: Carbon in EC’s C02 proposals priced up to 14 times higher than ETS
• Penalties in EC’s proposed CO2 legislation plan disappoint ACEA
• German responses to EC’s CO2 limit implementation proposals
• EPA refuses California waiver from federal Clean Air Act
• Government launches consultation on battery recycling
• Visteon selected to help U.S. Department of Energy with E85 optimised engine development

The European Commission has today published a Q&A document on yesterday’s proposed regulation to implement a 130 g/km fleet CO2 emissions limit by 2012. It includes data on the actual average emissions of each of the major manufacturers present in the EU new car market, showing for example that PSA Peugeot Citroën has the smallest reductions to make to meet the 2012 target at 16 g/km, while Porsche has the greatest at 138 g/km – although Porsche will be permitted to pool its emissions with those of VW Group under the proposed new regulation.

Concerning the cost of the measures, the EC says, “Our investigations show that cars will rise in price by a certain amount - but this will be compensated by fuel savings. On average purchase prices may increase by up to 6%.

“It should be underlined that average CO2 emissions from new cars have been reduced by 12% since 1995 but over the same period the price of new cars has increased significantly less than inflation. This shows that CO2 can be reduced in an affordable way. There are already several cars on the market that have low CO2 emissions[4], and no major price differentials have been observed.”

The English-language document can be downloaded from the European Commission website, at:

http://www.europa.eu/rapid/pressReleasesAction.do?reference=MEMO/07/597&format=HTML&aged=0&language=EN&guiLanguage=en

The UK’s Society of Motor Manufacturers & Traders (SMMT) issued a release yesterday in response to the European Commission’s published proposal for implementing car tailpipe CO2 emissions, detailing concerns in particular about “unrealistic” lead-times and costs of non-compliance.

“We support challenging targets, and in Britain alone we have cut CO2 by an estimated one million tonnes per year since 1997 through cleaner car technologies,” said Christopher Macgowan, SMMT chief executive.

“However, manufacturers must not be penalised for past decisions on product development. Proposals must be achievable and cost-effective, implementation dates must be realistic and fines proportionate if we are to maintain the breadth and diversity of automotive manufacturing across the UK.”

The SMMT is encouraged to note that weight has been chosen as the parameter by which the Commission sets targets for individual manufacturers. This means that those making small city cars may face lower CO2 targets than manufacturers of heavier, luxury models.

Within the framework, the Commission must recognise and protect the UK's unique lead in making luxury, low volume and specialist sports cars. Low volume producers are estimated to deliver turnover of over £1bn to UK plc, employ almost 6,000 people and produce approx 15,000 cars per year. We look forward to working with policy makers to ensure appropriate parameters and exemptions are included in the rules to ensure jobs, skills and investment stay in the UK. (The proposed EU legislation exempts manufacturers building no more than 10,000 vehicles a year from the proposed CO2 limit.)

However, the SMMT notes that according to the Commission's own assessment, production costs could increase by 6% per car under the proposed regime, and believes the proposed fines per gram/car sold are inconsistent with the market price of carbon - as much as 14 times more onerous than under schemes like ETS – the European emission trading scheme.

“This is totally disproportionate,” says the SMMT, going on to echo the ACEA’s plea for a ‘a more integrated approach’, involving fuel companies and others more closely in achieving CO2 reduction targets.

Christopher Macgowan added, “There is no link between the penalties facing the car industry and the price of carbon facing other industries through the European emissions trading scheme. The proposed penalties price a tonne of carbon produced by cars at up to €475*, whereas the ETS market price will evolve towards about €33 per tonne, according to Commission estimates, from currently less than €5 per tonne."

*Based on the assumption that a car drives 200,000km over lifetime, one gram of CO2 corresponds to 200kg of emissions. Paying €95/£66 for 200kg equals €475/£330 (5x95) per tonne of excess CO2 emissions.

The legislative proposal on reducing CO2 emissions from cars adopted yesterday by the European Commission does not offer the proclaimed balanced framework to cut CO2 emissions and to safeguard EU competitiveness and growth, according to the European Automobile Manufacturers’ Association, ACEA.

The ACEA says it fully supports the EU objective of reaching a level of 120 grammes CO2 per kilometre, but advocates an integrated approach, combining the efforts of all relevant parties involved: auto industry, fuel sector, policy makers and drivers. The ACEA claims the system proposed, if implemented, would effectively reduce the competitive strength of the European automobile sector and put car manufacturing in the European Union at risk. The proposal would also lead to disproportioned costs compared to the environmental gains and the costs of carbon reduction facing other sectors.

“The proposal is very disappointing and both its content and the way it was adopted are in stark contrast with the ‘better regulation’ principles of the European Commission”, said Sergio Marchionne, President of the European Automobile Manufacturers Association (ACEA) and CEO of Fiat. He added: “The penalties being proposed are of an unprecedented high level. We are not looking to buy our way out; we invest €20 billion a year in R& D and want to continue doing so. If (imposed) at all, penalties should be reasonable and defined in relation to the market price of CO2 applied widely to other sectors.”

ACEA Secretary General Ivan Hodac told Automotive News Europe that the ACEA estimates that the average cost of compliance with the 130 g/km limit will be €1,500 per car. “Carmakers can’t pass all of this on to the customer,” said Hodac. “The cost to the industry will be €20 billion and the effect on sales will be negative.”

Hodac also complained that many of the CO2-saving technologies developed by ACEA members – such as cruise control, six-speed transmissions and gear-shift indicators – were not permitted in the official CO2 testing procedure; manufacturers, he said, should be allowed credits for such innovations.

“Whatever motive led a majority of commissioners to decide this, we consider the solution to be wrong, we consider the solution to be very harmful and will do everything to force changes," a German Government spokesman, Thomas Steg, told Automotive News Europe yesterday.

However, Prof. Ferdinand Dudenhöffer, director of the CAR research centre at the University of Gelsenkirchen, described the new EC proposals to Autohaus magazine’s online edition as giving consumers the right price signals – fuel savings from clean cars had not hitherto been great enough to justify expenditure on clean car price premiums.

Opel supervisory board director Klaus Franz said the incentives to innovate on fuel economy could have a positive effect on automotive employment. Another German commentator, Ulrich Höpfner of the Institute for Energy and the Environment, (ifeu) said it seemed unlikely that even premium brand manufacturers would pay more than €500 per unit in phased-in penalties for not meeting the 2012 130 g/km CO2 limit.

Manufacturers had plenty of opportunities to avoid fines, the limits being constructed on a per-manufacturer rather than per-vehicle basis. (Manufacturers such as Porsche, according to the EC’s plan, will be entitled to pool their tailpipe emissions with fellow manufacturers such as VW, via a scheme so far not described by the EC in detail.)

- Kerstin Meyer, of the Brussels-based green lobby group Transport & Environment, said the EU’s proposals were lacking in three key areas: “There are no long-term targets, the CO2 targets are linked to weight rather than vehicle footprint, and the penalties are insufficient.”

(ANE, Autohaus, 19 December)

On 19th December the U.S. Environmental Protection Agency denied California and 17 other states the right to proceed with regulations to limit global warming gas emissions from new vehicles, on the grounds that the new 35 mpg-by-2020 CAFE standard in the newly approved federal energy bill would suffice to meet the states’ environmental objectives.

California Governor Arnold Schwarzenegger said he would appeal the decision and pursue every legal opportunity to obtain the waiver: "While the federal energy bill is a good step toward reducing dependence on foreign oil, the President's approval of it does not constitute grounds for denying our waiver. The energy bill does not reflect a vision, beyond 2020, to address climate change, while California's vehicle greenhouse gas standards are part of a carefully designed, comprehensive program to fight climate change through 2050," said Governor Schwarzenegger.

The EPA’s decision was greeted with relief by Alliance of Automobile Manufacturers' President and CEO Dave McCurdy: "By denying this waiver, EPA has not wavered in preserving a national program that raises fuel economy while reducing carbon dioxide. We commend EPA for protecting a national, 50-state program.

"Enhancing energy security and improving fuel economy are priorities to all automakers, but a patchwork quilt of inconsistent and competing fuel economy programs at the state level would only have created confusion, inefficiency, and uncertainty for automakers and consumers.

Jim Lentz, president of Toyota Motor Sales North America concurred: “It is important,” he said, “that the U.S. EPA has further clarified that the federal government is best suited to regulate fuel economy standards for the benefit of the entire nation."

New proposals are set out in a Government consultation which looks at the best way to improve the environmental performance of new batteries and ensure collection, treatment and recycling of waste batteries. They apply to batteries of all shapes, volumes, weights, types and uses including vehicle batteries, and, will help the UK implement the EU's Batteries and Accumulators Directive. Producer responsibilities include a ban on the disposal of industrial and automotive batteries in landfill or by incineration (in effect a 100% recycling target).

Further details are available at www.berr.gov.uk/innovation/sustainability/batteries/page30610.html

Visteon Corporation will share some of its powertrain electronics technology with the U.S. Dept. of Energy as part of a project to help foster the use of E85 ethanol-optimised vehicles.

Visteon is part of a project that the Department of Energy has initiated for its High Efficiency Clean Combustion E85 Optimized Engine (HECCE) programme. The project involves fuel-efficiency research as part of the Bush administration's "20-in-10" initiative, which calls for displacing 20 percent of gasoline usage in the next 10 years by increasing the use of alternative fuels and boosting efficiency.

Visteon's participation is part of a joint collaboration, led by Mahle Powertrain, to develop the next generation of engines by optimizing operation to achieve petrol-like fuel economy when using E-85. Experts involved in the programme include representatives from Visteon, Mahle Powertrain, Argonne National Laboratory and Michigan State University.