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20th December 2007

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.

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