Cutting carbon – the cost

One of the most contentious questions facing EU plans to set compulsory carbon dioxide emission limits for new cars is how much they will cost.

Germany has led countries arguing that binding targets would be too expensive for the European automotive industry, forcing investments and jobs out of the EU.

A Commission impact assessment published this month said that hitting the 120g/km target could cost Europe up to €23 billion.

An earlier draft impact assessment produced by the Commission’s European Climate Change Programme (ECCP) said the costs could run up to €60bn.

European car industry organisation ACEA accused the Commission of hiding the true price of binding targets by leaving ECCP estimates out of its published assessment.

But T&E, an environmental pressure group specialising in transport issues, says that the assessments were both based on outdated assumptions.

The Commission says it is now working on a definitive impact assessment to accompany a proposal for legislation, not expected before the end of this year.

EU industry analysts are also doing their best to work out what CO2 emission caps would mean for carmakers.

An analysis by US bank Citibank says future legislation would give manufacturers producing small cars an advantage over those focusing on larger models. Fiat, Renault and PSA Peugeot Citroën in particular could see their profits rise, while BMW and DaimlerChrysler would start to lose money, at least in the short-term.

Citibank singles out the Porsche Cayenne sports utility vehicle (SUV) as a model for which a CO2 cap in Europe would be "disastrous".

"If Europe is serious about meeting the 2012 target," says a Citibank analysis, "it has to encourage small cars, and discourage large ones." It adds that this means expected growth in the SUV, sports cars and luxury car sectors will have to be "choked off".

The differing effects of legislation on different manufacturers will make it hard to find one common approach to reducing emissions.

"The motor industry’s common position has broken down," concludes the bank. "It’s likely to get ugly."

From Fiat to Volvo -?how the car brands compare on C02

Car brand (average CO2 emissions in 2005 (grams per kilometre)

Fiat 139

Citroen 144

Renault 149

Seat 150

Ford 151

Peugeot 151

Skoda 152

Opel/Vauxhall 156

Volkswagen 159

Toyota 163

Suzuki 165

Honda 166

Hyundai 170

Kia 170

Nissan 172

Audi 177

Mazda 177

Mercedes-Benz 185

BMW 192

Volvo 195

Source: T&E

One of the most contentious questions facing EU plans to set compulsory carbon dioxide emission limits for new cars is how much they will cost.