Commissioners battle over CO2 rules on cars

European commissioners and senior officials are fighting over proposals that are to be published on 19 December which would punish with fines those carmakers that do not reduce carbon dioxide (CO2) emissions from new cars.

The Commission is anxious to avoid a public row, particularly while the UN climate change conference is taking place in Bali. But Commission President José Manuel Barroso and the Commission’s secretariat-general are struggling to avoid a damaging re-run of last January’s dispute over CO2 emissions from cars.

Günter Verheugen, the commissioner for enterprise, is fighting to reduce the impact of the proposals on the car industry and particularly German carmakers, which tend to have a poorer performance on emissions than French and Italian car firms.

An EU official said that when Barroso, Verheugen and Stavros Dimas, the environment commissioner, met two weeks ago, there was a "big row" over sanctions. "Verheugen refused to talk about sanctions, he dismissed the whole thing as a farce," said the official. An official in Verheugen’s team told European Voice that the commissioner fully supported the president.

Barroso told Bild Am Sonntag in an interview published on 26 November that carmakers should expect some kind of financial penalty if they failed to comply. "I don’t like the word sanctions. But there should be consequences if carmakers don’t respect the threshold value. They should pay a kind of compensation. Otherwise the system wouldn’t be very credible," Barroso said.

Germany’s environment ministry is arguing for fines at a third of the level being contemplated by the Commission.

The Commission agreed in February that carmakers should be required to reduce CO2 emissions for new cars to an average of 130 grams of CO2 per kilometre or less by 2012, with a further reduction of 10g/CO2 per km to be achieved by additional measures, such as the use of biofuels and improved tyre performance. In 2005 average car emissions in the EU were 165g/km.

Under the proposals to be published on 19 December, carmakers will face financial penalties if they fail to meet their targets.

A spokesman for Barroso said: "President Barroso and Commissioners Verheugen and Dimas are working closely together to present a legislative proposal before the end of the year."

A final draft of the proposal, which has been a shared dossier between the environment and enterprise departments, is still not agreed and has yet to be submitted for the consideration of other Commission departments. The inter-service consultation is expected to begin at the end of the week (7 December) or the beginning of next week (10 December) but will be abbreviated.

The level of sanctions is the subject of intense discussions within the Commission and among member states. German government sources said that the Commission favours sanctions of €90 per gram. The German government prefers what it describes as "ear-marked charges" set at €30 per gram. Based on 2006 sales figures from BMW and the average CO2 emissions of its range, the German carmaker would face a bill of around €1.2 billion at €30 per gram and €3.7bn at €90 per gram. In 2006, BMW’s pre-tax profits were €4.1bn and net profits €2.8bn. But in practice the Commission’s proposals will take account of the current spread of models in each carmaker’s range, so BMW, which makes larger, heavier cars, will have a de facto target higher than 130g/km. And by 2012, its average emissions would, on current trends, be much closer to 130g/km than in 2006.

EU officials are testing a range of different scenarios, where manufacturers over the target for the average car could be fined between €10 and €150 per gram, per vehicle sold. A Commission spokesman declined to comment on specific numbers.

There are three main points of contention in the proposal. First, the level of the fines. Sigrid De Vries, of the European Automobile Manufacturers’ Association, ACEA, said that there was "no reason to put [the car industry] in a corner and to talk about penalties at this stage". Chris Davies, a UK Liberal Democrat MEP and the Parliament’s rapporteur on CO2 from cars, said: "The penalties have got to be strong to require industry to make changes."

The second sticking point is what attributes of the car will be used as the basis for CO2 standards. The Commission is expected to recommend an approach based on the car’s weight, according to insiders. A Commission spokesman said that weight was just one of the elements being used. The car industry argues that weight-based systems have been proven to work in Japan, but green groups reject these arguments. Jos Dings, Transport and the Environment, a campaign group, argues that defining vehicle standards by weight would mean lighter cars would be punished with a tougher CO2 target, while manufacturers of heavier cars would not have an incentive to cut CO2 by reducing weight.

The third controversial issue is targets. The draft is not expected to contain a medium to long-term target for reducing CO2 emissions from cars. Claude Turmes, a Green Luxembourgeois MEP, said that the car industry needed a target on reducing emissions for 2020 because of the long lead times from design to production. He said that without such a target "the Commission loses all credibility on climate change policies".

European commissioners and senior officials are fighting over proposals that are to be published on 19 December which would punish with fines those carmakers that do not reduce carbon dioxide (CO2) emissions from new cars.