News: EU CO2 targets force car price hike

By Guy Bird for Business Car, Dec 2007

Hefty EU fines loom for high CO2-emitting carmakers

Heavy, large and very powerful vehicles are firmly in the crosshairs of newly proposed CO2-related EU draft legislation that could see their manufacturers fined billions of Euros. After the collective failure of the European car industry to meet voluntary CO2 targets set back in 1998 the EU is now proposing to fine any carmaker (including non-European brands) whose European CO2 emissions fleet average exceeds 130g/km after 2012.

Based on 2006 figures, carmakers like BMW at 182g/km, Mercedes, 184g/km (as DaimlerChrysler) and Porsche, with a whopping 282g/km, will need to improve their averages dramatically. For those that don’t, the EU is suggesting a ‘penalty premium’ starting in 2012 of 20 euros (£14) per g/km over the agreed average multiplied by the number of vehicles sold by the manufacturer in question. This penalty would rise in yearly increasing increments to 95 euros by 2015 and thereafter.

Porsche is currently horribly exposed as a maker of only high-emitting, high performance petrol sportscars and SUVs

However, carmakers will still be allowed to produce heavier cars that emit more than 130g/km as long as they are balanced out by lighter cars emitting less than that target. This still doesn’t help carmakers that don’t make small or light vehicles so the EU is also allowing ‘CO2 alliances’. Thus Porsche, which – as the graph amply illustrates – is currently horribly exposed as a maker of only high-emitting high performance petrol sportscars and SUVs, could team up with the broader range of the VW group in which it has a major shareholding.

For big independents like BMW and Daimler, some early reports have suggested links could be made with low-emitting partners like PSA to buy ‘carbon permits’ off them, although a BMW spokesman dismissed such an idea and branded the whole regulation “unrealistic”. Smaller independent carmakers selling less than 10,000 vehicles per year in Europe – like Aston Martin – who cannot or do not wish to join a pool can instead apply to the Commission for an individual target. The draft regulation will be discussed by the European Council and European Parliament this year and could be adopted directly without need for individual national laws. 

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