US, Asian manufacturers may be the only winners in European Union plan to reduce car emissions

Article by Christian Andrei, on March 26, 2012

Governments and environmentalists are concerned that unless the European Union sets ambitious targets for reducing vehicle emissions in 2020, its climate leadership in the auto industry would be threatened by aggressive U.S. and Asian manufacturers. The automakers in Europe are facing a drop in domestic sales and some overcapacity in some areas of the sector.

This made some people in the industry assert that difficult carbon standards will increase the pressure on tight profit margins. The EU has imposed its rules on automakers that by 2015, the average CO2 emissions have to be reduced to 130 grams per km. This goal is equivalent to fuel consumption of 4.5 liters per 100km (52 U.S mpg; 63 UK mpg). Automakers are on track to meet these standards, giving Europe a significant lead when it comes to vehicle efficiency policies.

But the U.S. has surpassed the EU's non-binding target of shifting to 95g/km by 2020. The U.S. has set an emissions standard for cars equivalent to 70-80g/km by 2025. China and Japan are quickly catching up with these standards too. Talks are ongoing between EU officials and automakers on how the 95g/km target could be achieved. The European bloc's executive, the European Commission, is preparing proposals for these standards to be made legally binding.

The European carmakers' association ACEA had a closed meeting with policymakers in Brussels last week. ACEA said that it would be "extremely challenging” to meet this target and that it needs a partial shift in production towards hybrid and electric vehicles.

But others, including those within the industry, have raised a challenge to ACEA's assessment. They think that the 95g/km goal won’t be a significant technological hurdle. Stefan Jacoby, CEO of Volvo, which is owned by China's Geely Automobile, said that for 2020, 95g/km is a value that can be attained with existing technology, without investing so much on electric vehicles. He concluded that this would be the correct level for 2020. [source: Autonews]

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