Germany driving hard bargain on vehicle emissions

SENIOR members of the German government have warned European Union member states that German car manufacturers could scale back or scrap production plans in their countries unless they support weakened carbon emissions rules, according to diplomatic sources.

Luxury marques such as BMW could benefit from the ruling. Picture: Getty
Luxury marques such as BMW could benefit from the ruling. Picture: Getty
Luxury marques such as BMW could benefit from the ruling. Picture: Getty

With EU governments and MEPs aiming to finalise the rules next week, which most of the 27 member states back, Germany has stepped up the pressure on them to water down limits on vehicle emissions to protect the country’s mighty car industry, particularly luxury makers such as BMW and Daimler.

Sources said some calls warning EU member states of possible consequences have come from members of Chancellor Angela Merkel’s office. Her office declined to comment.

Hide Ad
Hide Ad

One EU diplomat said Berlin had reminded Lisbon of Portugal’s €78 billion (£66.8bn) eurozone bailout, which was heavily financed by Germany, in its bid to convince the country to drop its opposition to softer limits.

“They have tried everything at the highest level to pressure member states, in particular countries in the bailout club, to support their proposals,” said the diplomat. “Germany seems hell-bent on pressing its interests.”

A German government source denied Berlin had put particular pressure on countries that have received EU financial aid, and said its aim was to protect jobs in the EU vehicle sector.

“Our strategy is to focus on France, Britain and Italy as the big car-producing countries, and on the countries which have important supply industries,” the source said.

“They should all be together in this fight. We should not drive jobs out of Europe at a moment of high unemployment.”

Germany’s position is backed by a handful of central European countries which produce cars, but France, Britain and Italy are opposed, EU sources say.

The European Commission proposal would set a goal of 95 grammes of carbon ­dioxide emitted per kilometre (g/km) as an average for all new vehicles sold in Europe from 2020.

Each manufacturer is assigned an individual target to take account of the nature of their fleet and their record of past cuts.

Hide Ad
Hide Ad

But making cars that emit less pollution is costly and restricts profit margins, which is why major German manufacturers want to delay the stricter rules.

The legal changes demanded by Berlin would allow luxury makers to continue selling more powerful – and more profitable – models in Europe after 2020, when the new EU emission limits are set to take effect.

Under the plan, carmakers would be allowed to carry over credits to pollute that were accrued before the new rules kick in. These “supercredits” are earned if manufacturers make some very low emissions vehicles, such as electric cars, which German firms are making to meet a separate national target.

But if they hold a glut of supercredits, they could carry on making higher-emissions models, and emissions levels will fail to meet the target.

An internal European Commission document on the latest German proposal said its plan “could result in a net increase in greenhouse gas emissions, increased oil and fuel use and reduced energy security”.

Germany and its car manufacturers say the flexibility they want is essential for spurring innovation, but critics say the changes amount to major loopholes in the rules.

An EU source said the German proposal would delay achievement of the 95g/km target until 2023 for those carmakers who made use of the accrued credits.

No-one from BMW was immediately available for comment. A spokesman for Daimler denied the firm had played any part in any threats, direct or indirect, made to EU member states.