Passenger cars account for up to 10 per cent of global C02 emissions. In view of the rapidly growing global stock of motor cars, especially in Asia, it is urgent to tackle this source of climate change.
There are two complementary ways of addressing the issue: through gasoline taxation and fuel consumption/emission standards.
The USA has traditionally relied on standards. Starting in the 1970s it has imposed mandatory C02 emission standards for cars and light-weight vehicles. These have forced the American car industry to change the design of its engines/cars and led to an increase in fuel efficiency of the American car fleet by about 70 per cent during the last 40 years, thereby narrowing the once huge gap with European cars.
In contrast, Europe has traditionally favoured taxation as the main policy instrument. Very high excise taxes on gasoline have induced manufacturers to build small cars, consuming only half of US vehicles.
In 2009, the EU has for the first time set legally binding standards for C02 emissions, the equivalent of fuel efficiency standards.
Fuel efficiency standards are a more effective instrument than gasoline taxes for reducing gasoline consumption and C02 emissions: Consumers are insensitive to gasoline prices; they react only slowly, mainly when buying a new more fuel-efficient car. In contrast, fuel efficiency standards force manufacturers to develop cars with lower gasoline consumption.
The US government is presently preparing new standards applicable for 2025. In May 2010, President Obama had invited the two agencies in charge of standard-setting ( EPA and NHTSA) to “produce a new generation of clean vehicles”. Since then they have been in consultation with the industry and other stakeholders to explore the potential for substantially stricter standards.
Their most ambitious scenario envisaged goes for a standard of less than 5 litre/100 km consumption, compared to 8 litre/100 km presently. Reaching an average consumption of less than 5 litre/100km for all new US vehicles would constitute a revolution, achievable only through large-scale use of electric engines.
The Environmental Protection Agency intends to issue its final ruling by July 1st 2012, just in time before the beginning of the presidential election campaign.
The EU is in the process of implementing its 2015 standard of 120 g/km C02 emissions, which corresponds to a fuel efficiency of about 6 litre/100 km. By then, the entire new car fleet will have to comply or pay penalties.
For 2020, the EU has fixed an objective of 95 g/km, to be confirmed in 2013. This would be close to the most ambitious US scenario for 2025.
The EU should not wait until 2013 to confirm the 2020 standard and fix an objective for 2025-30. This will facilitate the tremendous adjustments that lie ahead for the European car industry. As it takes more than 10 years to fully incorporate fuel-efficiency standards in the entire car fleet, regulators and the industry need to work hand in hand with a long-term perspective.
Today, it should also be possible to strive for globally harmonised fuel efficiency standards among the main manufacturing countries. To that end, the Commission should invite the regulatory agencies from USA, China, Japan, Korea, India and Brazil for an exchange of views on fuel emission standards beyond 2020. This would be a concrete contribution to the common challenge of climate change.
Author : Eberhard Rhein