Consultants study says European motor industry faces higher emissions reductions targets than other sectors
Sat 13 June 2015
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A new report from FTI Consulting finds that as a result of regulating emissions of new vehicles only, the automotive sector faces higher reduction targets than any other sector and that it is one of the most regulated industries in the EU. Earlier studies, however, have shown that the auto industry - in common with others - has consistently over-estimated the cost of compliance with environmental regulations and that the benefits of environmental regulation, across different sectors, often vastly outweigh the costs.
Responding to the FTI report, the European Automobile Manufacturers’ Association’s (ACEA) President, Carlos Ghosn, highlighted the industry's view about the importance of rebalancing the EU’s CO2 emissions reductions agenda and the auto sector’s global competitiveness.
Ghosn pointed out that, currently, CO2 reduction from road transport relies entirely on progress made in controlling emissions from new vehicles. He said that the FTI study found that this system manages to be both expensive and ineffective because it does not address the bulk of the vehicles already on the roads. As it is, he said, meeting the 95g CO2 target will cost manufacturers and estimated €1,000-2,000 per car by 2020.
Carlos Ghosn said: “We believe that a balanced and comprehensive approach should make it possible to develop a policy framework that will allow us to drive down total road transport emissions further and faster.”
He welcomed the European Commission’s stakeholder dialogue on decarbonisation which was held on 18 June, adding: “At the same time, we need to work with policy makers to protect jobs and growth. We will work constructively with EU policy makers to make this a reality.”
The LowCVP agrees that there are many potential contributing factors which can reduce the GHG impact from transport, one of the most immediate is the introduction of lower carbon fuels into the existing UK vehicle parc which is already capable of using much higher blends of biofuel than are currently sold.
NGOs counter, however, that the automotive industry has consistently overestimated the cost of compliance with environmental regulations. Studies conducted over ten years ago predicted that reducing CO2 emissions from new cars to an average level of 140g CO2/km would make them €2,400 and €1,200 more expensive, from 1995 and 2002 baselines respectively.
The Brussels-based NGO Transport & Environment says that, in fact, car prices have fallen more quickly since CO2 reductions began in earnest and have got cheaper, on average over the past ten or more years.
T&E's analysis claimed that fears that reduction of CO2 emissions would make cars unaffordable have been unfounded.
A wider ranging study by LSE and the Grantham Foundation (published in 2014), found that environmental regulations make a small difference to productivity and employment and only marginally affect international competitiveness.
The study also found that the benefits of environmental regulations often vastly outweigh the costs, that they induce through innovation in green technologies and that switching to green technologies can have economy-wide benefits.
An earlier (2013) report from Cambridge Econometrics - Fuelling Europe's Future - found that Europe could improve its growth prospects and create 500,000 to 1.1 million net additional jobs in 2030 through auto sector innovation. It found that increased technology to cut fuel consumption would allow the EU to reduce its dependence on foreign oil and deliver between €58 and €83 billion a year in fuel savings for the EU economy by 2030. It commented that the shift will achieve the double bonus of mitigating climate change and creating a much-needed economic stimulus.
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