Europe’s Climate Policy: A Disaster In The Making

The trouble is, the EU’s regulations to curb fuel consumption assume electric cars will be available to take up the slack. That is not a foregone conclusion. Buyers may simply shun them on grounds of price and utility.

European auto makers face massive fines if they haven’t slashed the fuel consumption of their vehicles by 2021, and a couple of reports published this week suggest some of the biggest manufacturers will be caught out in a big way.

Investment bank UBS, in a report entitled “CO2 compliance in EU – a disaster in the making?” said PSA Group of France faces a 25% hit to its profits and Fiat Chrysler Automobiles (FCA) will lose 20%. BMW, Mercedes parent Daimler and Renault of France are less vulnerable. The EU regulations express fuel consumption in terms of grams of carbon dioxide (CO2) emitted per kilometer.

Moody’s Investors Service said Volkswagen, Europe’s biggest auto maker, will be hit hard and adds Hyundai/Kia of Korea and Ford Motor to the list. Moody’s also said Toyota leads the way in compliance in Europe. Toyota never fully embraced Europe’s love affair with diesel, and has pioneered gasoline electric hybrids.

The trouble is, the EU’s regulations to curb fuel consumption assume electric cars will be available to take up the slack. That is not a foregone conclusion. Manufacturers worry that after spending massive amounts of money investing in electric cars, buyers will shun them on grounds of price and utility.

The EU has mandated average fuel economy across manufacturer’s fleets the equivalent of about 57 U.S. miles per gallon mpg in 2021, up from 41.9 miles per U.S. gallon in 2015, and 92 miles per U.S. gallon by 2030. This can only be achieved by a huge, and maybe impossible, contribution from expensive electric cars. The EU now insists on a 37.5% cut in carbon dioxide (CO2) by 2030 to 59 g/km from 2021’s 95 g/km.

The European Car Manufacturers Association is angry, saying the target for 2030 is totally unrealistic, and is driven purely by political motives, without taking technological and socio-economic realities into account. It hasn’t got quite so excited about the 2020/21 targets, but perhaps it should.

Diesel engines were supposed to provide much of the fuel efficiency to meet the targets, but following the VW dieselgate scandal, and mounting evidence that at least older diesel engines are spewing out health-damaging poisons, diesels have fallen out of favor. In 2018, diesel powered cars and SUV’s market share in Europe fell to 36% from 44% in 2017, and compared with a peak of 56% in 2011.

UBS, in its report, said in 2018 emissions of CO2 were 25% above target on average. It expects EU regulators to show no mercy if the industry lags.

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The post Europe’s Climate Policy: A Disaster In The Making appeared first on The Global Warming Policy Forum (GWPF).

via The Global Warming Policy Forum (GWPF)

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April 4, 2019 at 10:18AM

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