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ENVIRONMENT: Europe Eases the Way for Cars

David Cronin

BRUSSELS, Nov 26 2008 (IPS) - José Manuel Barroso, the European Commission’s president, has a penchant for large cars. At the same time as he was publicly encouraging citizens to be more sparing in their use of energy, it emerged in 2006 that his vehicle of choice was a Volkswagen Touareg.

With its rapacious appetite for fuel, Barroso’s 4×4 emits 265 grams of carbon dioxide for every kilometre driven. That was more than twice an objective for the maximum discharge of greenhouse gases from cars that the EU’s executive had set a decade earlier.

It appears apt, then, that when the car industry is feeling the effects of an economic slowdown, it turned to Barroso for help.

Vehicle makers are to be one of the key beneficiaries of a 200 billion euros (259 billion dollars) fiscal stimulus plan that he unveiled Nov. 26 to cushion Europe from the worst consequences of recession.

Five billion euros are to be made available to the car industry, most of which will be in the form of low-interest loans provided by the European Investment Bank in Luxembourg. This comes on top of the 6.5 billion euros that the EIB had already given to this industry, including to makers of luxury vehicles like Land Rover and Jaguar, between 2003 and 2007.

Nobody doubts that times are trying for the car industry. Although just over a million new cars were registered in Western Europe during October, this was a drop of almost 16 percent compared to the same month last year. Nor does anyone dispute its economic importance. Tax revenue from vehicles amount to some 381 billion euros per year, while about 10 million jobs depend either directly on the car industry or on related sectors.

But green activists are angered by how public funds are being raided in order to support an industry that has been lobbying strenuously against proposed EU-wide pollution limits. The European Automobile Manufacturers Association (known by its French acronym ACEA) has been arguing that stringent emissions standards will upset what it has termed the “fragile economics of an industry already in difficult circumstances.”

Jos Dings, director of the ecological campaign group, the European Federation for Transport and Environment, noted that the economic assistance is being given even as EU proposals for linking vehicle tax to emission levels and to improve fuel efficiency have either been diluted or shelved. Germany and Britain, two of Europe’s largest car markets, have also announced in recent days that they will cancel planned tax increases on fuel inefficient cars.

“This is a return to the failed policies of the past, old fashioned hand-outs of public money to carmakers,” said Dings. “EU leaders should reject this plan. The message should be loud and clear: not another cent of public money for carmakers until they drop their opposition to fuel efficiency standards.”

Negotiations are at an advanced stage between the EU’s three principal institutions on what mandatory emission limits should apply to cars. It is anticipated that an accord should be finalised in time for a meeting of the EU’s environment ministers Dec. 4.

The European Parliament’s environment committee voted in October that a limit of 130g/km should be set for 2012 and that this should be reduced to 95 g/km by the end of that decade. Yet France, the current holder of the EU’s presidency, has been seeking to delay the introduction of the 2012 limit until 2015.

Guido Sacconi, an Italian politician who is representing the European Parliament in the talks, said this week that a draft agreement he had reached with France and the European Commission confirmed that 95g/km should be the legally binding limit stipulated for 2020. “If we take account of the fact that in 2005, the average emissions were 159 g/km, we can see the importance of this conclusion, which calls on the automobile industry to undertake an effort to reduce carbon dioxide comparable to that required from other industrial sectors,” he said.

According to the Commission, the new bailout will help the development of low-polluting vehicles. A ‘research partnership’ between the private and public sector on using renewable energy sources to fuel cars is being promoted, while EU governments are being encouraged to offer tax discounts on cars with reduced emissions.

Greenpeace argued, however, that no loans should be handed out until it is proven that cars that are less harmful to the environment are being placed on the market. More than 30 percent of all support given to industry by the EIB went to cars between 1996 and 2005. Franziska Achterberg, transport policy campaigner with Greenpeace, said because this money has not been used to ensure improvements in fuel efficiency, it has been wasted.

“The parallel debates over car standard and loans raise doubts whether EU governments are serious about greening cars,” she said. “They are offering carrots but refrain from using sticks.”