European Parliament agrees to looser CO2 rules

In September, a committee in the European Parliament proposed easing the carbon dioxide emissions rules previously set to phase in over the next several years, and today the proposal was approved. The modifications require only 65% of manufacturer fleets to meet the strict 130g/km targets in 2012, raising that figure to 100% by 2015.

When the new rules were proposed several months ago, German industry committee member Werner Langen said, "This is an attempt to find a reasonable compromise between climate policy and the automobile industry's competitiveness." The phase-in process will ratchet up from 65% of the new-car fleet in compliance by 2012 to 75% in 2013 and 80% in 2014, ending at 100% compliance by 2015. Allowing a some room for adjustment based on the weight of the manufacturer's cars gives Fiat a tougher time, having to meet a 122g/km limit by 2015, while Daimler and BMW will only have to get down to 137g/km - still a far cry from today's figures. The end result is a EU-wide fleet that meets the 130g/km limit.

The European Commission's previously proposed legislation would have put the 130g/km average CO2 emissions limit in place for 100% of fleets as of 2012, with varying targets for individual manufacturers. The penalty for exceeding the emissions targets would amount to €95 ($136) for each gram of CO2 above the limit, multiplied by the number of cars sold. According to the industry committee that proposed the newly adopted standard, that should be reduced to €40 (57) per gram.

Despite the softer targets in the new proposal, automotive industry group ACEA has renewed its requests for €40 billion ($57 billion) in funding, reports Automotive News. "We are committed to do what we can to deliver, despite the sudden, dramatic economic downturn that severely limits our resources... We ask for governments to support the strategic auto sector in these extraordinary circumstances," said Christian Streiff, president of the ACEA and CEO of PSA.

The costs of compliance are going to be huge, amounting to about €25 billion ($35.7 billion) annually, according to a study by A.T. Kearney and Credit Suisse. To meet the new targets, automakers will have to reduce emissions by about 3% per year.

Environmental groups are decrying the proposal as the death of the movement, however. "It is questionable whether the agreed climate targets will ever be met given the combination of weak penalties and gigantic loopholes," Greenpeace said of the proposal in September.

Future caps in the new law are estimated to reach 95g/km CO2 emissions by 2020, however, leaving the door open for more haggling between the environmental lobby, industry advocates and the European Commission.