EU agrees steep fines to cut car CO2 from 2012

By Paul Taylor Reuters

BRUSSELS: The European Commission enraged Germany and its carmakers on Wednesday by proposing tough legislation to force down emissions of carbon dioxide from cars, with steep fines on manufacturers that fail to comply. With several commissioners dissenting, the European Union executive set a four-year phase-in period from 2012 for fines on manufacturers whose fleets exceed an average of 120 grams per km of the main greenhouse gas blamed for global warming. "This will send a strong signal to the world about the determination of the European Union to take bold measures on climate change," EU Environment Commissioner Stavros Dimas told a news conference.

German Chancellor Angela Merkel slammed the plan as "not economically favourable", telling journalists in Berlin it would burden Germany and its carmakers disproportionately. German producers of heavier luxury vehicles such as Porsche, with by far the highest emissions of any major carmaker, BMW and Mercedes-Benz, could face billions of euros in fines unless they change course fast.

The DJ Stoxx European car sector index fell 1.4 percent, triple the broader market's decline. Shares in Porsche were down 3.87 percent. German Environment Minister Sigmar Gabriel, often a backer of EU green initiatives, called it a "competition war" against the German car industry to benefit French and Italian rivals. But France complained that the Commission had let makers of heavier, more polluting vehicles off too lightly by varying the emission target according to the weight of the car.

Environmental campaigners accused Brussels of a sell-out for phasing in the fines over four years and setting no ambitious long-term goal. Greenpeace transport spokeswoman Franzisaka Achterberg said the EU had stood up like a lion for the world's climate at a U.N. conference but "is going down like a lamb and putting carmakers' short-term profits before our common survival".

Fines on companies for non-compliance will start at 20 euros ($28.80) per new car for each excess gram per km in 2012 on average over the whole fleet, and rise to 95 euros g/km in 2015. "The proposal is backed by credible penalties," Dimas said, noting that voluntary curbs had failed and road transport was the second-biggest source of emissions after power generation. Car producers denounced the plan, which requires makers of heavier luxury vehicles to make bigger cuts than manufacturers of smaller, lighter cars, and vowed to lobby member states and the European Parliament to fight them. "It's a bad decision. It is not balanced," Ivan Hodac, secretary-general of the European Automobile Manufacturers Association, told Reuters. "The level of penalties is totally unacceptable, up to 100 times higher than what is paid by other industries in the EU's emissions trading scheme," he said. Of the overall mandatory target, an average of 130 g/km must be achieved from improved engine technology and the rest through biofuels and more efficient gears, tires and air-conditioning. The average emissions level from cars in the EU was 163 g/km in 2004, the last year for which full data is available. The decision was reached after a showdown between industrial and environmental champions in the EU executive over how to fight climate change without penalizing European carmakers. It applies to all new cars sold in Europe, including those made by U.S., Japanese, South Korean and Chinese producers. Commission Vice President Guenter Verheugen, a German, dissented from the proposal and boycotted a planned joint news conference to announce it. He had sought lower fines and more flexibility on how companies achieve the cuts.

Several of the other 27 commissioners entered reservations in the minutes but did not demand a vote, a spokesman said. Germany's Volkswagen branded the proposal unfair, saying it would hit German firms harder than European rivals. BMW said the plan would distort the market and must be changed. Industry analysts forecast a fierce political battle. "It will lead to a political crisis. The Germans will have to pay more than the others. The rules are strange," said analyst Philippe Houchois at JP Morgan. Dimas, a Greek, argued for heavy fines as an effective deterrent to force manufacturers to invest in clean technology and produce lighter cars.

A table compiled by the Commission showed that France's Peugeot and Renault as well as Fiat of Italy would have to make the smallest cuts to attain their targets, while BMW, DaimlerChrysler, Japan's Subaru and Porsche would have to make the most progress. But carmakers will be able to team up and pool their CO2 emissions to meet the EU targets. That means makers of heavier cars will be able to buy emissions credits from producers whose fleet is below the limit.

To be continue in other article...

(Jakarta, Kamis 21 February 2008, 07.39 pagi)

Re-publish by Jacob Paradox from link (www.routers.com),(www.iht.com), (www.routers.com), (www.nytimes.com)