Volkswagen Group’s $15.3 billion settlement with the U.S. government and vehicle recall still won’t be enough to comply with clean-air laws, or to satisfy clean-air advocates.
The settlement reached on June 28 with the federal government acknowledges that the oldest 2.0-liter diesel engine cars covered by the case – including Jetta, Golf, and Beetle models dating back to 2009 – will emit more pollution than allowed under the emissions standards the company evaded. To compensate, VW will contribute funds to environmental programs.
For the $15.3 settlement, $10 billion will pay for the buyback of affected models and owner compensation. For the remainder, $2.7 billion will go to federal and California regulators to fund pollution-reduction projects, and $2 billion will be invested in clean technology. Volkswagen also announced a $603 million settlement to resolve consumer and environmental claims with 44 U.S. states.
The vehicle recall and fix shows how complicated it is to re-engineer cars after the fact for compliance with clean-air rules. For environmental groups and clean-air advocates, the settlement doesn’t address the core issue of getting VW’s dirty diesels fully cleaned up.
“For reasons they didn’t state, they’re allowing fixed vehicles to not be fixed, but to allow vehicles to emit twice as much pollution as they otherwise would allow,” said Daniel Becker, director of the Safe Climate Campaign.
The California Air Resources Board estimates, when fixed, the VW diesels will have their emissions cut by 80 percent to 90 percent over current levels. It won’t be enough to close the gap over emissions rules; regulators have estimated the diesel cars could emit as much as 40-times the permitted amounts of NOx. Even if the 90-percent reduction is reached, the dirty diesels will still be producing more emissions than cars that fully comply with clean-air laws – creating a sore spot for clean-air advocates.
Regulators must approve the repair before a recall is issued and, despite months of research and back and forth discussions with the automaker, no agreement has been reached.
California regulators rejected a proposed fix by VW on July 14 for 85,000 diesel vehicles with 3.0-liter engines. It’s therefore likely VW may have to buy back some expensive luxury vehicles.
At the federal level, adding a urea-tank system – which most diesel cars use – was deemed to have been prohibitively expensive, said Roland Hwang, director of energy and transportation at the Natural Resources Defense Council. Instead, regulators and VW came to agreement on alternative ways to clean up air pollution.
The settlement with the U.S. government requires VW to get 85 percent of the cars recalled by June 30, 2019. If it fails to do that, it will have to pay $85 million more into the environmental mitigation trust for each percentage point of the shortfall. The automaker will also have to pay an additional $13.5 million into the trust for each percentage point it falls below the 85 percent target in California.
VW still faces another challenge with state governments seeking restitution from Volkswagen AG. New York, Maryland, and Massachusetts are among several states planning to sue VW over the environmental damage already done.