German Automakers Battle CO2 Rules

Jan. 29, 2007: Forbes—EU Discussing Laws to Cut Vehicles’ CO2

Summary: "The EU’s executive arm said Monday it was still trying to decide what vehicles should be covered by a proposed new law to cut cars’ carbon dioxide emissions as German automakers said mandatory limits would force them to cut jobs.

The auto industry is likely to miss a voluntary target to cut average CO2 emissions for new cars so the European Commission has threatened to draft rules that would set a legally binding limit of 120 grams of CO2 per kilometer by 2012."

The voluntary target was 140 grams per kilometer by 2008; this year, the actual emissions average is at 163 grams—a 13% reduction from 1995 levels. For comparison, US-made GM cars emitted about 193 grams per kilometer (310 grams per mile) and US GM light trucks emitted 277 grams per kilometer (445 grams per mile) in 2002.

Instead of forcing them to reduce emissions, automakers say, member nations should introduce tax measures that encourage consumers to choose less-polluting vehicles. Currently, most European tax structures favor petrodiesel over biofuels, hydrogen, and gas-electric hybrids.

All right, armchair analysts, here’s your challenge: If you were in charge, how would you ensure that targets were met while minimizing economic impact?

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  • Alex

    It comes down to taxing the gas guzzling vehicles. The lower income families can receive a tax break, but the car companies must realize that their most important asset is their Research and Development Department, not the daily stock report. The key here is sustainability, not massive temporary bottom lines. It comes down to a social duty to care for the environment. Others may not care now, but their children will.

  • Tor

    Why tax the car? Just tax the emission you are trying to reduce instead i.e. gas taxes.