study suggests EU Tougher CO2 emission limits could provide growth

Proposed European legislation to cut CO2 emissions from Europe’s new-car fleet to 95g/km by 2020 could create about 400,000 jobs and save tens of billions of euros in fuel costs, a study said.

The new CO2 goal across is set for an initial vote in the European Parliament today. The plan has split the industry. Germany, home to luxury carmakers, has pressed for supercredits, which the European Commission says would dilute its plans.

British-based consultancies Cambridge Econometrics and Ricardo-AEA, using Commission and industry data, found that more fuel-efficient cars and vans could save the bloc 57 billion to 79 billion euros ($74.5 billion to $103 billion) a year in fuel costs.

“The results suggest that if a cost-effective transition to fuel-efficient cars can be realized, it will generate jobs across the European auto sector and its supply chain, as well as improving the spending power of European consumers,” Phil Summerton, the research project coordinator at Cambridge Econometrics, said. “It will also reduce Europe’s dependency on oil imports and the economy’s exposure to possible increases in future oil prices.”

Rather than helping to finance development of fuel supplies beyond Europe, more efficient conventional engines as well as hybrid and battery-powered cars and vans would generate between 356,000 and 443,000 jobs by 2030 compared with business as usual, the consultants estimated.

Ireland, holder of the rotating EU presidency wants to get agreement on a new CO2 goal before the end of June. Automakers are on track to meet the current target of 130g/km by 2015.

The Commission says it is pushing for a low-carbon Europe that is less dependent on oil imports, which currently cost the European Union roughly 1 billion euros a day. Against the backdrop of financial crisis, the EU executive links the need for jobs and growth to virtually every policy proposal, often meeting skepticism from industry.

The new report considered one scenario with vehicle efficiency frozen at the current level. A second scenario assumes an increased rate of improvement, which the study says is plausible because some carmakers have met their 2015 goals already.

The researchers found that, in the higher technology scenario, renewing the EU car and van fleet would cost a total of 472 billion euros by 2030, or 46 billion euros more as innovation costs are passed on to consumers. At the same time, the avoided annual fuel costs amount to 79 billion euros by then, for a gain of 33 billion euros a year to feed into the wider economy.

“Opting for lightweight solutions not only has a positive climate impact but also a real economic advantage, a must in the current economic situation,” said Gerd Goetz, director-general of the European Aluminium Association, which campaigns for more use of aluminum so cars will use less fuel.

Germany, whose manufacturers Daimler, BMW and Audi dominate the premium car segment, says it supports innovation but that ultimately the market and consumer preference should be left to decide.

An EU diplomat, speaking on condition of anonymity, said Germany did not share the Commission’s view that its proposal for supercredits unduly dilutes the law. Supercredits allow carmakers to produce more polluting vehicles if they also produce extremely low-emission vehicles, such as electric cars.

“At the end of the day, it is the reaction of the markets and the consumer that will decide on the real emissions,” the diplomat said.