EU Auto Manufacturers Wake Up to Kyotos Costs

by William Yeatman on March 30, 2004

The European trade group for auto manufacturers has voiced its objections to EU emissions reduction plans privately. According to Scotlands Sunday Herald (Mar. 21), “A confidential memo from the European Automobile Manufacturers Association to the Environment Commissioner, Margot Wallstrm, claims that the proposed cuts will seriously damage the industry. The association represents Ford, General Motors, DaimlerChrysler, BMW, Fiat, Renault, Peugeot Citroen, Volvo, Volkswagen and four others.”

The Herald says that the memo suggests that the emissions cuts from 165 grams of CO2 per kilometer in 2002 to 120 by 2010 would raise the cost of a car by 2,700 (nearly $5,000) at an annual cost to the EU of 33.5 billion ($60 billion).

The memo states, “Car buyers are not prepared to pay any extra for cleaner, more environmentally-friendly cars. An over-ambitious carbon dioxide reduction policy that is essentially only car-technology focused, would impose massive additional costs per car along with tremendous negative societal costs for the EU economy, and would threaten the competitiveness of the European car manufacturing industry. Adverse impacts for the EU economy would include: a move of car production to non-EU countries, disappearance of large/premium cars, plant closures, sizeable job losses, decreased trade balance, reduced income tax and lowered economic growth.”

The memo was backed up by one from the Japan Automobile Manufacturers Association, which represents Nissan, Honda, Toyota, Mazda, Mitsubishi, Suzuki, Yamaha and six other car makers. The Japanese memo says, “Considering the increasing trend towards globalization, competition in todays automobile industry is getting extremely fierce. We advise that the economic situation of this key industry be taken into account when considering the introduction of increased environmental legislation.”

Environmental groups reacted angrily to the documents. Duncan McLaren of Friends of the Earth Scotland told the Herald, “The EC must stand up to the car industry on this issue. If the industry fails to deliver on its promises then the EC should legislate to force it to cut pollution. Past experience tells us that the threat of legislation is the best way to stimulate real improvements and technological innovations.”

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