November 24, 2008

EU Moves Closer To Agreement On Reducing CO2 Emissions

European Union governments made progress Monday on an agreement to reduce greenhouse gas emissions from cars, but did not reach consensus on the details, diplomats said. 

Any agreement must strike the right compromise between the EU's struggling car industry and the bloc's priority in fighting global warming through a reduction in greenhouse gas emissions.

The lack of consensus likely means the governments and the European Parliament will not reach a final deal on the matter in subsequent negotiations Monday evening.  However, a deal might be reached later in the week.

"The Council agreed on political principles, not all details. The meeting with parliament will be exploratory," said one EU diplomat, who added that the governments would likely take up the issue again on Wednesday.

During Monday's talks, ambassadors of the EU's 27 nations agreed to reduce average carbon dioxide emissions from new cars by about 18 percent to 130 grams per kilometer.  The new standards would take effect in 2012 for part of automakers' output, with full compliance by 2015.

"There was agreement on a phased-in approach toward cutting CO2 emissions. But some countries wanted a higher initial level and others a lower initial level," said the diplomat.

However, EU envoys failed to agree on penalties for companies exceeding these emissions, and any deal must receive the support of parliament before it can become law.

Another diplomat said that most nations supported a French proposal that called for reducing CO2 emissions to 130 g/km in 2012 for 65 percent of each producer's fleet, then for 75 percent in 2013 and 100 percent in 2015.

The compromise was made to accommodate luxury car makers such as BMW and Mercedes, who typically make larger vehicles with higher CO2 emissions.

To mollify the European Parliament, where most lawmakers support more stringent emission cuts, the governments also agreed in principle on a bold goal to reduce emissions from cars to 95 grams per kilometer by 2020.

The diplomat added that some small car manufacturers might be temporarily exempted from general rules under the deal.

While the legislature's environment committee has supported strict emissions cuts, it is not clear whether the entire house would back the proposal in a final vote, particularly as car makers undergo production stops and lay-offs due to a slowing economy.