August 29, 2006

EU warns car makers over CO2 emissions cuts

By Jeff Mason

BRUSSELS (Reuters) - European and Asian auto makers must do
more to meet voluntary targets to reduce carbon dioxide (CO2)
emissions from new cars or face possible legislative action,
the European Union's executive arm said on Tuesday.

The European Commission said average CO2 emissions from new
cars in the 15 "old" EU member states in 2004 were down 12.4
percent from 1995 levels, far off the target of a roughly 25
percent cut by 2008/09.

"The situation is not satisfactory. I urge industry to step
up their efforts," Industry Commissioner Guenter Verheugen said
in a statement.

The 2004 figures showed a slight improvement from 2003,
when new car emissions were down 11.8 percent from 1995 levels.

European car makers have agreed to reduce C02 emissions
from new cars to an average of 140 g/km by 2008, while Japanese
and Korean manufacturers have agreed to meet that goal by 2009.
The target represents a cut of around 25 percent from 1995

Verheugen and Environment Commissioner Stavros Dimas said
in the statement they would consider taking legislative
measures if auto makers did not meet those commitments.

The European Automobile Manufacturers Association pledged
to keep working on the problem but described consumer demand
for "safer and larger cars" as having a counterproductive
effect on reducing car pollution.

It called on policy makers to create tax incentives to prod
consumers to buy less-polluting cars.

"There is now a need to link the taxation of cars and of
alternative fuels more vigorously to CO2 emissions," ACEA
Secretary General Ivan Hodac said in a statement.

Germany's BMW said in March it will start serial production
within two years of cars that burn hydrogen in modified
engines, beginning with a few hundred cars that can switch
between petrol and hydrogen so drivers are not stranded seeking
a hydrogen pump.

Within Europe, vehicles with hybrid motors -- which combine
a standard engine to electric motors and a battery -- are on
the rise but still represent well less than 1 percent of new
cars registered.

The auto industry's CO2 agreements make up part of the
25-country EU's efforts to meet its commitments to fight
climate change and reduce greenhouse gas emissions under the
Kyoto Protocol.

Under Kyoto, the EU's 15 "old" member states must reduce
greenhouse gas emissions to 8 percent below 1990 levels by

The Commission said cars were responsible for more than 10
percent of the EU's CO2 emissions.

Car makers are in no hurry to see CO2 targets bundled into
mandatory legislation. France's PSA Peugeot Citroen said the
company found it too premature to speak about new laws because
the voluntary targets applied for 2008.

"In general we are against legislation because it is a free
market and in the end the consumer decides," said spokesman
Marc Bouque, adding carmakers cannot force consumers to buy
more environmentally-friendly cars.

(additional reporting by Michael Shields in Frankfurt and
Marcel Michelson in Paris)