Germany wins backing of EU to block car emissions law

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LUXEMBOURG (Reuters) -- European Union environment ministers agreed to German demands to scrap an agreement to cap average EU new-car emissions at 95 grams per kilometer in 2020 from about 130/g/km now after Berlin argued the target would cost jobs and damage its premium automakers.

After months of forceful lobbying from Germany, the ministers from the 28 EU member states agreed on Monday to reopen a deal sealed in June, but said they would work to secure it in weeks, not months.

German luxury carmakers Daimler and BMW produce heavier and less fuel-efficient vehicles than those from volume automakers such as Italy's Fiat, meaning they would find it challenging to meet tougher CO2 targets.

EU governments and the European Parliament had agreed in June a 95g/km target. The target is equivalent to fuel use of 4 liters per 100km (59 U.S. mpg/71 UK mpg).

But Germany built a coalition of countries supporting its plan to delay the start of the emission curbs. It proposed the law should be fully applicable to all new cars only in 2024.

On Monday, EU environment ministers meeting in Luxembourg authorized Lithuania to start talks with the European Parliament to change a preliminary deal agreed in June.

"It was made clear from all sides that we want an ambitious climate-protection goal and, at the same time, it was made clear that in some places more flexibility must be sought and can be found," German Environment Minister Peter Altmaier told reporters after the meeting. "In this narrow room for maneuver, we will find a solution in the coming weeks."

Countries including the UK and Poland supported the German call for a revision of the draft. Ministers from nations such as Belgium, France and Italy said they backed the June deal. To be enacted, the draft law would need approval from both member states and the European Parliament.

Disappointment

EU Climate Commissioner Connie Hedegaard told reporters she was disappointed that agreement on implementing a target first laid out five years ago had been blocked. "It is not a terrific thing that we could not conclude on cars," she said.

Environment campaigners say Germany is abusing the EU's democratic process, throwing away the chance to make European cars more energy efficient and to reduce the bloc's dependency on oil imports.

British-based consultancy Cambridge Econometrics researched how much Europe would save on oil imports if the 95 g/km target was implemented across the EU fleet. It found the EU as a whole would save around 70 billion euros ($94.94 billion) per year, while Germany would save 9 billion euros in fuel bills.

"It's an unacceptable price, which will be paid by every European driver in higher fuel bills, by the planet that will warm quicker and potentially by Europe's auto sector that will be less competitive," Greg Archer, a program manager at campaign group Transport & Environment, said. "The deal struck in June was a reasonable political compromise. Now we go back to the drawing board."

Although Germany managed to get the support of other EU ministers on Monday, many member states have voiced unease at the manner in which Berlin blocked the deal.

Sweden's Environment Minister Lena Ek said the risk was that further delays could hold back adoption of the rules until 2015 because of impending European Parliament elections next year and the appointment of new commissioners.

Germany would bear "a very heavy responsibility," she told reporters.

As well as seeking to protect its automakers, Germany also wants to avoid the car emissions law complicating its decision on forming a new governing coalition.

The German Greens are strongly in favor of cutting CO2 emissions to 95g/km, but Chancellor Angela Merkel and her conservatives support the country's carmakers.

Bloomberg contributed to this report

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