European automakers will miss their voluntary target for reducing carbon dioxide by 2008, a European Commission source said.
"They will overshoot their target by a little bit," the source said on condition of anonymity. "It's pretty common knowledge within the Commission, but it's politically incorrect to say it."
Under a 1999 agreement, the European auto industry pledged to cut per-car CO2 emissions to 140 grams per kilometer by 2008, compared with 185g/km in 1995. Their Japanese and Korean counterparts pledged to reach the same level a year later, in 2009.
CO2 is a greenhouse gas held responsible for global warming and is generated by fuel combustion. The amount of fuel a car burns parallels the amount of CO2 it produces.
The EU source predicted European carmakers' CO2 emissions would be in the range of 145g/km to 148g/km in 2008.
In June, the EU issued a report assessing progress made in 2003 toward the goal. More than halfway through the lifetime of the voluntary accord on CO2, the report shows that after a steep fall in the late 1990s, average CO2 emissions of European brand new cars have barely diminished since 2001 (See chart).
The early surge in reducing CO2 is attributed to automakers' production of more fuel-efficient engines of all types. The dramatic increase in the number of cars with new-generation diesel engines has played a major role in the drop in CO2. Diesel cars emit less CO2 than comparable gasoline-powered cars because diesels use about 20 percent less fuel than a gasoline-powered model.
Those easy gains are fading for several reasons: Diesels are half of the European sales mix; Europeans are buying heavier and more powerful cars that burn more fuel; and new EU rules for cars such pedestrian safety measures force automakers to add components to cars, making vehicles heavier.
"Carmakers are very far from reaching their 2008 target," said Patrick Coroller, an official at France's Agence de l'Environnement et de la Maitrise de l'Energie (ADEME), a state-funded environmental agency. "We are pessimistic."
The issue has big implications for the auto industry.
It has invested huge amounts to develop new powertrains that consume less fuel. For example, a new 1.6-liter gasoline engine that PSA/Peugeot-Citroen jointly developed with BMW is expected to emit 10 percent less CO2 than the engines it replaces. It will enable some small cars it is used in to meet or beat the 140g/km CO2 mark.
The required investment for this achievement: E610 million.
Asked about the possibility that European automakers will miss their CO2 target, Alfredo Filippone, spokesman for ACEA, the European auto manufacturer association, said member carmakers "are doing their utmost to meet their 140g/km CO2 objective."
Japanese and Korean carmakers are even further away than ACEA from meeting 140g/km CO2, according to an annual update done by the European Commission on CO2 emission. Japanese and Korean carmakers have until 2009.
Japanese automakers "still hope to live up to their commitment," said Hiroki Ota, the European representative for the Japanese Auto Manufactures Association, JAMA. He said a clearer picture would emerge with the CO2 figures for 2004. They will be made public in the first half of 2006.
The EU called the CO2-reducing performance of Korean automakers "still unsatisfactory."
In Seoul, a representative of the Korean Auto Manufactures Association, KAMA, disagreed that Korean automakers are falling behind on reducing CO2 emissions. He said Korean carmakers have successfully met mid-term goals.
"Korean automakers are fully committed to the CO2 reduction goals as agreed with the EU," he said. "We are making a lot of effort to meet the goals."
Car manufacturers have long expressed concerns over CO2 reduction targets. But so far, their public objections had focused on the longer term target of 120g/km by 2012.
Two years ago, ACEA's then-chairman, former Renault CEO Louis Schweitzer, called the 120g/km objective "unreasonable."
Carmakers say they cannot force customers to shun powerful engines and gas-guzzling SUVs in favor of low-emission cars.
The rising popularity of SUVs has had a big impact on CO2 emissions: SUVs use an average 30 percent more fuel than a sedan, said ADEME's Coroller.
For example, the worst vehicle sold in Europe for CO2 emissions last year was the Volkswagen Touareg at 346g/km, an ADEME report shows. That poor result hasn't hurt the Touareg's western European sales, which doubled in 2004 versus 2003 and are up 17.7 percent to 23,059 units after six months.
Customer demand for SUVs is so strong that even holdouts such as Renault and PSA/Peugeot-Citroen will joint the segment. They both will start selling mid-sized SUVs in 2007. The move is bound to increase their average fleet CO2 emissions, observers say.
So far, the two French carmakers and Italy's Fiat are the leaders when it comes to low CO2 cars. Their fleets are made up of fuel-efficient, small to medium-sized cars. In 2004 the three had emissions of less than 150g/km CO2 in France (see table).
Carmakers say other regulations imposed by the EU work against CO2 reduction.
PSA CEO Jean-Martin Folz says new pedestrian safety rules make a car heavier and less aerodynamic, thus increasing fuel consumption. The EU rejects that assertion.
Folz has also cited new rules to make cars recyclable, which he says favors the use of materials such as steel that are heavier than plastics.
Automakers also argue that tougher anti-pollution norms expected to come into force at the end of the decade, known as Euro 5, may make compliant diesel engines too expensive for most customers to afford.
Automakers worry that if they miss the voluntary CO2 target, the EU will legislate even tougher regulations with financial penalties.
In its June CO2 report, the Commission warns it has been asked by the EU council of government "to present immediately proposals, including legislative ones" should it become clear one or more associations will not honor their commitment."
But there are signs the Commission may show understanding for some of the automakers' points.
A Commission spokeswoman said that slapping mandatory CO2 objectives on car manufacturers through legislation "is one, and only one, of several options."
The Commission has agreed to discuss ways to improve regulations within a working group called Cars 21 (as in 21st century), which first met April 13 and is expected to make recommendations in November.
Other options include tax incentives to lure customers into buying CO2-friendly cars. The EU Commission recently recommended the adoption of an EU-wide taxation based on CO2 emissions to help deter customers from buying high-emission cars.
It will probably take two to three years to implement -- too late to help carmakers to make the 140g/km mark in 2008, but helping longer term efforts to clear the air.
-- Norman Thorpe contribued