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PA IN THE MEDIA

Cars' emissions too high - risking billions in fines

Read the original article on Svenska Dagbladet (SvD) 

Emissions from Europe's automotive industry are heading in the wrong direction - only five out of 13 car manufacturers are in line with the EU's CO2 emissions target. For those who miss the targets, billion-euro fines are expected. At the same time, the EU is about to tighten the requirements even more.

The EU has the world's strictest regulatory framework when it comes to cars' carbon dioxide emissions. A new PA Consulting study now shows that eight out of 13 car manufacturers operating within the Union will miss new emissions targets in 2021.

There are several reasons for this. “In particular, manufacturers, especially in Germany, have been too slow to move their fleets to cleaner technology,” says Michael Schweikl, PA automotive expert.

The EU regulatory framework states that by 2021, the average carbon dioxide emissions for a manufacturer's fleet of vehicles shall be 95 grams per kilometer. This is significantly lower than the US's ceiling of 125 grams, but is still too high for the EU to achieve the goals of the Paris agreement, as SvD reported earlier.

Each manufacturer with emissions above the target is fined. Unless companies make dramatic changes, a manufacturer like Volkswagen will risk a fine of SEK 14.4 billion.

If progress isn’t made, the fines will be even higher. This because the EU agreed earlier this week to further tighten the emission rules - the goal is now to reduce CO2 emissions from cars by 37.5 percent by 2030.

There will be even more aggressive goals in the future, which puts more pressure. Switching the fleet to electric cars and hybrids is already too late for the 2021 goal, but it is time for car companies to sit down and present a strategy on how to reach the new targets,” Schweikl says.

Schweikl highlighted the Asian car manufacturers Toyota, Honda and Mitsubishi - but also Volvo - as leaders in the fight for reduced carbon dioxide emissions because they "were quick to reschedule their fleet to hybrid models with new powerful engines.”

Companies like Daimler and Volkswagen are, according to Schweikl, on the right track, although German manufacturers are set to miss the target.

The problems for them is in the volume of sold cars that pull up the emission levels. Companies like Jaguar-Land Rover, which sell significantly fewer cars can meet the emission targets while having a much higher emission level,” says Schweikl.

Of the European countries the study focused on, Norway shows the best results. Sweden's western neighbour has reduced its average carbon dioxide emissions from 100.5 to 83.6 grams per kilometer from 2015-2017. Second, the Netherlands has 101.3 grams/kilometer and in third place Denmark with 106 grams/kilometer.

I think it's about people in those countries being more open to change,” says Schweikl.

Sweden's performance is less impressive with an average output of 121 grams/kilometer, although 5.2 percent of new sales consisted of hybrids or electric cars. In the study, only Germany (126) and Switzerland (133) have higher figures for CO2 emissions.

Schweikl believes the way forwards for companies will be difficult, but if manufacturers learn and share new technologies with each other, they will soon be able to produce cheaper, climate-smart cars.

If companies fail to succeed, they risk being disrupted by new and smarter companies.

At the same time, they must understand that the technology will change very quickly. Just look at China, where electric car companies will challenge European manufacturers even harder than Tesla does, says Schweikl.

Driving into a low emissions future – looking beyond 2021

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