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CLIMATE CHANGE: EU Swerves Away From Taxing Car Pollution

David Cronin

BRUSSELS, Nov 23 2007 (IPS) - European Union governments look set to reject calls for taxing cars based on their contribution to climate change.

At a Dec. 4 meeting, finance ministers from the EU’s 27 member states are scheduled to discuss a proposal for reshaping taxes imposed on cars so that they take account of the amount of carbon dioxide (CO2), the main climate-changing gas, they emit.

But Portugal, the current holder of the EU’s rotating presidency, has conceded that a breakthrough on this plan is unlikely. This is despite a pledge made by the EU governments earlier this year that they would lead international efforts to fight climate change.

In an internal paper, seen by IPS, the Lisbon government says there is “opposition from a considerable number” of EU countries to “an obligation to introduce a CO2 element into national car taxes.”

As an alternative, Portugal is advocating what it calls a “more flexible approach”, which would leave it at the discretion of national authorities to decide how to tax pollution caused by cars.

The EU’s executive, the European Commission, originally tabled plans for a ‘green’ tax on cars in 2005. It advocated that the vehicle registration taxes levied by EU governments should be phased out over a 10-year period and replaced with measures that are at least partly based on CO2 emissions.

Chris Davies, a British Liberal member of the European Parliament, described the opposition to the plans as “extraordinary”, especially given that some car-makers have reacted favourably to the idea of a green tax.

“Faced with a real opportunity to make a real difference in terms of CO2 emissions, member state after member state are simply refusing to act,” he told IPS. “This demonstrates a real weakness.”

As well as having potential environmental benefits, Davies argued that a green tax could help reduce the EU’s dependence on imported oil. “This should be a win-win option,” he added.

He suggested that the opposition to the dossier should not lead to it being removed from the EU’s agenda. The European Commission, he said, should put pressure on recalcitrant EU governments to ensure that progress is eventually made. “There is a need for the Commission to act as an umpire in areas where it has the power to do so,” he said. “Without the teacher in the classroom, saying you must do your homework, the children go away and skive off.”

Cars and vans account for almost one-fifth of the EU’s total carbon emissions.

In a new study, the European Federation for Transport and Environment (T&E), an alliance of 49 green organisations, found there are serious discrepancies between emissions from vehicles made in different countries.

Last year emissions from new vehicles made by Germany’s largest car firms Daimler Chrysler and Volkswagen rose by 2.8 percent and 0.9 percent respectively. By contrast, emissions from French and Italian vehicles fell by an average of 1.6 percent.

Japan often fared better than Europe, according to the study. An average fall in emissions of 2.8 percent was recorded for new Japanese cars.

T&E director Jos Dings pointed out that Angela Merkel, now Germany’s chancellor, advocated in 1994 that a maximum legal limit of 120 grams of carbon dioxide emissions per kilometre should be established for cars. Merkel was her country’s environment minister at the time.

Although EU policy-makers have discussed that target ever since then, the Commission suggested earlier this year that a less stringent goal of 130g/km should be set. Ironically, it agreed to that measure after Merkel and the German car industry lobbied the Commission not to opt for the 120g/km limit.

Dings argued that it would be “perfectly feasible” for cars to meet the 120g/km limit by 2012. Studies suggest this would increase the retail cost of new vehicles by only a few hundred euros, he said, while there would be a long-term saving as a result of reduced fuel consumption.

According to the latest available data, the average European car emitted 160g/km during 2006.

Graham Smith, a vice-president in Toyota’s European headquarters, said he regretted that EU governments cannot find sufficient consensus to introduce a carbon tax on cars.

Binding regulations are preferable to voluntary commitments on reducing CO2, he said, as they apply a “level playing field” to all manufacturers.

But he argued that it would “probably be more appropriate” to introduce new reduction targets for 2015, rather than 2012. Because of the lengthy production cycles for cars, many models due to be introduced in the next few years have either been designed or are at an advanced stage. “We fully support efforts to reduce CO2 but we are operating in a harsh commercial world,” said Smith.

Richard Smokers, a transport policy consultant who has worked for the European Commission, said that carmakers have known for some time that they would have to comply with new reduction targets.

“They should have been preparing to have things on the shelf to meet these targets,” he said. “And I know they have been.”

 
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