Brussels warns city diesel bans threaten low emission plans

19 July 2017

The highest EU auto official has criticised policymakers over their plans for city driving bans, urging them to focus on emissions compliance. EU industry commissioner Elżbieta BieÅ„kowska stressed that politicians are at risk of jeopardising the EU’s progress in persuading OEMs to invest in clean technologies – and that undermining OEMs’ core diesel business models with bans threatens ′a rapid collapse of the diesel market in Europe,’ undermining OEM willingness to invest.

She calls on city politicians not to focus on deeply political short-term bans but instead focus on the bigger, longer term picture of encouraging OEMs to bring their vehicle emissions in line with the Euro 6 emissions standards. Local politicians have talked up bans following a loss of credibility in emissions controls following the Dieselgate scandal. However, Bieńkowska fears such an approach will backfire, alienating consumers that were previously encouraged to buy diesels in some markets such as the UK, and meaning OEMs have less money available to invest in the zero-emission vehicles many cities ultimately desire.

In her 17 July letter to transport ministers of EU member states, BieÅ„kowska wrote: ‘While I am convinced that we should rapidly head for zero-emission vehicles in Europe, policymakers and industry cannot have an interest in a rapid collapse of the diesel market in Europe as a result of local driving bans.’ She also highlighted the impact talk about bans was already having on used diesel residual values.

A collapse in diesel demand also threatens the EU failing to meet its CO2 climate change targets.

Bieńkowska wants the political focus to be squarely on emissions compliance. She is pressing for a more comprehensive approach to recalls, including carmakers withdrawing cars from sale if they do not meet emissions limits, as Daimler has just done with a sweeping 3 million car recall, and Audi has done with withdrawing some A4 and A5 models from sale.

Paris, Madrid and Athens have announced diesel driving bans from 2025, with Paris looking to remove all combustion engine vehicles from sale by 2040.

However, a VDA-commissioned Ifo study has raised the warning that calls for a ′worst case scenario’ of a ban on combustion engine car sales by 2030 would put an alarming 600,000 German jobs under threat, including 426,000 in car manufacturing and the rest from support industries such as suppliers. Supplier Bosch for example has 50,000 jobs linked to diesel technology.

The calls come at a sensitive time in German politics, with national elections only two months away. The Government is facing growing pressure to combat emissions exceeding EU limits, or face city bans – with some politicians arguing the threat to public health outweighs industry damage.

Representatives from federal and regional governments are set to meet with carmakers on 2 August to find the best solution for both sides. The VDA, which represents German carmakers, has already begun discussions with the Government on ways to tackle pollution from diesel cars in order to avert highly damaging diesel bans, which are already significantly harming sales of diesel models.

There are signs that German cities that have talked about bans – such as Stuttgart and Hamburg – are listening. Stuttgart has said it would prefer to upgrade Euro 5 diesels to improve their emissions rather than instigate a ban. There are also questions about whether local authorities conducting such bans is legally feasible.

German environment minister Barbara Hendricks told Handelsblatt: ′The auto industry has the responsibility that it will not come to [cities implementing driving bans].’ She stressed that to achieve this, it was the duty of carmakers to retrofit the affected cars as quickly as possible and that they must do so at their own cost.

Driving bans have become a highly effective stick to force carmakers towards large-scale retrofitting. Some say up to 13 million EU diesels are affected, although the industry argues the figure is far lower.

Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen, told Reuters that carmakers are reluctant to make the switch from their combustion engine business models yet because it is not yet clear how electric vehicle (EV) demand will pan out. German EV demand has been weak despite incentives and the only market where strong growth over the next few years looks certain is in China (Volkswagen’s largest market), which is implementing a quota system to force the switch.

BMW CEO Harald Krueger has warned that the high costs of developing electric vehicles (currently with little return) means that a full shift to electric vehicles is not possible without fuel-efficient diesel engines forming an interim step.

A BMW spokesman said: ′We see good prospects to find a federal solution to upgrade Euro-5 diesel cars. BMW will bear the cost of such an upgrade.’