Timing Still Issue, But Auto Makers, EU Appear Closer to Emissions Deal

Special Coverage

Frankfurt Auto Show

FRANKFURT – Fiat SpA CEO Sergio Marchionne says the European Commission and auto makers in the region are close to a compromise agreement on future emissions standards, although he declines to provide details.

Speaking to journalists at the auto show here and joined by seven colleagues from competing European auto makers, Marchionne says auto makers would agree to cut carbon-dioxide emissions to 120 g/km by 2015, but that any proposal with an earlier effective date, such as a 2012 timeframe proposed earlier by the EC, is “not doable.”

“We are as committed as (the EC) to achieving 120 grams,” says Marchionne, who is the current head of the ACEA, the European auto makers’ association. “That continues to be the single largest point of convergence between ourselves and the commission. We recognize the need to get there. What’s left to discuss is the methodology and the timing.”

Sergio Marchionne

The ACEA is insisting every one of the EU’s 27 countries be on board with the agreement. Today, only 11 EU members enforce C02 emissions regulations, Marchionne says.

In addition, any deal must include governmental efforts to promote “eco-driving,” he says. Eco-driving refers to motorists who make a conscious effort to conserve fuel by such measures as combining all errands into one trip, observing speed limits and making sure tires are properly inflated. Marchionne says studies show eco-driving can cut CO2 emissions about 7%.

“The problem is (emissions reduction) always ends up being a technology issue, and people end up doing whatever they want,” he says.

Leaving auto makers to solve the problem by technology, alone, would be too costly, Marchionne says, insisting fuel providers, law-enforcement agencies and infrastructure developers also bear some responsibility.

He also emphasizes the importance of the auto industry economically, calling it “the engine of Europe,” as it directly employs more than 2.3 million people and produces a third of the vehicles built annually worldwide.

In addition, it ranks as the most regulated industry in Europe, he points out, adding that E20 billion ($27.7 billion) is spent annually on research and development, some of which has gone toward achieving a 13% reduction in CO2 emissions since 1995.

Marchionne balks at suggestions the automobile industry was too negative in reacting to the EC’s initial CO2-reduction proposals made public earlier this year.

“We were purely reacting to what we considered to be an unrealistic imposition, both in terms of time and absolute numbers, for the achievement of an objective,” he says. “There are better ways to get this done. We are willing to work with everybody as part of an integrated approach to achieve that end and get there as quickly as possible.”

Marchionne also cautions against reading too much into the abundance of vehicle introductions at this year’s Frankfurt auto show that focus on cutting emissions. Major European players such as BMW AG, Porsche AG, DaimlerChrysler AG and Marchionne’s own Fiat, unveiled alternatively powered concepts on the exhibition’s first day.

European auto makers are not alone in their struggle to reach a compromise on emissions with lawmakers. In the U.S., the industry was dealt a blow this week when a U.S. District Court judge ruled 11 states are free to adopt California’s stricter emissions limits. Auto makers also find themselves at odds with a Senate proposal to raise fuel economy to 35 mpg (6.7 L/100 km) by 2020 and will attempt to forge a compromise in the coming weeks.

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