Both in the US and in the EU there is a fight going on that does not need any fighting.

As if choreographed, within the same week both the US Congress (18 Dec 07) and the EU Commission (19 Dec 07) have approved new regulation to reduce car exhaust emissions.

In the US, the House of Representatives voted yes to a fuel efficiency standard of maximum of 35 miles per gallon (15 kilometres per litre) by 2020.

In Europe the proposal is expressed in CO2 emissions per kilometre driven, the maximum being 130g/km.

Some basic calculations allow us to reconfigure this into g/km driven, allowing a clear comparison between the two:

• US: 174,5g/km by 2020
• EU: 130g/km by 2012

Let us ignore this remarkable show of disparity of priorities here. That point makes itself.

I can imagine that also in the US there were opponents against this ludicrously soft emission standard, undoubtedly supported by US automobile lobbyists. But as I am more familiar with the European situation, I would like to expose the thinking that even the EU fight was rigged somehow.

While Mr. Verheugen at DG ENTREPRISE and Mr Stavros Dimas at DG ENVIRONMENT were fighting over the command-and-control policy on car emissions, reality seems to almost have overtaken policy-forming. Although Mr. Verheugen showed an unrelenting drive to protect Germany’s car manufacturing industry, and he and German MP’s will keep pushing while the proposal moves to a vote in the European Parliament, the automobile industry does not seem to need his services at all.

Standards

In environmental economics we’re no fans of standards. They come under the category of command & control policies, and while they do give a sense of justice to concerned but uninformed citizens, they are far from ideal as they do not hold many incentives for progress - why indeed would you push your R&D department to go beyond compliance and bring to market a super-clean car with 80g/km? In fact, if you would go ahead and market that super-clean car, authorities may consequently tighten the standard and do away with your competitive advantage. Opportunities are usually missed with standards, and often they have perverse incentives.

Another reason to have reservations about emission standards lies in the fact that different hydrological, geographical and meteorological phenomena result in different environmental effects for the same standard. E.g. millions of 130g/km cars in traffic-jammed downtown London gives a higher ambient air pollution level than millions of 175g/km cars in the plains of Nebraska.

However, technology forcing, defined as ‘setting the standard too high for today’s technology’, still gets support from a few enthusiasts in the environmental economics community.

Technology forcing

Are US and EU civilians supposed to conclude that these emission standards are in fact tough, a.k.a. technology forcing? That would explain the fierce debates.

But can we really talk of difficult to reach targets?
How many ads do we encounter these days showing cars with emissions already below or very near the 130g/km?
You might assume that the current offer of 2012-compliant clean cars consists of ugly, cheap, uncomfortable, slow, unpractical, small, plastic, rattling, unpopular, unreliable and unsafe vehicles.
You would be mistaken.

Renault’s cool brand new family-size Laguna model states exactly 130g/km as emission level. BMW has a very nice 1-series, at 123g/km, and at Volkswagen, you can buy a Golf BlueMotion today that emits only 115g/km.
I repeat: these are today’s emission levels for nice cars, not in the year 2012.

VW Golf: already below the 2012 emission standards today.

If you think a VW Golf is below you, let’s upgrade to the Passat BlueMotion, emitting 136g/km.

VW Passat: if you can bare the social derision.

You might think the VW Passat is still too blue-collar for an important person like yourself. Cue the new Audi A4, which emits 144g/km. This new A4 is truly a limousine disguised as a rep-mobile, or vice-versa, pardon my enthusiasm.

Brand new Audi A4: a limo in workhorse clothes.

And there is also the 2008 new Audi A3 luxury hatchback, promising emissions considerably below the current A3’s 119g/km.

Audi is probably not going to like my saying this, but if an A3 or A4 luxury vehicle is still too small and cheap for you, probably you have issues that can’t be fixed by purchasing automobiles...

But also thàt could be ok.

Mercedes’ future S-class vehicle: now also clean-class.

Mercedes-Benz’ future S-class, the F700, is sure to cater for the tastes of even the jettiest of jetsetters. This limousine has all the comfort and safety measures imaginable. It also boasts a 258hp engine, propelling its pampered occupants from 0 to 100 km/h in only 7,5 seconds. But most importantly, it will emit only 127g/km, i.e. below the 2012 EU standards.

Too much of a good thing

It is this author’s opinion that the automobile lobbyist are too good at their job.

Any industry has indeed the right to look out for its interests. However, will it not look ridiculous if the so-called tough emissions standards hit the streets (pun intended) at the same time as top-notch top-range luxury vehicles such as the Mercedes S-class, already operating well within compliance?

Why fight if you have already won?
Must the show really go on?