European car regulation: What the European Union could learn from Dieselgate

The European Union’s leadership on the issue of climate change has been one of its greatest accomplishments: by setting ambitious targets for the world’s largest single market, the European Union has provided benchmarks for other nations around the world. However, recent scandals, in which the onboard computers in a variety of European company’s diesel cars were programmed to cheat on emissions tests, have cast doubts on the European Union’s commitment to emissions enforcement and have undercut its role as a global clean power leader . The EU Competitiveness Council’s meeting on May 29 is an important opportunity to reiterate the European Union’s support for clean power and environmental protection and to demonstrate its commitment to robust enforcement.

The European Union’s clean power leadership has helped define its moral compass globally since its formation 24 years ago: from Denmark’s role in establishing wind power, to Germany’s efforts to put solar power on the map, to EU actions to secure the 2015 Paris Agreement. The European Union also has led the world in reducing vehicles’ negative impact on the climate. Its 2013 world-leading emissions standards for cars - 95 grams of carbon dioxide per kilometer - helped other countries set their own ambitious goals. By 2025, similar regulations adopted by the United States, Japan, and China will harmonize with these European standards, creating promising international coordination to reduce carbon emissions.

The EU leadership in environment came into doubt

In recent years, unfortunately, EU environmental leadership has been called into question. Starting in the 1990s, the European Union promoted “clean diesel” technology for high-efficiency, low-emission vehicles. Heavy subsidies and other inducements were very successful, and many Europeans chose diesel cars. Today, about 50 percent of cars on European roads are diesel, compared with just about 3 percent  in the United States. Then, in 2015, “Dieselgate” blew up in the European Union’s face. The problems started in the United States, where it was discovered that half a million Volkswagen (VW) diesel cars were engineered to cheat on diesel emissions tests. The cars’ onboard computers produced testing data that allowed them to pass emissions tests with engines that, in the real world, exceeded national standards up to 40 times over. It soon came out that VW had been cheating in Europe, and globally as well. The damage further expanded when later studies showed that virtually every European automaker had been cheating on the diesel emissions requirements.

Every year 38.000 people in the EU die prematurely because of air pollution

This cheating is not just a matter of flaunting regulations; it has devastating real-world consequences. Lax enforcement allowed well over 30 million high-polluting diesel cars onto European roads, where they constitute a major contributor to the severe air pollution that kills nearly half a million people in the European Union annually. A recent study showed higher-than-permitted diesel vehicle emissions caused 38,000 premature deaths worldwide in 2015, of which 11,400 occurred in the European Union. Mayors of cities such as London, Madrid, and Paris have called for a ban on diesel cars to protect residents. Aware of the popular and regulatory backlash, manufacturers including Renault and Volvo have discussed moving away from diesel cars altogether.

European car testing authorities might have thought they were helping manufacturers through lax enforcement, but in reality they allowed manufacturers to pour billions of euros into technology that no longer can be marketed abroad and that has waning prospects at home.

A chance to reinstate the leadership role

In the shadow of Dieselgate, EU leaders have an opportunity to reassert their leadership. So far, however, this has been a wasted opportunity. Although both American and European regulators were fooled for years, the U.S. Environmental Protection Agency (EPA), a federal agency responsible for testing, auditing, and certifying cars, took fast and effective steps following the diesel scandal. VW has agreed to pay up to $25 billion in penalties from U.S. federal and state environmental regulators as well as claims from owners and dealers, and the company also has agreed to buy back 500,000 high-polluting vehicles. Multiple senior VW officials have been charged for criminal actions.

By contrast, the European Union’s response to Dieselgate has been sluggish. This shortcoming is, in large part, because of its weak enforcement framework. The U.S. EPA has a muscular enforcement mechanism: noncompliance can cost a manufacturer up to $36,000 per engine per day. However, the European Union has no similar organization or laws.

It was not good for the car industry to be lax on the rules

Dieselgate could be a rallying cry for more far-reaching action to protect EU citizens’ health. Instead, some member nations appear to be drawing battle lines over basic health protections. Among those seeking to retain the status quo are Germany and Italy, not coincidentally nations with large manufacturers of diesel technologies.

German manufacturers have historically pushed back on tighter emissions regulations, both in Europe and United States. But, following Dieselgate, there may be an opportunity to change this narrative. Despite official German resistance at the national level, individual manufacturers seem to be pivoting toward a new investment trajectory. VW, whose brand was severely damaged by Dieselgate, committed to electrifying 25 percent of the vehicles it sells by 2025. Mercedes is moving in a similar direction, announcing 13 new electric models. BMW, a pioneer in electrification, now has six models with electrified powertrains. 

The manufacturers can produce clean cars - they are electric           

In the aftermath of Dieselgate, the European Union has a chance to restore its environmental leadership.  This road begins with EU ministers opening their eyes to the risks of protecting what has become a subprime technology. Dieselgate laid bare how negligence by both manufacturers and policymakers can lead a whole industry to invest in a stranded asset and damage its international reputation.

With its environmental credibility on the line, the EU Commission has taken one step in the right direction—proposing reforms to the legal framework governing the approval and testing of cars in the European Union. These reforms would strengthen health benefits and environmental outcomes, and would authorize strict penalties for noncompliance. The proposal is now in front of the Competitiveness Council, which must approve the terms before the final deal is struck with the EU Parliament in autumn 2017.

© Steve Jennings/AFP

EU ministers should recognize what the auto industry already knows: clean power technology, such as mass-market electric powertrains, will define the industry in future decades, and policymakers will need to need to provide a supportive but rigorous regulatory environment for this technology. EU policies to support clean power technology not only will improve the health of EU citizens but also could be a cornerstone of the European Union’s relevance to an environmentally conscious younger generation. We hope that the Competitiveness Council on May 29 will support reforms that will point the EU car industry back in the right direction.

Margo Oge has worked for the US Environmental Protection Agency for 32 years, 18 of the she was the head of the Office of Transportation and Air quality.

Margo Oge