IF BALI failed to produce much besides cop-outs and compromises, at least the European Commission showed that it means business when it comes to tackling carbon emissions. Transport-related CO2 emissions in the European Union grew by one-third between 1990 and 2005 and now constitute 27% of the EU total. Of these, the commission reckons, cars and vans are responsible for about half.

On Wednesday December 19th the commission published its final proposals for cleaning up Europe’s cars. Although it will be at least a year before they become law and there is still scope for some of the details to change there is now little doubt that in only a few years’ time European carmakers will have to meet the world’s strictest CO2-emission standards.

At present Europe’s cars emit an average of about 160 grams of CO2 per kilometre (g/km). There has been some reduction since carmakers were last threatened with legislation a decade ago, but progress has been painfully slow—about 1.5% a year rather than the 3% needed to meet the voluntary target of 140g/km by 2008 that the industry agreed to a few years ago. The commission is therefore insisting that by 2012, the fleet-average emissions from new cars sold in the EU must not exceed 130g/km, with another 10g/km reduction coming from other sources, such as low rolling-resistance tyres, more efficient air-conditioning and greater use of biofuels.

The proposals have split Europe’s car industry down the middle. The French and the Italians, represented by PSA Peugeot Citroën, Renault and Fiat, have so far been fairly sanguine. In 2006 their fleets, heavily biased towards fuel-efficient small cars, averaged 142-147g/km. It will not be easy for them to meet the new rules without increasing the cost of their cheap, low-margin cars, but they are close enough to be confident that they can get there.

For the Germans it is a different matter. Volkswagen makes plenty of small cars but its fleet-average emissions have actually been rising slightly because of the recent success of its Audi brand. But it is Mercedes-Benz and BMW that feel most threatened by the commission’s plans. Their brands are synonymous with big, powerful cars that promise luxury and high performance. Mercedes props up the 2006 emissions league table with a fleet average of 188g/km, and BMW is next from bottom with 184g/km.

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