Merkel Says She Blocked Car Carbon Curbs to Shield Auto Jobs

Photographer: Daniel Roland/AFP via Getty Images

German Chancellor Angela Merkel gets out of a Volkswagen up! car as the president of the VDA federation of the German automotive industry Matthias Wissmann, right, and Volkswagen CEO Martin Winterkorn, center, look on during a visit to the company's booth at the international Frankfurt motor show on Sept. 15, 2011. Close

German Chancellor Angela Merkel gets out of a Volkswagen up! car as the president of... Read More

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Photographer: Daniel Roland/AFP via Getty Images

German Chancellor Angela Merkel gets out of a Volkswagen up! car as the president of the VDA federation of the German automotive industry Matthias Wissmann, right, and Volkswagen CEO Martin Winterkorn, center, look on during a visit to the company's booth at the international Frankfurt motor show on Sept. 15, 2011.

German Chancellor Angela Merkel said that she blocked a draft European Union law aimed at reducing carbon-dioxide emissions from cars over concerns the measure would cost jobs in the auto industry.

A coalition of EU states led by Germany prevented approval of the measure at a meeting of diplomats in Brussels earlier this week. Merkel said that she moved to delay the proposal -- which would cap average carbon discharges by passenger vehicles in the bloc at 95 grams a kilometer in 2020 -- to defend jobs.

“This is also about employment,” Merkel told reporters in Brussels today after a European Union summit. “That’s why we need time to review and evaluate and decide what we will do. That’s why the vote didn’t happen.”

Merkel’s intervention, made less than three months before federal elections, collided with EU efforts to cap pollution by cars through varying targets for individual manufacturers ranging from Volkswagen AG (VOW) to General Motors Co. (GM) Current EU legislation requires carmakers to cut discharges to 130 grams a kilometer on average in 2015 and sets a non-binding goal of 95 grams for 2020.

“With such an important policy decision, it’s important that prudence trumps speed,” German auto-industry lobby VDA said in a statement. “Therefore, it’s correct that sufficient time to review compromise suggestions are allowed.”

‘Take Care’

Ireland, representing the EU governments, and negotiators from the European Parliament reached a preliminary deal on the draft emissions law on June 24. The proposal needs qualified-majority support from national governments. That failed to materialize at a two-day meeting of EU leaders billed as a jobs summit that ended today.

While the European Commission, the EU’s regulatory arm, said earlier today that it was disappointed about the delay, Merkel rebuffed any such criticism on economic grounds.

“At a time when we’re spending days sitting here talking about employment, we have to take care that, notwithstanding the need to make progress on environmental protection, we don’t weaken our own industrial base,” Merkel said.

It now falls to Lithuania, which takes over the bloc’s rotating presidency from Ireland next week, to propose a new date for a decision on the matter.

Ford’s Disappointment

Ford Motor Co. (F), which has developed clean-running engines like the 1.0-liter EcoBoost Motor, said it was “disappointed” that a minority of member states was able “to delay a well-balanced agreement,” the company said in a e-mailed statement. “We will now have to re-group within the industry to determine the next steps.”

The deal made between Ireland and the Parliament includes the continued use of so-called supercredits, or incentives, to encourage car producers to develop clean technologies.

The supercredits need to be applied in a “more meaningful way,” according to the European Automobile Manufacturers’ Association. Greenpeace said in an e-mail that any further weakening of the proposal would be “pure greed” and the cost would be borne by European drivers.

To contact the reporters on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net; Tony Czuczka in Berlin at aczuczka@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net; James Hertling at jhertling@bloomberg.net

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