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European Car-Efficiency Rule Would Cut Fuel Bill by 25%

Workers position a Mercedes Benz automobile onto the display area. Photographer: Valentin Flauraud/Bloomberg
Workers position a Mercedes Benz automobile onto the display area. Photographer: Valentin Flauraud/Bloomberg

March 18 (Bloomberg) -- A European Union plan to tighten emissions standards on cars would cut auto-fuel costs by almost a quarter in 2030, according to a report e-mailed by a group promoting policies to reduce carbon emissions in the region.

Fuel bills would fall 57 billion euros ($75 billion) from a projected cost of 245 billion euros in 2030, said the European Climate Foundation, which contributed to the report prepared by Cambridge Econometrics and Ricardo-AEA. Producing fuel-efficient vehicles would add 22 billion euros of capital costs, it said.

“The effect of reduced spending on fuel more than outweighs the impact of increased spending on vehicle technology to reduce carbon emissions,” according to the e-mailed report. “Most of the money spent on fuel leaves the European economy, while most additional money spent on fuel-saving technology remains in Europe as revenues for the technology suppliers.”

The EU is at the forefront of global efforts to reduce the greenhouse gases blamed for climate change, targeting a cut of 20 percent in 2020 from 1990 levels. The 27-nation bloc already has a non-binding goal of cutting the average CO2 from passenger vehicles to 95 grams a kilometre in 2020 from 159 grams in 2007, a target the European Commission proposes should be binding.

The European Parliament’s Industry, Research and Energy Committee is tomorrow scheduled to issue a non-binding opinion on making the 95-gram goal for cars and other standards for vans mandatory, the first step in a process that needs authorisation by the whole Parliament, as well as by member states.

Jobs Added

Today’s report for The Hague-based foundation, examines the effects excluding taxes in 2030 of meeting the proposed car and van standards for 2020, plus improved efficiency of less than 1 percent a year for the following decade. The policy would add 356,000 jobs to the EU economy by 2030, even after accounting for lost posts in refining, according to the report’s authors.

In a second scenario that assumes meeting 2020 goals and improving vehicle efficiency by about 3 percent a year through 2030, the bloc’s fuel bill would fall by 79 billion euros, the study showed. The capital cost of the car fleet would rise by 46 billion euros and the EU economy would add 443,000 jobs.

The overall economic effect of either trajectory would be “neutral to mildly positive,” according to the study.

In the less efficient scenario, the bloc’s gross domestic product would gain an extra 16 billion euros in 2030, while a higher level of efficiency would add 10 billion euros. Those figures are on top of GDP, at 2008 prices, of 15.6 trillion euros in 2030, assuming no vehicle efficiency improvements.

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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