Passing inspection.

Photographer: Sean Gallup/Getty Images

VW's Mea Culpa Implicates All Carmakers

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
Read More.
a | A

Volkswagen's voluntary admission of "irregularities" concerning the carbon dioxide emissions of its cars should send a shudder through the entire auto industry. Although VW's previous problem with nitrogen oxide emissions -- a software "defeat device" specifically meant to cheat tests -- appears to have been specific to the company, other automakers almost certainly share the flaw of building cars with CO2 emissions that look better on tests than in real life.

QuickTake The Cost of Carbon

The Washington-based International Council on Clean Transportation -- the  organization that led the U.S. Environmental Protection Agency to expose VW's diesel emissions fraud -- showed in a report this year that real-life CO2 emission levels from cars in Europe were increasingly exceeding test results. In 2014, it said, emissions from European passenger cars exceeded certification values by 40 percent, four times the gap in 2001, when standards were more lax. No real-world CO2 reduction has been achieved since 2010.

The emissions are higher than declared because fuel consumption is higher. Drivers know how difficult it is to achieve the consumption level car companies report for their vehicles. According to the ICCT, the divergence costs an average European car owner 450 euros ($489) a year. There's a cost for governments, too: They take in less in emission-based taxes. The Netherlands, according to the study, may be losing 3.4 billion euros a year because of the discrepancy.

And of course, there's a cost to the environment. According to the United Nations, total greenhouse gas emissions caused by transport in the U.S. are 16 percent higher than in 1990. In the European Union, they are 14 percent higher. Perhaps the increases would have been even bigger if emissions standards hadn't grown stricter, but the regulatory strictures seem pointless if they haven't achieved a reduction.

To get these results, ICCT collected anonymized data on real-life fuel consumption from sources such as the German web service Spritmonitor.de, which lets users track their gas mileage, as well as fleet management companies and car magazines that run real-life tests. Here is the divergence from CO2 certification values for various manufacturers, according to Spritmonitor.de data:

ICCT

Every manufacturer selling cars in Europe has the same CO2 "irregularities" as VW. In fact, most have a bigger problem. Toyota even has one with its hybrids. By raising the issue, VW is dragging others down with it. Most likely, VW's self-flagellation is the result of a management decision to take what accountants call a "big bath," bringing all potentially costly problems into the open in the shortest time possible.

In any event, carmakers around the world now will have to come clean or risk being exposed by regulators. I'm not sure an industry-wide witch hunt is a good idea, and it would be rather hypocritical. The ICCT has been reporting CO2 emissions cheating since 2013, and regulators in the U.S., the EU and elsewhere have been aware of the problem. Besides, they cannot but know that reported fuel consumption is a fiction. So they should take the blame along with the industry. 

In Europe at least, regulators realize that the standards they've set may be too stringent. No one is ready to enforce them by moving to real-world testing and demanding that non-compliant cars be taken off the market. Governments need to agree to a plan with the car industry and give it time to get the technology right. Applying the strict standards now won't lead to overnight greenhouse gas reductions, anyway: The average car on U.S. roads is 11.5 years old; in Europe, the average vehicle age is 9.65 years. Besides, low oil prices encourage people to travel more and buy cars with bigger engines, and a return to economic growth after the 2008 financial crisis is pushing fuel use higher.

Phasing out coal-burning power plants can achieve quicker results. Government agencies should follow consumers' lead: car buyers aren't eager to penalize VW for its emissions cheating. The German company recently reported its October results in the U.S., and they are marginally higher than a year ago. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:
Max Berley at mberley@bloomberg.net