French carmakers back German bid to delay EU carbon limits

BRUSSELS -- Renault and PSA/Peugeot-Citroen have reversed their stance and now support a German bid to delay a 95 grams per kilometer limit on average CO2 emissions for new cars in the EU, government officials and diplomats said.

Backed by German automakers, Chancellor Angela Merkel's government aims to water down a deal agreed in June to cut average new-car emissions to 95g/km by 2020 from 130/g/km now. The 95g/km target is equivalent to fuel use of 4 liters per 100km (59 U.S. mpg/71 UK mpg).

Berlin wants to introduce a four-year phase-in period under a proposal circulated by German diplomats.

Germany has so far been unable to secure support from a blocking minority of governments to dilute the new rules, ahead of a vote scheduled later this week. But Renault and PSA have broken ranks with the French government to side with Germany's Daimler, BMW and General Motors' Opel division.

"We became aware of this common industry position last week," a French ministry official said. Germany is expected to use it to press the new demands, an EU official said on Friday.

Alliance pressure

Renault and PSA have previously said they stand to gain competitive advantage from new CO2 limits, thanks to the smaller-than-average size and fuel consumption of the cars they sell. But the French carmakers have come under pressure from their respective alliance partners to adopt a common stance on CO2.

Renault and Japanese affiliate Nissan share a growing number of engines and vehicle platforms with Daimler. PSA is hoping to renew a major engine-sharing deal with BMW and is developing future vehicles with 7 percent shareholder General Motors and its Opel division.

Under the German proposal the average CO2 emissions limit of 95g/km would apply only to 80 percent of cars produced in 2020, rising by 5 percentage points each year to reach full implementation only in 2024.

The final rules should be "designed in a way that manufacturers are enabled to reach the 2020 target in the most cost-effective way," the German proposal says. "Therefore they need more flexibility in the transition phase."

The Transport & Environment lobby group said the latest German proposal would effectively raise the 2020 target by nearly 10 percent to 104g/km in 2020. It would also raise the average new car driver's fuel bills by 138 euros a year as new vehicles will be less fuel efficient, the Brussels-based group said.

'Gaz guzzlers'

Greg Archer, from Transport & Environment, said Germany wants to give its luxury carmakers "four more years to sell even more gas-guzzlers."

The lobby group said Germany still has not secured the support of enough EU countries to form a blocking minority to undo the deal negotiated in June. "But Chancellor Merkel is exerting extreme pressure on member states to bend to her demands," it added in a statement.

Renault and Peugeot, which had raised no previous objections to the proposed CO2 limits, declined to comment on whether they now support Germany's bid to loosen the rules.

PSA "has already taken the 2020 targets into account and is well on track to meet them -- while also aware that they are tough," a spokeswoman said.

Renault executives often discuss the company's regulatory stance with Daimler counterparts, a source close to the French carmaker said. "Renault and Daimler talk a lot about this kind of stuff."

Reuters contributed to this report