Diesel decline risks reversing Germany's CO2 gains
Declining demand for diesels has put Germany on track to post its first rise in CO2 from its new-car fleet since EU policymakers began regulating tailpipe pollution in the late 1990s.
According to statistics from Germany’s automobile importers association, VDIK, new vehicles sold in Germany emitted 127.6 grams of CO2 per kilometer during January through May. That’s up from 127.0g/km during the first five months of last year.
“If the current trend continues and the diesel market performs the way it has in the first half of this year, and SUVs maintain their rise, then we may have a small increase at the end of the year,” said Bernd Mayer, who is a VDIK managing director.
The last time this happened in Germany, at least among VDIK members, was in 1997, when emissions were only starting to become a political and regulatory issue for carmakers in the EU following the adoption of the Kyoto climate treaty that year. The German motor vehicle authority, the KBA, only began recording data about 10 years ago.
Should emissions rise in Europe’s largest auto market, it would indicate the risk that many carmakers have pointed to, namely that a sharp reduction in diesel sales would pose a serious threat to reaching the EU’s target of reducing overall fleet emissions to 95g/km starting in 2020, down from an EU average of 118.1g/km in 2016.
While the data only includes the first five months and only refers to one market, Germany could be a proxy for the broader trends. Germany’s diesel penetration rate has dropped to about 41 percent since March after making up nearly half of all new-car sales in the past. That drop followed a consumer scare that drivers owning diesels purchased as recently as 2015 might be banned from entering cities to help reduce another pollutant, smog-causing nitrogen oxides.
The pullback by buyers comes at a bad time for the industry. According to data from the European Environment Agency, last year’s 1.4g/km reduction in CO2 from the EU’s new-car fleet was the smallest year-over-year improvement recorded in the last decade. This can be attributed to cooling demand for diesels, which are roughly 15 percent to 20 percent more fuel efficient than vehicles with gasoline engines, and the recent boom in SUVs. The high-riding vehicles typically have poor aerodynamics compared with hatchbacks, sedans and wagons, and are often heavier.
“Normally, we have a curve which is permanently on the decline – and that is true within the course of a year as well, in other words the first-half figure is typically higher than that of the year end,” said Reinhard Elkmann, head of economic analysis, statistics and market research at VDIK.
Among VDIK members, which includes low-CO2 producers such as Peugeot, Citroen, Fiat and Toyota, the association calculates that its own new-car fleet emitted 122g/km of CO2 last year, 4.9g/km less than the overall German market, and a 38 percent reduction over the level in 1995.
Elkmann said that whether CO2 emissions increase for the overall German market this this year “will depend to a large degree how demand develops in the second half for diesels and SUVs.”