EU Mulls Proposal to Spare Carmakers Hefty Emissions Fines

(Bloomberg) -- The European Union’s executive arm may propose a solution in March to spare carmakers emissions fines while sticking to its ambitious green transport goals, according to a senior lawmaker from the region’s biggest political group. 

The European Commission is in talks with the automotive industry to address the challenges it faces and is set to come up with an action plan next month. That may include a legislative change to allow for banking and borrowing emission credits to enable carmakers more flexibility in meeting pollution norms, said Peter Liese, lead lawmaker for environmental issues for the European People’s Party in the European Parliament.

“I hope there will be short-term measures that allow us to keep the targets but to be flexible on the penalties,” he told reporters in Brussels on Monday. 

“For example, if you don’t meet the targets in 2025, you can compensate this by overachieving the targets in 2026 and 2027,” Liese added. “I think this is a good thing. We have this already in heavy-duty vehicles, there’s no reason why we can’t have it in light duty vehicles and cars.”

A proposal by the commission would need approval by member states and the EU parliament to enter into force. 

The European Automobile Manufacturers’ Association, known as ACEA, has sounded the alarm over the prospect of steep fines for missing emissions targets. Volkswagen AG is trying to offset an estimated €1.5 billion ($1.6 billion) hit this year. To avoid such penalties, automakers are currently allowed to “pool” with others further along the route to electrifying, averaging out their emissions. 

However, that may benefit foreign producers such as Tesla Inc. and China’s BYD Co.

Public support for the EU’s Green Deal — unveiled five years ago as a cornerstone of potential growth — has shrunk amid worries about the costs of the energy shift and the competitiveness of the region’s industry. Carmakers in particular have suffered from persistent inflation and high borrowing costs, as well as apathy toward EVs.

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