While the world continues to belch out pollutants, carmakers are coming to terms with the EU's decision to legislate on emissions, writes Donal Byrne
There can be very little dispute about the conclusions of the Intergovernmental Panel on Climate Change (IPCC) report on the state of the world's environment, which was published last week.
The distillation of the scientific knowledge and logic of the world's leading researchers on climate change makes for truly shocking reading: predicted temperature increases of between 1.1 and 4.0 degrees Celsius by the end of the century; corresponding rises in sea levels of 28 to 43cm; the disappearance of arctic sea ice during summer, increasing numbers of heat waves and more intensive tropical storms are all predicted.
Poverty, starvation, pollution and death will be the consequences. Most worrying of all, however, is that it is too late to prevent these changes - all we can do is try to stem them.
Against this background, European car manufacturers are struggling in their PR battle with the EU to argue why they should not be forced into mandatory reductions in C02 emissions from cars to an average of 130 grammes of C02 per kilometre (the average car now produces about 140 grammes) by 2012.
The industry argues that the added expense will threaten jobs, move production outside of the EU and cause huge competitive loss.
"At least 12 million EU workers and their families count on a balanced policy on CO2 emissions from cars. The car industry does not want to be part of an experiment. If left unchanged, this proposal would erode the economic strength of Europe," says Sergio Marchionne, president of the European Automobile Manufacturers Association.
Well, they would argue strongly against anything that affects their profit margins, I hear the more sceptical among you say. However, the European car industry does have a point when it says perhaps the finger of blame should be pointed more forcefully elsewhere.
There is a real paradox in the fact that the European car industry is actually responsible for 1.5 per cent of global carbon dioxide emissions - half of the figure in the United States and two thirds of the figure for the Asia-Pacific region, according to a new report from Lehman Brothers - one of the world's biggest investment banks - analysts.
The fact is that almost 60 per cent of the world's greenhouse gas is produced by the consumption of energy but only 5 per cent of the figure is due to cars.
So the EU contribution to that overall figure is 1.5 per cent of the total. The argument the industry is putting forward therefore is that Europe has embraced its Kyoto obligations enthusiastically but America and Asia have not.
In other words, Europe is going greener while America, China and India are continuing to belch out pollutants unchecked.
Let us consider some facts about the United States' contribution to global warming: it has 4 per cent of the world's population but produces a quarter of the world's carbon dioxide emissions; it consumes 25 per cent of the world's oil but has only 2 per cent of its oil reserves; it has 160 million people living in areas with smog at officially classified dangerous levels; the average American produces almost three times as much refuse every year as the average Italian and public transport accounts for only 1 per cent of all travel in America.
Of all of the factors affecting climate change, energy consumption is the most destructive (the others are refrigeration and air conditioning; agricultural practices; land use change and industry, which, oddly, is less than 5 per cent of the total figure) and it is the one that needs to be tackled most urgently.
How to do so is the big question. The burning of oil and coal and other fossil fuel is choking the planet and until alternatives are embraced we still have the problem.
This is neither an argument for nuclear power nor an apologia for the car industry, it is more about perspective.
And there is another statistic that the European car industry must accept. It may be a small global contributor to CO2 emissions, but passenger cars alone contribute 11 per cent to the EU's output of CO2.
The European industry has been slow to change and an EU official recently told us that the decision to press ahead with the new measures was as a result of the industry's inability or unwillingness to change quickly enough.
This is summed up by the view of one European car company executive who once told me: "Car companies are like any other. The only things that make us spend more than we have to are competition and regulation."
While the companies protest, some of their number are making the best of the situation. Fiat has emerged as the greenest manufacturer in a European table for emissions - that is because it makes smaller cars with cleaner engines - and companies like Peugeot and Citroën have been aiming greener for several years now.
So what impact will the current debate have in Ireland?
Toyota Ireland marketing director, Steve Tormey, believes people will now start moving towards cars with smaller engines and opt more for diesel, which produces much lower levels of CO2.
"It is the luxury cars that will pose the problem. Lexus now has hybrid technology options and people looking for a big car will still go for a big car, but maybe opt for a green alternative. Someone driving a 5-Series BMW is not suddenly going to go out and buy a 1.0-litre car."
Toyota will be producing a number of models with hybrid technology (its Prius is the only car featuring it now) within five years. Steve Tormey argues, however, that expensive hybrid technology needs to be supported - the Prius attracts a tax break on VRT. "This debate does not mean greener cars with lower emissions are going to be top of buyers' agendas. People respond when they are penalised or incentivised - that is what makes the difference."
He points to the fact that Toyota sold 150 Prius cars last month alone and will sell some 500 this year "if we can get them".
In the meantime there will be some frantic re-shuffling of projects in companies like Mercedes, BMW and Volvo as the new reality nears.
Green tax in the next budget will link car tax and CO2 emissions
Green car tax is on the way and this year's budget will see measures introduced that directly link car tax and CO2 emissions for the first time.
The Department of Finance has taken the unusual step of asking for submissions from interested parties on how the new tax should be structured (you have until the first of next month to make your contribution to VRT@finance.gov.ie, should you wish) but it has already given a fairly clear indication of what system it favours itself.
Vehicle registration tax (VRT) yielded some €1.3 billion in revenue last year, so expect as much stick as carrot in the final taxation equation. The department says that "adjustments in the VRT system, as well as in the motor tax system, can both affect car buyers' behaviour directly through pricing adjustments favouring lower emission cars, but also by making more explicit in their minds the link between their vehicle choice and its environmental impacts."
There are various options for structuring this tax but the most favoured are: retain the current engine size bands and VRT rates but to apply a reduced rate of VRT for cars with CO2 emissions below a set rate of emissions, and put a levy on cars above a certain range. The same range would apply to all engine size bands.
So, for example, a car with the lowest rating would attract, say, 5 per cent less VRT, cars in the middle would probably remain the same and cars in the higher brackets would probably attract a 5 per cent penalty.
The other favoured option is to introduce five engine size bands with small cars getting the greatest reduction in VRT rates (10 per cent as against 22.5 per cent of the purchase price of a car below 1.2 litres with less than 145 grammes of CO2 per kilometre, for example) and bigger cars attracting a much higher penalty (40 per cent of the purchase price for a car with a 2.5-litre engine and producing 191 grammes of CO2 per km, for example).
However, the department says it has not yet finalised any particular structure and is waiting to complete its acceptance of submissions. Whichever system is adapted though, people buying cars with very big engines or four-wheel drive vehicles for everyday use look set to take the biggest hit.