Europe’s climate targets won’t be risked by news that the Volkswagen scandal has widened to CO2 emissions but the bloc might find it harder to lay ground for global carbon markets at next month’s Paris talks.

The German carmaker this week reported “irregularities” in CO2 emissions levels that could affect about 800,000 cars in Europe, causing its shares to plunge again, weeks after it admitted cheating on tests for other pollutants.

Environmental campaigners T&E think the revelation is “the tip of an emerging iceberg in terms of a systematic manipulation of vehicle tests” that highlights the growing gap between test and real-world CO2 emissions for all auto manufacturers.

“The problems in Europe arise because carmakers are allowed to test specially prepared ‘golden’ vehicles in unrepresentative laboratory tests conducted by testing organisations they pay. The tests are overseen by national type approval authorities, which compete for the business of ‘approving’ cars for sale and are paid by the carmakers,” they said.

But even if each new car tested is found to have higher CO2 output, this won’t directly affect EU member state reported emissions that count towards the bloc’s overall greenhouse emission goals, because the levels are calculated based on the amount of fuel bought, a T&E spokesman said.

This means any subsequent revisions to car CO2 data won’t lead to pressure to make additional reductions in other sectors – or to set deeper targets under the EU ETS – to cover a shortfall to the bloc’s legally binding 2020 and intended 2030 greenhouse gas targets. Though ultimately the gap between test and real-world emissions is not driving down the sector’s CO2 output as quickly as the Commission would have envisaged and this may eventually pressure regulators to take additional action.

“We are overachieving on our 2020 targets,” said a European Commission spokeswoman when questioned over the VW scandal at a daily press briefing in Brussels, adding that the bloc’s executive had “an unwavering commitment to reducing CO2 emissions.” The EU is on course to cut its emissions by 4-5 percentage points more than the 20% 2020 target.

TOUGHER STANCE

The VW scandal could, however, signal a tougher stance among EU lawmakers in setting upcoming emission laws, including the post-2020 ETS reforms.

The latest CO2 standards for new cars agreed in 2014 were delayed by one year to 2021 after heavy lobbying from German automakers, who warned that stricter regulations would cost jobs.

“It could now be easier to sell to the public the need to take additional measures on car emissions,” said Philip Ruf, a carbon market analyst at ICIS Tschach Solutions.

GLOBAL CREDIBILITY

In the nearer term, EU negotiators are heading to Paris at the end of the month, aiming to enshrine in a new global climate treaty strict rules for accounting and auditing GHG emissions, which would underpin international emissions trade and further another EU goal of expanding carbon markets worldwide.

But the moral authority and the EU’s self-determined leadership role at global climate talks has been put into question by the VW scandal, according to BNEF analyst Richard Chatterton, as quoted in a Bloomberg article.

“How can the EU ask developing countries to adhere to strict monitoring, reporting and verification standards when one of its leading firms has been deliberately bending the rules?”

By Ben Garside – ben@carbon-pulse.com