EU said to mull $22B package to boost sales of ‘clean cars’

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The European Commission is preparing a major economic stimulus package that could include 20 billion euros ($22 billion) to offer consumers in the 27-nation bloc incentives to buy environmentally friendly passenger cars, German daily newspaper Sueddeutsche Zeitung reported.

Details of the subsidies for car purchases have not been finalized. Discussions are still taking place and there are disagreements over how to define “clean cars,” the paper paper said, citing an internal EU document. In the U.S., there has not yet been movement toward a similar “Cash for Clunkers” initiative.

The German transport ministry is pushing to include cars that emit 140 grams per km, far above the 2021 fleet emission target of 95 g/km. This would mean buyers of crossovers such as the Volkswagen Tiguan with a 148-hp engine would qualify for a subsidy, the Sueddeutsche Zeitung said.

Such a move would be “completely unacceptable,” Stef Cornelis, from the Brussels-based lobby group Transport & Environment, told the paper. Stefan Heimlich, head of the European motorist club ACE, also criticized the German proposal, saying it would hurt, not help, automakers’ efforts to reach CO2 emission reduction targets mandated by the EU.

The European auto industry, the world’s second largest by production after China, has pushed for a coordinated and harmonized fleet renewal scheme for all vehicle types and categories.

On May 14, CEOs from major car and truck manufacturers and their suppliers met with members of the Commission to discuss a recovery plan for the automotive sector “with a view to stimulating the wider economy and bolstering the transformation to a carbon-neutral society.”

France’s Finance Minister, Bruno Le Maire said on May 18 that any aid offered to the industry by his government offered would seek to encourage sales of cars with lower emissions.

German Chancellor Angela Merkel also has made it clear that any economic stimulus packages must also serve to protect the climate. Her comments make it unlikely that Berlin would introduce incentives to encourage consumers to swap old cars for new models. Many European governments used such scrapping programs in 2009 to boost new-car sales.

European Commission President Ursula von der Leyen on May 13 outlined her reasoning for a focus on carbon-friendly stimulus measures. “If it is necessary to increase our debt, which our children will then inherit, then at the very least, we must use that money to invest in their future by addressing climate change, reducing the climate impact and not adding to it,” she told the European Parliament.

The incentives would be part of a 100 billion-euro ($110 billion) package economic program for the transport sector, according to the Sueddeutsche Zeitung.

Half of that sum might be earmarked towards accelerating development of new alternative drivetrains to cut emissions from road transport, the one major area of the economy that continues to see rising carbon emissions. Funds would also go towards constructing 2 million public charging stations for EVs by 2025.

A spokeswoman for the Commission declined to comment on the Sueddeutsche Zeitung report, but told Automotive News Europe that a new “Marshall Plan” to underpin an economic recovery would be presented on May 27.

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Saurabh Shukla

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