The automobile industry is a vital part of the German economy, accounting for about 20% of all industrial activity in that country. Today, Germany is home to such world class auto manufacturers as BMW, Audi, Mercedes, and Volkswagen. Combined, they employ nearly 800,000 workers. Hundreds of thousands more work for outside suppliers or in car sales, vehicle maintenance, and automobile financing. Economically, what’s good for the German car industry is good for Germany.
That’s a problem for regulators. While every single nation in the world (except the US) thinks the emission reduction goals agreed to in Paris in 2015 are vital to slowing global warming, nobody wants to be kill the goose that laid the golden egg. According to influential German newspaper Süddeutsche Zeitung, representatives from various German car companies have been quite successful lately at obtaining face to face meetings with regulators to talk about future emissions standards. Environmentalist groups complain they have been shut out of those conversations.
As a result of all this schmoozing, the European Commission, which is responsible for setting emissions policy, is expected to back away from a plan to tighten emissions regulations and abandon the idea of fines for manufacturers that do not comply. Originally, the proposed regulations required emissions to be reduced by 25% by the year 2025 and 35% by 2030.
But those targets have been adjusted downward to 15% by 2025 and 30% by 2030. Furthermore, the Commission intends to waive binding quotas for low and zero emissions cars and substitute a system of rewards for companies who produce cars that emit less than 50 grams of carbon dioxide per kilometer.
Around the world, different countries and jurisdiction are wrestling with similar issues. California is the leader in setting hard quotas which manufacturers must meet in order to sell cars within that state. China has a blended system in the works that will require a certain percentage of new cars to qualify for emissions credits. Electric cars will get more credits compared to plug-in hybrids or conventional hybrids.
Süddeutsche Zeitung claims Volkswagen has been especially active in its campaign to “work the refs,” so to speak. It says Günther Oettinger, a member of the European Commission who is from Germany, seems to have caved completely to the wishes of the German car industry after receiving a call from Matthias Wissmann, the leading lobbyist for the German auto industry. Volkswagen, of course, is a prominent member of the trade association that employs Herr Wissmann.
The situation in Germany is similar to what is happening in the US, where trade groups representing foreign and domestic automakers are calling for a rollback of Obama era fuel economy standards. While the headlines all trumpet the coming electric car revolution and the manufacturers are all touting how green their offerings will be some day, behind the scenes a furious struggle is going on to keep the gravy train of automotive profits going as long as possible.
One would expect nothing less from capitalist economies, but the larger question is how much capitalism can the world tolerate before it becomes uninhabitable?