14 January 2005

The European Commission has published a working paper recommending rules for establishing fiscal incentives for cars that exceed the current regulatory requirements. Member States that wish to introduce such incentives should grant them for vehicles that meet a PM emission limit of 5 mg/km. “At the present state of technological development, it appears that a value of 5 mg/km or below can only be met if diesel cars are equipped with particulate filters,” said the Commission.

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The current mandatory Euro 4 emission standard—effective January 2005—is 25 mg/km. The Commission has not recommended any specific NOx limits in regards to the tax incentive programs.

The European emission legislation allows the Member States to introduce tax incentives for automobiles that exceed current emission standards. A number of countries had implemented such incentives for Euro 4 vehicles offered ahead of time. As the Euro 4 standards are now mandatory, tax incentives should be logically based on the future Euro 5 limits. Since the Euro 5 regulation has not yet been proposed, the Commission published its recommendation to avoid fragmentation of the internal market, with different Member States using different tax incentive criteria.

Germany, France, The Netherlands, Austria and Sweden have been all interested in establishing their own Euro 5 tax incentive programs. The German government was aiming at introducing incentives from January 2005, based on the values that would be proposed under Euro 5. To be able to do so, it called upon the Commission to present a Euro 5 proposal by the end of 2004.

The announcement was made yesterday in Brussels, during a joint press conference held by Günter Verheugen, EU Commission Vice-President responsible for Enterprise and Industry, and Bernd Pischetsrieder, President of ACEA. At the same conference, Verheugen announced the creation of a high level group for a Competitive Automotive Regulatory System for the 21st Century—CARS 21. The group’s objective is to generate recommendations to improve the worldwide competitiveness of the European automotive industry making at the same time Europe more attractive for foreign investments. Verheugen named the following more particular objectives for the CARS 21 group:

  • “Firstly, chart the way towards sustainable development of the automotive industry for the next 10 years, to avoid negative interaction and cumulative effects of the various policies.
  • “Secondly, define the best possible regulatory approaches, in order to improve the competitiveness of this industry. The new Commission will not hesitate to break with the past, when it comes to cutting red-tape and over-regulation.
  • “Thirdly, the group shall set out the necessary conditions for ensuring that Research and Development efforts translate into concrete innovation that gives our industry a first mover advantage.”

Source: European Commission