When hearing about a politician from the right side of the political map who believes we need to make a choice between fighting climate change and economic progress, you probably have a member of the GOP in mind. However, I doubt many would instinctively associate this notion with German Chancellor Angela Merkel.
Yet last month, Chancellor Merkel was the one who led the efforts to block new EU regulation aimed at improving the fuel efficiency of European cars over concerns the measure would cost jobs in the auto industry. “This is also about employment,” Merkel told reporters in Brussels. “That’s why we need time to review and evaluate and decide what we will do. That’s why the vote didn’t happen.”
This position was somewhat surprising considering that only two months ago, at Germany's annual Petersberg climate talks, Merkel called for a binding pact by 2015 to reduce carbon emissions, saying that waiting is not an option as inactivity only increases the cost of combating climate change later on.
Even more surprising was what seems to be the main reason behind this flip-flop – heavy lobbying from the German automobile industry which represents BMW, Daimler, VW, Porsche and around 600 other companies and opposed the new regulation. It was pretty interesting to see that auto companies we usually hear about in the context of radical innovation in mobility, bold sustainability strategy or partnerships with carpooling ventures are also lobbying against tougher climate regulation.
So what was the fuss all about? Basically the new regulation would require new European cars to emit no more on average than 152 grams of carbon dioxide (CO2) per mile by 2020, compared to the current regulation that allows carmakers to emit up to 208 grams per mile on average in 2015 and sets a non-binding goal of 152 grams for 2020. Just for comparison, the American CAFÉ standards for 2025 (54.5 mpg) are equivalent to 163 grams of CO2 per mile.
Apparently, for German carmakers even the current European standards are challenging because of their relatively bigger size compared to other carmakers in Europe like France’s Peugeot and Italy’s Fiat that sell smaller cars with lower emissions. The Guardian reported that according to the International Council on Clean Transportation, German carmakers currently produce a fleet with emissions that are more than 10 percent above the 2015 European requirement (208 gCO2/mile).
Rather than looking at the new regulation as an opportunity to push the German auto industry forward, Chancellor Merkel described it as a risk, arguing that stricter caps could severely handicap Germany's automobile industry. Spiegel Online also reported, according to the German newswire, DPA diplomats from Berlin had threatened that the German automobile industry would be forced to move out of Europe if the stricter emissions levels were passed.
Merkel’s request for more time echoed the German auto industry’s approach, “with such an important policy decision, it’s important that prudence trumps speed,” the German auto industry lobby VDA said in a statement, according to Bloomberg. “Therefore, it’s correct that sufficient time to review compromise suggestions are allowed.”
Not everyone shared this sentiment. Greg Archer of the European NGO Transport and Environment said, " It is ludicrous for Germany to claim it needs more time, as the 95g [per km = 152g per mile] target was agreed five years ago and Germany has already put forward five different proposals that have been rejected by the vast majority of EU countries."
Actually, if you look back five years, you see that even then Chancellor Merkel was working on buying more time for the German auto industry, pushing to delay the binding 208 grams per mile target from 2012 to 2015 after the German automakers heavily lobbied against the EU original proposal. Just like today, they claimed that “they would be unfairly disadvantaged as a result [of the new regulation], given that most car companies in the country, including Daimler, BMW and Audi, specialize in larger luxury automobiles that emit more CO2."
The position Merkel has taken now makes sense considering she’s a politician facing a tough election in two months and doesn’t want to confront a powerful industry or face allegations she prefers jobs over the economy. I guess that when you have an election coming, it’s much more difficult to stress, like President Obama did last month, that fighting climate change and growing the economy should not be an “either/or” proposition, but rather a “both/and” one.
What doesn’t make much sense is the position of the German car industry. Mark Vachon, VP, GE ecomagination, said once: “You don’t need to choose now between the economy and the environment. Innovation is the way you can have both.” And for some reason, while we hear time and again how German automakers are innovative and apply what Vachon was talking about, when push comes to shove they seem to operate very differently, acting in a way that we definitely wouldn’t expect from companies claiming to advance automotive sustainability.
Interestingly, the only company that publicly went against the delay of the new regulation was Ford. The company said in a statement it was disappointed that a minority of member states was able to delay a well-balanced agreement. “We will now have to re-group within the industry to determine the next steps,” the company added.
So, at the end of the day what we’re left with is regulation that will be delayed for unknown time and the question if companies can truly be committed to sustainability while lobbying to stop a tougher climate regulation at the same time. What do you think?
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.
Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.