Exclusive: French carmakers back German bid to delay CO2 curbs - sources

BRUSSELS/PARIS Fri Sep 27, 2013 6:38pm BST

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BRUSSELS/PARIS (Reuters) - Germany has enlisted French carmakers' support for a last-ditch bid to delay new EU vehicle emissions limits by four years as it battles to win more time for its luxury auto industry, government officials and diplomats said.

Berlin wants to re-open and water down draft carbon dioxide goals agreed in June by introducing the phase-in period, under a proposal circulated by diplomats on Friday and seen by Reuters.

Chancellor Angela Merkel's government is engaged in an uphill struggle to weaken the measures cutting new car emissions to 95 grams of CO2 per kilometre by 2020 - a major challenge for upmarket German automakers Daimler (DAIGn.DE) and BMW (BMWG.DE).

Germany has so far been unable to secure support from a blocking minority of EU governments to dilute the new rules, ahead of a vote expected next week.

But Renault (RENA.PA) and PSA Peugeot Citroen (PEUP.PA) have broken ranks with Paris to side with their German industrial partners Daimler, BMW and Opel, officials said.

"We became aware of this common industry position last week," a French government official said. Germany is expected to "use it to press the new demands", the official added.

Merkel intervened in June to prevent an earlier scheduled EU vote after Berlin unsuccessfully pressured other governments to oppose the draft, warning of possible consequences for cooperation in other areas.

The latest German move would result in effective emissions of 104 g/km in 2020, 10 percent above the target, according to Brussels-based campaign group Transport & Environment.

"Germany's real motivations for preventing a vote are now clear - to give its luxury carmakers four more years to keep selling gas-guzzlers," policy coordinator Greg Archer said.

Renault and Peugeot declined to comment on whether they now supported Germany's bid to loosen the rules.

Both French carmakers have previously said they stand to gain competitive advantage from tighter CO2 limits, thanks to the below average size and fuel consumption of the cars they sell.

"Peugeot has already taken the 2020 targets into account and is well on track to meet them - while also aware that they are tough," a spokeswoman said.

But the French carmakers have come under pressure from their respective German industry partners to adopt a common stance.

Renault and Japanese affiliate Nissan (7201.T) share a growing number of engines and vehicle architectures with Daimler's Mercedes-Benz and Smart models.

Peugeot hopes to renew a major engine-sharing deal with BMW while developing future vehicles with 7-percent shareholder General Motors (GM.N) and its Opel division.

Renault executives often discuss regulatory issues with Daimler counterparts, a source close to the French carmaker said. "Renault and Daimler talk a lot about this kind of stuff."

COST CONCERN

Under the latest German counter-proposal, the 95 gram limit would apply only to 80 percent of new cars in 2020, rising by 5 percentage points each year to full implementation in 2024.

The rules should be "designed (so) that manufacturers are enabled to reach the 2020 target in the most cost-effective way", the document says. "Therefore they need more flexibility in the transition phase."

Most carmakers are on course to achieve CO2 emissions comfortably below the interim EU target of 130 g/km for 2015.

Germany has so far won backing from Hungary, Slovakia and the Czech Republic - not enough to block the vote. A French reversal could change that.

But Socialist President Francois Hollande is under pressure from Green deputies and ministers to stand firm.

France will study the German initiative "just as we would any other proposal", the government official said.

"But as things stand we remain in favour of the agreed deal," the official added. The French carmakers' 11th-hour position is "not something we would take into account".

Paris has yet to respond, a German government official said. "It's not clear if they will support the French carmakers' position."

Germany's renewed determination to torpedo the CO2 legislation is irking many European partners, officials from several EU states and institutions said.

"It's as if after a football match with a given result, the losing team decides to change the rules and everyone has to restart the match until they win," one diplomat said.

Berlin's approach "bodes badly for the future" of EU decision-making, said Chris Davies, a member of the European Parliament for Britain's Liberal Democrats.

"Special pleading by Germany on behalf of the most lucrative carmakers has to be resisted, or there's a risk of undermining EU industrial policy across the board."

(Additional reporting by Andreas Rinke in Berlin, Christiaan Hetzner in Frankfurt and Gilles Guillaume in Paris.; Editing by Jane Merriman and Mark Potter)

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