On track to be greener

Toyota, PSA/Peugeot-Citroen, and BMW are the carmakers closest to reaching their EU-mandated CO2 targets, according to data by market researcher Jato Dynamics.

Toyota, PSA and BMW need to cut their overall fleet emissions by 7 per cent or less to comply with the tougher emissions regulations, which start to take effect next year and go into full effect in 2015.

By then, the industry must reduce CO2 emissions from new cars sold in Europe to a fleet average of 130 grams per kilometre.

Last year's average was 140.9g/km, down from 145.9g/km in 2009, according to Jato's analysis of 21 European markets.

Daimler, Mazda, and Nissan will need to speed up the pace of their CO2 cuts to help the industry reach the overall goal.

If the carmakers fall short, they will face steep fines.

From 2012 to 2018, the penalties that a a car group faces for being over its target are: €5 ($9) a vehicle for the first g/km of CO2; €15 for the second gram; €25 for the third gram; and €95 from the fourth gram onwards.

A carmaker with sales of 1 million units in Europe that misses the target by 1g/km of CO2 faces a €5 million fine.

"I don't think anyone would be put out of business," said Gareth Hession, Jato vice president for research. "But I think you would have to significantly change your retail pricing position if you were to carry on producing high-emitting cars."

Jos Dings, director of Brussels-based green transport campaigners T&E, thinks it is unlikely carmakers will miss their targets.

"They are clever enough to test the cars in a way that they can comply," said Dings.

New engine technologies and a sales mix that has shifted toward cheaper, smaller, lighter vehicles is helping carmakers reduce CO2 emissions, Jato and T&E conclude.

Toyota only needs to cut its fleet CO2 by 4.2 per cent by 2015 to reach its EU target of 124.8g/km.

Overall, Toyota ranked second in Europe last year based on average CO2 emissions of 130.0g/km, according to a Jato review.

Fiat had the lowest group CO2 last year - 125.9g/km. The Italian carmaker needs to drop down to 116.1g/km - an 8.4 per cent decrease - by 2015.

T&E feels carmakers previously exaggerated the time needed to comply with car CO2 limits.

During 2008, carmakers lobbied aggressively to extend by three years a deadline for average new car CO2 emissions to reach 130g/km.

As a result the EU postponed the target year from 2012 until 2015.

"This has woken up people to not believe what the industry says about feasibility," T&E's Dings said. Said Jato's Hession: "If you set the goal at 120g/km instead of 130gr/km, I think the majority still would have met that. But you would have knock-on costs to consumers and you would have had an impact on the profitability at some of those corporations."

Hession also warns that meeting the next goal - 95/g/km by 2020 - will be even harder.

"We are getting to the point where a lot of the eco-technology is becoming mainstream, so moving to the next step and beyond becomes ever more challenging and expensive," he said.

"You start to need to make parts out of magnesium and other exotic and expensive materials and the costs start to ramp up."

To reduce the amount of CO2, a gas blamed for climate change, the EU set carmakers individual CO2 reduction targets as part of a goal to cut average new-car emissions in Europe overall to 130g/km by 2015 from 160g/km in 2006.

The 130g/km figure is equivalent to fuel consumption of about 5.6 litres of petrol or 4.9 litres of diesel fuel per 100km.

Pressed by French and German carmakers, the EU also introduced also a weight-based system which sets individual targets for each carmaker.

Fiat, which sells mainly small cars, had the lightest average weight for its models at 1067kg last year compared with 1337kg in 2009.