German diesel vehicle bans: who stands to lose out?

Frankfurt am Main – A top German court has ruled that older diesel vehicles can be banned from parts of city centres to reduce harmful air pollution, with potentially far-reaching consequences for Europe’s top economy.

Here’s how Tuesday’s decision could affect different groups in the future.

 

– Diesel drivers –

 

Owners of diesel cars face uncertainty, as it is up to local governments whether to ban older vehicles.

Politicians have not given up hope of finding an easier solution.

“My aim is and remains that bans should not come into force,” federal Environment Minister Barbara Hendricks said following the ruling.

But around 10 million of the 15 million diesel cars registered in Germany fall short of the latest Euro 6 EU emissions regulation, potentially making them eligible for a ban, as well as two million diesel trucks.

People in Stuttgart and Duesseldorf — the two cities in Tuesday’s case — could be among the first hit.

Commuters and car-dependent workers could be most affected, while some residents, emergency services and tradesmen will enjoy exceptions.

Financially, diesel owners will suffer “a significant reduction in the value of their vehicle,” said auto industry expert Joerg Hoenemann of consultancy EY.

The good news: judges said implementation of driving bans should be gradual, with only cars meeting the Euro 4 standard eligible for immediate restrictions. In Stuttgart, for example, the more numerous and more recent Euro 5 cars are safe until at least September 2019.

 

– The car industry –

 

Fear of diesel bans and the legacy of Volkswagen’s 2015 “dieselgate” emissions cheating scandal have undermined the motors’ market share in Germany, from 48 percent in 2015 to 39 percent last year.

If bans deepen diesel’s slump and a trend develops towards less labour-intensive electric motors, a large chunk of the 800,000 jobs in the German car industry could be at risk.

Meanwhile the debate on bans has increased political pressure for industry to pay up to help right past wrongs.

So far they have offered trade-ins and updates to motor control software, but opponents say those steps don’t go far enough and are calling for hardware fixes.

A study by Evercore bank found such complex hardware refits could cost more than 7.6 billion euros ($9.4 billion).

 

– Government –

 

Some 70 German cities including Munich, Stuttgart and Cologne recorded average nitrogen dioxide levels above EU thresholds in 2017, according to the Federal Environment Agency (UBA).

Germany could face legal action from Brussels if it fails to hit targets.

The federal government has cobbled together a one-billion-euro fund to pay for air-friendly improvements to public transport like electric buses.

But local authorities are pressuring Berlin to introduce a standardised “blue badge” nationwide to identify the least-polluting cars, simplifying enforcement of diesel bans if they come about.

The subject could divide a prospective coalition government under Chancellor Angela Merkel’s conservatives, who largely favour sparing car owners and the industry, and the centre-left Social Democrats.

It will also be up to cities and Germany’s 16 federal states to upgrade transport links and coax more people from behind the wheel.

Another tug-of-war over who foots the bill with the federal government is likely, especially after ministers this month proposed making public transport completely free.

 

– Health and the environment –

 

Some analysts warn that on a global scale, fewer diesel cars in Germany could actually be worse for the environment.

European governments originally encouraged carmakers and drivers to choose diesel as the motors emit less of greenhouse gas carbon dioxide than similar petrol engines.

“It will be more and more difficult for the manufacturers to meet EU limits on CO2 emissions by 2021” with fleets including fewer diesels, Bratzel predicted.

“That could cost them a lot more money” in fines, he added.

As for the fine particle and NOx pollution at the root of the case, “driving bans only address the symptoms and not the cause,” Bratzel judged.

“On peak days they can help meet the NOx limits, but there will be no reduction of fine particle pollution, which is much more dangerous to health” and is mostly generated by friction on tyres and brakes, he said.

By Tom Barfield