VW are facing a huge crisis as a company. I have been contacted by so many people across Scotland about the emissions scandal that I want to have a place on my website to specifically keep folk up to date with the action, the inquiry and, in due course, the penalties and compensation related to this. If you wish to sign up for my updates then please go to: www.alynsmith.eu/airquality
This page outlines the current state of affairs from an EU perspective.
In 2014, VW produced 10.14 million vehicles, made €10,847 billion profit and owned €351,209 billion in assets.
VW has said that this scandal will impact on just under 11 million vehicles worldwide:
- 1,189,906 in UK
- 508,276 are VW
- 393,450 are Audi
- 131,569 are Skoda
- 76,773 are Seat
- 79,838 are Volkswagen Commercial
EU Legal Framework
Legal NOx emission levels (the combined emissions of NO and NO2) are currently set within the Euro 5 and 6 regulations at 80 milligrams per kilometre, from 180 milligrams under the previous regulations.
To bypass these standards VW took advantage of the fact that modern cars need to know when they are on a rolling road to initiate a defeat device which cut NOx emissions temporarily. This clearly contravenes Article 5 (2) of Regulation (EC) No 715/2007 which explicitly bans defeat devices.
There is a serious concern here. Air pollution results in over 430,000 people dying prematurely in Europe and costs €940 billion annually in lost productivity. It seems to me that a case could be made that one of the reasons air quality standards have not improved across Europe is that cars have been polluting more than regulations permit. Indeed, this has been suggested in the past by EU Commissioners (letter from Commissioner Janez Potocnik).
I have written to the Scottish Environment Protection Agency outlining my concerns and enquiring what steps are being taken in Scotland.
Real Driving Emissions Testing
The easiest method to catch a company doing what VW did is to use a Real Driving Emissions test which analyses emissions whilst the car is on the road, not in a lab. This is precisely what the EU was proposing even before this scandal broke. The draft Commission Regulation on Real Driving Emissions test procedure outlined how the new NOX levels being proposed would be tested.
These tests were brought in as part of a wider framework of new regulations which would reduce the amount of NOX that could be produced to 80mg/km. What happened next is scandalous but I must first explain a small part of EU procedure that is rarely commented on. Comitology is a process though which regulations are transposed into a form in which they can be legally enforced. The reason this is not usually discussed is because it usually technical and uncontroversial!
Unfortunately, in this case, the Commission Comitology ruling allowed a conformity factor of 2.1 for type approval in 2017 and for all vehicles in 2019, dropping to a conformity factor of 1.5 for type approval in 2020 and for all vehicles in 2021. This means they effectively changed the law as follows:
- the ruling states that the proposed 80mg/km limit can be exceeded by 110% until 2021 (effectively replacing the limit value with 168mg/km)
- and by 50% thereafter (effectively changing the limit to 120 mg/km).
In January, the Commission unveiled a series of proposals to better regulate the testing of cars. They focused on three areas:
- further restricting any financial links between the organisations responsible for testing and the manufacturers,
- moving from the current system which focuses on the approval of a vehicle before it is placed on the market to a system where there is also surveillance of the cars after sale,
- giving the Commission the ability to challenge decisions made at a member state level and to directly impose penalties on car manufacturers.
Any such reforms will be welcome but they do not address the current proposals to allow manufacturers to breach emissions standards by such a large percentage.
The European Parliament response
The Environment Committee of the Parliament passed a resolution calling on the Commission to withdraw the draft measure and submit a new one by 1 April 2016. This also made clear that the new measure should introduce a Real Driving Emissions test for all vehicles with a conformity factor reflecting only the possible tolerances of the emissions measurement procedure in place by 2017. This means that the only error allowed would be a possible error from the machine testing the car - hardly unreasonable.
Unfortunately although Parliament had this opportunity to overturn the comitology ruling a majority of MEPs failed to support the resolution (317 in favour out of a required 375 MEPs).
VW's defeat devices were initially discovered in California. In the US, the Environmental Protection Agency (EPA) has the power to fine a company up to $37,500 for every vehicle that it finds to be breach of standards which gives VW a potential fine of $18bn. This vast figure is dwarfed by the U.S. Department of Justice who earlier this year began the process of suing Volkswagen, outlining that penalties could reach $46 billion (Bloomberg Intelligence estimate).
VW has currently put aside €6.5bn (approximately £4.7bn) to cover costs and have acknowledged that this will be insufficient.
In the US, VW have proposed to fit a urea tank that will be used to spray into the exhaust and neutralise the NOx emissions. This system will cost a lot more to install than the mere software fix currently being proposed in Scotland.
Despite this, it has already been rejected by the US authorities in California, with the support of the U.S. Environmental Protection Agency, as the fix is "substantially deficient" and would not correct the problems.