Clive Crook at Bloomberg says there are several scandals linked to the VW diesel debacle. Here we’ll focus on one of them, related to so-called climate policies. Was the ‘dash for diesel’ ever a rational policy?
A third scandal, even more costly than the first two, also needs to be noticed and examined. It concerns the economic and environmental policies that first set European car manufacturers and consumers on course to this pile-up.
Remember that “clean diesel” was a government-led initiative, brought to you courtesy of Europe’s taxpayers. And, by the way, the policy had proved a massively expensive failure on its own terms even before the VW scandal broke.
It’s this scandal that teaches the most important lessons.
Beginning in the mid-1990s, mindful of their commitments to cut carbon emissions, Europe’s governments embarked on a prolonged drive to convert their car fleets from gasoline to diesel. With generous use of tax preferences, they succeeded. In the European Union as a whole, diesel vehicles now account for more than half of the market. In France, the first country to cross that threshold, diesel now accounts for roughly 80 percent of motor-fuel consumption.
What was the reasoning? Diesel contains more carbon than gasoline, but diesel engines burn less fuel: Net, switching to diesel ought to give you lower emissions of greenhouse gases. However, there’s a penalty in higher emissions of other pollutants, including particulates and nitrogen oxides, or NOx. Curbing those emissions requires expensive modifications to cars’ exhaust systems.
To facilitate the switch, Europe made its emission standards for these other pollutants less stringent for diesel engines than for gasoline engines. The priority, after all, was to cut greenhouse gases.
Except that the switch to diesel probably didn’t cut greenhouse gases. Making diesel cheaper by taxing it at a preferential rate encouraged people to drive more. And emissions of GHGs higher up the fuel-supply chain are worse for diesel than for gasoline. (Increasing demand for diesel drew in more supplies from Russia; producing and moving those supplies caused more emissions.) Treating diesel to lower its sulfur content adds yet another carbon penalty.
At best, the clean-diesel strategy lowered carbon emissions much less than hoped, and at ridiculous cost; at worst, as one study concludes, the policy added to global warming.
No matter: Europe’s car makers, flying the banner of environmental virtue, committed themselves to the strategy — and none more so than VW, which even attempted to bring it to the U.S. That, one might conclude, was its biggest mistake: U.S. regulators aren’t so understanding, and its government hasn’t bet the industry on diesel.
Europe, meanwhile, has an economically and environmentally misaligned car industry; a reputational crisis of unsurpassed scale centered on its biggest manufacturer; a NOx-induced public-health emergency in many of its cities; and quite possibly less than nothing to show for the effort when it comes to climate change.
VW may have perpetrated one of the biggest frauds in corporate history. Europe’s clean-diesel strategy, which set the scene for that fraud, may be the most expensive mistake in the history of environmental policy. As I say, an embarrassment of riches.
Full report: Climate-Change Politics and the Volkswagen Scandal
The linked study is an eye-opener:
Critical evaluation of the European diesel car boom – global comparison, environmental effects and various national strategies