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Europe’s fight to stay ahead in clean vehicle race

(Reuters) – The European Union risks losing its climate leadership in the auto sector to aggressive U.S. and Asian manufacturers unless it sets ambitious targets for cutting vehicle emissions in 2020 and beyond, governments and environmentalists have warned.

Europe’s carmakers are struggling with declining domestic sales and overcapacity in parts of the sector, leading some in the industry to argue that tough carbon goals will heap more pressure on tight profit margins.

In 2009, the EU adopted rules forcing carmakers to cut average car emissions to 130 grams of CO2 per kilometre (g/km) by 2015. That goal, which carmakers are on course to meet, gave Europe a clear global lead in vehicle efficiency policies.

Since then, however, the EU’s non-binding target of moving to 95g/km by 2020 has been surpassed by the United States, which has set an emissions standard for cars equivalent to 70-80g/km by 2025, while China and Japan are also catching up fast.

EU officials are discussing with automakers how the 95g/km target can be met, ahead of proposals expected later this year from the bloc’s executive, the European Commission, to make it legally binding.

At a closed meeting in Brussels this week, the European carmakers’ association ACEA told policymakers that meeting the target would be “extremely challenging”, and require a partial shift in production towards hybrid and electric vehicles.

But others, including some within the industry, have challenged ACEA’s assessment, and say the 95g/km target would not present a major technological obstacle.

“I think that 95g/km is, for 2020, a value which can be reachable with today’s technology, without investing too much into electrical vehicles. So for 2020, that’s the right level,” said Stefan Jacoby, chief executive of Volvo, owned by China’s Geely Automobile (0175.HK).

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