VW CEO says diesel too cheap for more ambitious transport climate targets

Diesel must become more expensive to allow a faster transformation of the car industry to comply with more ambitious climate targets proposed by the European Commission, according to Volkswagen CEO Herbert Diess. "If you want to achieve the transition faster, you need the right framework conditions," Diess told the Welt am Sonntag. "As long as the diesel price is at a multi-year low of one euro per litre, it will be difficult." He also said his company, which has strongly committed to electric mobility, could cope with more ambitious targets. "If our society is prepared to accept that the transformation towards CO2 neutral mobility should happen more quickly, Volkswagen could manage," Diess said, adding that more ambitious emission limits could lead to job losses in certain sections of the car industry, while new jobs would be generated elsewhere. "We need to discuss with suppliers and policymakers if it would be possible for the entire industry."

The European Commission last week proposed to step up the bloc's 2030 climate target to cutting emissions by at least 55 percent (prior target: 40%). The plan includes more stringent rules for passenger cars. Germany's car industry association (VDA) criticised the proposal as "too risky" and warned of "painful job losses. Diesel is cheaper than petrol in Germany because it is taxed at a lower rate. Clean mobility proponents have long called for an end to this "diesel subsidy”, and even Diess' predecessor Matthias Müller suggested abolishing the tax advantage in 2017.

Car industry expert Ferdinand Dudenhöffer, head of the Center for Automotive Research (CAR) at the University of Duisburg-Essen, said more ambitious emission limits might not be as damaging to the German car industry as feared. He told Welt am Sonntag that stepping up the target could lead to 13,000 additional job losses, but emphasised that a similar number of new jobs could be created at the same time, resulting in little changes to overall employment. However, Dudenhöffer expects that the transition to electric mobility will lead to the loss of 100,000 jobs in the German car industry by 2030. The sector currently employs more than 800,000 people in the country.