Volkswagen scandal exposes error of Europe’s ‘clean diesel’ plan

It happened that Elon Musk released Tesla’s Model X at about the same time as the Volkswagen scandal broke, which was felicitous timing.

It neatly encapsulated the vast and telling difference between the US and European ways of dealing with climate change.

The big German carmaker’s admission that it fitted defeat devices to its diesel cars to get around emissions standards will spell the end of Europe’s 20-year-old “clean diesel” strategy.

After the United Nations Framework Convention on Climate Change was negotiated at the Rio de Janeiro Earth Summit in 1992, the forerunner of the Kyoto Protocols, Europe and the US embarked on very different strategies for dealing with their car fleets.

In the US, the authorities pushed for zero emissions and in response the carmakers all developed electric vehicles: the Ford Ranger EV pick-up truck, GM’s EV1, Chrysler TEVan, Nissan Alrta EV, Toyota RAV4 EV, to name a few.

All of them failed and all were withdrawn from sale. It was 15 years too early for the battery technology. Lithium ion was still too expensive and the batteries too big and slow to charge, and Tesla, which eventually made EVs cool, was a decade from even being incorporated, let alone launching a car.

Europe, on the other hand, embarked on a “clean diesel” strategy, using generous tax concessions to encourage a switch to diesel cars. The idea was that although diesel contains more carbon, cars burn less of it.

That definitely did the trick (tax incentives always do) and today more than half of Europe’s cars are diesel. In France it’s 80 per cent: I was there recently and it’s very hard to find a petrol car anywhere.

There were two big problems with the plan, which boiled down to one big one: it didn’t work.

Although the net carbon emissions from diesel are less than petrol, diesel produces other pollutants, mainly nitrogen oxides, and secondly the tax concessions encouraged people to drive more.

It’s now plain that Europe’s big strategy was a disastrous mistake. At least America’s post UNFCCC strategy failed fast, as they say in Silicon Valley; Europe’s took 20 years, which has made it much more difficult.

Europe’s carbon emissions actually rose as a result of the “clean diesel” strategy and cities like Paris ended up with a smog problem they didn’t have in the 90s.

The German carmakers took up the diesel strategy enthusiastically and none more so than Volkswagen, but because the diesel engines performed so badly in the pollution tests, Volkswagen’s engineers, led at the time by the now ejected CEO Martin Winterkorn, came up with a software workaround.

That was in the mid-90s. It took until 2014 for the “defeat device” to be discovered, when the International Council on Clean Transportation routinely commissioned researchers at the West Virginia University to test diesel emissions. To their surprise they found emissions from VW cars far exceeded the other cars, and the limits set by both Europe and the US.

The scientists reported their findings to the Environmental Protection Authority, but it took until September 18th this year for the EPA to issue a Notice of Violation to Volkswagen, whence all hell has broken loose.

The direct costs of this to Volkswagen will be immense: $US18 billion in cash fines, goodness knows how much in the cost of recalling cars and that times two in reputational damage. The entire German car industry, and Germany itself, has also been damaged.

But the more interesting and lasting effect could be on transport generally, and even more broadly on the progress towards switching from fossil fuels to renewable energy.

Europe’s “clean diesel” strategy is now dead. Not only didn’t it work, it has been exposed as a fraud, at least in part.

Europe’s car fleet will not be converted back to petrol — the next push will surely be for electric vehicles. In fact, it would not surprise if Volkswagen led that push, as part of its strategy for recovering its reputation.

Tesla should build a European factory smartly, but in any case all the major global carmakers are well advanced on building electric vehicles, with a few working on all-electric super cars as well.

Tesla has made electric vehicles cool. The two-seater roadster it produced 2008 and 2012, its first car, was like a throat-clearing exercise.

The Model S P85D in “insane” mode is the fastest road car in the world. If it entered the Bathurst 1000 at Mt Panorama this weekend (and was able to make the 1000km distance) it would lap the V8 Supercars.

As all carmakers know, this stuff is important: you need to win races to sell ordinary cars.

So Tesla’s “ludicrous” speed plus the VW scandal and the end of diesel will hasten the coming of electric cars.

Meanwhile the CEO of an Australian start-up called Smart Commercial Solar, Huon Hoogesteger, told me yesterday that solar power is now cheaper than the grid, over the life of the assets (his business sells solar panels to businesses on a five-year time payment plan, where he installs them for free, they pay for the power and own the assets in five years).

Hoogesteger said that Australian businesses, large and small, are now falling over themselves to convert to solar, not to get off the grid but simply to cut their energy bills.

Eventually batteries will enable businesses and households to leave the grid, but for the moment they are too expensive and don’t make commercial sense (although plenty of people are buying them anyway).

The world is changing, fast. Death spirals await those who can’t adapt.