VW fiasco puts emission tests to global scrutiny

The European Parliament is advocating a greater regulatory and oversight role for the governments

In the United States, automakers conduct their own emissions tests and submit the results to the government. In Europe, auto-makers pick who conducts the tests and where they are done. And these two regulatory systems are considered the world’s gold standards.

Questions about the wisdom of allowing automakers so much sway in how air pollution standards are enforced grew this week after the resignation of Volkswagen’s chief executive, following the company’s diesel emissions cheating scandal.

Regulators in several European countries have opened investigations, attorneys general in the United States have joined federal inquiries, and there has been broader criticism of Volkswagen, and diesels, in markets from South Korea to Brazil.

Volkswagen has admitted installing software in 11 million vehicles that was used to provide false results about emissions, though it was not clear if it was used in all countries where the cars were sold. But the breadth of the scandal could finally threaten to bring change to an industry with a record of cheating since cars were first regulated.

While United States automakers are allowed to test their own cars, the Environmental Protection Agency does its own random checking, and the vast majority of enforcement actions are undertaken by American regulators.

In the European Union, by contrast, automakers can get new car models tested in any member state and can hire private companies, which regard them as clients, to conduct the testing. Member states have regulatory jurisdiction, and enforcement is scant.

One of the testing firms used by automakers in Europe is Applus Idiada of Spain, which has counted the major automakers, including Volkswagen, among its clients, though no company beyond Volkswagen has been implicated in the current scandal.

But advocates say tactics used by such companies highlight flaws in the European system. Applus Idiada markets itself as being able to provide “optimisation of engine behaviour to fulfill emissions and FE targets” – FE refers to fuel economy – in one of its publications, and uses similar language in others.

What does that mean for automaker clients? “They will find ways to artificially lower the test results using flexibilities in the testing methods,” Greg Archer, a former director at Britain’s renewable-fuels regulator who now works at Transport and Environment, a Brussels-based advocacy group that has done its own testing, said in an interview.

The way the system is set up creates inherent problems, Archer added. “Carmakers ‘shop’ for the best deal from agencies across Europe and directly pay for their services,” he said on the Volkswagen scandal. “The job of the engineer overseeing the test is ultimately dependent on the next contract from the carmaker.”

Automakers have the same incentive to shop around for lenient testing companies that bond issuers have long had to shop around for the credit rating agency that would give them the highest credit rating. Overgenerous ratings of complex financial instruments based on mortgage prices were widely blamed as helping to set off the global financial crisis.

Volkswagen’s rivals have had a clear response to the emissions cheating scandal: not us. “There is no evidence that this is an industrywide issue,” the European Automobile Manufacturers’ Association said in a statement Wednesday, adding, “We cannot comment on an issue affecting one individual company.”

Lawmakers in the European Parliament on Wednesday debated the implications of the scandal at length, with members in several parties advocating a greater regulatory and oversight role for the European governments, instead of the member states.

“Of course that will be a big fight with the member states,” said Bas Eickhout, a Dutch Green Party member who sits on the Parliament’s committee on Environmental, Public Health and Food Safety. He said he wanted the European Commission, the government’s executive branch, to move quickly on plans to put new emissions testing into effect that will take place at independent laboratories.

And he wanted commission officials to quickly determine if the Volkswagen software was used to evade European tests, something that has still not been disclosed by Volkswagen.

He said some lawmakers also lamented that Europe lagged on enforcement, leaving US regulators to take on such cases. “We are better in talking. The US is better in acting,” he said, adding, “That’s a bit of a painful conclusion.”

In the United States, as attorneys general across the country opened investigations, Dan Becker, director of the safe climate campaign at the Centre for Auto Safety, said the country also needed to rethink how emissions were tested. Independent testing has shown a widening gap between results in laboratories and the real world, raising suspicion.

“The automakers have proven that they’re not trustworthy,” Becker said. “The government has to overhaul the testing to make sure that independent parties ensure that the cars that are put on the road pollute less and are safe.”

Differing priorities

There are differing priorities among regulators around the world. Europe’s regulations have tended to emphasise global warming emissions, while US regulation has put more focus on smog-forming pollutants, making it more difficult for diesel to comply. But those differences have been narrowing.

India and China rely on old European emissions standards known as Euro 4 that were phased out by Europe in 2009, replaced by Euro 5 and then Euro 6 rules that have stricter limits on smog-forming pollutants.

S Velmurugan, head of the traffic and engineering division at the Central Road Research Institute, based in Delhi, said there had been an influx of Volkswagen cars in the past three or four years in India, some of them diesels. Volkswagen diesels still represented only about 1 per cent of overall car sales in India last year.

But the Indian regulatory system to measure the quantity and quality of emissions produced by cars is widely regarded as flawed. “If the software is coming as part of the engine, it is easy to pass the test,” Velmurugan said. The US testing methods were “more rigorous,” he added. “Ours are not very good.”

In Brazil, which has also used European emissions standards as a model, Marcio Veloso, coordinator of emissions control at the country’s Environment Ministry, said the government would make an official request to Volkswagen to determine if the software was used on Volkswagen’s only diesel model in Brazil, a pickup truck.

“If they say the technology was used here, we’ll take appropriate legal measures,” Veloso said. “If they say it wasn’t, we’ll do some tests just in case. And in the future we may pay a little closer attention to Volkswagen.”

The new scandal could also crush the efforts of German automakers to open more export markets to diesel. Volkswagen had struggled for many years to win governments’ permission to sell diesel cars outside Europe, and that goal now seems especially challenged.