More ready than willing: Global automakers seek to roll back Euro VI in Latin America

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Last week, global automakers won a rollback of NOM-044, critical Euro VI-equivalent vehicle emission regulations in Mexico that require new trucks and buses to be dramatically cleaner. Mexico will now have to wait at least another year for cleaner vehicles that will save thousands of lives and help Mexico City avoid costly air pollution emergency measures that keep cars and trucks off the street.

Unfortunately, that’s not all. Automakers are asking the governments of both Mexico and Brazil to further delay these lifesaving regulations for several more years. Automakers acknowledge that Euro VI technologies, which have been commercially widespread for more than a decade, deliver 98% to 99% reductions of particulate matter and nitrogen oxides (NOx) in the real-world, along with fuel savings . . . just not in Latin America. There are claims that it’s too expensive, the market isn’t ready, and now COVID-19.

At ICCT, we’ve written about how critical these Euro VI / EPA 2010 regulations are many times. How they eliminate loopholes in Euro V to reduce real-world NOx emissions by 98%, how they virtually eliminate particle emissions, how they are expected save more than 100,000 lives over the coming decades in Brazil and Mexico, and how they can save money due to better fuel economy. We recently published a blog in Portuguese and held a webinar in Spanish about the importance of implementing these standards as scheduled.

What more can I say? Well, plenty.

Some in industry argue that Euro VI will increase the cost of trucks and buses, but let’s look at history. Manufacturers were fined a record €2.9 billion by the European Commission after admitting to colluding on a premium of €10,000 for Euro VI. Never mind that the premium was about five times our estimate of the real cost, what’s important to remember is that price is an altogether different question from cost. As one example, I highlight that an August 2019 contract for 30 new, low-floor Euro VI buses in Mexico City came in at a 7% lower per-vehicle price than the March 2019 contract for 70 new, low-floor Euro V buses.

While manufacturer marketing materials for Europe tend to present a rosy picture about fuel economy, these benefits tend to be downplayed in Latin America. Data is somewhat scarce, but one study tested Euro V and Euro VI vehicle models from seven European manufacturers in 2010 and 2016. As shown in the figure below, the power increased in all Euro VI models, and fuel consumption was reduced in all but one. Five of the Euro VI models reduced fuel and urea consumption by 10%–12% and one by 5%. This matches the fuel consumption reductions from Euro VI engines in India, which were found to be 7%–14%.

Figure 1. Percent changes in consumption of fuel and fuel + urea and available engine power for seven European manufacturers between the same or similar 2010 (Euro V) and 2016 (Euro VI) models.

In case you’re wondering, yes, India successfully implemented Euro VI-equivalent standards in April 2020, in the midst of a global pandemic and with no real delay. Mexico and Brazil have per capita GDPs four to five times higher than India and their markets are dominated by international companies with more than a decade of experience with Euro VI. In India, local manufacturers without this experience implemented these standards in little more than three years. China, dominated by local manufacturers and joint ventures, and with a GDP similar to that of Mexico, is scheduled to implement Euro VI-equivalent standards in the coming year. No delays have been requested.

In Mexico, another excuse for delay is that PEMEX has not achieved full compliance with fuel quality standards. This has been going on for more than a decade, and the latest plan is for 100% ultralow-sulfur diesel in 2025. As frustrating as these delays are, more than 80% of the fuel sold currently meets ultralow-sulfur standards, and the United States and Brazil both offer successful examples of dual fuel distribution. Mexico even offers its own precedent with the phase in of unleaded fuel and three-way catalysts. Certainly, these examples offer a better alternative to introducing another 160,000 highly polluting trucks and buses (assuming steady annual sales in Mexico over four years of delay) that would remain on the roads for decades.

Meanwhile, COVID-19 is the main excuse from manufacturers seeking to delay PROCONVE 8 regulations in Brazil. Like Mexico, Brazil’s sales of heavy-duty trucks fell during the lockdown. But they’ve bounced back since, and I’m not sure how this brief dip in production and sales translates into three years of delay. Also, while a COVID-19 related recession could lead to sales declines and job losses, why would Euro VI regulations necessarily make this worse? Manufacturing investments are well underway, Euro VI models are already available in both Mexico and Brazil, and while a regulatory transition is often accompanied by a temporary dip in sales, this is generally more than balanced out by pre-buys.

Study after study is showing that air pollution increases the risk of death from COVID-19. As two of the hardest hit countries in the world, you might think this new context would increase the value of these regulations in Mexico and Brazil, rather than serve as an excuse to delay their implementation.

As we watch the world’s uneven reaction to COVID-19, the climate crisis has picked up the pace in my corner of the world, the San Francisco Bay Area. For years I’ve mourned how the 1-2 punch of climate-related drought and bark beetles had colored the Sierras brown with more than 100 million dead trees, standing like so many matchsticks ready to ignite. Stuck at home with the windows closed to keep out smoke and my office at 110°F / 43°C, I worried that heat waves, getting more intense each year, and the drying atmosphere would completely do in our natural air conditioning system, the mighty Karl the Fog. Somehow, I expected the birds falling dead from the skies. But like our former governor, Jerry Brown, I’m surprised by how bad it got, and how fast.

Magical thinking won’t save us, but NOM-044 and PROCONVE 8 will save lives in Mexico and Brazil and help slow climate change. People are dying and the world is on fire—we can’t wait any longer. Sure, there is more to be done; there always is. But we could start by not destroying the progress already made.