Europe's love affair with diesel cars has been a disaster

Europe's love affair with diesel cars has been a disaster

Europe's love affair with diesel cars has been a disaster

Updated by Brad Plumer on October 15, 2015, 1:45 p.m. ET

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Last month's news that Volkswagen had been illegally rigging its diesel-powered cars to cheat on pollution tests has sparked plenty of outrage. Hearings, lawsuits, fines, general opprobrium. And rightly so; the company's deception was appalling.
But there's a much broader, far more consequential problem here that a lot of coverage has danced around or hinted at only indirectly. So let's say it: Europe's longtime promotion of diesel vehicles as a "green" transportation option has been a complete and total disaster — for reasons that go well beyond the Volkswagen scandal.
Ever since the 1990s, European governments have been encouraging drivers to buy diesel cars as an alternative to traditional gasoline-powered vehicles. The rationale was simple: Diesel engines use fuel more efficiently, so the switch was supposed to reduce carbon dioxide emissions and help stave off global warming. Thanks to tax breaks and other incentives, diesel cars now make up one-third of Europe's fleet, whereas they're a sideshow in the US and Japan:

(Cames and Helmers, 2013)

Europe's diesel push might have seemed sensible once upon a time. But 20 years later, with the benefit of hindsight, it looks like a huge mistake, an impotent climate policy that had all sorts of unintended consequences.
The biggest drawback of diesel cars is that they emit higher levels of other harmful air pollutants like particulates and nitrogen oxides. And those ended up being far harder to clean up than experts initially predicted. We now know that Europe's regulators have failed spectacularly to control diesel pollution, relying on weak rules and flimsy testing procedures. Lots and lots of automakers — not just Volkswagen — have been manufacturing diesel cars that emit far more gunk than they're supposed to. As a result, cities like London and Paris are clogged with dangerously high levels of air pollution, causing thousands of premature deaths each year.
And that's not the worst part. It's now looking like Europe's diesel push didn't even do anything to help global warming, as one 2013 study by Michel Cames and Eckard Helmers found. The CO2 benefits from switching to diesel cars were overrated and offset by the extra soot their engines produced. On top of that, Europe's entrenched diesel industry has impeded developed hybrid and electric car technologies that might have provided much deeper emissions cuts.
The whole episode is a sobering case study in how well-intentioned green industrial policy can go horribly wrong. So let's roll the tape and see what lessons we can learn from Europe's decades-long diesel fiasco.

Why Europe embraced diesel cars in the 1980s and '90s

(David Ramos/Getty Images)

After crude oil gets pumped out of the ground, it's sent to refineries to be turned into usable fuel. Those refineries typically distill the oil into lighter and heavier components. The lightest stuff includes gasoline. On the heavier side is diesel fuel, which contains more energy per gallon.
For most of the 20th century, automakers largely designed cars to run on gasoline, which was more flammable and combusted easily using sparks. Engines that could combust diesel fuel, using air compression, had been invented in the 19th century, but they were noisier and belched more smoke, so they were mostly confined to large ships and trucks. Diesel was often used instead for heating and producing electricity.
But starting in the 1980s, French and German automakers began showing more interest in developing diesel-powered cars. The reasons have always been a little murky, although Cames and Helmers suggest it traces back to the OPEC oil crises of the 1970s. After global crude prices spiked, France decided to swear off using diesel for electricity and built a bunch of nuclear plants instead. Germany, meanwhile, switched from oil to natural gas for heating. When the crisis finally subsided, Europe's refiners were still producing lots of diesel with no buyers. So governments began urging automakers like Peugeot to look into diesel-powered vehicles.
By the late 1990s, diesel technology had improved dramatically, thanks to advances in fuel injection — common rail, especially — that allowed the engines to run more quietly. The newer diesel engines were a technical marvel, operating more efficiently than their gasoline counterparts and using less fuel per mile traveled (and, hence, emitting less carbon dioxide per mile). All they needed was a market.
Rising concern over global warming provided that push. In 1997, the European Union signed the Kyoto Protocol and committed to cutting its heat-trapping carbon dioxide emissions roughly 8 percent by 2012. The next year, the EU reached a landmark agreement with the continent's car manufacturers on reducing CO2.
At the time, there were lots of different paths Europe's automakers could have taken to green itself. They could've pursued direct injection technology for gasoline vehicles, making those engines more fuel-efficient. They could've ramped up R&D of hybrid electric car technology, as Japanese automakers like Toyota were starting to do. But European companies like Peugeot and Volkswagen and BMW had already been making big investments in diesel, and they wanted a climate policy that would allow those bets to pay off.
Europe's policymakers obliged. The EU agreed to a voluntary CO2 target for vehicles that was basically in line with what diesel technology would be able to meet. As researcher Sarah Keay-Bright later noted, these standards were explicitly crafted so as not to force Europe's automakers to develop hybrids, electric vehicles, or other more advanced power trains.
Soon thereafter, European nations — including Britain, France, Germany, Italy, Spain, and Austria — began cutting taxes on diesel fuel and diesel car purchases to promote sales, all in the name of thwarting climate change. Diesel sales soared. Back in 1990, just 10 percent of new car registrations in Europe had run on diesel. By 2011, that had climbed to nearly 60 percent.

Today, Europe's diesel cars are a public health nightmare

(Dan Kitwood/Getty Images)

Diesel engines do have one big pitfall. They may be more fuel-efficient and emit less CO2, but their engines tend to emit higher levels of other nasty air pollutants, including soot, particulates, and nitrogen oxides (NOx). Heavy exposure to these air pollutants can exacerbate heart and lung disease, trigger asthma attacks, and even cause premature death.
Everyone knew this back in the 1990s. Europe's regulators simply considered the trade-off acceptable. "At the time, the prevailing belief was that climate change was the really hard problem and should be the priority, whereas we'd had experience improving air quality, so everyone assumed we could easily fix that issue later," explains Martin Williams, an air pollution researcher at King's College London who previously worked for Britain's environmental agency.
That assumption turned out to be wrong. When European regulators later moved to clamp down on NOx and other conventional air pollution from diesel vehicles, they failed miserably.
Starting in 2000, the EU began ratcheting down the legal limits for NOx emissions (though Europe's diesel cars have always been allowed to emit NOx at a relatively higher rate than gasoline-powered cars). New vehicles were tested in laboratories, where cars were placed on giant treadmills, spun through a few exercises, and measured for pollution.
Trouble was, these tests turned out to be incredibly flimsy and easily gamed, explains John German of the International Council on Clean Transportation. Automakers could send cars to labs that were optimized for testing: stripped of excess weight, with the air conditioning turned off, and so on. The test cars complied with the pollution limits just fine. But the cars that were actually being sold to consumers were quite different, with much higher emissions. (German says this sort of subtle gaming was technically legal, unlike Volkswagen's more elaborate deception, which involved illegal software that only turned pollution controls on during tests. Still, even if Volkswagen was the most flagrant cheater, it was hardly unique.)
Few realized the EU's pollution tests were badly flawed until 2010, when researchers started studying emissions from vehicles that were actually on the road. In one study, Williams set up roadside infrared detectors to measure NOx pollution from cars in seven British cities. What he found was shocking: Europe's newest diesel cars were emitting roughly as much NOx as older diesel cars from the 1990s.
In other words, 20 years of increasingly strict air pollution regulations had done absolutely nothing to reduce pollution. "That was the most surprising part," Williams says.
By that point, the damage had been done. Today, Paris occasionally jousts with Beijing for the title of world's most polluted city. London is grappling with unsafe levels of nitrogen dioxide. Germany, Austria, and Ireland have NOx pollution well above the legal limits.
And the health toll has been staggering. One recent study found that diesel pollution from cars, buses, and trucks in Britain caused 9,400 premature deaths in 2010 alone. It's difficult to suss out what fraction of those deaths might have been avoided if emission rules had been properly enforced all along, but that gives some sense of the brutal cost here.
Nitrogen dioxide concentrations in Europe (areas above the healthy limit in red)

(European Environment Agency)

To be fair, European regulators have scrambled to improve the tests now that they've realized what was happening. But it's still unclear whether the diesel car industry can ever clean up its act.
Starting in 2014, the newest, most stringent emissions standard — known as Euro 6 — require diesel cars to emit no more than 0.08 grams of NOx per kilometer, an 84 percent reduction from 2000-era levels. Europe's regulators will also start requiring on-road testing in addition to laboratory checkups. (That's what the United States EPA does, and it should eliminate most gaming, although, as the Volkswagen scandal showed, truly determined cheaters are hard to detect.)
But here's the fat asterisk: Now that they can no longer easily game the system, Europe's automakers are lobbying hard to relax the pollution standards. That's because it's not very easy to cut NOx pollution from diesel cars. One of the technologies that could meet the most stringent limits, known as selective catalytic reduction, involves running the car's exhaust through a honeycombed chamber that sprays urea and water, which breaks the NOx down into harmless nitrogen, oxygen, and water molecules. But these devices can add about $5,000 to $8,000 to the price of a vehicle, which would make many small cars uneconomical. They can also negatively affect fuel economy, torque, and other aspects of the car's performance.
So the jury's still out on whether "clean diesel" cars will even be viable in practice. Volkswagen had claimed to have cracked the problem with its most recent diesel models ... except we now know the company was doing it by rigging the cars with software to evade pollution tests.

The grim irony: Europe's diesel push hasn't helped with global warming

If Europe's diesel surge had helped mitigate climate change, then maybe (just maybe) you could argue that all this extra air pollution was worth it. Except here's the grim plot twist: The climate benefits appear to have been negligible.
In their 2013 paper, Cames and Helmers argued that Europe is probably worse off today, from a global warming perspective, than it would have been if automakers had just focused on improving gasoline-powered cars all along. And Europe is arguably much worse off than it would have been if automakers had started investing in hybrid electric technology back in the 1990s.
The authors offer up this chart, showing that Europe's diesel cars may have once had a sizable CO2 advantage over traditional gasoline vehicles. But today that gap has virtually disappeared, as new technologies like turbochargers have made gasoline engines nearly as efficient as diesel cars:
Carbon dioxide emissions from new cars in Europe and Japan

4 CO2-emission time trend of new registered cars (comparison EU - Japan). (Cames and Helmers, 2013)

What's more, there are two subtle drawbacks to diesel engines that make them worse for global warming than they seem.
First, even if diesel cars emit less CO2 than gasoline vehicles, they emit a lot more black carbon, or soot, a pollutant that (we've recently learned) also contributes significantly to global warming. The precise accounting here is still subject to some dispute, but Cames and Helmers point out that black carbon emissions from diesel cars likely negate a big chunk of their CO2 advantage.
Second, remember that European countries encouraged diesel car adoption by slashing taxes on the diesel fuel itself, compared with gasoline. But as any Econ 101 student will tell you, cutting fuel prices gives people an incentive to drive more miles — and increase their overall emissions. This further chips away at any climate advantage diesel might have.
Add it up, and Cames and Helmers conclude that "the European diesel car boom did not cool down the atmosphere."
(By the way, this analysis doesn't even take into account the awful knock-on effects from Europe's subsequent policies to secure diesel fuel made from palm oil. Those biofuel mandates have led to widespread deforestation in Indonesia and Malaysia, further exacerbating global warming. The EU only recently scaled these policies back.)
One final coda here. Go back and look at the Japanese cars on the graph above. Back in the late 1990s, Japanese automakers were also thinking about cutting CO2, but they figured that diesel was a dead-end technology, since the cost of cleaning up the extra NOx pollution would be too high. Instead, companies like Toyota started investing in hybrid vehicles, with the first Prius appearing in 1997. By contrast, Europe's automakers initially scoffed at electric powertrains, and none of them even bothered producing hybrids until Mercedes finally rolled one out in 2009.
Japan's decision now looks prescient, and Europe's looks shortsighted. Hybrids proved much greener: The newest Japanese cars now produce roughly 10 percent less CO2 per mile than Europe's diesel vehicles do, on average. And Japan's automakers appear to be better set up for the future. Many experts now think that transportation will eventually have to become electrified if we want truly deep reductions in emissions. But European automakers, stuck on diesel for so long, are scrambling to catch up.

Europe is now struggling to undo its diesel mistake — but it's not easy

(Matt Cardy/Getty Images)

Because of the Volkswagen scandal, and the staggering levels of pollution in cities like Paris and London, Europe's policymakers are now beginning to rethink their fondness for diesel cars. But it's a hard technology to give up. Path dependency is a hell of a drug.
In diesel-loving France, Ségolène Royal, the environment minister, recently said that the country would consider phasing out preferential tax breaks for diesel over the next five years. "We need to start preparing our move out of diesel," she reportedly told France 5 television. But she's also bristled at any suggestion that France should act too quickly. After all, diesel cars still account for more than 60 percent of all European sales for Renault and Peugeot, two major local manufacturers. They can't just unwind those positions overnight.
Volkswagen, for its part, is also engaged in a bit of soul searching around diesel (at least, when it's not recalling its 11 million law-breaking diesel cars and dealing with criminal investigations). The company recently announced that it would take a major plunge into electric powertrains, creating a standardized architecture for a new wave of plug-in cars. "The Volkswagen brand is repositioning itself for the future," said executive Herbert Diess. Except, of course, this shift won't happen overnight. Because VW spent so many years dreaming up ways to evade regulators and sell diesel cars, it's now playing catch-up to electric car companies like Tesla.
In the meantime, Europe's smoggy cities still have to grapple with the fallout from all those polluting diesel cars that are still on the road — and will likely stick around for years. The EU has started to pressure countries with the worst air pollution. Cities like London, Stockholm, and Milan are already experimenting with emission-free zones. In the future, drivers with old diesel clunkers could have to pay extra to travel downtown in certain cities. But even this cleanup will take years.

Energy bets can sometimes go horribly wrong. So how do we avoid that?

Europe's misadventure with diesel cars is a great case study in how energy policy can go very badly awry, and no doubt there's a long list of lessons to draw. I'll just mention a few big ones:
First, Europe's complete failure to regulate diesel pollution is worth studying. Not only had regulators designed flimsy emissions tests — partly at the behest of industry lobbying — but it took two decades to even realize the tests were failing. Crafting ambitious environmental rules is all well and good, but without ample enforcement and monitoring, those rules are basically pointless. (Note that China is now pursuing ambitious climate policies of its own, but experts keep muttering that enforcement will be a big challenge — a caveat that deserves much more attention.)
Another possible takeaway is that if we really want to reduce greenhouse gas emissions from the transportation sector, liquid fuels are ultimately a dead end and electrification is the best path forward. There's no shortage of experts who believe that, and certainly that's the lesson Volkswagen seems to be drawing from this fiasco. That said, it's worth noting that Toyota, which was ahead of the pack in developing hybrid electrics in the late 1990s, actually doesn't believe electric cars are the future and is pouring R&D into hydrogen cars instead.
Which brings us to the third takeaway. The future is hard to predict. Diesel cars seemed like a reasonable idea in the 1990s and a disaster today. That suggests that policymakers should have a lot more humility when crafting energy policy. One approach might be to pursue more technology-neutral policies organized around preferred outcomes — say, tightly enforced standards that require lower emissions — rather than favoring specific industries just because they happen to seem promising at that moment in time.
This issue comes up again and again. For years, governments have been laying down big bets on emerging clean energy technologies. France did it with nuclear power in the 1970s and '80s. Germany did it with wind and solar power in the 2000s, through feed-in tariffs. The United States has done it with corn ethanol in the past decade.
Done right, this sort of government support can be valuable, helping useful new energy options break into the mainstream against entrenched competition. But there's also a huge risk that governments will end up gambling on badly flawed technologies that then become the entrenched competition and prove impossible to get rid of. The US arguably made that mistake with ethanol, which have had unintended ripple effects on the food supply and deforestation and is proving politically difficult to wind down. Now it looks like we can put the drive for diesel in that category, too.

Further reading:

• Michel Cames and Eckard Helmers' 2013 paper "Critical evaluation of the European diesel car boom — global comparison, environmental effects and various national strategies" is well worth reading for the details on the diesel fiasco.
• The Guardian's Jon Vidal also wrote a great piece exploring the unintended health effects in Europe of the rise of diesel.
• The International Council on Clean Transportation has done the best work documenting the divergence between tests and real-world emissions for cars in Europe. (This work helped them uncover Volkswagen's deception.) This report offers a great summary. Note also that Europe's cars, both gasoline and diesel, get worse fuel economy than tests suggest.

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