The Volkswagen Scandal: What could the short-term impact be on EU policy?
The last few weeks have certainly been turbulent for Volkswagen (VW). It was discovered at the end of September 2015 that the company had manipulated tests for nitrogen oxides (NOx) emissions from its cars so that these appeared to be lower than they actually were. This discovery ultimately led to the resignation of VW’s CEO Martin Winterkorn, and a 40% decrease in the value of VW shares[1].
The “Volkswagen Scandal” has also had an impact beyond VW, leading to increased public and political scrutiny of the entire automotive industry. With this scrutiny comes the expectation that the relationship between public authorities, policy-makers and the automotive industry will change[2].
So, is this expectation likely to be met? And, where do we need to look to know whether the Volkswagen Scandal (VW Scandal) could really make a difference in the short term? To answer these questions, I consider the impact of the VW Scandal on EU standards for car emissions. For this purpose, I identify a key institutional venue, European Commission/ industry interactions at the technical level, and a key automotive policy issue, the testing of car emissions. I suggest that the short-term policy impacts of the VW Scandal have so far been limited, due to the automotive industry’s past strategic framing of policy issues.
The key institutional venue
The literature on lobbying in the EU provides useful insights for determining the key institutional venue to be considered when assessing the short-term impacts of the VW Scandal[3]. According to the literature, industry interest groups are most successful at influencing[4] EU policy outcomes during policy formulation[5]. Policy formulation here refers to the stage in the policy process during which solutions to policy problems are identified and assessed[6]. To influence policy formulation, interest groups need to be able to provide policy-relevant information, and to allocate considerable financial resources to have regular contacts with the European Commission[7].
These insights suggest that the automotive industry can be expected to be most influential during interactions with the Commission at a technical level, during policy formulation. The automotive industry is represented at the EU level by national automotive industry associations (e.g. the German VDA)[8] and the European automotive industry associations (e.g. ACEA)[9].
The key policy issue
The most relevant current automotive policy issue relates to the testing of car emissions. The EU is to introduce new tests for determining pollutant emissions from cars (i.e. all emissions, including NOX, aside from CO2) based on “Real Driving Emissions” (RDE) [10]. These RDE tests are, unlike current tests, conducted outside laboratories and are designed to reflect real driving behaviour. These more realistic tests are more stringent, and will increase the emissions measured for a given car. The introduction of the new tests therefore presents an opportunity to strengthen the EU’s standards for car emissions.
The need to introduce RDE tests was already recognised by policy-makers before the VW Scandal. Yet, this policy issue has certainly gained in salience in the wake of the Scandal. The actual impact of the introduction of these new tests will, however, depend on whether the current pollutant limits are maintained when introducing new tests, or whether these limits will be lowered (to compensate for the impact of introducing new, more stringent tests). In other words, will the emissions limits be considered absolute, or will the limits be changed?
Importantly, for the introduction of RDE tests, this issue has been framed as a technical issue in the current EU legislation. Pollutant limits are in this case to be amended through a technical decision-making procedure, by the relevant Committee, composed of specialised EU Member State representatives[11].
On 28 October 2015 EU Member State representatives, in such a Committee[12], adopted conversion factors[13] for adjusting current NOx limits to account for the change to RDE tests[14]. The current limits were significantly lowered through the adoption of high conversion factors. It will be possible for car manufacturers to initially[15] exceed current NOx limits more than twofold, and permanently[16] by 50%[17]. Commenting on the decision, Jos Dings, Director of the environmental interest group Transport & Environment, noted: “That was the first concrete test [after the VW Scandal] and a very disappointing one”[18].
Key finding
Considering the above, it appears that the automotive industry (including ACEA and the VDA) has been able to frame the adjustment of pollutant limits when introducing RDE tests as a technical issue. A recent document[19] published by ACEA in September 2015 provides some evidence in this regard. In this document ACEA describes emissions tests as being unrelated to real driving emissions, and merely a tool for allowing “customer[s] to make comparisons between vehicles”. This essentially means that limits should not be considered absolute. Ultimately this also means that the adjustment of limits when introducing new tests is framed as a technical issue[20].
As a result of this framing, decisions have been shifted to a technical decision-making procedure, which increases the prominence of European Commission / industry interactions at the technical level, the broad institutional venue where the automotive industry is most influential relative to other institutional venues[21]. And, it appears that this then ultimately allowed the adoption of high conversion factors for adjusting pollutant limits to account for the change to the more realistic RDE tests.
Conclusion
So, could the VW Scandal really make a difference in the short term? It does not seem so, as the automotive industry appears, through past strategic framing of policy issues, to have limited the Scandal’s impact in the short term. More specifically, EU Member State representatives did not take the opportunity to strengthen the EU standards for car pollutant emissions, and instead adopted high conversion factors.
Nevertheless, the opportunity to strengthen EU standards for car emissions could still be fully exploited in the future. The European Parliament could block the relevant legislation setting out high conversion factors for NOx. It could argue that such decisions, essentially amending pollutant limits, cannot be taken through a technical decision-making procedure. Only then would the Volkswagen Scandal really have made a difference.
[1] Decrease of value of VW shares of 40.2% between 16 September and 18 November 2015.
[2] http://www.theguardian.com/business/2015/oct/18/volkswagen-scandal-lost-opportunity-car-industry
[3] Here, several large N empirical studies are considered.
[4] The literature on lobbying in the EU has considered access of interest groups to EU institutions as a key factor determining potential influence. It has also considered influence more directly, both through self-evaluation of interest groups, as well as through assessing the extent to which interest group preferences are ultimately attained.
– Dür A. 2008. Measuring Interest Group Influence in the EU – A Note on Methodology. European Union Politics 9(4): 559-576.
[5] Klüver H. 2013. Lobbying in the European Union: Interest Groups, Lobbying Coalitions, and Policy Change. Oxford University Press: Oxford; 60-91.
[6] Howlett M, Ramesh M, Perl A. 2009. Studying Public Policy – Policy Cycles and Policy Subsystems. Oxford University Press: Oxford.
[7] Eising R. 2007. Institutional Context, Organizational Resources and Strategic Choices. European Union Politics 8(3): 329-362.
[8] German Association of the Automotive Industry
[9] European Automobile Manufacturers’ Association
[10] EU legislation limits pollutant emissions through the “Euro”-standard.
[11] Refer to Article 14(3) of Regulation 715/2007/EC Article 13(7).
[12] In the Technical Committee on Motor Vehicles (TCMV)
[13] So-called “conformity factors”
[14] Technical Committee on Motor Vehicles (TCMV)
[15] From September 2017 for new models, and from September 2019 for new vehicles.
[16] From January 2020 for new models, and from January 2021 for new vehicles.
[18] http://www.theguardian.com/business/2015/oct/30/vw-scandal-the-winners-and-losers-from-carmakers-to-car-owners
[19] ACEA Q&A Document published on 30 September 2015, accessed at: http://www.fahrzeugindustrie.at/uploads/tx_news/QA_on_Emissions_Testing_01.pdf
[20] The author recognizes that the broad overlap between automotive industry preferences and policy outcomes does not necessarily mean that the industry successfully exerted influence. This could indeed merely be a coincidence. Nevertheless, the literature recognizes such an overlap as relevant evidence.
– Klüver H. 2013. Lobbying in the European Union: Interest Groups, Lobbying Coalitions, and Policy Change. Oxford University Press: Oxford; 60-91.
In addition, the author recognizes that the evidence provided here for this overlap is only anecdotal.
[21] This approach has been described in the literature, where it has been noted that “framing and reframing of policy issues exerts most leverage when it coincides with a parallel shift of institutional venues”.
– Baumgartner FR, Jones BD. 1991. Agenda dynamics and policy subsystems. Journal of Politics 53(4): 1044-1074.
– Daviter F. 2007. Policy Framing in the European Union. Journal of European Public Policy 14(4): 654-666.