A French effort to reduce vehicular emissions of carbon dioxide might ease market-based problems of the European program known as dieselization.
Many countries in Europe encourage the use of diesel in cars and trucks with taxes favoring the distillate fuel over gasoline.
France is one of those countries. Early this year, the French government added a program aimed at discouraging the purchase of large cars. The purpose is to reduce emissions of CO2.
As described in the Aug. 12 Oil Market Report of the International Energy Agency, the program adjusts prices of vehicles with discounts and surcharges according to estimated emissions of CO2 per distance driven.
A vehicle emitting more than 160 g/km, for example, incurs a surcharge as high as €2,600. A car emitting less than 120 g/km receives a discount of as much as €1,000.
The French fight against carbon amounts to an extra boost for diesel vehicles. Diesel-powered cars emit less CO2 than gasoline counterparts of equivalent horsepower, IEA points out. They're also about one-third more fuel-efficient.
Under the new French program, small diesel engines enjoy steep discounts. A car with a 90 hp diesel engine emitting 120 g/km receives a €200 discount. A gasoline car of the same horsepower emits 150 g/km and gets no discount.
While diesel-powered cars use less fuel and emit less CO2 than gasoline-fueled vehicles, they cost more to buy and maintain.
The popularity of diesel vehicles in Europe thus has resulted mostly from the historic price discount of diesel relative to gasoline, IEA notes.
Until recently, the fuel-price difference could offset the purchase-price penalty of a diesel vehicle fairly quickly. Now, however, elevated prices of oil and distillates have made diesel and gasoline prices converge in most countries—and diesel to pull ahead in some.
The new price relationship makes diesel vehicles less appealing than before to average motorists, IEA says. Only those who drive great distances may see a cost benefit in diesel vehicles.
IEA adds, "This could augur a renewed interest in gasoline engines, thus partly reversing Europe's dieselization trend—unless other countries emulate France's policy."
(Online Aug. 23, 2008; author's e-mail: email@example.com)