Emissions scandal drags on over loopholes
INDUSTRY NEWS/ While automotive industry deals with new WLTP regulations, it continues to discover gaps, writes Patrick McGee
After Volkswagen was caught cheating diesel emissions tests in 2015, one of the first actions its engineers took was to launch a secret project: to obtain cars from rival manufacturers and conduct tests on their emissions. Its aim was to find evidence of widespread cheating across the industry, so guilt could be spread around and penalties diluted, say two people inside the company.
The Volkswagen Scandal, in other words, might helpfully become the Car Scandal.
Vehicles from Fiat, Hyundai and others were tested for harmful nitrogen oxide emissions by VW engineers from late 2015 to early 2016. The engineers had a simple conundrum: VW had just admitted to equipping 11 million cars with software to detect laboratory tests and enable them to enter a lowemissions mode. If VW’s best engineers found regulations so onerous that they resorted to deliberate fraud, what had its rivals done?
A third person in the company insists there was a more innocent explanation for the tests. Engineers uninvolved in the original cheating had to use rival cars as control variables to better understand their own sophisticated software — some of it supplied by third parties and used by rival brands.
“We were not dirtying others’ hands to make our own look clean,” says this employee.
Volkswagen declined to comment on this previously unreported episode.
What the engineers found shocked them. Rival brands’ NOx emissions were “a complete disaster”. Performance on the road was “completely different to the technical data”, says a VW worker. The summary of whether rivals were skewing emissions results was clear: “It’s not only VW who is cheating.”
What is unclear is whether rivals were deploying the same strategy as VW — using a “defeat device” to illegally trick regulators into believing its cars were green — or if they had become better at bending the rules on tests, a problem that still exists with petrol cars, as the European Commission revealed in July when it disclosed the latest “tricks” car makers were using to exploit loopholes for incoming 2020 emissions procedures.
The distinction is blurred but important. VW paid the consequences of crossing the line and cheating NOx emissions tests in the US. But the efforts of other car makers to legally undermine testing for both NOx and CO² in Europe have never resulted in real penalties.
“Legal optimisation was done on an industrial scale,” says Nick Molden, CEO of Emissions Analytics, which conducts realworld driving emissions tests.
“It became so ingrained in how cars were certified that the car makers didn’t understand they had done something wrong. That’s the scandal in Europe: that these actions were not illegal.”
Nearly three years after Dieselgate was exposed, Volkswagen is still the only car maker to have pleaded guilty in the US court for cheating NOx emissions tests and lying to regulators. Damages have been in excess of $25bn.
In Europe, however, there has been no comparable clampdown on what might be called “the other emissions scandal” — or what one compliance expert dubbed “the lawful but awful ways” in which car makers legally exploit EU loopholes to achieve the best possible scores for CO² emissions.
It had been known in the industry for years that car makers were gaming the EU lab tests in myriad ways: overinflating tyres, taping doors, removing the sound system and turning off the air-conditioning were just a few of the methods that helped cut emissions in the lab but that were impossible to replicate on the road.
In 2014, a year before the VW diesel scandal was exposed by the US Environmental Protection Agency, one study showed that car makers had become increasingly brazen in “optimising” EU tests to lower their stated carbon dioxide emissions. From 2001 to 2013, the gap in CO² emissions in the lab versus on the road nearly quadrupled from 8% to 31%, according to the International Council on Clean Transportation (ICCT). In 2016, the gap was 42%.
Even with car makers under scrutiny, and European regulators under pressure to enforce rules, the gap has since widened — reaching 42% in 2016.
Given the commission’s recent accusations it would, however, be wrong to conclude that car makers “are at it again”. Rather, they never stopped in the first place.
Once the VW engineers completed their allegedly damning report in early 2016, the company decided not to publish it. VW had just adopted a legal strategy of full co-operation with US authorities, in part to accelerate a settlement; it worried about appearing like it was shirking responsibility. The results were given to independent institutes, in case they wanted to verify them. And VW moved on.
Within months, however, allegations implicating Mercedes, Fiat-Chrysler and Opel began to emerge as the institutes and EU regulators performed their own comprehensive NOx emissions tests.
Recalls to “fix” or “modify” emissions software have since become a regular occurrence. But Europe has not taken strong action to penalise them for using legal tricks to undermine CO² tests, which is why problems persist, says William Todts, executive director at the European Federation for Transport and Environment (T&E), a clean energy group.
By contrast, the US, which operates “the most stringent policy enforcement practices” according to the ICCT, has taken strong action. The lab-road discrepancy in emissions is present in the US, too, but the EPA corrects for it so there is virtually no gap and fuel economy information is credible.
That car makers are still bending EU rules, therefore, is as much a story of ineffectual regulation. Engineers, after all, are tasked with building engines to meet test requirements, just like students focus their reading on what is likely to be in exams.
“Manufacturers will always respond to literal requirements from the regulators,” says John German, senior fellow at the ICCT. “If something isn’t specified in the regulations, it’s not really ethical to take advantage of that — but neither is it illegal.”
In the US, the EPA sets and enforces the rules; in Europe, Brussels sets the rules but enforcement is left to national authorities. “Nobody has the mandate or legal authority that the EPA has,” German says.
Critics of the EU system say the national authorities’ independence and incentives are questionable. Germany’s transport authority, the KBA, is in a difficult position to impose billions of euros in fines on a car industry that employs 800,000 people in the country.
When, in April 2016, the KBA found that Mercedes, Opel and VW cars were understating pollution by turning off emissions controls in temperatures not found in test procedures, it recalled 630,000 cars. It simply told car makers to stop exploiting the loophole.
“It’s very tough to fight with the guys that create the jobs,” says Óscar Rodriguez Rouco, a car analyst at Banco Sabadell in Madrid. “I don’t think that any carmaker will have any big trouble with European fines.”
Emissions testing in the EU is being overhauled, albeit gradually. Simple lab tests under the New European Driving Cycle (NEDC) described by T&E as “utterly discredited” are being replaced by tests designed to better replicate on-the-road conditions. The new system also gives the commission powers to check cars already on the road, and it can penalise car makers up to €30,000 a car in case of noncompliance.
Yet critics say Brussels is not going far enough. “They’ve taken away some … loopholes; they’ve made the cycle more aggressive, but it’s still more gentle than reality,” Molden says. “Car buyers will still find their cars emitting more CO² by about 20%.”
The commission’s research arm said in July car makers were already undermining these new CO2 emissions tests — before they even become mandatory in September.
The commission’s Joint Research Centre found that cars were still being configured to produce low results on NEDC tests, but featured a different configuration to emit higher emissions on the incoming regime, the Worldwide Harmonised Light Vehicle Test Procedure, or WLTP.
The logic is to inflate the baseline for 2020 emissions — the year NEDC standards are phased out in favour of WLTP — because targets in 2025 and 2030 are based on a percentage reduction from the start point.
To obtain lower emissions on the NEDC test, car makers can test the cars on full batteries, enable start/stop engine technology and manually shift gears quickly. To raise emissions for WLTP, they perform a separate test using a depleted battery, disable start/stop functions and shift gears more slowly.
Brussels acknowledges that it inadvertently created this loophole when it wrote the WLTP regulations.
The commission found that some car makers were inflating emissions for WLTP standards by up to 13% and on average by 4.5%. They continued to “systematically” understate NEDC emissions by 4%.
Brussels says it is working to close the loophole and possibly amend the law.
A bigger challenge, the ICCT’s Peter Mock says, is for the car makers to shift gears on compliance. “Car makers have a social responsibility to be more honest and to not exploit every single loophole they come across,” Mock says.
MANUFAC T U R E R S WILL ALWAYS RESPOND TO LITERAL REQUIREMENTS FROM THE REGULATORS
The main benefits of the new WLTP tests