Mercedes props up the 2006 emissions league table with a fleet average of 188 grams of CO2 per kilometer.

If Bali failed to produce much besides cop-outs and compromises, at least the European Commission showed that it means business when it comes to tackling carbon emissions.
Transport-related CO2 emissions in the European Union grew by one-third between 1990 and 2005 and now constitute 27 percent of the EU total. Of these, the commission reckons, cars and vans are responsible for about half.
As reported by Economist.com, on December 19th, the commission published its final proposals for cleaning up Europe’s cars. Although it will be at least a year before they become law and there is still scope for some of the details to change there is now little doubt that in only a few years’ time European carmakers will have to meet the world’s strictest CO2-emission standards.
At present Europe’s cars emit an average of about 160 grams of CO2 per kilometer (g/km). There has been some reduction since carmakers were last threatened with legislation a decade ago, but progress has been painfully slow--about 1.5 percent a year rather than the 3 percent needed to meet the voluntary target of 140g/km by 2008 that the industry agreed to a few years ago.
The commission is therefore insisting that by 2012, the fleet-average emissions from new cars sold in the EU must not exceed 130g/km, with another 10g/km reduction coming from other sources, such as low rolling-resistance tyres, more efficient air-conditioning and greater use of biofuels.
The proposals have split Europe’s car industry down the middle. The French and the Italians, represented by PSA Peugeot Citroen, Renault and Fiat, have so far been fairly sanguine. In 2006 their fleets, heavily biased towards fuel-efficient small cars, averaged 142-147g/km. It will not be easy for them to meet the new rules without increasing the cost of their cheap, low-margin cars, but they are close enough to be confident that they can get there.
For the Germans it is a different matter. Volkswagen makes plenty of small cars but its fleet-average emissions have actually been rising slightly because of the recent success of its Audi brand. But it is Mercedes-Benz and BMW that feel most threatened by the commission’s plans. Their brands are synonymous with big, powerful cars that promise luxury and high performance. Mercedes props up the 2006 emissions league table with a fleet average of 188 grams of CO2 per kilometer, and BMW is next from bottom with 184g/km.
BMW has at least been making an effort to burnish its environmental credentials. As well as reducing the weight of its cars, it is now extending across its range a package of fuel-saving tricks called “Efficient Dynamics“. This brings together the latest engine technologies with energy-saving auxiliary units, automatic start-stop and regenerative braking.
By contrast, Mercedes still seems to be in a state of denial. It has heavily promoted its BlueTec technology, but that is primarily designed to deal with clean-air regulations in America, not to meet European CO2 rules. Along with BMW, General Motors and Chrysler, it has developed a new hybrid system called Two-Mode. But this is an expensive option that is likely to find its way only slowly into the firm’s sport utility vehicles (SUVs) and bigger saloons.
Intensive lobbying by BMW and Mercedes, with support from the EU’s industry commissioner, Gunter Verheugen, and the German chancellor, Angela Merkel, has had some effect. To the fury of green campaigners, the commission has agreed to a “weight dispensation“ that will allow makers of heavier cars to produce higher fleet-average emissions.
The commission is determined not to let the premium carmakers off the hook, however, so much will depend on the slope of the CO2 graph. The most grossly polluting vehicles may not be numerous, but if they do not attract stiff penalties the emission rules will lose all credibility. The commission would like to impose fines of 95 euros ($137) per car per gram on emissions exceeding 130g/km.
Without any weight allowance, the existing Mercedes fleet would attract a penalty of about 5,500 euros a vehicle. In practice the final figure will be lower. But the commission is adamant that although it does not want to destroy the German carmakers’ business, they must be under real financial pressure to develop and implement radical fuel-saving technologies.

African governments have signed economic partnership agreements with the European Union under duress, according to Dr Rob Davies, South Africa’s deputy trade and industry minister.
Some 35 of almost 80 African, Caribbean and Pacific (ACP) countries involved in negotiations aimed at reaching economic partnership agreements (EPAs) had accepted deals with the European Commission by December 19.
Davies alleged that many of these trade accords were reached because the Commission had threatened to impose onerous tariffs on goods from ACP countries destined for the Union’s markets should EPAs not be concluded this year.
“This lead to a situation where a country that was unwilling to sign on did so under huge duress and with little enthusiasm,“ he told Ipsnews.net.
Although its neighbors--Swaziland, Botswana, Namibia and Lesotho--have entered into agreements, South Africa has decided not to. This is despite the fact that the five countries comprise the Southern African Customs Union.
One of the major points of divergence to emerge during talks between South Africa and the EU concerned the latter’s insistence that a most favored nation clause be inserted into the agreement.
Such a clause would require South Africa to ensure that any trade concession which it grants to a country enjoying more than a one percent share of world merchandise exports--such as China, Turkey, India and Brazil--is automatically conferred on the EU, too.
“This would lock us into a primary relationship with the EU for ever more,“ said Davies. “It would be an unacceptable limit on our sovereignty.“
Nonetheless, Davies said he was encouraged by assurances from JosŽ Manuel Barroso, the Commission’s president, during the recent summit between EU and African leaders in Lisbon, Portugal.
Barroso promised that further discussions on the EPAs would happen in 2008 and that there would be an opportunity to revise provisions that ACP countries regard as contentious.
Barroso’s intervention has been considered as more conciliatory than the inflexible stance adopted by Peter Mandelson, Europe’s trade commissioner, who has insisted that ACP countries must commit themselves to far-reaching trade liberalization in order to comply with rules set by the World Trade Organization.
The EPAs require that ACP countries remove at least 80 percent of the trade taxes they levy on imports from Europe.
This requirement has been denounced by NGOs, fearful that farmers and nascent industries in poor countries will be unable to compete with an avalanche of imports that are often cheaper than goods produced domestically and, in the case of food, highly subsidized.
Mandelson hit back at those criticisms in a speech delivered in Ljubljana, Slovenia, on December 12. “The EPAs have been subjected to an aggressive NGO campaign,“ he said.
“The EU has been accused of forcing open African markets to European companies; of bullying poor countries into liberalization they do not want or need. What strikes me most about these arguments is that they carry such a profoundly distorted view of the value of trade. More importantly, they show no respect for the many ACP negotiators and reform-minded ministers who have worked hard with the EU to build agreements that do reflect development needs,“ said Mandelson.
He claimed that South Africa, which already signed a trade agreement with the EU in 1999, does not seem to speak for the many African countries who do need these agreements and who are signing up to them.
But Davies dismissed the suggestion that his government has been trying to impede economic progress in Africa. “It’s manifestly untrue that we are trying to hold everyone back,“ he said.
“We were not legally obliged to enter into the EPA (negotiating) process. But we did so because we thought it could be a step to regional integration (in Southern Africa). I’m afraid it has worked out in an endgame that could contribute to regional disintegration.“
The tariffs will not apply to 32 ACP states that are recognized by the United Nations as least developed countries (LDCs). These are eligible to benefit from a scheme known as Everything But Arms, under which most of their non-military exports can enter the Union free of duties or quotas.
Yet EU governments decided earlier this month that any ACP country not categorized as an LDC will lose the current preferential access it enjoys to the Union’s markets on 1 January unless it signs an EPA. Tariffs--often exceeding 10 percent--will be applied to those countries’ exports, with an adverse effect on their earnings.
Ten countries--Gabon, Congo-Brazzaville, the Cook Islands, Micronesia, Tonga, Palau, the Marshall Islands, Naura, Niue and Nigeria--could face such tariffs, as they had not yet signed EPAs as the Brussels institutions prepared for their Christmas holidays.
The EU’s threat came despite calls by development aid ministers representing four of its 27 governments that no ACP country should be put in a worse-off position if it cannot sign an EPA.

Strength of the Venezuelan economy has long been a key factor in the popularity of President Hugo Chavez.

The strength of the Venezuelan economy has long been a key factor in the popularity of President Hugo Chavez.
With oil prices surging and government coffers bulging, Chavez has been able to offer generous social programs and price controls to keep basics affordable for all. But now the first cracks in the economic boom are starting to show. Inflation is surging, shortages of certain products are spreading, and the value of the bolivar, the local currency, is sliding, at least on the black market.
According to Businessweek.com, the troubles call into question the outlook for Chavez’s “socialist revolution.“
“It’s going to be a bumpy ride in 2008,“ says Julia Buxton, a professor at Britain’s University of Bradford, who has written a book about Venezuelan politics. “There are going to be a lot of domestic economic variables that Chavez will have to confront.“
To be sure, the country’s economy remains relatively strong. With oil prices still near all-time highs, growth for the first nine months of 2007 came in at 8.4 percent. But Venezuela’s inflation rate is also ticking up, and it is now the highest in the region. With a 4 percent rise in November, inflation for the last 12 months hit 20.4 percent, up from 10.4 percent in May, 2006. Chavez had set a goal of reducing inflation to single digits this year.
Yet it is Chavez’s efforts to fight inflation that have led to many of shortages. The government froze prices for more than 100 items in 2003 and hasn’t raised most of the prices in four years. Producers now claim they can no longer make money at current prices, so they’re shutting down production.
But there are no easy answers to the problems. Finance Minister Rodrigo Cabezas said that the government is studying the possibility of easing price controls to combat shortages. But stocked shelves will come at a cost.
The government recently removed price controls for sterilized milk, and the price of a liter surged more than 60 percent, to 3,600 bolivars.

If a tight monetary policy is essential to preventing the economy from growing too fast, a fiscal policy that focuses on people’s livelihoods as well as energy and environmental concerns will be indispensable when China is to continue to develop in a sound and sustainable manner, reported Chinaview.cn.
It has been reported that China’s fiscal revenue could reach 5.1 trillion yuans ($690 billion) this year, which would be an increase of about 30 percent from last year. The swelling coffers are a natural reflection of the country’s robust economic growth, which clipped along at a rate of 11.5 percent in the first three quarters this year.
However, even as the country is on target to register its fifth consecutive year of double-digit growth this year, the authorities have made preventing the economy from overheating next year a priority policy. They are also wary that recent price hikes could evolve into outright inflation.
Policymakers have tightened up the monetary policy to rein in credit growth and slow investment. Overseas, a looming US slowdown is also expected to exert considerable negative pressure on China’s exports.
To support sound and fast economic expansion amid slowing investment and export growth, the government must make more active use of fiscal policy to boost domestic consumption, an important but underdeveloped growth engine.
That means the government should continue its efforts to increase spending on education, healthcare, social security and other issues closely related to people’s living standards. The lack of adequate fiscal input in these areas has long prevented consumers from loosening their purse strings.
The rapid rise in fiscal revenue--more than double the rate at which the economy is growing--has clearly put the government in a strong position to lavish money on public welfare issues.