Daimler Fights Tighter Mexico Emission Rules as Smog Worsens Getty Images

Daimler Fights Tighter Mexico Emission Rules as Smog Worsens

The 20 million residents of Greater Mexico City typically wake to a blanket of smog so thick it cloaks volcanoes as high as 18,000 feet that ring the capital.

Daimler AG and other truck makers are fighting to delay new emission standards in Mexico as the government struggles to control the worst smog in the capital city in 14 years.

The Latin American nation published draft rules in December 2014 to slash emissions on all new trucks and buses. Since then the regulations have stalled as companies including Daimler, which is Mexico’s largest builder of heavy duty vehicles, call for less stringent controls, saying the tighter standards could make new trucks too expensive for consumers.

“They have been pushing for delays and interim standards, which could actually make emissions from these vehicles worse,” said Katherine Blumberg, of the International Council on Clean Transportation, or ICCT.

Daimler and other truck manufacturers say Mexico should focus on renewing the country’s aging fleet of vehicles to clean up the smog, and are calling on the government to provide subsidies, as well as slowing the expensive new emission standards. The government, which is cutting spending after a slump in oil prices, wants industry to bear the cost. While the two sides argue, the 20 million residents of Greater Mexico City typically wake to a blanket of smog so thick it cloaks volcanoes as high as 18,000 feet that ring the capital.

The authorities estimate that smog kills 2,700 people each year in the city. As pollution has worsened, that estimate may need to rise, says Mexico’s Environmental Rights Center, known as Cemda. Ozone levels climbed to their highest this spring since 2002, forcing authorities to impose emergency restrictions.

Aging Fleets

Daimler says that the retooling needed to comply with the new regulations would raise truck prices as much as 20%, making them so expensive it would deter the purchase of new vehicles. That would lead companies to keep older polluting trucks on the road in a country where the average age of heavy vehicles is already 17 years.

The equivalent shift in standards in the U.S. pushed prices up about 17%, according to Kenny Vieth, president of Columbus, Indiana-based Americas Commercial Transportation Research Co. In Europe, prices rose 5% to 10% each time the emissions rule tightened, according to analyst Christoph Domke of Frost & Sullivan consultancy.

"We need to get many more new vehicles on the road, and lower the age of those vehicles," Stefan Kurschner, chief executive officer of Daimler Vehiculos Comerciales Mexico, said in an interview. "That will clean up the air."

While Mexico is proposing to raise standards to Euro VI from the current Euro IV, the nation’s truck and bus chamber, Anpact, is seeking simultaneous implementation for at least four years of both Euro V and Euro VI, the first being a standard that Europe no longer uses. This will prevent a collapse in sales, says Anpact, which also seeks tax breaks and incentives equal to about 20 percent of the price of a vehicle.

"Publishing a new environmental standard alone doesn’t reduce emissions," said Miguel Elizalde, the president of Anpact. "The success will happen when transporters buy the new technology." He also faults the government for delaying new standards since at least 2009 by not making the cleaner fuel needed for the vehicles available nationwide.

Public Health

Publication of the new standards has been tied up in part by the industry’s insistence on a four-year transition from 2018, said Rafael Coello, an official with the nation’s environmental protection agency.

Anpact’s "proposal is a big threat for public health," said Axel Friedrich, a former German environmental regulator and co-founder of ICCT, the group that raised concerns about Volkswagen AG test results. "If you have two standards, operators will buy the cheaper vehicle. Is the life of a Mexican worth less than the life of a European?"

While Euro VI standards requires a diesel particulate filter to be fitted to trucks, Euro V doesn’t. The ICCT also points out that it isn’t only the wealthy nations of Europe and the U.S. that have imposed the new restrictions. Beijing will begin their implementation in 2017, with the rest of China and India following in 2020.

In Mexico, the government gave initial approval to the Euro VI standards in a draft proposal published in the official gazette in 2014, but has yet to publish the final rules a year and a half later.

Deputy Environment Minister Rodolfo Lacy Tamayo told Bloomberg a final draft of the standards will be published next month after a meeting with Anpact. Mexico offers some inducements to junk old vehicles for new ones, but direct monetary incentives would be "impossible, and even more so with our budget cuts," he said.

Opportunity

In Europe, Daimler has praised the Euro VI standard that came into operation in 2014, saying in one statement they would reduce nitrous oxide and particulate emissions by more than 90%, and that the company’s early adoption of the rule turned an obstacle into an "opportunity."

What’s more, truck and bus makers in Mexico already make vehicles that meet the new standards for shipment to the U.S., said Cemda spokeswoman Margarita Campuzano. Mexico’s government is at fault for letting pressure from the automobile industry, whose $26 billion in new investment since the beginning of 2010 has been a motor of economic growth, delay the new standards, she said.

The government must decide how far it can push the industry. Trucks dumped 5 million kilos of tiny particles into the atmosphere last year and were the source of 85% of those pollutants, known as PM2.5, which pose the greatest health risk, Blumberg said.

"It’s totally unacceptable" that companies are pushing for two standards, said Antonio Mediavilla, Mexico City’s director of air quality control. "Why would you unnecessarily expose millions of people to higher pollution levels just because of economic interests?"

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