BRUSSELS | Mon Feb 18, 2013 6:25am EST

BRUSSELS (Reuters) - Germany's tactics to safeguard its output of big, luxury cars threaten a planned target for European Union limits on vehicle carbon emissions by 2020 and could also jeopardize any future ambitions, a document from the bloc's executive said.

Proposals from the German government and German Christian Democrat politician Thomas Ulmer undermine attempts to enforce a 95 grams of CO2 per km (g/km) emission ceiling on cars by 2020, according to the Commission document seen by Reuters on Monday.

EU politicians are divided between those keen for rigorous green standards and those seeking flexibility.

The German car industry and Ulmer, who is leading debate on the car law continuing in the European Parliament this week, have been at the forefront of demands for increased allocation of so-called supercredits.

These allow manufacturers to produce cars that exceed the EU target if they also make very low emission electric or hybrid vehicles.

The Commission says a certain number of supercredits (a maximum of 20,000 per manufacturer) could support innovation, but too many would be counterproductive because that could prevent conventional cars from becoming any less polluting.

The internal Commission document, seen by Reuters, looked at four scenarios based on the German proposals - which would set no limit on supercredits - and found they would mean emissions in a range of 99 g/km to 123 g/km - compared with the EU goal of 95 g/km on average across all new EU vehicles by 2020.

As a result, it said, they would lead to "substantial increases in CO2 emissions and oil use" as well as "significant increases in consumer fuel costs and resulting decreases in GDP".

KNOCK-ON EFFECTS

There would also be knock-on effects. Because the supercredits would delay achievement of the 95 gram target, the German proposals would "have implications for the ability to set further CO2 targets".

Germany dominates the premium car segment, with manufacturers including BMW, Mercedes and Audi.

By contrast, proposals by British Liberal Member of the European Parliament Fiona Hall and Spanish Socialist MEP Eider Gardiazabal give an incentive for very low emissions vehicles, but have only "a limited impact on the effective CO2 target".

As a result, "their impact on consumer fuel costs and GDP is also rather limited," the Commission paper said.

The scenarios give a range of deviation from the Commission target, depending on how many supercredits are earned through the production of ultra-low emission vehicles.

Greg Archer, a program manager at campaign group Transport & Environment, predicted 10-15 g/km in excess of the 95 gram goal was likely, given ambitious German targets for electric vehicles.

"The effect will be fewer jobs created, higher fuel bills for drivers and more CO2 released," he said. "Yes, we want to encourage electric vehicles, but we don't want to encourage electric vehicles if that means conventional cars don't get any cleaner."

The Commission declines to comment on unpublished documents.

None of the Members of the European Parliament involved was immediately available for comment.

(Editing by Anthony Barker)

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German Chancellor Angela Merkel (C) reacts during the commemoration of the new 380-kV high voltage power line between Schwerin and Hamburg, in Schwerin December 18, 2012.

BERLIN | Wed Dec 19, 2012 9:24am EST

BERLIN (Reuters) - German Chancellor Angela Merkel's cabinet agreed on Wednesday to accelerate the construction of 2,800 km of new high-voltage power lines to push forward the country's shift to renewable energy.

However, in a sign of the complexities of formulating energy policy in Europe's biggest power market, two of her ministers said they had failed to agree a common position on a proposed reform of Europe's system of permits to cut carbon emissions.

Under the nationwide grid plans, the new transmission lines will be completed within four years from a previously planned 10 years and cost about 10 billion euros ($13.21 billion).

The cabinet agreed to mainly prioritize the construction of lines to transport power from wind turbines near the coast and offshore to industrial areas in southern and western Germany.

Germany's ambitious switch to renewable power sources is the result of a major policy reversal from Merkel last year. After the Fukushima disaster in Japan, she decided to speed up the closure of nuclear plants.

One obstacle in achieving her targets, including a goal for renewable energy to account for 35 of German power production by 2020 from around 23 percent now - is the limited capacity and routing of existing grids.

In addition to the new lines, the draft law envisages expanding existing high voltage grid by about 1,500 km.

"(This agreement) shows that we are absolutely on time with our plans... This is a huge step in the expansion of the grid, a huge step for the switch to renewables," said Economy Minister Philipp Roesler.

In a bid to deal with strong local resistance to grid expansion, the planned law sets limits on the legal options opponents can pursue.

Another important contribution came from Germany's 16 federal states who signaled they would let the federal grid operator Bundesnetzagentur coordinate plans, rather than insisting on individual processing, which causes delays.

However, more needs to be done: Distribution grids that take power from high voltage networks served by big power stations and transport it to consumers must also be adapted to cope with an increasing number of wind and solar power installations.

CO2 PERMIT ROW

At a news conference to discuss progress on Germany's "green revolution", Roesler and Environment Minister Peter Altmaier said they were still at odds on EU plans to reform carbon emissions permits but vowed to talk again next year to try to find common ground.

The dispute between the ministers, who share responsibility for energy policy, has been a major factor in holding up any agreement on an EU proposal to withdraw some emissions permits from the market to stop a price slump.

Altmaier said he expected the European Commission to make a new proposal after the European Parliament had dealt with the subject in February.

"As soon as this proposal is on the table, the German government will take a view on it," said Altmaier.

Roesler also signaled a willingness to talk.

"We both have the goal that we want a well-functioning emissions certificate market," he told reporters.

Altmaier backs the EU proposed reform of the Emissions Trading Scheme (ETS), a main pillar of the bloc's efforts to cut CO2 emissions, but Roesler opposes meddling in the market.

Benchmark EU carbon prices were up 1.44 percent at 7.03 euros a metric ton at about 1150 GMT. ($1 = 0.7568 euros)

(Additional reporting by Markus Wacket, Vera Eckert; Writing by Madeline Chambers; Editing by Noah Barkin and David Cowell)

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TOKYO | Fri Oct 12, 2012 3:47pm EDT

TOKYO (Reuters) - British finance minister George Osborne on Saturday blamed an effective German veto for the failure of a $45 billion merger between British defense firm BAE (BAES.L) and European aerospace group EADS (EAD.PA) this week.

Speaking to British reporters on the sidelines of an International Monetary Fund meeting in Tokyo, Osborne said the transaction might have succeeded if the national governments and the companies' shareholders had discussed it more thoroughly.

"It is not that we were committed to the deal, we just thought it worth discussing. We have been a bit disappointed primarily by Germany's attitude, which in effect vetoed the deal," Osborne said.

"I would like to have found more time to discuss the possibility of merger," he added.

Talks to create the world's largest aerospace and defense company collapsed on Wednesday. Several sources involved in the discussions said German Chancellor Angela Merkel had blocked the deal, but that Britain and France were supportive.

German sources have however said they were unconvinced by the deal's commercial logic, and were concerned the combined company could be locked out of U.S. defense deals.

BAE is a private British company, and the U.S. armed forces account for nearly half of its revenue. Because Washington is reluctant to give contracts to firms influenced by foreign governments, BAE considers minimizing state control as crucial to its business.

EADS has a more complicated share structure that gives big influence to German and French industrial groups and the French state. To keep its influence at the combined firm, Germany would have had to have bought out a holding by engineering firm Daimler.

Osborne said the British government's stance had been straightforward.

"We had some very clear red lines: we were absolutely clear our national security had to be protected, absolutely clear that we wanted to protect job and investment in the UK, and we were concerned about large shareholdings held by other countries."

(Reporting by David Milliken: Editing by Neil Fullick/Jeremy Gaunt)

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