EU to tie state auto aid to green research

20th November 2008, Comments 0 comments

State aid for European carmakers will concentrate on technological development and on the production of environmentally friendly vehicles.

Strasbourg -- Any state aid for European carmakers will concentrate on technological development and on the production of environmentally friendly vehicles, French European Affairs Minister Jean-Pierre Jouyet told the European Parliament on Wednesday.

Jouyet's comments came shortly after EU Industry Commissioner Guenter Verheugen lent weight to the argument in favor of bailing out ailing carmakers, describing the German manufacturer Opel as a "special case" in Europe.

"Extraordinary circumstances require extraordinary measures," Verheugen said in the European Parliament in Strasbourg, although he went on to say that he was not fully decided about the proposed multibillion-euro aid package from the German government.

The European Union has strict rules on state-aid for industry, in the interest of maintaining competitiveness across the 27-member bloc.

However, Verheugen said it was "in no-one's interest" that Opel be allowed to fail. Opel would be a competitive firm, he said, were it not for the critical situation of Opel's US parent company, General Motors.

Opel has asked the German government for 1 billion euros (1.27 billion dollars) in credit guarantees to tide it over through a potential liquidity crisis that could arise if GM runs out of cash.

Carmakers had also asked the European Investment Bank (EIB) for up to 40 billion euros in cheap loans to help them weather the storm, something the EIB has since described as a "fantasy."

Germany's Social Democrats (SPD) want state aid to be given to the car industry and have called for any such rescue packages to be used as an incentive to make more environmentally friendly vehicles.

"Research into environmentally-friendly cars is the future," said SPD representative Matthias Groote. "It's not only ecologically worthwhile, it's economically worthwhile," he said.

Car sales across Europe were down 14.5 percent in October on the same month in 2007. The European car industry provides income for some 12 million families and last year generated a combined turnover of 551 billion euros (700 billion dollars), or about 5 percent of the continent's gross domestic product (GDP).

DPA/Expatica

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