European dieselization: Policy insights from EU car trade

Abstract

European dieselization, i.e. the sustained increase in the diesel share in the passenger car fleet, is associated with the first EU strategy to reduce CO2 emissions from passenger cars. This paper aims to contribute to the literature on dieselization by looking at EU international trade flows in passenger cars, a perspective seldom found in the literature. Trade data confirm that the bulk of EU diesel trade flows occurs between EU partners, although diesel imports from other, non-EU countries are also significant. Besides, the external competitiveness of the EU car industry is clearly based on petrol cars. The analysis of trade data also reflects previous findings on the increase in car size. On the policy side, the divergence between CO2 from new car registrations and total CO2 emissions from passenger cars during the dieselization era proves that strategies for decarbonization should not rely exclusively on efficiency gains, demand policies are also needed. The dieselization phenomenon warns of the major inertia that road transport policies can have. The analysis of EU car trade also underlines the need to coordinate environmental policy with other relevant countries in the international car market.