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City bans propel diesel's demise in Europe

With urban pollution rising up the political agenda, high emissions and a poor public image could prove terminal for the road fuel

Things are not going well for the diesel industry in Europe. A court decisionmade on 27 Februaryallowing German cities to ban diesel cars was followed a day later by news that Rome wants to ban the fuel's use in its city centre by 2024.

Paris, Madrid, Mexico City and Athens have also all announced plans to ban the fuel from city centres by 2025.

Germany's Federal Administrative Court ruled that cities can ban diesel-fuelled cars to tackle local air pollution, rather than wait for a national standard to be developed. That makes it more likely that cities with high levels of pollutantsincluding nitrogen oxides (NOx)such as Stuttgart, Düsseldorf, Munich and Cologne, could follow suit.

As OECD Europe's largest consumer, the move to ban diesel use in Germany is highly damaging for the fuel's future. In December, Germany consumed around 730,000 barrels a day of diesel, according to data from the International Energy Agency (IEA)a year-on-year increase of almost 3%. Total diesel consumption across Germany, the UK, Italy, France and Spain was 4.78m b/d in December, IEA data show.

Germany's fleet of diesel cars totals some 15m vehicles, of which around 9m older ones could be affected. The other 6m would probably be exempt, as they meet more modern Euro-6 emissions controls. Millions of vans, trucks, buses and taxis also run on diesel, but local authorities are likely to be wary of imposing a strict ban on vehicles that could have a severe impact on commerce.

Diesel's demise began in 2015 with the VW emissions scandals. German car manufacturer VW admitted that CO2 emissions and fuel economy figures were incorrect for 800,000 vehicles. The company then later admitted cheating on diesel NOX and particulate emissions disclosures.

Just over 40% of European cars run on diesel, but the share is falling. In January, car registrations in Europe increased by 7.1%, from a year earlier, to 1.28m, according to the European Automobile Manufacturers Association.

However, new registrations for diesel-fuelled vehicles fell by 12.5% in the 17 European markets for which data was analysed, according to JATO Dynamicsa UK-based automotive sector consultancy.

Car manufacturers are already responding by curtailing their ranges of diesel-fuelled vehicles on offer. Fiat Chrysler is preparing to stop producing diesel passenger vehicles by 2022, according to a recent Financial Times report, while Toyota said last year that it may not produce another new diesel model.

But the rapid rate at which consumers are prepared to switch away from diesel may serve as a warning for what lies ahead for the oil sector over the longer-term as the internal combustion engine goes head to head with electric-vehicle technology.

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