Fiat Chrysler buys emissions credits from its “green” rivals

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The automaker, which is behind on fuel efficiency targets, has bought US greenhouse gas emissions credits from Toyota, Tesla and Honda Motor.

A report released from the US Environmental Protection Agency shows that Fiat Chrysler Automobiles has purchased about 8.2 million megagrams of emissions credits. A megagram is equal to 1,000 kilograms and is calculated on emissions saved over legal requirements. Even without acquiring credits, Fiat Chrysler would still have been in compliance for the 2014 model year, the report said. The company stated it earned credits for making improvements to air conditioning systems and other technological improvements. It is a common practice for carmakers to use pollution credits to meet regulatory requirements on fuel efficiency and to avoid fines if they fail to meet the fuel efficiency standards. These type of credits can be earned by selling alternative-fuel cars, hybrid or electric cars, by using certain air-conditioning technology or they can buy credits from other car manufacturers.

But with fuel prices in US at their lowest levels in eight years, the demand for friendly cars is dropping, as more customers are waiving towards big SUVs and pickups with large engines. It is also a reason for slowing US automakers’ progress on fuel economy targets, according to the Environmental Protection Agency. The report revealed that the passenger cars and light trucks averaged 24.3 miles per gallon in 2014, with no improvement from the 2013 model year, after a 0.7 mpg fuel economy progress in the previous year. Fiat Chrysler ranked last among major automakers with a fleetwide fuel efficiency of 20.8 miles per gallon for the 2014 model year and is projected to nearly tie General Motors Co in 2015 at 21.8 mpg for last place, EPA said. Fiat Chrysler, which previously purchased nearly 1.7 million megagrams of emissions credits from Tesla, Nissan Motor and Honda, acquired another 6.5 million credits through the end of the 2014 model year, the report shows. The new purchases include 5.5 million in credits from Toyota and Honda and about 1 million from Tesla.

Via Reuters/Automotive News