Renault seeks partners for emissions pool

Renault has filed notice with the European Commission that it is accepting partners for an "open" emissions pool, an arrangement that allows automakers that are on track to meet tougher CO2 targets to combine their emissions with others that might be in danger of missing them, resulting in heavy fines.

Open pools that have already been formed include EV maker Tesla and Fiat Chrysler Automobiles; Volkswagen Group and the Chinese company SAIC, which sells the MG brand in Europe; and Toyota and Mazda.

The European Commission considers a pool as one manufacturer for the purpose of compliance with a specific CO2 emissions target. There are two types of pools: Closed pools are brands under one automotive group, while open pools have at least one outside member.

The financial details of all open pools are not known, but Tesla’s revenues from its FCA pool in Europe -- and a similar arrangement in the U.S. -- were $594 million in 2019, and $354 million in the first quarter of 2020 alone.   

Renault is likely to be well under its emissions targets for 2020. It has Europe’s best-selling electric vehicle, the Zoe small hatchback, and this year introduced a number of electrified models, including plug-in hybrid versions of the Captur small SUV and Megane compact station wagon and hatchback, as well as a conventional hybrid version of the Clio small hatchback. 

Full-electric vehicles such as the Zoe are eligible for EU "supercredits," meaning that each sale is counted twice in 2020.  

In an update with the European Commission published on Friday, Renault said it was forming an open pool and accepting new members until Nov. 18. There are specific requirements, including the disclosure of CO2 emissions data to determine whether there is a risk the pool could miss its targets and providing documents showing the pool participant can cover to cost of any potential excess emissions premium.

One other open pool remains available. The London Electric Vehicle Company, owned by Zhejiang Geely Holding Group of China, is accepting applications until Oct. 31.

Volvo, which has a strong lineup of electrified models, said earlier this month that it would be open to forming an open pool, according to a report in the Financial Times.

Daimler, which holds a 1.5 percent share in Renault Group and collaborates on development and production, could potentially join Renault’s pool. Daimler CEO Ola Källenius has said meeting emissions targets in 2020-21 would be a "challenge." A media spokesman did not immediately return a request for comment.

Automakers that sell in Europe must meet a fleetwide CO2 average of 95 grams per km, with each company assigned a specific target based on the average mass of the vehicles they sell. Thus, companies with heavier vehicles such as Daimler have higher targets than those that primarily sell small cars, such as Renault.

The penalties for missing the EU's targets are severe. Fines are 95 euros per gram over the target, multiplied by the number of vehicles an automaker sells, so they could potentially reach into the billions.