July 18, 2017 / 12:24 PM / a month ago

Combustion engine ban puts 600,000 German jobs at risk: Ifo

4 Min Read

FILE PHOTO - Cars for export stand in a parking area at a shipping terminal in the harbour of the northern German town of Bremerhaven, late October 8, 2012.Fabian Bimmer

BERLIN (Reuters) - More than 600,000 jobs could be at risk in Germany from a potential ban on combustion engine cars by 2030, the Ifo economic institute said in a study commissioned by Germany's VDA car industry lobby.

Pollution from cars, including those with diesel engines, has become a sensitive subject in Germany since Volkswagen (VOWG_p.DE) admitted to systematic cheating of emissions tests to mask levels of health threatening nitrogen oxides.

Cities such as Munich and Stuttgart are looking at banning older diesel cars, whose emissions they blame for causing an increase in respiratory diseases.

The Ifo study, published on Tuesday, said a switch to sales of zero-emission cars would threaten 426,000 car manufacturing jobs, with the rest coming from related industries, such as suppliers.

Two months before Germany's national elections, the government faces growing pressure to reduce emissions or face complete bans on diesel cars in some cities. Representatives of federal and regional governments will meet with carmakers on Aug. 2 to find ways to curb diesel-related pollution.

The VDA, representing carmakers such as Volkswagen (VOWG_p.DE), Daimler (DAIGn.DE) and BMW (BMWG.DE), has already been talking to the government on steps to curb pollution from diesel cars that the industry hopes will avert driving bans which have already hit sales of diesel models.

"Industry groups are deliberately pushing the worst-case scenario to safeguard their vested interests," NordLB analyst Frank Schwope said.

For every 2-3 jobs that will be lost from phasing out combustion engines, one new position will be created in R&D, IT and other sectors related to zero-emission technology, Schwope said, dismissing Ifo's findings as incomprehensible.

Environment Minister Barbara Hendricks told Tuesday's edition of German business daily Handelsblatt: "The auto industry has the responsibility that it will not come to this (driving bans)." She said the industry had to retrofit the affected cars as quickly as possible and must do so at its own cost.

Ifo president Clemens Fuest dismissed criticism that Germany's car industry has been slow to embrace new technologies as it has focused on defending the combustion engine that has driven its prosperity.

"That thesis doesn't stand up given efforts on innovation," Fuest said, noting German carmakers own 40 percent of international patents on combustion engine cars and a quarter of patents on fuel cell cars.

But Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen, said high spending on R&D has mainly benefited combustion technology and carmakers had some catching up to do on battery research.

"The VDA is getting its defences in position," he said. "They're still keeping to combustion engines because it's hard to predict how electric car demand will pan out."

Reporting by Andreas Cremer; Editing by Jane Merriman

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