Diesel drivetrains have long been a crucial component to the European market’s forbidden-fruit appeal for American enthusiasts, ranking right up with station wagons and manual transmissions on the list of under-offered features in the American market. But there are signs now that Europe’s longtime infatuation with oil-burners might be drawing to a close (and not just for biodiesel). The Telegraph reports that Europe-wide diesel market share has fallen from 52 percent to 46 percent in the last 12 months, with the UK’s share dropping from about 43 percent to about 41 percent. Much of this trend is being driven by growth in the low-cost car segment, where the higher cost of diesels make them less competitive. Fears of higher repair costs for more complicated clean-diesel drivetrains and a relative undersupply of diesel fuel aren’t helping either. And just as diesel is faltering in its most important consumer market, the EU is eying a tax increase that Reuters UK says “could boost demand for gasoline at the expense of diesel.”
The EU identifies the same global reductions in gasoline demand (particularly in the US, where ethanol mandates are credited with reducing consumption) without a corresponding drop in diesel demand as its motivation for adjusting its tax scheme to favor gasoline. The current tax structure favors diesel, and an adjustment could interrupt refiners’ efforts to invest in diesel refining capacity.
But another gasoline alternative is gaining attention as Europe deals with a changing energy environment: natural gas, in both liquified petroleum gas (LPG) and Compressed Natural Gas (CNG) forms. Germany already subsidizes LPG at the pump, while other countries like Italy offer consumer credits on LPG- and CNG-powered cars. With North Sea oil reserves tapping out, rich supplies of natural gas from Norway and Russia could eat away at both diesel and gasoline market share in the future. But in any case, EU commissioners see any changes in diesel, gasoline and natural gas tax structures as a “mid-term” solution, and a “bridge” to eventual “decarbonisation of transport.”