Germany to hold another diesel summit to try to break deadlock

By Markus Wacket

BERLIN (Reuters) - The German government will hold another summit on Friday to try to agree a way to tackle pollution from diesel vehicles without resorting to bans, with the transport minister saying his top priority is to ensure owners can swap old cars for cleaner ones.

Two government sources said on Tuesday the high-level summit would be held in the German chancellery, and both Environment Minister Svenja Schulze and Economy Minister Peter Altmaier were due to take part.

Carmakers and German government representatives failed to reach a compromise on Sunday over potential hardware retrofits for older diesel vehicles. Friday's meeting will take place ahead of a deadline at the end of September set by Chancellor Angela Merkel to stave off bans on older vehicle.

The government currently envisages offering owners of affected diesels in 10 heavily polluted cities options including buy-backs, exchanges and hardware refits, according to a document seen by public broadcaster Bayerischer Rundfunk.

But ministries are divided over the issue. The Environment Ministry favours hardware retrofits costing around 3,000 euros ($3,500) per vehicle, but Transport Minister Andreas Scheuer favours incentives for drivers of older diesel vehicles to trade them in for newer models to curb pollution.

Differences over how to tackle the problem of diesel cars with excessive emissions have strained Merkel's ruling coalition. She said on Monday that a coalition committee would meet on Oct. 1 to discuss matters including diesel policy.

The subject has proved controversial as pollution levels have exceeded European Union limits in a number of German cities, but the government is worried about the cost of replacing or upgrading vehicles and the impact on the country's powerful car industry, its biggest source of export income.

Environment Minister Svenja Schulze said on Twitter the problem could not be solved without retrofits, adding: "Hardware retrofits paid for by manufacturers are the best and most fair way to deal with the diesel crisis."

Scheuer said in a statement on Tuesday, however, that he favoured exchanging older diesel cars for newer, cleaner ones.

"Regarding possible hardware retrofits for German diesel vehicles, my aim is to make sure owners do not pay anything. My aim is also to ensure that the loss of value of used diesel cars is offset by carmakers, who would either take them back or exchange them," he said.

Industry sources said the decline in value would only be compensated for in regions particularly badly affected by pollution.

On retrofits, industry and government sources said the aim in particular was to refit around 1.2 million vans as it was relatively easy in technical terms and such vehicles were on the roads in towns often and for long periods of time.

A spokesman for automaker Daimler said the company was working on a package of measures.

($1 = 0.8506 euros)

(Reporting by Markus Wacket; Additional reporting by Ilona Wissenbach and Thomas Escritt; Writing by Michelle Martin; Editing by Maria Sheahan and Mark Potter)