U.S., EU vow emissions crackdown in wake of VW scandal

By Timothy Gardner, David Morgan and Barbara Lewis

WASHINGTON/BRUSSELS (Reuters) - Government regulators on both sides of the Atlantic vowed on Friday to toughen auto emissions tests in the wake of Volkswagen's admission it cheated on diesel emissions, but some officials and environmentalists doubted the pledges would be easily achieved.

The U.S. Environmental Protection Agency notified auto manufacturers in a letter that they could require additional tests for "any vehicle" to determine whether it meets emission standards under normal road conditions, not just at controlled testing facilities.

"We aren't going to tell them what these tests are. They don't need to know," Chris Grundler, an EPA official, told reporters.

Any changes could mean higher costs for automakers, particularly any that become subject to recalls or production changes, as well as bigger regulatory hurdles in obtaining certifications.

Across the Atlantic, Elzbieta Bienkowska, the EU commissioner responsible for industry, said: "Our message is clear: zero tolerance on fraud and rigorous compliance with EU rules. We need full disclosure and robust pollutant emissions tests in place."

Earlier this week, Volkswagen said 11 million vehicles worldwide were fitted with software similar to the kind that allowed the company to cheat U.S. tests, but said it was not turned on in the bulk of them. Volkswagen could face $18 billion in fines from the EPA after it admitted using software in diesel cars that evades tests.

The company has said it would set aside $7.3 billion (6.5 billion euros) in its third-quarter accounts to help cover the costs of the biggest scandal in its 78-year history, blowing a hole in analysts' profit forecasts.

The EPA's Grundler said Volkswagen embedded a sophisticated algorithm within 100 million lines of software code to defeat current emissions test procedures and that regulators aim to root out any so-called "defeat devices."

RESISTANCE TO CHANGE

The EU has developed emissions tests for real road driving, not simply in labs, that will be phased in beginning in January next year.

But an EU source said there could still be difficulties in introducing new test procedures that match real-world driving conditions after years of official inertia and industry resistance to change.

Some auto companies have used strategies to pass tests in lab conditions, such as using lighter materials in cars, and that is why real-world driving tests are being rolled out in the EU.

"I still think the industry will say it's hard because they always do," one EU source said, speaking on condition of anonymity.

Lucia Caudet, a Commission spokeswoman, said the Commission only sets the regulatory framework. "Let me be very clear: the Commission does not itself do the policing. This is done on the ground by Member State authorities."

Despite pledges in several European nations to get tougher, there are also pressures in many countries where many people work for auto companies.

Germany faces resistance to any toughening of the test regime from its powerful motor industry. It markets its cars on a promise of clean performance, but tells the Commission its engines take years to design and new pollution standards should not be rushed.

In 2013, Chancellor Angela Merkel won a delay in a law compelling carmakers to meet new CO2 emissions standards, saying jobs were at stake.

More recently, EU officials, speaking on condition of anonymity, said Germany had been lobbying for flexibility to soften a proposed new law to supplement laboratory testing with driving new cars on real roads.

In the United States, a clean air advocate expressed some doubt that the EPA, which operates under a limited budget, could adapt its testing to quickly make a difference.

"It remains to be seen" if EPA can quickly improve its emissions testing, said Frank O'Donnell, president of Clean Air Watch. "I hope so, but in the case of VW, this horse has already left the barn."

(Reporting by Timothy Gardner, David Morgan in Washington and Barbara Lewis and Phillip Blenkinsop in Brussels; Editing by Matthew Lewis)