Diesel Falls Out of Favor in Europe

Diesel Falls Out of Favor in EuropeThe pace of dieselization is slowing in Europe as governments end incentives to promote use of the transportation fuel, with the market share of diesel cars in France, the biggest user, dropping to 57.2% in July, from 64.7% 18 months ago.

Gasoline has regained 2% market share in the five biggest European markets since January 2014, Petromatrix market analyst Alessandra Agnello told the Platts 9th European Refining Summit in Brussels.

"If the fuel tax bias towards diesel will be removed this trend could accelerate," affecting motor fuels demand, she said in a presentation.

There are plans to ban diesel cars from Paris by 2020 as new government subsidies in France and the U.K. encourage a switch to electric and hybrid cars.

Europe is the world's biggest user of the fuel as subsidies over the last 20 years supported the uptake of diesel engine technology to cut carbon dioxide emissions. But policy reversals are now seen amid concern about higher nitrogen oxide and other particulate emissions.

Extra gasoline barrels produced by European refineries could stay in the area instead of being exported if gasoline demand rebounded as a result, Petromatrix concluded.

Diesel cars accounted for 53% of new car sales in 2014 and 2013, lower than 55% seen in 2012, according to Agnello, citing data from the European Automobile Manufacturers Association.

The carbon dioxide efficiency gap between diesel and gasoline cars is narrowing and was at 129g/km versus 127g/km in 2013, Petromatrix research showed.

From Sept. 1 Euro 6 standards lower nitrogen oxide emissions for diesel cars by 100mg/km, to 80mg/km, although this is higher than the 60mg/km standard for gasoline cars implemented a year ago.

Spain and France have the highest market share of diesel cars, at 66% and 63%, respectively, with Germany and the U.K. the lowest at 50%.

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