Merkel doubles funding to help German cities fight air pollution | Business

Angela Merkel has pledged a further €500m (£460m) to help German cities fight air pollution caused by diesel cars, as a scandal strangling the automobile industry threatened to engulf politicians at the height of an election campaign.

The German chancellor said she was doubling financial aid to cities from a previously announced €500m, in an attempt to stave off the threat of a ban on diesel vehicles.

The public health threat posed by nitrogen oxide emissions came to the fore after Germany’s biggest carmaker, Volkswagen, admitted in September 2015 to fitting millions of vehicles worldwide with illegal devices to cheat pollution tests.

The scandal has since widened, with other German carmakers under scrutiny over collusion allegations.

With elections looming on 24 September, Merkel and other politicians have a tightrope to walk between balancing public health safety and securing millions of jobs in the vital automobile sector.

The emissions scandal has also depressed the resale value of diesel cars, and urban driving bans would sharply accelerate the trend – a powerful election issue for millions of drivers.

After a meeting with 30 mayors whose cities or towns are threatening diesel bans, Merkel said she would stump up the cash to help them develop cleaner transport infrastructure.

The immediate priority is to “prevent driving bans”, said Merkel, mindful she has to protect the crucial industrial sector.

The centre-left Social Democratic Party (SPD), junior partner in Merkel’s coalition, backed the conservative leader in defence of the diesel technology.

Diesel, said the vice-chancellor, Sigmar Gabriel, of the SPD, was a “transition technology”.

Green charity WWF has accused the Merkel government of a “misguided protectionism” of the car sector, which ends up hurting green innovation while foreign competitors are forging ahead.

Merkel was nicknamed the “car chancellor” in 2013 after she argued against an EU cap on emissions. But she and her centre-right CDU are not alone in having cosy ties with the auto sector, the backbone of the German economy.

The SPD also has strong links. Their stronghold state of Lower Saxony, where VW is based, has a 20% stake in the company.

Merkel has repeatedly said she was angered by the sector’s transgressions but has also spoken out against costly hardware fixes for diesel engines, and refused to commit to a date by which Germany should phase out fossil fuel-powered cars, as Britain and France have vowed to do by 2040.

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