VW’s Deal Fixing Tainted Cars Includes Another Huge Green Energy Giveaway

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Chris White Tech Reporter
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Volkswagen’s recent agreement to fix a batch of tainted vehicles requires the German automaker plow millions more into various green energy projects.

VW hammered out a deal Tuesday forcing the company to buy back or fix nearly 83,000 3.0-liter diesel vehicles. The company must maintain an 85 percent recall rate or risk dumping more money into a mitigation fund propping up several green energy projects.

Mitigation actions, according to the Environmental Protection Agency’s website, include allowing states affected by the tainted vehicles to charge “infrastructure for light duty zero emission passengers” – in short, eligible states can use the money to retrofit their public transportation fleet with electric vehicles.

The deal requires the company to contribute $225 million into the fund, which was developed earlier this year to fix VW’s tainted 2.0-litre diesel vehicle – VW would have to put more money into the account if it fails to reach the proscribed recall rate.

The German automaker was originally required to plow $2.7 billion into mitigation efforts, according to an agreement reached earlier this year forcing the company to fix another 500,000 tainted diesel vehicles.

In addition to the mitigation fund, VW was also forced to plow another $2 billion investment into electric vehicle technology, which will be distributed within the next decade.

The payments will be doled out to various plaintiffs, such as the state of New York, which will use $115 million for environmental projects to improve air quality, and another $30 million to the state’s general fund.

All told, the company will now be responsible for shoveling nearly $5 billion into certain aspects of the green energy industry.

Tuesday’s agreement is a civil case mandating the company buy back or fix the vehicles.

The new deal requires the company to buy back the older 3.0 vehicles or terminate leases, and must offer modifications substantially reducing emissions if one is approved by the EPA. VW is not, however, required to buy back the newer 3.0 vehicles if it can modify them enough to put them in compliance with the Clean Air Act.

Volkswagen estimates it will cost more than $10 billion to comply with the recall rate under the Clean Air Act 2.0-liter partial settlement. Tuesday’s settlement will only add to the high cost of compliance.

A lawsuit filed in July found that VW installed cheating devices into more than 500,000 vehicles deactivating the new injection technology during road-testing situations. That technology ended up in all the cars tainted with the devices from model year 2004 to 2008.

The EPA and the Department of Justice championed the deal during a Tuesday phone conference.

“This consent decree provides a remedy for every affected vehicle which will be removed from the road or meet enforceable standards that will reduce emissions, and will also require VW to provide additional funding to address the harmful impacts to human health and the environment from VW’s violations,” Assistant Attorney General John C. Cruden told reporters on the conference.

A criminal investigation into the fuel emission scandal is ongoing.

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