Volkswagen’s emissions scandal


So now the US Justice department has launched a criminal investigation into Volkswagen deliberately cheating on federal air pollution tests.

As Bloomberg reports, the criminal probe will provide an early test of the Justice Department’s newly stated commitment to holding individuals to account for corporate wrongdoing.

Just as importantly, if charges are laid, it will open Volkswagen to civil action which could cost the company billions.

On Friday, Volkswagen was ordered to pull 500,000 vehicles off the road after it admitted to the US regulator, the Environmental Protection Agency (EPA), that it had fitted “defeat devices” to its cars which are designed to get around emissions tests in the laboratory. The software activates full emission controls only during testing but then reduces their effectiveness during normal driving. This enables cars to get better fuel economy at the expense of higher nitrogen-oxide emissions. It puts more zip into the VW.

,VW’s share price has slumped by almost 20 per cent on the news.

Why is this happening? Because as reported here, other governments around the world are now looking into the matter to see if their emission standards have been violated by Volkswagen.  In plain language, this may not be an isolated case. The tail risk has just got much bigger.
What makes this case even more egregious is the difficulties regulators are now having managing all those greenhouse gas emissions we are now pumping out in the air. Volkswagen has done the wrong thing and has betrayed society.


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