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Reducing CO2 emissions from passenger cars

Questions and answers on the regulation to reduce CO2 emissions from cars

What is the problem?

Road transport is the second biggest source of greenhouse gas emissions in the EU, after power generation. It contributes about one-fifth of the EU's total emissions of carbon dioxide (CO2).

Road transport is one of the few sectors where emissions have been rising rapidly over the last 20 years, with the exception of the period 2008 to 2010 when lower transport activity due to the economic slowdown brought a drop in CO2 emissions. In the period 1990 to 2010 emissions from road transport increased by 22.6%. This increase acted as a brake on the EU's progress in cutting overall emissions of greenhouse gases, which fell by 15.4%.

Passenger cars alone are responsible for around 12% of EU CO2 emissions. Although there have been significant improvements over recent years in vehicle technology – particularly in fuel efficiency, which translates into lower CO2 emissions – these have not been enough to neutralise the effect of increases in traffic and vehicle size.

What is the EU's objective?

The EU Regulation on passenger cars is the first main measure of the EU Strategy to reduce CO2 emissions from light-duty vehicles(cars and vans). Under the Regulation, average CO2 emissions from cars should not exceed 130 grams CO2 per km by 2015 and should drop further to 95g/km by 2020. The 130 grams target will be phased in between 2012 and 2015. It represents a reduction of 19% compared with the 2006 level (161.3 g CO2 per km).

This approach is similar to the legislation on CO2 emissions from light commercial vehicles (vans) adopted in 2011. Achieving these targets will help Member States reach the economy-wide reductions in greenhouse gases they have committed to deliver by 2020 under the climate and energy package.

How will it work in practice?

Each manufacturer gets an individual annual target based on the average mass of all its new cars registered in the EU in a given year. As of 2012, manufacturers must ensure that 65% of the new cars registered in the EU each year have average emissions that are below their respective targets. The percentage rises to 75% in 2013, 80% in 2014 and 100% in 2015.

Indicative emissions are established for each car according to its mass on the basis of the emissions limit value curve in Annex I in the Regulation. The limit value curve is set in such a way that a fleet average of 130 grams of CO2 per km is achieved for the EU as a whole.

Only the fleet average is regulated, so manufacturers will still be able to make vehicles with emissions above their indicative targets if these are offset by other vehicles which are below their indicative targets.

In order to comply with the regulation, a manufacturer will have to ensure that the overall sales-weighted average of all its new cars does not exceed the limit value curve. The curve for passenger cars is also set in such a way that, compared to today, emissions from heavier cars will have to be reduced by more than those from lighter cars.

Table with the limit value curve

The precise formula for the limit value curve is:

Permitted specific emissions of CO2 = 130 + a × (M – M0)

Where:

  • M = mass in kg
  • M0 = 1289.0
  • a = 0.0457

What if a manufacturer does not meet its target?

If a manufacturer's average emission levels are above the target set by the limit value curve it will have to pay an excess emissions premium. The more a manufacturer goes above the target, the higher the premium. It will be calculated on the basis of the number of grams per kilometre (g/km) that an average vehicle registered by the manufacturer is above the target, multiplied by the number of cars registered by the manufacturer. A premium of €5 per car registered will apply to the first g/km above the target, €15 for the second g/km, €25 for the third g/km, and €95 for each further g/km. From 2019 every g/km of exceedence will cost €95.

How does this legislation differ from legislation on light commercial vehicles (vans)?

The vans legislation is closely modelled on the legislation for cars. However, as the car market differs from the van market, there are some differences between the two regulations.

The limit value curve is different in its value and its slope because cars are lighter and emit less CO2 than vans. Therefore, the limit value curve is flatter for cars, meaning that more reductions are required from larger cars. This is not the case for vans, because there is little risk of an uncontrolled increase in the size of vans.

The phase-in period for vans also starts later than for cars because the light commercial vehicles regulation was adopted later. The rules on derogations for small-volume manufacturers are also different.

How are the manufacturers placed in relation to their targets?

The chart below shows the actual position of the various car manufacturers in terms of the average CO2 emissions of the new cars they manufactured in 2006 (the year on which the Regulation's impact assessment was based).

average CO2 emissions by car manufacturers

The up-to-date information on average CO2 emissions of different manufacturers is available at the European Environment Agency's website.

How will manufacturers' progress be monitored?

The relevant national authorities in each Member State will report annual registration figures for new cars to the European Commission, which will collate the data. Manufacturers will be invited to check that the data is correct. On that basis the Commission will publish, by 31 October each year, a list showing the performance of each manufacturer in terms of its average emissions and compliance with the annual emissions target. This will allow manufacturers' progress to be tracked. The data can be found at the European Environment Agency's website.

How will the regulation promote alternative technologies?

Super-credits

Manufacturers which produce cars with extremely low emissions (below 50g/km) will be given extra incentives in the first few years. When calculating the average emissions of each manufacturer's fleet, each low-emitting car will be counted as 3.5 vehicles in 2012 and 2013, reducing to 2.5 in 2014, 1.5 vehicles in 2015 and one vehicle from 2016. This will lower the manufacturer's average emissions as calculated by the Commission, making it easier to meet the target.

Eco-innovations

Because the test procedure used for EU vehicle type approval is outdated, certain innovative technologies cannot demonstrate their CO2-reducing effects under the type approval test. As an interim procedure until the test procedure is revised, manufacturers which fit new cars with approved "eco-innovations" that reduce emissions will be able to count up to 7 g/km worth of emission savings towards the 130 g/km target. The savings must be independently verified. See also: eco-innovations.

Alternative fuel vehicles

Vehicles capable of running on E85 fuel (a mixture of petrol with 85% ethanol) will be considered, until the end of 2015, as having CO2 emissions 5% lower than the level  reported by the Member States provided that 30% of the filling stations in the Member State where the vehicle is registered offer this type of fuel. The fuel must comply with the sustainability criteria set by other legislation.

How will manufacturers comply? What about small manufacturers?

Manufacturers may form a pool to meet the specific emissions targets jointly. When forming a pool, manufacturers must respect the rules of competition law: the information they exchange should be limited to average specific emissions of CO2, their specific emissions targets, and their total number of vehicles registered.

In addition, manufacturers which sell fewer than 10,000 cars per year and which cannot or do not wish to join a pool can instead apply to the Commission for an individual target. Manufacturers selling between 10,000 and 300,000 cars per year can apply for a fixed target of a 25% reduction from their 2007 average emissions.

What about the impact on car buyers?

Cars are expected to become more fuel-efficient as a result of new investments and technologies. This will lead to fuel cost savings for users.

Will cars become more expensive?

It is not certain that the cost of meeting the new targets for cars will be passed on by manufacturers to buyers. However, even if the purchase price of vehicles rises slightly, this will be more than compensated for by fuel savings over the vehicle's lifetime.

Will older vehicles have to be taken off the market?

No, the emissions targets apply only to new cars. Cars registered before 2012 will not be affected. The lower fuel consumption of new cars may however provide a powerful incentive for replacing older cars by newer ones.

Is this part of a wider strategy?

Yes. The Commission has a comprehensive strategy, adopted in 2007, which sets the objective of limiting average CO2 emissions from new vehicles to 120 g/km. This is to be achieved through setting emissions performance standards for cars and vans and through additional measures that can bring a further reduction of 10 grams CO2 per km.

Furthermore, to promote the purchase of fuel-efficient cars, an EU-wide system of consumer information on the CO2 emissions of all new cars is in operation.

Member States are also encouraged to promote fuel-efficient cars through their vehicle taxation policies.

Besides the regulation limiting CO2 emissions from new passenger cars, which was adopted in April 2009, the measures being taken to implement the strategy are:

  • EU legislation to reduce CO2 emissions from new light commercial vehicles (adopted in May 2011)
  • Improvements to car components with the highest impact on fuel consumption, such as:
    • standards on rolling resistance of tyres,
    • standards on the efficiency of mobile air conditioning,
    • on-board indicators incentivising more efficient driving,
    • gradual reduction in the carbon content of road fuels, notably through increased use of sustainably produced biofuels.

For more details on the implementation of the Strategy, see the progress report adopted in November 2010.

What is the next step?

The Regulation on cars is directly applicable in the Member States and does not need to be transposed into national law through national legal instruments.

The Regulation is currently being reviewed with a view to implementing the 2020 target of 95 g/km.

Questions and answers on the proposed Regulation defining the modalities for reaching the 2020 target for CO2 emissions from new cars (July 2012)

How much will the 2020 mandatory target save consumers in lower fuel bills?

The 2020 target for cars of 95 g CO2/km implies reductions in annual fuel consumption to private users and business owners of 27% compared with the 2015 mandatory target of 130g. For an average car, it is estimated the consumer will save some €340 in the first year, and a total of €2904-3836 (depending on the price of fuel) over the car's lifetime (13 years), as compared with the 2015 target. The higher the oil price, the greater the overall savings will be.

For both cars and vans, the 'payback period' – the time it takes for cumulative fuel cost savings to outweigh the additional cost of buying a more fuel-efficient vehicle - is below five years. Net cost savings over a vehicle's lifetime are estimated at around €2000 for cars and €2500 for vans.

Will the 2020 target increase the price of cars?

It may do, but this depends on how far producers pass on additional manufacturing costs through higher vehicle prices. The average additional manufacturing cost is estimated at around €1100 per car in 2020. Even if the full additional cost is passed on through higher prices, the Commission's impact assessment shows that this extra cost to purchasers will be outweighed several times over by fuel cost savings over the lifetime of the vehicle. Over the past decade new car prices have decreased on average by about 1% annually while fuel consumption and CO2 emissions have also fallen every year. The European Automobile Manufacturers' Association (ACEA) has stated that this trend is not likely to change.

Will the tighter emission targets be bad for the economy?

No, on the contrary. The proposals are expected to stimulate research and innovation in the automotive sector, promoting green growth and jobs and improving the international competitiveness of the EU industry. The impact assessment shows that the regulations would shift spending from fuel, which has a low impact on employment, to vehicle technology and other goods.

Compared with the 2015/2017 targets for cars and vans, it is estimated that consumers will save €27bn per year in fuel costs in 2025, rising to €36bn in 2030. The 2020 targets could increase EU GDP by €12bn annually and spending on employment by some €9bn a year.

The proposals would in total save almost 160 million tonnes of oil, worth about €70bn at today's prices, in the period to 2030. They would also prevent the emission of around 420 million tonnes of CO2, over the same period, resulting in net cost savings to society of €100-200 for every tonne of CO2 avoided.

Will older vehicles have to be taken off the road?

No, the emission limits will apply only to new vehicles. Those sold before 2020 will not be affected and will not have to be taken off the road. But the lower fuel costs of the new vehicles will provide a powerful incentive for replacing old cars and vans.

How does the 2020 target compare with current emission levels?

The 2020 mandatory target for cars of 95g CO2/km is 27% lower than the 2015 target of 130 g/km and 30% below last year's average level of 135.7g/km.

How have the 2020 targets been set?

The 2020 targets were established during the political process involving the European Parliament and Council that led to the adoption of the existing Regulations. The Commission has verified that the 2020 targets are achievable at reasonable cost by carrying out a thorough analysis of the available technologies and of their costs and benefits.

Are the 2020 targets technically and economically feasible?

Yes, the Commission's assessment of the technologies currently available shows that these are available to allow manufacturers to reach the targets at reasonable cost. The technological potential remains for further reductions beyond 2020, particularly in the case of vans.

Has the Commission consulted stakeholders on its proposal?

Yes, an on-line public consultation on policies to reduce greenhouse gas emissions from road vehicles was held from September to December 2011. The results are available here.

In addition, a stakeholder meeting was held in December 2011 where the results of the car and van analysis were presented (see here for summary of the meeting), and the CARS21 High Level Group also discussed the targets.

Are the 2020 proposals in line with the recommendations of CARS21?

Yes, the key recommendations of the CARS21 High Level Group regarding the 2020 CO2 targets were that they should be implemented without change. The Commission's proposals do that.

Are the proposals part of a wider strategy?

Yes. The Commission has a comprehensive strategy, adopted in 2007, to reduce CO2 emissions from new cars and vans. A wide range of measures has been implemented. For details see the Commission's progress report. Following adoption of the latest Transport White Paper, the Commission is now pursuing a comprehensive strategy to reduce GHG emissions from transport by 60% compared to 1990 levels by 2050. CO2 standards for vehicles form a key part of this overall strategy.

Have the 2020 targets for cars and vans been set in the same way?

Yes, the underlying assessment is identical. It looks at the technologies available and their costs. The most appropriate way of distributing the effort is then assessed. While the assessment methodology is the same, the results are slightly different because of the different characteristics of the markets for cars and vans.

How will small manufacturers comply?

As in the existing regulations, manufacturers may form a pool to meet the mandatory emission targets jointly. When forming a pool, manufacturers must respect the rules of competition law; the information they exchange should be limited to average specific emissions of CO2, their specific emissions targets, and their total number of vehicles registered.

In addition, smaller manufacturers benefit from provisions enabling them to have less demanding targets. The very smallest manufacturers registering less than 500 vehicles per year would be exempt from meeting the targets.

Why produce the proposals now?

The existing regulations state that the Commission should bring forward proposals for implementing the 2020 targets by the end of this year. The Commission is doing so several months before the deadline so that the modalities can be agreed as early as possible in order to increase certainty for manufacturers.

Why make two separate proposals? Why not merge the Regulations?

There are two existing regulations with slightly different requirements so it makes sense to have a separate amending measure for each one. The option of merging the regulations was assessed in the impact assessment, but because of the differences between the characteristics of the car and van markets and van testing procedures it was not possible to merge the requirements into one structure.

Will the proposals promote electric, hybrid and other alternative propulsion systems?

Yes, the proposed Regulations not only create an incentive to improve internal combustion engines using petrol and diesel but will also spur electric, plug-in hybrid, fuel cell, natural gas, and LPG (liquefied petroleum gas)-fuelled vehicles. Manufacturers will be free to reduce emissions in the most cost-effective manner. This is in line with the Commission's standard approach of being technology-neutral.

Isn't CO2 being over-emphasised compared with other pollutants?

Other pollutants in vehicle emissions are regulated through EU legislation governing air quality and these are also being progressively reduced. The latest emission standards for these pollutants, known as Euro 6, come into force from 2014. Many technologies can reduce emissions of both CO2 and the traditional pollutants which affect air quality.

The European Parliament has asked for 2025 CO2 targets for cars and vans. When will these be proposed?

The Commission has said it intends to issue a communication around the end of 2012 in order to carry out a consultation on the form and stringency of post-2020 CO2 targets for light duty vehicles. It would be premature to propose the targets before that consultation has taken place.

Isn't the Commission's approach flawed since real world emissions are not the same as test cycle results?

While it is clear that the emissions test cycle gives very different results from real world driving, there is no evidence that test cycle results do not correlate to real world emissions. A vehicle with lower emissions in the test cycle will also have lower emissions under real conditions.

The Commission is nevertheless taking part in international efforts to develop a new global test procedure for light duty vehicles and it is hoped that this will result in CO2 values that are somewhat more realistic than the current test procedures.

Why has the Commission based its proposal on a vehicle's mass rather than other possible parameters?

The existing cars Regulation is based on a vehicle's mass and in drawing up its proposal for the 2020 target the Commission assessed a wide range of other possible bases for the future Regulation. All of these parameters except using the area of the vehicle (known as its 'footprint') were found to be undesirable. The possible use of footprint instead of mass was analysed in detail. It does offer some benefits, including slightly lower costs. However, it was considered that providing certainty for manufacturers ruled out a change of the basis for the regulation for 2020.

Will the proposals put certain car manufacturers at a disadvantage?

The impact assessment addressed the questions of competitive neutrality and social equity. These were assessed based on the relative retail price increase for different manufacturers and car segments. The Commission believes that its proposal is fair to all cars manufacturers taking into account the full range of factors to be considered.

Why include super credits?

The impact assessment says they increase emissions.

It is true that the impact assessment shows super credits can lead to increased CO2 emissions if significant use is made of them. However, super credits can also be seen as providing a strong incentive for manufacturers to develop and market technologies that will need to be deployed more extensively in the future. They can therefore be considered as a sort of technological stimulus.

For this reason it is appropriate to allow for super-credits for a period of four years while limiting the number of vehicles which can benefit from them to 20 000 cars per manufacturer over the duration of the scheme.

Why does the Commission not propose phasing in the 2020 limit over a number of years?

Phasing in the new limit prior to 2020 would be more demanding on manufacturers and could make it more difficult for them to comply. On the other hand, phasing in the target starting 2020 onwards would weaken the Regulation and achieve lower CO2 savings than the Council and European Parliament foresaw when requesting the 95g CO2/km target. This would not be helpful in view of the EU's target of reducing overall greenhouse gas emissions by 20% compared to 1990 by 2020. It would also be contrary to the recommendation of the CARS21 High Level Group that the 95g/km target should be implemented in 2020.

Will the limit value curve for 2020 have a different slope compared to the 2015 target?

The limit value curve serves to calculate the specific emission targets for an individual car manufacturer's fleet average. The curve describes the relationship between the CO2 emissions target and the mass of the vehicle (expressed in kgs). The curve implies that heavier cars are allowed higher emissions than lighter cars, while ensuring that the overall fleet average target of 95 g in 2020 is met.

For 2020 the slope of the curve would remain at 60%, based on 2006 fleet data, the same as in the legislation for 2015. The line proposed by the Commission would require the same level of reduction effort (27%) from all vehicle types as compared to the 2015 limits. This 27% reduction represents the difference between the 2015 target of 130g and the 2020 target of 95g. As a result, the relative effort for each manufacturer is not altered.