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European Union legislation adopted in 2009 sets mandatory emission reduction targets for new cars. This legislation is the cornerstone of the EU's strategy to improve the fuel economy of new cars sold on the European market. The law is similar to that for new vans.

Under the Cars Regulation, the fleet average to be achieved by all new cars is 130 grams of CO₂ per kilometre (g/km) by 2015 – with the target phased in from 2012 - and 95g/km by 2020. The regulation is currently undergoing amendment in order to implement the 2020 target.

The 2015 and 2020 targets represent reductions of 18% and 40% respectively compared with the 2007 fleet average of 158.7g/km.

In terms of fuel consumption, the 2015 target is approximately equivalent to 5.6 litres per 100 km (l/100 km) of petrol or 4.9 l/100 km of diesel. The 2020 target equates to approximately 4.1 l/100 km of petrol or 3.6 l/100 km of diesel.

Key elements of the legislation are as follows:

Limit value curve

Emission limits are set according to the mass of vehicle, using a limit value curve. The curve is set in such a way that a fleet average of 130 grams of CO₂ per kilometre is achieved by 2015. The limit value curve means that heavier cars are allowed higher emissions than lighter cars while preserving the overall fleet average. Only the fleet average is regulated, so manufacturers are still able to make vehicles with emissions above the limit value curve provided these are balanced by vehicles below the curve.

Phasing-in of requirements

The EU fleet average target of 130g CO₂ per km will be phased in between 2012 and 2015. In 2012, an average of 65% of each manufacturer's newly registered cars must comply with the limit value curve set by the legislation. This will rise to 75% in 2013, 80% in 2014, and 100% from 2015 onwards.

Penalty payments for excess emissions

If the average CO₂ emissions of a manufacturer's fleet exceed its limit value in any year from 2012, the manufacturer has to pay an excess emissions premium for each car registered. This premium amounts to €5 for the first g/km of exceedance, €15 for the second g/km, €25 for the third g/km, and €95 for each subsequent g/km. From 2019, the cost will be €95 from the first gram of exceedance onwards.

Long-term target

A further emission reduction to 95g CO₂/km is specified for the year 2020. Following a thorough review of the target's feasibility, in July 2012 the Commission proposed legislation setting out the modalities of how this target is to be reached. The proposal requires approval by the European Parliament and Council to become law. For a summary see the section 'Implementation of the 2020 target' below.

Eco-innovations

Under the test procedure used for vehicle type approval, certain innovative technologies cannot demonstrate their CO₂-reducing effects when being type approved. Manufacturers can be granted emission credits equivalent to a maximum emissions saving of 7g/km per year for their fleet if they equip vehicles with innovative technologies, based on independently verified data.

Super credits

The cars Regulation gives manufacturers additional incentives to produce vehicles with extremely low emissions (below 50g/km). Each low-emitting car will be counted as 3.5 vehicles in 2012 and 2013, 2.5 in 2014, 1.5 vehicles in 2015 and then 1 vehicle from 2016 onwards. This approach will help manufacturers further reduce the average emissions of their new car fleet.

Pools acting jointly

Manufacturers can group together to form a pool which can act jointly in meeting the emissions target. In forming a pool, manufacturers must respect the rules of competition law and the information that they exchange should be limited to average specific emissions of CO₂, their specific emissions targets, and their total number of vehicles registered.

Targets for smaller manufacturers

Independent manufacturers which sell fewer than 10,000 vehicles per year and which cannot or do not wish to join a pool can propose their own emissions reduction target which is subject to approval by the Commission. The Commission decides on the basis of a set of agreed criteria which include the manufacturer's emissions reduction potential.

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.

Special purpose vehicles, such as vehicles built to accommodate wheelchair access, are excluded from the scope of the legislation.

Monitoring of emissions

The Commission has set out rules on the data required to monitor the CO₂ emissions of new cars. Monitoring reports can be found under the Documentation tab above.

Implementation of the 2020 target

The Commission's legislative proposal for implementing the 95 g/km target includes the following provisions:

• All manufacturers would be required to achieve the same level of reduction - 27% - from the 2015 target;
• The target would continue to be set on the basis of a vehicle's mass;
• Eco-innovations would continue to apply once the new test procedure for vehicle type approval is in place;
• Super-credits with a multiplier of 1.3 would apply in 2020-2023 for vehicles emitting less than 35 g/km; this benefit would be limited to a maximum of 20 000 cars per manufacturer over the period;
• The excess emissions premium would remain at €95 per g/km from the first gram of exceedance;
• Small-volume manufacturers would be given greater flexibility regarding when they can apply for their own reduction target;
• The smallest manufacturers, producing fewer than 500 cars per year, would be exempted from meeting the target;
• Niche manufacturers would receive a new target for 2020 of a 45% reduction from their 2007 level;
• The regulation would be reviewed by end-2014 in order to set reduction targets for post-2020.