Introduction
Cars in Europe are responsible for around 20 per cent of the total CO2 emissions, - the gas that is most responsible for climate change - and they consume the oil that makes our continent energy dependant. The regulation on a reduction of their polluting capacity has an impact on many social, economic and environmental elements. It can boost the development of investments in low-carbon technologies and tools.
Transport CO2 emissions grew by 32% between 1990 and 2005 in the EU. The share of transport in CO2 emissions has risen from 21% in 1990 to 27% in 2005 and the so-called ' light duty vehicles' are responsible for approximately half of the emissions. The new regulation sets a binding target of 120 grammes per kilometre (g/km) by 2012. That will translate into a 19% reduction of CO2 emissions and will place the EU among the world leaders of fuel efficient cars. In the past, the 120g per km target had already been set, but it has been postponed twice (first to 2010 and then to 2012).
Previous commitments
In 1995, the EU heads of state and government set themselves the goal of reducing emissions of CO2 from new cars to 120 g/km by 2012 as a measure to combat climate change. This corresponds to fuel consumption of 4.5 litres per 100km for diesel cars and 5 litres/100km for petrol cars. In addition, the EU-15 is committed under the Kyopto Protocol to reduce greenhouse gas emissions by 8 per cent by 2008-2012 compared to the 1990 level.
In 1998, the European Automobile Manufacturers Association (ACEA) committed to the EU to reduce the average CO2 emissions from new cars sold in the EU to 140g/km by 2008. Japanese and Korean car producers, represented by JAMA and KAMA made a similar commitment to be achieved by 2009. From 1995 to 2004, average emissions fell from 186g/km to 161g/km. Other stratagems, such as raising awareness among consumers and influencing demand through fiscal measures were also expected to contribute to the overall goal. This, however was seen as unsufficient when regarding the proportion of pollution emitted by cars, which has constantly increased over the period and the rate at which car makers were meeting the 140g/km target.
Current situation among car makers
The Commission's 130g CO2/km objective is defined as the average of the new cars sold in a given year. Today, just four European manufacturers (Fiat, Citroen, Renault and Peugeot) are currently on track to meet the 2008 target of 140 g/km, whereas carbon emissions of newly registered cars in Germany still averaged at 172.5 g/km in 2006 – just 0.5% lower than the previous year.
The discussion on how the new target will be translated into specific objectives for manufacturers has thus split the car industry in two, pitting French and Italian carmakers, which typically produce smaller, more fuel-efficient models, against manufacturers of large, high-performance vehicles such as Mercedes, Audi, Porsche, BMW, Jaguar and Land Rover.
The latter – mainly German and UK-based companies – claim that the new legislation will penalise them unfairly as they are simply responding to consumer demand for bigger, safer and more powerful cars. They say that the chances of them meeting the target within the next five years are virtually non-existent with present technologies.
Since February 2007, the Commission has adopted a new strategy to reduce carbon dioxide emissions from new cars and proposes detailed measures for reaching the 120g/km objective by 2012. The 120 g/km represents a 35% reduction over 1995 levels. The proposals include a sliding scale of fines on car makers who fail to meet the target and a weight- based formula to share the burden for cutting emissions more equitably between the car makers.
See the Commission's CO2 page.
The Commission is not asking automobile manufacturers to bear the full responsibility for this reduction, proposing instead an 'integrated approach' where average emissions are to be brought down to just 130g/km through vehicle-technology improvements. The remaining cuts (10g/km) are to be achieved by complementary measures, such as the further use of biofuels, fuel-efficient tyres and air conditioning, traffic and road-safety management and changes in driver behaviour (eco-driving). How this will be achieved concretely remains uncertain.
The draft legislation defines a limit value curve of permitted emissions of CO2 for new vehicles according to the mass of the vehicle. The curve is set in such a way that a fleet average for all new cars of 130 grams of CO2 per kilometre is achieved. From 2012, a manufacturer will be required to ensure that the average emissions of all new cars which it manufactures and which are registered in the Community are below the average of the permitted emissions for those cars as given by the curve. That curve is set in such a way that heavier cars will have to improve more than lighter cars compared to today, but that manufacturers will still be able to make cars with emissions above the limit value curve provided these are balanced by cars which are below the curve. Heavier cars, such as SUVs and luxury models – which manufacturers say respond to certain consumer demands – can exceed the 130g/km target, so long as they are counter-balanced with smaller, less-polluting models. Manufacturers' progress will be monitored each year by the Member States on the basis of new car registration data.
In addition, independent manufacturers who sell fewer than 10,000 vehicles per year and who cannot or do not wish to join a pool (see below) can instead apply to the Commission for an individual target. Special purpose vehicles, such as vehicles built to accommodate wheelchair access, are excluded from the scope of the legislation.
.png) The proposal COM(2007)856 has been communicated to the Council and to the European Parliament as part of the co-decision legislative procedure. The full text of the proposal is available here. See also the press release and a short description of the proposal.
The Draft Report on the Proposal for a regulation of the European Parliament and of the Council setting emission performance standards for new passenger cars as part of the Community's integrated approach to reduce CO2 emissions from light-duty vehicles is available here.
CO2 fines
The proposal will provide manufacturers with the necessary incentive to reduce the CO2 emissions of their vehicles by imposing an excess emissions premium if their average emission levels are above the limit value curve. This premium will be based on the number of grams per kilometre (g/km) that an average vehicle sold by the manufacturer is above the curve, multiplied by the number of vehicles sold by the manufacturer. A premium of €20 per g/km has been proposed in the first year (2012), gradually rising to €35 in the second year (2013), €60 in the third year (2014) and €95 as of 2015. Most manufacturers are expected to meet the target set by the legislation, so significant penalties should be avoided. Any money raised from the scheme would go into EU funds. More specifically, the amendments by the European Parliament ask for the money to be 'used to increase support for CO2 reduction research and innovation activities in the automotive sector'.
For those manufacturers specialising in larger or more powerful vehicles, such as Porsche, whose average CO2 emissions currently stand at 282g/km, the Commission proposal leaves the door open to a "pooling" system, whereby manufacturing groups can team up in order to share the burden of meeting their goals. Under the legislation, several manufacturers will be able to group together to form a pool which can act jointly in meeting the specific emissions targets. 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.
Additional measures
The Commission has also proposed:
- To encourage member states to promote and stimulate the purchase of fuel-efficient vehicles, via car taxation (EurActiv 13/03/07) and a review of labelling rules, to include indications about cars' annual running costs, fuel consumption and possible vehicle CO2 tax levels, in order to raise consumer awareness;
- to invest in more research aimed at reducing emissions to an average of 95g CO2/km by 2020, and;
- voluntary EU-wide code of good practice on car marketing and advertising, aimed at shifting some of the focus away from vehicle performance towards more sustainable consumption patterns. Parliament says this will be ineffective and have called for binding rules on the display of information on environmental performance in all promotional materials, but media agencies immediately rejected this plan saying it would harm the audiovisual sector (EurActiv 25/10/07).
An essential aspect arguably overlooked in the Commission's strategy remains consumer behaviour and how to influence it. Indeed, one of the reasons for the lack of progress on vehicle fuel efficiency is the fact that Europeans continue to buy and drive bigger and more powerful cars – and there are very few policies to dissuade them from doing so.
Reactions to the proposition
European Parliament
MEP Chris Davies (ALDE-ADLE, UK) has been supportive of an amendment to the proposal implying more responsibility for the car makers to cut CO2 emissions but gives them more time to make the design changes, hence reducing the impact on car prices for consumers. The report thus calls on the Commission to review its objective to 125g/km, through vehicle technology alone, by 2015. See the Motion for a European Parliament Resolution on the Community Strategy to reduce CO2 emissions from passenger cars and light-commercial vehicles.
Environmental NGOs
NGO representatives such as Transport & Environment, which have particularly active on the dossier claim that in order to be consistent with scenarios to reduce CO2 emissions by 2020 and 60-80% by 2050, ambitious long-term targets need to be established. This implies a target of 80g/km by 2020 and one of 60g/km by 2025. T&E are critical of the weakened target and what they perceive as the low, graduated level of fines saying that car makers can meet the 130g/km objective with existing, off-the-shelf technology. They also criticise the Commission's failure to include targets for 2020 and 2025, saying that this will not give sufficient longer term incentive to invest in fuel efficiency. T&E had recommended that fines for carmakers missing the average CO2 target should be 150 Euros per gram exceeded, per car sold. T&E are also opponents of the 'weight-based curve' approach adopted by the Commission. They say that this concession to the makers of larger, performance cars takes away much of the incentive to reduce vehicle weight, one of the easiest and most effective ways of cutting fuel consumption.
In August 2008, T&E released a study presenting the progress made by the major car manufacturers in 2007. It is available here.
Car manufacturers
Car manufacturers were also critical of the Commission's proposal. ACEA (the trade body for the European car industry) says that the proposals do not offer a balanced framework to cut CO2 emissions and to safeguard EU competitiveness, the European automotive sector and growth. They would lead to costs being disproportionate to environmental gains and the costs of carbon reduction facing other sectors. German car makers look likely to be hit hardest by the regulations as they are currently framed as they have historically produced more high-performance, mostly higher carbon cars. Consequently, the German Government has reacted particularly negatively to the proposals. Chancellor Angela Merkel said: "We believe that this path is not economically favourable. We think, therefore, that industrial policy is being made here which burdens Germany and German carmakers." At the Ninth Franco-German Council of Ministers held in June 2008, Nicolas Sarkozy the French President of the Republic and the German Chancellor agreed on a common view regarding the reduction of CO2 emissions and supported the Commission's proposal. Read their Joint Statement here.
Volkswagen said the proposals are unfair to German manufacturers, though the company welcomed the decision to phase cost penalties in over four years. French car-maker Peugeot said: "These plans are anti-ecological, anti-social, anti-economical and anti-competitive in relation to non-European Union carmakers." BMW said the proposals were "naive" steps that would distort the market in favour of makers of smaller cars. The only good thing about them, the company said, is that the steps were only proposals and not yet legislation, so can still be improved.
In the News
European car manufacturers have gathered and asked for a €40 billion loan to maintain competition with the US who have just announced a $25 billion support package for its car sector last week. The European Automobile Manufacturers Association (ACEA) - which represents 15 major producers including Volgswagen, BMW, Renault and Fiat - put together the bid at a board meeting on Friday. On the occasion of the Paris Auto Show on Thursday 9th October, President Nicolas Sarkozy has pledged 400 million euros in state aid to develop electric and hybrid cars, promising to push for changes in EU rules to allow countries including Britain to give more support to green car initiatives.
Meeting in Brussels on 15-16 October, the 27 European leaders gave their support to a France-inspired plan to support Europe's ailing automobile industry and instructed the Commission to come up with proposals to support all European industries before the year's end. More
Latest news
The EU Ministers of the Environment gathered in the European Council of 20-21 October, following a Dutch initiative, opposed the French plan of phasing-in CO2 emissions by cars. The Dutch Environment Minister insisted that the level of compliance should be in line with the Commission's proposal and reflect the ambitious objective of at least - 20% of CO2 emissions by 2020. This was in substance the message of the European Parliament's ENVI Committee vote.
The French compromise involved phasing-in the target, requiring full compliance only as of 2015 and without clear long-term objectives. It also sought lower penalties for offenders which are only marginally above their targets and wanted to introduce extra credits for carmakers which use innovative means of producing cleaner cars or selling very low-emission vehicles.
But, according to government sources, the Dutch position was supported by many other EU states at the meeting, with the UK, Belgium, Sweden, Finland and Denmark speaking out in its support. More
Vote on the new legislation
On December 17, the European Parliament voted on the compromise legislation on a proposed target of an average of 120g of CO2/km for the whole car industry by 2012, compared to the current levels of 160g/km. The regulation sets an average target of 130g CO2/km for new passenger cars to be reached by improvements in vehicle motor technology. Additional measures will further help achieve the 120g/km target through other technical improvements. For 2020, the compromise introduces a long term target for the new car fleet of average emissions of 95 g CO2/km.
Key elements:
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"Volume phase-in": In the period 2012 to 2014, the final compromise provides that the targets will be applied to 65%, 75% and 80% of a manufacturer's cars in the years 2012, 2013 and 2014 respectively. This is to allow manufacturers time to adapt their fleet to the new targets. |
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Reduced excess emissions premiums: Penalties until 2018 of €5 per gram for the first 1 gram of exceedance, €15 for the second gram of exceedance, €25 for the third gram of exceedance and €95 for all subsequent excess emissions. After 2018, all excess emissions would be charged at €95 per gram. |
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Eco-innovations: The CO2 emissions benefits of some automotive technologies cannot currently be measured under the EU's regulatory test procedures which underpin the Regulation. Until the review of the test procedure, each manufacturer will be able to discount up to 7g/km from its fleet average emissions due to such eco-innovations. The discount will be made on the basis of an application to the Commission and the emissions reductions would have to be verified. Ultimately the system for recognising eco-innovations will be replaced by a new revised regulatory test procedure that adequately reflects real world emissions. A review of the test procedure is due by 2014. |
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Derogation – niche manufacturers: The Commission proposal included a derogation for small volume manufacturers (less than 10,000 registered cars per year). An additional derogation for niche manufacturers (responsible for between 10 000 and 300 000 cars per year) has now been introduced. Manufacturers under this derogation will be required to reduce their average fleet emissions by 25% compared to 2007 (or the equivalent for new entrants) |
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Ultra-low carbon vehicles: An additional incentive for flex-fuel vehicles is included in the compromise for very low emitting vehicles. Each registered vehicle that emits below 50 grams per kilometre of CO2 will obtain "supercredits", i.e. it will be treated as if it were more than one vehicle for the purpose of calculating a manufacturer's average CO2 level. The multiplier is 3.5 for the years 2012 and 2013, 2.5 in 2014, 1.5 in 2015 and no multiplier from 2016 onwards. |
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Long term objective for 2020 of 95 grams per kilometre subject to a review by 2013 of the modalities of reaching it (including the slope of the limit value curve and the penalty regime). Although many of the amendments weaken the ambition level of the Commission proposal in the short-term, the agreement will still introduce binding targets for the sector and make a significant contribution of about one third to reducing emissions in the non-ETS sectors. |
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Sources: Euractiv, Europa Press Release, Europa, T&E, Low Carbon Vehicle Partnership
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