Environment and Climate

CO₂ regulation of passenger cars and light commercial vehicles in Europe

Official CO₂ limits for passenger cars and light commercial vehicles have been in force for a number of years. EU Regulation EC 443/2009 set an official CO₂ limit for passenger vehicles of 130 g/km CO₂ for 2012, phased-in gradually by 2015.

Regulation through 2020

Since 2009, passenger cars and light commercial vehicles have been subject to CO2 regulation in the EU. The average emissions of all newly registered vehicles from a manufacturer in one year must not exceed a statutorily defined limit in grams of CO2 per kilometer. For passenger cars, the target for 2015 is 130 g/km. This number will drop to 95 g/km by 2021. The average CO2 emitted by light commercial vehicles had to be reduced to 175 g/km by 2014, and the binding limit in 2020 will be 147 g/km. The CO2 regulations follow the same principle for passenger cars and light commercial vehicles. The regulation does not set a single value for all of Europe; rather, it takes the different corporate product ranges into consideration. Each individual manufacturer, therefore, does not need to meet the overall fleet value for Europe of 95 g/km for passenger cars or 147 g/km for light commercial vehicles. Rather, a specific limit is calculated for each manufacturer on the basis of the average vehicle weight of the manufacturer’s fleet. This ensures statistically that the average of all manufacturers will meet the European fleet value.

Regulation beyond 2020

The reduction of fuel consumption for new cars has made great progress in recent years. Fuel consumption and therefore CO2 emissions for new cars have fallen continuously. The successes of recent years, however, cannot be readily continued into the future beyond 2020. Technologies that have contributed to consumption reductions so far will become more and more difficult as their optimization level increases. For the future, an exponential increase in the development costs for these technologies can be expected. In order to maintain the pace of CO2 reduction, the European CO2 regulation must therefore be fundamentally re-examined for the period after 2020. The EU already has the most ambitious fleet targets in the world. The USA requires just 121 g/km by 2020, China 117 g/km and Japan 105 g/km.

The existing regulation is aligned solely to the technical efficiency of new cars. CO2 values on the street, however, are influenced by many different factors. These include vehicle efficiency, kilometers traveled and lifespan of a car, driving style, the existing vehicle fleet and the CO2 content of energy carriers. A convincing and comprehensive political strategy must consider all factors and exploit the full potential for reducing CO2. Total transportation emissions are primarily driven by the existing vehicle fleet.

In Western Europe, about 12 to 14 million new cars are registered each year. The current regulation applies only to these new cars. The fleet of about 250 million vehicles, in contrast, is not captured by this regulation. Therefore, a comprehensive regulatory approach must drive rapid fleet replacement above all. If new passenger cars must be equipped with more and more complex technologies to meet excessive future CO2 targets, the risk could arise that drivers will hold onto their old cars for financial reasons. Long-term reduction of CO2 is only possible, however, if as many new, efficient passenger cars as possible are sold.

In addition to the lack of consideration for the passenger car fleet, the current CO2 regulation also gives too little credit to technological trends. Even the 95 gram target for 2020 cannot be met with conventional technology alone. However, the required transition to alternative drivetrains, particularly electric mobility, is not currently proceeding quickly enough. The questions of market stimulation and filling or charging infrastructure for vehicles with alternative drivetrains have been answered only hesitantly by policy-makers to date. A purely product-based limit policy from the EU that does not address technology trends, on one hand, and customer demand, on the other, would be one-sided and unbalanced. There are also substantial economic weaknesses and risks.

If the current CO2 regulation is simply continued, this could lead to a politically driven, premature end to the combustion engine. This would take away the financial basis for investment in new drivetrain technologies by one of the most important industrial sectors in Europe. Such a policy would not be technologyneutral and would massively limit the diverse portfolio of manufacturers. The EU would also thwart its higher-level goal of increasing the share of industry to 20 percent of GDP with an overregulated climate policy. In terms of industrial policy, the successful value-creating structure of high-volume and premium cars in Germany and Europe should be secured for the long term. The 20 percent industrial target must therefore be given the same consideration as the 20 percent climate target.

Suggestions for effective climate protection

The ideal path for regulation after 2020 must still be identified. Nevertheless, basic principles that should be applied in the future can be derived from past experience. Effective reduction of absolute CO2 emissions must be approached not only from the supply side with new cars, but also on a much more broad basis. Therefore the VDA suggests a two-pronged strategy.

On the one hand, the automotive industry must further improve the efficiency of their new vehicles. Statutory reduction mandates are helpful – as long as they address the market growth of alternative drivetrains. It is important that the conversion of the CO2 testing method from the current NEDC test cycle to the future WLTP cycle does not cause indirect tightening of targets. Eco-innovations and other flexible instruments that reduce CO2 emissions should continue to be addressed in the future. This also includes combustion engines with regenerative fuels. In addition, the next regulatory period – similarly to other climate and energy policy targets – should be aligned to 2030 rather than 2025.

On the other hand, the previous purely supply-side regulatory methodology must be supplemented with an overall strategy on the demand side. The idea is to reduce CO2 emissions of all road transportation, not just those from new cars. The other influencing factors on CO2 emissions from road transportation must be addressed. This is particularly true of the kilometers driven or lifespan of cars, and of the CO2 content of energy carriers, that is, fuels or electricity. For example, fuels could be included in emissions trading (ETS) – as a supplement to fleet regulations. Intelligent, digital technologies for traffic direction or backup avoidance, for example, should also be included, as they offer enormous efficiency potential, now more than ever. The same applies to CO2 savings from intelligent driving habits. In order to secure the market growth of electric vehicles, an active, demand-based policy by EU member states to support the new technology is also needed.

Dr. Martin Koers
Dr. Martin Koers Head of Department Economic and climate protection policy

Tel: +49 30 897842-350 Fax: +49 30 897842-600
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