European Commission
MEMO
Brussels, 11 July 2012
Climate action: Questions and Answers on the proposals to reduce CO2 emissions from cars and vans further by 2020
The proposals put forward by the Commission today would amend existing regulations on CO2 emissions from light duty vehicles (cars and vans). Questions and answers about the existing regulations can be found on the following pages:
Cars: http://ec.europa.eu/clima/policies/transport/vehicles/cars/faq_en.htm
Vans: http://ec.europa.eu/clima/policies/transport/vehicles/vans/faq_en.htm
How much will the 2020 mandatory targets 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 vans, the 2020 target leads to savings in annual fuel consumption of 16% compared with the 2017 target of 175 g CO2/km. For an average van, this means estimated fuel cost savings of around €403 in the first year or €3363-4564 (depending on the price of fuel) over a van's lifetime (also 13 years) as compared to retaining the 2017 target.
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 targets increase the price of cars and vans?
They 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 €450 per van and €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.[1]
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, 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 do the 2020 targets 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.
The 2020 mandatory target for vans of 147g CO2/km is 16% lower than the 2017 target of 175 g/km and 19% below the 2010 average of 181.4 g/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 at:
http://ec.europa.eu/clima/consultations/0012/index_en.htm.
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.[2] Following adoption of the latest Transport White Paper[3], 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 this year 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.
CARS REGULATION
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.
VANS REGULATION
Why has the Commission based its proposal on a vehicle's mass rather than other possible parameters?
Various possible bases for the Regulation were assessed. The area (referred to as its 'footprint') and the carrying capacity (referred to as its 'payload') were analysed in the impact assessment and both were ruled out. It was concluded that a van's area can be easily manipulated and this could raise the risk of strong perverse effects. Since carrying capacity is a value declared by manufacturers it is also potentially subject to manipulation and was ruled out.
Shouldn't the 2020 target be tightened up?
The 2020 target for vans was agreed only last year. In view of the regulatory certainty manufacturers need in order to plan their future production, it is not appropriate to change the target now, particularly given the relatively short time gap between the 2017 and 2020 targets for vans.
Why is the additional manufacturing cost per van lower than estimated in 2009?
The estimated average additional manufacturing cost of around €450 per van in 2020 is lower than estimated in the Commission's 2009 impact assessment. This is due to emission reductions that have been applied since 2007, a drop in the costs of CO2 -reducing technologies, and more accurate data on van emissions.
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[1] http://www.acea.be/collection/co2_emissions_faq_on_co2/#Q10
[2] http://ec.europa.eu/clima/policies/transport/vehicles/documentation_en.htm
[3] COM(2011) 144 final