EUROPEAN COMMISSION

Brussels, 13.7.2023

SWD(2023) 256 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT REPORT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council on circularity requirements for vehicle design and on management of end-of-life vehicles, amending Regulations (EU) 2018/858 and 2019/1020 and repealing Directives 2000/53/EC and 2005/64/EC

{COM(2023) 451 final} - {SEC(2023) 292 final} - {SWD(2023) 255 final} - {SWD(2023) 257 final}

Table of contents

Glossary

1Introduction

1.1Political context

1.2Legal context

2Problem definition

2.1Problem area 1: Lack of integration of circularity in vehicle design and production

2.1.1    What is the problem?    

2.1.2    What are the problem drivers?    

2.2Problem area 2: Lack of quality and quantity in reuse and recycling

2.2.1    What is the problem?    

2.2.2    What are the problem drivers?    

2.3Problem area 3: ‘Missing vehicles’ cause environmental impacts

2.3.1    What is the problem?    

2.3.2    What are the problem drivers?    

2.4Problem area 4: Lack of EU level playing field to improve circularity in the design, production and end-of-life treatment of lorries, buses and motorbikes

2.4.1    What is the problem?    

2.4.2    Problem drivers    

2.5Overview of problems and drivers

2.6Who is affected and how?

3Why should the EU act?

3.1Legal basis

3.2Nature of the legal instrument

3.3Subsidiarity: necessity and added value of EU action

4Objectives: What is to be achieved?

4.1General objectives

4.2Specific objectives

5What are the available policy options?

5.1What is the baseline from which options are assessed?

5.2Description of the policy options

5.2.1    Policy Options 1A, 1B and 1C (related to specific objective 1 ‘design circular’)    

5.2.2    Policy Options 2A, 2B and 2C (related to specific objective 2 ‘use recycled content’)        

5.2.3    Policy Options 3A, 3B and 3C (related to specific objective 3 ‘treat better”)    

5.2.4    Policy Options 4A, 4B, 4C and 4D (related to specific objective 4 ‘collect more’)    

5.2.5    Policy Options 5A, 5B and 5C (related to specific objectives 1 to 4)    

5.2.6    Policy Options 6A, 6B and 6C (related to specific objective 5 ‘cover more vehicles’)        

5.3Measures discarded at an early stage

6What are the impacts of the policy options?

6.1Methodological considerations

6.2Environmental impacts

6.2.1    Design circular: Improve reusability, recyclability and recoverability, 3R type-approval    

6.2.2    Use recycled content: increase recycling and decarbonise production for selected materials    

6.2.3    Treat better: Improve treatment quality and quantity    

6.2.4    Collect more: Improve collection quality and quantity    

6.2.5    Provide appropriate financial and organisational incentives to improve collection and waste treatment    

6.2.6    Cover more vehicles: Extend the vehicle category scope    

6.3Economic impacts

6.3.1    Design circular: Improve reusability, recyclability and recoverability    

6.3.2    Use recycled content: increasing recycling and decarbonising production for selected materials    

6.3.3    Treat better: Improve treatment quality and quantity    

6.3.4    Collect more: Improve collection quality and quantity    

6.3.5    Provide appropriate financial and organisational incentives to improve collection and waste treatment    

6.3.6    Cover more vehicles: Extend the vehicle category scope    

6.4Administrative burden

6.5Social impacts

6.5.1    Job creation    

6.5.2    Impacts on SMEs    

6.5.3    Contribution to SDGs    

7.How do the options compare?

7.1Summary of impacts and costs/ benefits

7.2Cost benefit analysis, cost efficiency, effectiveness, coherence and proportionality

8Preferred policy package

8.1Preferred options

8.2Combined impacts of the preferred policy package

8.3Expected impacts on the competitiveness of the automotive industry

8.4REFIT (simplification and improved efficiency)

8.5Application of the ‘one in, one out’ approach

8.6International Aspects

9How will actual impacts be monitored?

Glossary

1Introduction

1.1Political context

The European Green Deal (EGD) is Europe’s growth strategy to ensure by 2050 a climate neutral, clean and circular economy, optimising resource management and minimising pollution. The Circular Economy Action Plan (CEAP) 1  and the New Industrial Strategy for Europe 2  lay out the roadmap for the European industry to meet the EGD objectives. The Circular Economy Action Plan contains a commitment to review the legislation on end-of-life vehicles (ELVs) with the aim to “promote more circular business models by linking design issues to end-of-life treatment, consider rules on mandatory recycled content for certain materials, and improve recycling efficiency”. The EU Action Plan: ”Towards Zero Pollution for Air, Water and Soil” 3  also stressed the need for the Commission to propose new measures to address the EU’s external environmental footprint linked to the export of ELVs and used vehicles. The European Council 4 and the Parliament 5 have both recognised the importance of this initiative.

In this light, the purpose of this impact assessment is to provide the evidence needed for the joint review of the Directive 2000/53/EC on end-of-life vehicles (“ELV Directive”) 6 and of Directive 2005/64/EC on the type-approval of motor vehicles with regard to their reusability, recyclability and recoverability (“3R type-approval” Directive) 7 . The review of these Directives aims to boost the transition of the automotive sector to a circular economy, thereby reducing the environmental footprint linked to the production and end-of-life treatment of vehicles and strengthening the sustainability of the automotive and recycling industry in Europe.

The invasion of Ukraine by Russia in 2022 reiterated the importance for the EU industry to reduce the vulnerability of its supply chains, especially for critical raw materials (CRMs) essential for the EU’s strategic autonomy and for the transition to a carbon-neutral economy. The EU heads of state or government have made the transition to a circular economy a priority in that respect, contributing to securing EU supply of critical raw materials 8 . This is also a key point in the Green Deal Industrial Plan for the Net-Zero Age 9 .

The automotive sector is a pillar of the EU economy and its transition to more circular models will have a considerable spill over effect on key related industries, especially the extraction and processing sectors. The automotive industry is embedded in complex and global supply chains and has recently faced production shutdowns, semiconductor shortages and problems sourcing skilled labour. This initiative comes at a time of supply chain challenges and intense competition which have put pressure on automotive manufacturers to reduce costs and improve efficiency. The shift towards electric vehicles, as the EU and other major automotive markets in the world seek to drastically reduce the carbon intensity of road transport, requires a major transformation of the industry and heavy investments in new technologies such as battery production to stay competitive. In addition, the automotive sector is one of the largest users of CRMs in the EU industry and the electrification of the fleet will lead to a considerable increase in the demand for these materials. Increasing the recovery of CRMs used in the automotive sector is therefore an essential element of this review, and an important contribution to the overall EU strategy to improve the security of supply of such materials, as reflected in the Commission proposal for a CRM Act 10 .

The transition of the automotive sector to circularity is also key to reaching by 2050 the climate neutrality targets included in the European Green Deal, complementing the various initiatives under the “Fit for 55” package 11 . The initiative is also consistent with other recently launched initiatives designed to improve the eco-design of products and ensure sustainable management of waste, especially the proposal for a new Regulation on batteries 12 , the proposal for a Regulation laying down harmonised conditions for the marketing of construction products 13 , the proposal for a Regulation on Ecodesign for Sustainable Products (ESPR) 14 and the proposal for a new Waste Shipment Regulation 15 . Finally, this initiative complements other recent legislative developments designed to transform the automotive industry, such as the proposed revised CO2 standards for cars and vans 16 , the proposed Euro 7 standard on emissions from new motor vehicles 17 and the ongoing revision of the three Directives of the “Roadworthiness Package” 18 . A more detailed description of the interaction between this initiative and other EU policies and legislation can be found in Annex 10. This initiative supports the implementation of the Sustainable development Goals (SDGs), in particular SDG 9 “Industry, innovation and infrastructure”, SDG 12 “Responsible consumption and production”, SDG13 “Climate action“.

1.2Legal context

The ELV Directive was adopted in 2000 and established for the first time a harmonised EU framework designed to ensure the environmentally sound treatment of vehicles reaching the end of their life and considered as waste 19 . To this end, the ELV Directive sets out measures which need to be implemented by the Member States and relate to:

1.The prevention of waste, especially measures to limit the presence of hazardous substances in vehicles and to encourage Member States to take account and facilitate the recycling and reuse of vehicles and their parts, in the design and production stage of new vehicles;

2.The collection of ELVs, notably through obligations for Member States to ensure that authorised treatment facilities (ATFs) are available within their territory, that ELVs are transferred to ATFs and that this transfer occurs without any costs for the last holder;

3.The environmentally sound treatment of ELVs, through requirements on depollution;

4.The setting of annual targets for the reuse and recycling (85%) as well as reuse and recovery (95%) of ELVs, based on the overall weight of vehicles;

5.The provision of information by producers on components and materials used in vehicles, to facilitate their identification for reuse and recovery.

This Directive contains 13 Articles and 2 Annexes. Except for the Annex II on hazardous substance restrictions, it has not been subject to any substantial amendments since its adoption in 2000. At the occasion of the revision of the Waste Framework Directive in 2018, the co-legislators agreed 20 that the Commission “shall review [the ELV] Directive, by 31 December 2020, and to this end, shall submit a report to the European Parliament and the Council, accompanied, if appropriate, by a legislative proposal”. It indicates that the ELV Directive revision should focus on the feasibility of setting recycling targets for specific materials and the problem of ‘unknown whereabouts’ of end-of-life vehicles. 

The 3R type-approval Directive 21 , adopted in 2005, aims to improve the design of new vehicles with regard to their reusability, recyclability and recoverability. The need for this Directive was foreseen when the ELV Directive was adopted in 2000, in order to link the provisions of the ELV Directive (like the prohibition of certain hazardous substances, treatment of ELVs and the reuse, recycling and recovery targets) to ‘design’ provisions in the type-approval process. In particular, the Directive states that vehicles should be constructed so as to be 85% recyclable/reusable and 95% reusable/recoverable. The 3R type-approval Directive is part of the type-approval framework 22 , whereby new vehicle types are tested and granted type-approval before being placed on the EU market, provided they meet a set of technical requirements. It places obligations on national type-approval authorities to verify information provided by car manufacturers on reusability, recyclability and recoverability of new vehicle types.

2Problem definition 

This impact assessment addresses the following four problems:

1.The design and production of new vehicles do not sufficiently contribute to the ambitions of the European Green Deal for a climate-neutral, clean and circular economy (‘design and production’ problem area);

2.The treatment of vehicles at the end of their life is suboptimal compared to its potential to contribute to a climate-neutral, clean and circular economy (‘waste treatment’ problem area);

3.An important share of vehicles subject to the ELV Directive are not collected to be treated under sound environmental conditions in the EU, contributing to pollution in third countries (‘collection’ problem area);

4.There is no EU level playing field for the design, production and end-of-life treatment of vehicles currently outside the scope of the ELV Directive, resulting in unexploited potential to the circular economy objectives of the European Green Deal (‘scope’ problem area).

These four problems were identified in the evaluations of the ELV Directive 23 and of the 3R type-approval Directive 24  as preventing the transition of the overall automotive supply chain to a circular economy. 

These problems relate to all stages of the life cycle of the automotive sector beyond use (design, production, waste management). They have different features and affect different economic operators (vehicle manufacturers, dismantlers, recyclers, authorities). This impact assessment therefore provides in the first place an analysis of their specific drivers and of specific options designed to address each of the objectives corresponding to these problems separately. This allows for a thorough presentation of each problem and of the different possible options to address them, as well as of their respective impacts.

It is however also essential that these problems are addressed in a consistent and mutually supportive manner to improve circularity across the whole automotive supply chain. There are clear links and synergies between the problems, objectives and measures linked to design, production, waste collection and recycling. For example, improving the design and production of new vehicles is key to ensuring higher quantity and quality of recycling of ELV, and improving quality of recyclates from ELVs is also essential to allow them to be taken up as recycled materials in new vehicles. For that reason, after an analysis of options specific to each problem, this impact assessment provides, in section 8.1, a preferred package of options covering them all, which represents the most effective and efficient solution to meet the general objective of this initiative (improving circularity for the whole automotive supply chain). A more detailed presentation of these problems and their drivers are provided in Annex 6.

2.1Problem area 1: Lack of integration of circularity in vehicle design and production

2.1.1What is the problem?

The EU automotive sector is among the world's biggest, providing 13.8 million direct and indirect jobs, representing 6.1% of total EU employment. In 2021, 12 million motor vehicles (cars, vans, lorries, buses) were manufactured in the EU and 11.5 million were placed on the EU market 25 . The production of vehicles is one of the most resource intensive industries and represents a significant impact in terms of use of raw materials. Europe’s automotive sector is responsible for 19% of the demand of the EU’s steel industry (over 7 million tons/year 26 ), 10% of the overall consumption of plastics (6 million tons/year 27 ), a significant share of the demand for aluminium (42% for all transport equipment, around 2 million tons/year 28 ), copper (6% for automotive parts 29 ), rubber (65% of the production of general rubber goods 30 ) and glass (1.5 million tons of flat glass produced in the EU 31 ). The electrification of the automotive sector, combined with the increasing integration of electronics in vehicles, will lead to more copper and CRMs, including rare earth elements 32 in vehicles, as well as more advanced and lightweight materials like high grade steels and rapidly growing demand for aluminium alloys. The market demand has also resulted in a steady rise in sales of Sport Utility Vehicles (SUVs). SUVs represented around 40% of annual car sales of vehicles in Europe in 2020, compared to 10% in 2010. SUVs are heavier than conventional cars and their production requires greater amounts of primary materials, which considerably increases their environmental footprint. This has compounded the trend for heavier vehicles. 

The result is that the production of vehicles represents a considerable environmental footprint, primarily due to the GHG emissions linked to the energy required for the extraction and processing of primary materials such as coal and iron ore (for steel), bauxite (for aluminium), copper or oil (for plastics). The extraction and processing of metals represent about 10% of global greenhouse gas emissions globally. The automotive industry is undergoing profound changes towards climate-neutrality through the electrification of the vehicle fleet. As a result, the “production phase” in the vehicle lifecycle will have a higher environmental footprint than its “use phase”, notably due to the importance of raw materials for the manufacturing of EVs. In terms of shares of the production carbon footprint, aluminium will be contributing 35-50% 33 , steel 15-25%, plastics 4-7%, compared to 10-20% for the battery raw materials 34 .

The dependence on primary materials is also making the supply chain for the automotive industry more vulnerable, compounding the challenges observed recently with disruptions for semi-conductors or magnesium and the hike in energy prices that followed the start of the war in Ukraine.

The automotive sector is only recently starting to embrace the decarbonisation of their production process to enable a full transition to a circular economy. Due to quality requirements, the automotive industry relies heavily on the supply of primary raw materials and uses very little recycled materials. This is the case especially for plastics, steel 35 and aluminium 36 . Notwithstanding the recent advances made by EU automotive industry frontrunners, the current level of integration of circular models in the design, production and end-of-life stages of the vehicle lifecycle remains insufficient to attain the objectives of the Circular Economy Action Plan to “promote more circular business models by linking design issues to end-of-life treatment, consider rules on mandatory recycled content for certain materials, and improve recycling efficiency”.

2.1.2What are the problem drivers?

The drivers for this problem are a combination of market and regulatory failures which result in a lack of integration of circularity in the design and production phase of vehicles.

Market failure    

Prices of primary materials do not factor in environmental externalities of extraction and processing and are generally lower than secondary materials due to economies of scale. The lack of market demand for secondary materials has in turn not encouraged the recycling sector to invest and increase supply and quality of recyclates suitable for the automotive sector.

Regulatory failures

Regulatory requirements designed to ensure that the automotive sector reaches climate-neutrality have focused on the use phase of vehicles (rather than on the circularity in the production and end-of-life stages). This has encouraged the incorporation of lightweight and composite materials in new vehicles, which are particularly challenging and costly to recycle. The growing use of new techniques to assemble parts (typically gluing elements instead of using screws) in vehicles has further hampered easy dismantling and high-quality recycling of ELVs.

The provisions in the ELV Directive 37 on the design of cars to facilitate dismantling, re-use, remanufacturing and recycling, as well as the use of recycled content, are too generic. The provisions in the 3R type-approval Directive lack specificity, for example for the verification that (i) the reusability, recyclability and recoverability targets are met and for (ii) incentivising a more sustainable vehicle design and production. The verification of how vehicle manufacturers meet their obligations on recyclability and recoverability is largely built on the ISO 22628 standard from 2002 38  that does not take into account the degree of development in recycling technologies and allows for a wide interpretation as to what materials can be considered as “recyclable”. In addition, there is no reporting obligation for Member States and the Commission on the implementation of the 3R type-approval Directive and no regular monitoring has been carried out at this point. Moreover, there are no legal incentives for manufacturers to increase the amount of recycled content in new vehicles or to use materials and parts which can be easily repaired, dismantled, re-used, remanufactured or recycled 39 . Lack of clarity in definitions for secondary raw materials makes it difficult to distinguish between primary and secondary raw materials and between post-consumer scrap and pre-consumer scrap.

2.2Problem area 2: Lack of quality and quantity in reuse and recycling 

2.2.1What is the problem?

Vehicles reaching their end of life currently are not managed in optimal conditions. About 6.1 million ELVs are collected every year in the EU, representing 6.9 million tons of waste 40 , with 66% (4 million tons) of ferrous metals, 11% (0.7 million tons) of non-ferrous metals, 2% (0.1 million tons) of glass and 14% (1 million tons 41 ) of mixed plastics 42 . While substantial progress has been made since 2000 to reach the 85% recycling/re-use target set out in ELV Directive, a large share of materials, in particular Automotive Shredder Residues (ASR) is sent to landfills or incinerated. The share of plastics in the composition of vehicles has considerably increased, and today ranges from 14 to 18% of the total weight of new passenger cars. Only 19% of plastics or 0.2 million tons per year from ELVs is currently going to recycling and 0.1 million tons are effectively recycled, while around 0.8 million tons of plastic waste per year either ends up in landfills (40%) or is sent to waste-to-energy facilities (41%). 

The increased use of certain materials in new vehicles since the introduction of the ELV Directive poses challenges, in particular the integration of carbon-fibre- and, most of all, glass-fibre-reinforced plastics as lightweight materials that cannot currently be recycled easily. The widespread use of electronics in new vehicles creates additional difficulties. They contain important concentrations of CRMs, including REEs, which are currently not recycled at the end-of-life 43 . Finally, while the recycling rates of metals like steel (88%) or aluminium (95%) from ELVs are high, the quality of the scrap is often too low, notably due to contamination with other materials during the shredding process. For steel this is typically due to high levels of copper content in ELV scrap and for aluminium due to insufficient sorting of alloys respectively containing zinc, copper, silicon and magnesium alloying elements accumulating in cast aluminium. This prevents higher scrap utilisation rates in the production of new high-grade products and the scrap is downcycled for other purposes.

The share of parts and components from ELVs which are re-used or remanufactured remains low. The suboptimal management of waste from ELVs represents a loss of resources for the industry in the EU, either because waste is not recycled back into the economy (especially for plastics or glass) or because the quality of the scrap is often too low (especially for steel and aluminium) for direct use by the industry in the EU.

2.2.2What are the problem drivers?

The potential for higher quantity and quality of materials from ELVs to be re-used, remanufactured and recycled remains underexploited, due to the following regulatory and market failures:

Market failures

It is currently not profitable to recycle from ELVs materials such as plastics and glass or precious metals from electronic components. Economies of scale and incentives to promote better quality of scrap are lacking. Authorised Treatment Facilities (ATFs) are mostly SMEs which make their business in the commercialisation of the most valuable spare parts removed from ELVs and the sale of depolluted ELVs to shredders. The market for other spare parts 44 remains limited, as the cost for their dismantling is high and many ATFs are not equipped to reach out to a wider range of customers for instance on digital marketplaces. After ATFs, ELVs are transferred to shredders where, in most Member States, there is no sophisticated technology in place to sort, separate and recover various materials contained in ELVs into clean fractions, notably high-quality steel and aluminium scraps and plastics suitable for mechanical recycling. Investments in “post shredding technologies” (PST) are capital intensive and they remain underdeveloped across the EU.

Regulatory failure

The definition of “recycling” in the ELV Directive includes “backfilling” 45 and is broader than other definitions applied to other waste streams, pursuant to the Waste Framework Directive. As a result, in some Member States, considerable amounts of wastes from ELVs, especially inert materials, glass particles, mixed plastics, rubbers, fibres and textiles are backfilled and accounted as recycled. The methodology to calculate that the recycling/re-use targets are met is not sufficient to provide clear evidence that only waste which enters recycling is counted towards the achievement of the targets 46 . The ELV and 3R type-approval Directives do not sufficiently incentivise vehicle manufacturers to provide dismantling information on components and materials that would facilitate ATFs, garages and repair shops to identify, locate and dismantle valuable spare parts and components. As an example, the lack of sufficient information on CRMs contained in vehicles do not ease their early-stage disassembly and sorting in the authorised treatment facilities.  The provisions on this point in Article 8 of the ELV Directive, and their implementation by the vehicle manufacturers, are often seen by the dismantling sector as too limited, notably as the information might not be free of charge and not user-friendly. There is no incentive either in the current legal framework for economic operators to increase the re-use and remanufacturing rates of parts from used vehicles or ELVs.

Regarding financial responsibility, the ELV Directive does not specify that car manufacturers should contribute financially to the costs linked to the dismantling, re-use, remanufacturing and recycling of materials and components from ELVs. This contrasts with other sectors, such as batteries, electric and electronic equipment and packaging, where “extended producer responsibility” (EPR) schemes explicitly include the financing by producers of the waste management phase of their products. In March 2022, the Commission carried out inspections at the premises of automotive companies and associations of such companies, based on concerns that several of them may have violated antitrust rules and colluded to agree not to provide any financial support to the dismantling and recycling sector. The investigations on this case are ongoing 47 .

2.3Problem area 3: ‘Missing vehicles’ cause environmental impacts

2.3.1What is the problem?

While around 6.1 million ELVs are reported to be treated according to the ELV Directive every year, it is estimated that around 32% of de-registered vehicles, i.e., approximately 3.4 million units per year, are of unknown whereabouts (so-called “missing vehicles”) and 1 million units (10%) are exported as used vehicles. Despite numerous studies on this problem 48 , it remains challenging to estimate the proportion of these vehicles gone missing due to administrative failures, illegal dismantling in the EU or illegal export outside the EU. In any case, the treatment of ELVs and the recovery of materials from these ELVs is not in accordance with the requirements and causes environmental damages, such as oil spillage, unsound treatment of refrigerants or improper removal of hazardous substances and of components for higher quality of recycling. This represents unfair competition and economic losses for authorised treatment facilities, which have to abide by EU rules. It further means a loss of secondary resources which are important for reducing industry’s environmental footprint through the use of recyclates instead of primary resources. Illegal dismantling and export of ELVs are also feeding criminal networks. 

The export of used vehicles also raises important environmental and public health challenges. While the export of ELVs from the EU to non-OECD countries are considered as hazardous waste and thus banned, this is not the case for used vehicles that have not (clearly) reached the waste stage. Although these vehicles are not formally waste, they are exported to third countries are often close to end of service stage, meaning that they cannot be used for the primary purpose they were conceived, in a fully safe manner. The EU is the biggest exporter of used vehicles worldwide. In 2020, the number of used vehicles exported from the EU to third countries amounted to 870,000 vehicles at a value of € 3.85 billion. The most important destinations are Africa, Eastern Europe, Central Asia and the Middle East. Used vehicles exported from the EU contribute to affordable access to mobility in third countries, where they are used longer than in the EU. However, as documented in a recent study 49  on the quality of used vehicles carried out by the Dutch Ministry of Infrastructure and Water Management, a significant part (more than 60%) of used vehicles exported to African countries do not meet Euro 4/IV emissions standard, are older than 15 years and do not have a valid roadworthiness certificate. The roadworthiness status proves that the vehicle is in a technically and environmentally sound condition to use it 50 . Therefore, it is an essential factor determining the appropriateness and full functionality of a vehicle to be safely exploited during its service phase. According to the Correspondents Guidelines No 9 “Shipments of Waste Vehicles” 51 , failure to pass a periodic roadworthiness test for more than 2 years may be considered as one of the indicators to suspect that the vehicle is not functional anymore, it is technically irreparable, and thus should be considered as an end-of-life vehicle. There are also indications that a considerable portion of exported vehicles undergo illegal alterations, like the removal of air bags and exhaust filters. They present a serious risk of polluting the environment and for road safety. According to WHO, road accidents cause the death of 1.25 million people and injure 20-50 million people annually. Despite having only 54% of the global vehicle fleet, low and middle-income countries account for 90% of these fatalities. The African continent, which is the main destination of used vehicles exported from the EU, has the highest road traffic fatality rates, with 246,000 deaths annually, and this figure is expected to rise to 514,000 in 2030, representing an increase of 112%. In order to address these problems, and as documented by the UN Environmental Programme 52 , a growing number of countries and regional organisations 53  committed to restrict the import of used vehicles, based on their age, compliance with air pollutant emission limits (Euro standards) or roadworthiness criteria.

2.3.2What are the problem drivers?

The drivers for this problem are a mix of regulatory and market failures resulting in (i) a lack of traceability (ii) insufficient enforcement and (iii) the absence of considerations linked to roadworthiness and environmental protection when used vehicles are exported from the EU.

Market failures

There are economic incentives for insurance companies, dealers and private owners of ELVs to sell them on online market places or directly to non-authorised treatment facilities or export them in contravention of EU rules: they will obtain higher prices than if they have to deliver them to authorised treatment facilities, which have to abide by the requirements of the ELV Directive for the treatment of these vehicles and are subject to social security, employment and other fiscal charges (unlike the informal sector).

The steady demand in developing countries is an important driver for the export of used vehicles outside the EU, associated with the high prices that exporters of such vehicles can obtain compared to what they could gain with selling them in the EU. There are also factors that can make it difficult to sell certain types of used vehicles in the EU, such as emission taxes and restrictions on access to urban centres. This can make it more attractive for exporters to sell these vehicles in developing countries where such restrictions might not exist. Overall, the demand for used vehicles in developing countries is a significant factor in the global trade in used vehicles and is likely to remain so in the future. The global fleet of LDVs is set to at least double by 2050. Some 90% of this growth will take place in non-OECD countries which import a large number of used vehicles.

Regulatory failures

The ELV Directive and the EU legislation on registration documents and roadworthiness do not contain sufficient provisions to track a vehicle until it reaches the end-of-life. Especially, the obligation to record and report ELVs, upon issuance of a certificate of destruction (COD), is not clearly attributed to stakeholders and public authorities. The difficulty in exchanging information on the registration and de-registration of vehicles contained in the vehicle registers of the different Member States is a key obstacle to the problem of unknown whereabouts.

The absence of clear and legally binding criteria on the distinction between used vehicles and ELVs also makes enforcement of the requirements of the ELV Directive very challenging. Specific guidelines 54  were developed to assist enforcement and customs officials in implementing the rules on the export of ELVs, and especially to distinguish between ELVs and used cars. These guidelines are however non-binding and are combined with a lack of enforcement capacity. The illegal sector widely exploits this grey area, notably to export illegally ELVs, which are waste and shall be subject to treatment under the EU waste legislation, however they are presented as used vehicles, for which no trade restrictions apply. Even economic actors in the formal sector 55  regularly auction total loss vehicles without checking their final destinations.

Moreover, the absence of a requirement to export from the EU only roadworthy vehicles allows exports of used vehicles even for those not authorised to be driven on EU roads due to lack of compliance with safety or environmental rules. The enforcement of the mandatory roadworthiness status of a vehicle is an essential part of the EU regime designed to ensure that vehicles are kept in a safe and environmentally acceptable condition during their use. Directive 2014/45/EU 56 contains a long list of minimum elements which have to be tested, in order for a vehicle to obtain a roadworthiness certificate. Every vehicle that is at least 4 years old circulating on EU roads has to have a valid roadworthiness certificate. As per Article 5 of Directive 2014/45/EU, cars and vans must be tested at least every two years after the age of 4, while heavy-duty vehicles, including their trailers must undergo inspections every year. In accordance with the EU legislation, each Member State shall recognise the roadworthiness certificate issued by tother Member State. While these requirements are a condition for a vehicle to be used on EU roads, they are currently not relevant when used vehicles are exported from the EU to third countries. In addition, there are also no requirements that exporters of used vehicles and competent authorities of EU Member States check that used vehicles comply with the conditions set out by importing countries for the import of such vehicles.

There are no specific provisions in the ELV Directive requiring the Member States to carry out inspections or take enforcement actions to ensure that its provisions are properly implemented, or to establish penalties against breaches of the requirements set out in the Directive.

2.4Problem area 4: Lack of EU level playing field to improve circularity in the design, production and end-of-life treatment of lorries, buses and motorbikes

2.4.1What is the problem?

The ELV and 3R type-approval Directives apply to passenger vehicles (M1), as well as to light commercial vehicles (N1) 57 . Around 85 % of 323 million vehicles registered in the EU fall within the scope of ELV Directive 58 . 15% of registered vehicles are therefore not covered, representing around 52 million vehicles (motorcycles (L3e-L7e), lorries and buses) 59 . By mass, this represents 33% of registered vehicles, or 191 million tons. The average sum of materials from motorcycles), busses and lorries that became waste in 2019 can be estimated to amount to more than 4.13 million tons 60 . L1 and L2 including e-bikes and mopeds, although included in the LMT definition under the Battery Regulation, are not considered for the scope extension here 61 . The reason is that they are smaller than motorcycles, are not included in the vehicle registrations in certain member states and are typically collected via bicycle and scooter dealers compared to large motorcycles.

There is no comprehensive information on the treatment of end-of-life motorcycles, lorries and buses. The information gathered for this impact assessment shows that there is an important market for used spare parts dismantled from end-of-life motorcycles and lorries, and that the treatment of the vehicles outside the scope of the current legislation also has specific features:

·End-of-Life motorcycles are often treated by small operators in the EU;

·End-of-life lorries have a longer lifetime than M1-N1 vehicles, are exported in large number (up to 75%) outside the EU when reaching a certain age and, when dismantled in the EU, are usually treated in facilities which are either specialised in their treatment, or also treat end-of-life passenger cars;

·A non-negligible share of used busses (around 33%) are exported outside the EU, and their dismantling raises specific challenges dues to a lower share of metals and higher share of textile and glass compared to other vehicles.

The vehicles excluded from the ELV and 3R type-approval Directives are currently not subject to any specific requirement when it comes to eco-design and their waste phase. The consequences of this exclusion are the following:

1.No guarantee on the environmentally sound management of the waste stemming from end-of-life vehicles outside the scope of the legislation; 

2.No legal incentive for the re-use or recycling of large volume of parts, components and materials (steel, iron, aluminium, copper, CRMs, plastics, glass…) stemming from such waste;

3.No legal incentive to increase the design for circularity of the vehicles in question;

4.Risk of a fragmentation of the EU market as individual Member States take individual measures to address the end-of-life stage of the vehicles concerned.

The data collected for this impact assessment shows that at least seven Member States have adopted various types of legal provisions governing the end-of-life stage of lorries, buses or motorbikes. Many of them have especially established a requirement that these vehicles should be delivered to an ATF at end-of-life and require that their dismantling complies with specific obligations, especially on depollution. This poses the risk of fragmenting the EU market, as economic actors willing to escape national rules could decide to get their vehicles dismantled in another EU Member State with lower or no requirements.

Overall, the integration of circularity in the business model of producers of vehicles outside the scope of the ELV and 3R type-approval Directives largely relies on voluntary actions.

2.4.2Problem drivers

Regulatory failures

The main driver for the problem outlined above is the exclusion of powered two- and three wheelers, lorries and buses from the scope of the ELV and 3R type-approval Directives. More than twenty years after adoption of the ELV Directive, this has led to a situation where there is no transparency on the degree of circularity of the sectors concerned and that they are not incentivised to go beyond a “business as usual” scenario. The fact that a few Member States have started to set out national regulations covering the end-of-life stage of vehicles not in the scope of the EU legislation is a sign that the current limited scope is considered as sub-optimal.

2.5Overview of problems and drivers

Figure 1 below presents an overview of the main problems this initiative aims to address, their drivers and consequences, in line with what is presented in Sections 2.1 to 2.4.

Figure 1 - Problems, drivers and consequences

2.6Who is affected and how?

The stakeholders which are primarily affected by the problems described in this section are those involved in the whole supply chain for the design, production and waste management of vehicles. This includes vehicle manufacturers, importers, suppliers of spare parts for the automotive industry, dismantlers (which are mostly SMEs), shredding/recycling companies, industries relying on scraps as feedstock for their production (notably in the steel, aluminium, copper and plastics sectors), exporters of used vehicles, insurance companies (who own and sell a large share of ELVs), workers, consumers, non-EU stakeholders like third-country producers exporting vehicles to the EU and importers of used vehicles from the EU, competent authorities in charge of the implementation of the ELV and type-approval legislation. More information on how these stakeholders are affected by the initiative can be found in Annex 3.

3Why should the EU act?

3.1Legal basis

The legislative proposal is based on Article 114 of the Treaty on the Functioning of the European Union (TFEU), which is to be used for measures that aim to establish or ensure the functioning of the internal market. This is essential as the proposal is designed to set out requirements which govern the placing on the EU market of motor vehicles.

The proposal tackles a number of key problems related to the single market. These include: i) an uneven playing field for vehicles placed on the market; ii) barriers to the functioning of recycling markets and improvement in economies of scale; iii) uneven implementation of the ELV Directive, since applicable rules are subject to interpretation; iv) lack of attention to quality and value retention in reuse and recycling; v) the persistent problem of ‘missing vehicles’ and lack of clarity to distinguish ELVs from used vehicles in the case of export and (vi) the need for a stable and fully harmonised regulatory framework, in particular related to uneven implementation of the polluter pays principle across Member States.

Harmonised rules are necessary to ensure that all goods placed on the EU market comply with similar conditions. Article 114 TFEU is the legal basis of the overall regulatory framework on type-approval of motor vehicles, including the 3R type-approval Directive, whereas the ELV Directive has an environmental legal basis (Article 192 TFEU). At the time of adoption of the ELV Directive, the choice of an environmental legal basis was justified as the Directive did not place any direct obligations on any economic operators, in particular no obligations linked to the placing on the market of vehicles, and as it essentially set out measures to be adopted by the Member States, targeting the end-of-life stage of a vehicle.

The policy options will lead to further harmonisation of: product requirements for vehicles placed on the Union market, in particular related to i) harmonised requirements for the inclusion of recycled content for plastics, steel and CRMs; ii) harmonised and improved materials declarations on the presence and locations of hazardous substances, the levels of recycled content for a range of materials including CRMS, and iii) improved requirement on information exchanges facilitating reuse and recycling. The proposal will also set requirements for ensuring a well-functioning market for secondary raw materials while preventing and reducing the environmental impacts from the production and recycling of vehicles.

The new legislation will modernise the existing requirements relating to the placing on the market of vehicles on the EU market, which currently are included in the 3R type-approval Directive, and those requirements will be merged with the rules applicable to the end-of-life stage of the vehicle. The new legislation will furthermore include a number of new provisions aimed at closing the material loop in products. With this in mind, it is appropriate that the new legislation is based on Article 114 TFEU, thus allowing for both ensuring a smooth functioning of the internal market and a high level of environmental protection.

The choice of Article 114 of the TFEU as a legal basis allows to build environmental-related requirements as the core elements of conditions on the type-approval and thereby the placing on the EU market of vehicles. It follows other examples of legislative proposals tabled by the Commission recently, aiming at covering in one single instrument sustainability/circularity requirements applying to the whole lifecycle of products, such as the proposal for a Batteries Regulation 62 , the proposal for a Regulation on Eco-design for Sustainable Products 63  and the proposal for a Regulation on Packaging and Packaging Waste 64 .

3.2 Nature of the legal instrument

The evaluation of the ELV Directive and 3R type-approval Directive identified the generic nature of their provisions as one of their main shortcomings. Many of these provisions were found to be too general, not setting sufficiently clear requirements and not measurable. This led to diverging interpretation among the Member States (for example on the calculation of recycling targets), to a lack of progress (for example on design for recycling) or could not be properly monitored (for example the provisions in the 3R type-approval on the verification by Member States that vehicle producers adequately demonstrate that new vehicle types comply with the requirements on re-usability, recyclability and recoverability). This is hampering the functioning of the EU single market and not resulting in a better protection of the environment.

In addition, the co-existence of two separate legal acts (ELV Directive and 3R type-approval Directive) brings with it the risk that their respective provisions are not synchronised. The provisions of both Directives are intrinsically linked, as the 3R type-approval Directive needs to mirror the provisions of the ELV Directive. The merger of the two existing Directives into a single Regulation represents the most efficient solution to ensure this synchronisation. It will provide the necessary legal certainty, simplify the current regulatory landscape by gathering all requirements into a single act and contribute to a stronger EU market integration. A Regulation will ensure that the obligations are implemented at the same time and in the same manner in all 27 EU Member States in a harmonised way. Compared to a Directive, the choice of Regulation also reduces the administrative costs linked to the transposition process into national legislation and allows new EU requirements to apply earlier. The choice of a Regulation is consistent with the rest of the type-approval regulatory framework, where Directives have been turned into Regulations as part of the measures adopted at the EU level in the aftermath of the “Dieselgate” emissions scandal.

3.3Subsidiarity: necessity and added value of EU action

To ensure a harmonised and well-functioning internal market across all EU Member States and enable a smooth transition of the automotive sector to the circular economy, in line with the ambition of the European Green Deal, it is essential to put in place a common set of rules at the EU level, with clear requirements and obligations addressed to both Member States and economic operators. Otherwise, the risk is to fragment the EU market and make progress on circular economy dependent on voluntary actions by economic actors or individual Member States. EU action is necessary to meet all the objectives of this initiative.

The EU automotive sector benefits greatly from the internal market. As indicated above, type-approval rules streamline the conditions linked to the placing on the EU market as adopted at EU level. Without active EU level regulatory intervention, only small-scale and local incentives to design and produce vehicles in a way which limits the use of primary materials and increase the use of secondary materials are expected, as there are no legally binding provisions on the design for circularity of such vehicles today.

Harmonisation of requirements would facilitate the development of modern and environmentally sound infrastructure for the treatment for all vehicles in the EU, support innovation and address the implementation problems related to the different interpretations of existing legislation. It would also allow setting a clear reporting and monitoring mechanism, resulting in transparency and data comparability across the sector.

The difficulties related to the “missing vehicles” are common to all Member States. The cross-border dimension of the problem is one of its main features and requires an EU response. There were different attempts by some Member States to address the problem, which have not proven effective. The difficulty in exchanging information on the registration of vehicles between vehicle registers of the different Member States requires a harmonised solution. The same goes for the export of used vehicles from the EU, which can only be governed at the EU level in view of the EU common rules on customs and external trade.

Finally, the treatment of vehicles not covered by the ELV Directive has been regulated differently by the Member States. The study supporting the evaluation of the EU rules on end-of-life vehicles 65  revealed that only few Member States have established a consistent legal framework for the treatment of these vehicles at the end-of-life, whereas in others it is not clear how they are treated and what consequences to the environment are caused when the treatment is carried under sub-optimal conditions. Maintaining nationally fragmented regulatory frameworks in the EU would leave more than 45 million vehicles currently on EU roads at higher risk of encountering illegal dismantling activities, environmentally unsound treatment causing an uneven playing field between economic operators and significant potential loss of valuable secondary raw materials from the ELVs. 

The objectives of the revision of the EU rules on end-of-life vehicles cannot be sufficiently achieved by the Member States acting individually but can rather, by reason of the scale and effects of the measures, be better achieved at Union level.

4Objectives: What is to be achieved? 

4.1General objectives 

The overall objective of this initiative is to improve the functioning of the EU internal market by reducing the negative environmental impacts linked to the design, production, service life and end-of-life treatment of vehicles and contributing to the sustainability of the automotive and recycling sectors.

4.2Specific objectives

In order to address the problems described in section 2, the initiative seeks to address the following five specific objectives:

1.‘Design circular’: Improve circularity at the design phase of vehicles, to facilitate and increase the removal, reuse, remanufacturing and recycling of materials, parts and components contained in vehicles, so that vehicle producers use more materials and technologies which do not hamper the removal of re-usable parts and components, use more materials which are easy to recycle and dismantlers are provided with information allowing them to increase and improve the removal, re-use and recycling of parts, components and materials from ELVs. 

2.‘Use recycled content: Significantly increase the use of recycled materials (especially plastics, steel, aluminium and CRMs) in the production of vehicles, thereby incentivising recycling, reducing strategic dependencies of raw materials for the automotive industry and supporting the decarbonisation of the EU industry.

3.‘Treat better’: Significantly increase the quantity and quality of materials (especially plastics, steel, aluminium and CRMs) re-used, remanufactured and recycled from ELVs, thereby reducing the environmental footprint linked to the management of the waste generated by the automotive industry, supporting the creation of a dynamic market for secondary materials in the EU and facilitating the incorporation of more reusable parts into used vehicles extending their lifespan at moderate costs for end-users.

4.‘Collect more’: Significantly increase the collection of ELVs in the EU and ensure roadworthiness of used vehicles exported from the EU, so that the number of “missing vehicles” and the EU external pollution footprint and road safety risks associated with the export of non-roadworthy used vehicles outside the EU are reduced.

5.‘Cover more vehicles’: Increase circularity in the design, production and end-of-life treatment of vehicles (lorries, buses, trailers 66 and L3e-L7e category vehicles 67 ) which are currently outside the scope of the ELV and 3R type-approval legislation and ensure that they are treated properly.

5What are the available policy options?

5.1What is the baseline from which options are assessed?

The automotive sector is currently undergoing a massive transformation in its design and production patterns, triggered by the shift to (heavier) electric vehicles, increasing use of advanced and lightweight materials and the growing number of electronic components in vehicles. The main share of the environmental footprint of the automotive sector will shift from the use phase to the materials production and end-of-life phase. Electrification will increase the mass in vehicles in general and of non-ferrous metals in particular. The trend to put on the market larger and heavier vehicles (like SUVs) is expected to continue, which translates into an increasing use of primary materials and its associated carbon footprint, which can offset the environmental gains linked to the phasing out of combustion engine. For aluminium for instance, current ELVs contain around 100 kg of predominantly cast alloys, whereas average new vehicles contain 180 kg and BEVs more than 320 kg of aluminium per vehicle, predominantly wrought alloys 68 . For global production, a four-fold increase in aluminium demand is expected 69 towards 2050. The limitations inherent to both the ELV and the 3R type-approval Directives (generic provisions, limited monitoring and enforcement) would remain, and prevent real changes towards making the design and production of all vehicles placed on the EU market more circular.

Novel components, advanced materials and more complex (and lighter) vehicle designs will further increase the reliance of the sector on CRMs. Electric drivetrains will significantly increase the share of electric drive motors in the EU fleet, either being induction motors or permanent magnet motors 70 containing rare earth elements such as neodymium and dysprosium for their construction 71 . Dysprosium demand will double by 2030 to six times higher by 2050; praseodymium will increase by 50% in 2030 and double by 2050 72 ; for neodymium an eleven-fold increase by 2032 is expected 73 . Increasing numbers of electronic components shifts the presence of platinum-group metals from catalysts to multiple parts distributed over the vehicles. The use share of magnesium, another CRM used for lightweight parts and in aluminium alloys, is expected to increase significantly, with an annual growth of 9.5% from 2020 to 2025 74 .

The uptake of recycled materials like plastics, steel and aluminium would be largely left to voluntary initiatives by individual economic actors. Plastics materials in vehicles is expected to represent around 200 kg on average per light-duty vehicle (13% of the total weight of an average EV). Currently, the level of (post-consumer) recycled plastics in cars is limited to 2.5% and little progress on this is expected without regulatory intervention in the next years, so that the automotive sector would remain a major user of virgin plastics across the EU industries 75 .

The problems linked to the waste stage of the life cycle of vehicles will remain. Under a baseline scenario, around 10 million passenger cars and vans would become ELVs in 2035, containing 7.6 million tons of steel (and cast iron), 1.3 million tons of aluminium, 175 thousand tons of copper and brass, 250 thousand tons of glass and 1.6 million tons of plastics. The dismantling and recycling sector would continue to focus on materials and parts which are profitable, and, in the absence of incentives or regulatory requirements, the quantity of recyclates from materials which are difficult to remove or recycle (especially plastics, glass, CRMs, textiles, composite materials) will not increase. Without incentives, the quality of recyclates would not improve either, hampering their uptake in new production and ultimately preventing the design and production of vehicles to become more circular. Electric vehicles are expected to represent up to 35 % of ELVs by 2035 76 . The costs per vehicle for dismantling batteries and e-drive motors are high and require sizeable investments in new skills and equipment (e.g., handling and storage of batteries). Most CRMs in EVs risk therefore to continue to be lost during the recycling processes or downcycled due to lack of economies of scale and lack of recycling and further refining capacity. This is likely to be the case for rare earths magnet materials diluted in the ferrous ELV stream or for other CRMs like magnesium or silicon to be found in mixed unsorted ELV steel and aluminium fractions.

A lack of new policy intervention would result in considerable losses of resources, including of CRMs, with significant impacts on the environment and the EU economy and a missed opportunity to put the automotive sector on a path to circularity, at a moment where the shift to electrification is driving profound changes in its business and production models.

Finally, a side effect to the shift to EVs might be the development of the market for second-hand vehicles, which are more affordable than new EVs. This could in turn boost the demand for used spare parts and provide incentives for the whole automotive supply chain to increase re-use and remanufacturing.

The problem of missing vehicles was identified in 2010 and has not been successfully addressed since then, despite a series of soft law initiatives and individual measures taken by some Member States. Without policy intervention addressing the drivers of this problem, it is anticipated that the problems with illegal and informal activities and loss of resources will continue at similar levels. Despite efforts by some Member States, it is expected that the number of missing vehicles will amount to approximately 3.2 million in 2035. By 2035, it is estimated that over one million of old, used, non-roadworthy vehicles would be exported annually from the EU to third countries, mostly in Africa, non-EU central Europe and central Asia, exposing populations in destination countries to air pollution and road safety problems. It could be that the implementation of new import requirements by receiving countries leads to a reduction in the volume of exported used vehicles from the EU; in the absence of international harmonised standards on this point and in view of limited enforcement capacities in importing countries to control shipments of used vehicles, this reduction is expected to be of a small magnitude.

Finally, keeping a large amount of road vehicles outside the scope of the ELV and 3R type-approval legislation would mean that the design, production and end-of-life treatment of these vehicles would continue to operate on a ‘business as usual’ scenario with limited integration of circularity considerations, no guarantee that the vehicles are managed in a sustainable manner when they reach the end of their life, and losses of resources not re-used or recycled. In 2030, the number of end-of life motorcycles would amount to approximately 1.6 million units, the number of end-of-life lorries to approximately 265,000 units and the number of end-of-life buses to approximately 30,000 units 77 . This represents 5 million tons of materials by 2030. These vehicles (especially lorries and buses) will use a growing quantity of CRMs, in order to comply with the latest CO2 emission performance 78 and air emission standards (requiring for example technologies for exhaust gas control, leading to more copper, platinum and palladium), but also due to the electrification or hybridisation of some models (requiring lithium batteries and the use of permanent magnets containing rare earth elements in e-drive motors) and the shift of other models to hydrogen-powered technologies (with the associated use of fuel cells for which platinum plays an essential role as a catalyst element) 79 . Voluntary actions by some economic operators might slightly increase the contribution of these sectors to the circular economy, but there would be no leverage at the EU level to use this potential to its full extent. It is likely that Member States would increasingly adopt different measures applying to these vehicles 80 , posing a risk of fragmentation in the internal market.

The export of used lorries and buses to third countries could decrease as a result of the implementation of the Euro VI standard 81 which necessitates that heavy-duty vehicles put on the EU market after 2013 are equipped with advanced aftertreatment technologies which require the use of high-quality fuels and reagents, especially for diesel-powered vehicles (i.e. diesel exhaust fluid or AdBlue) which may not be widely available in a number of importing countries. If it materialises, this decrease would lead to a corresponding increase in the number of vehicles becoming waste in the EU, but would still not guarantee that the exported used vehicles are roadworthy upon export. It should be noted that the impact of the implementation of Euro VI norms in the EU on the level of export of used vehicles is likely to be much higher for lorries than for M1-N1 vehicles: the practical totality used lorries exported from the EU are diesel vehicles which, when equipped to comply with Euro VI norms, may not function properly in countries which do not have the same the fuel standards and cannot supply these lorries with the required technologies and urea. The impact is less clear on the export of used M1-N1 vehicles as they can continue to be driven with lower fuel quality (albeit being much more pollutant than compliant vehicles).

Overall, the problems described in section 2 will increase in severity in the future. Without simultaneous regulatory intervention in all above areas at the same time, the automotive sector will increasingly depend on supply of primary raw materials, including CRMs, with a significant environmental footprint at extraction and processing stages.

5.2Description of the policy options

As displayed in Figure 2, this impact assessment presents and analyses policy options designed to attain each of the five specific objectives described in Section 4.2. For each of these specific objectives, the impact assessment analyses three policy options (A, B and C), which are specifically addressing the objective in question, except for Policy options 5A to 5C which contain supporting measures for the attainment of different objectives and therefore serve to attain several of them 82 . 

Figure 2 - Policy options and specific objectives

1.Policy options 1A, 1B and 1C are designed to meet specific objective 1 - ‘Design circular’;

2.Policy options 2A, 2B and 2C are designed to meet specific objective 2 - ‘Use recycled content’ and include requirements for car manufacturers to incorporate minimum amounts of recycled materials in new vehicles; 

3.Policy options 3A, 3B and 3C are designed to meet specific objective 3 - ‘Treat better’ and aim to improve the management of waste from ELVs and to support the market for re-used and remanufactured parts;

4.Policy options 4A, 4B and 4C are designed to meet specific objective 4 - ‘Collect more’ and aim at higher collection rates of ELVs;

5.Policy options 5A, 5B and 5C provide appropriate financial and organisational incentives to support the implementation of the other policy options;

6.Policy options 6A, 6B and 6C are designed to meet specific objective 5 ‘Cover more vehicles’ and improve circularity for the vehicles currently outside the scope of the ELV and 3R type-approval legislation.

The options are based on a comprehensive list of 52 potential policy measures listed in Table 1, which are extracted from the evaluations of the existing legislation, and input from Member States and stakeholders as described in more detail in Annex 2. They also take account of the suggestions provided in the Fit for Future Platform (F4F) opinion, which can be found in Annex 5 83 . A detailed description of each measure presented below can be found in Annex 7.2 for selected measures and Annex 7.3 for discarded measures, as well as references to the underlying information in the supporting study.  Table 1 includes discarded measures (marked with an X) for which the reasoning is provided in Section 5.3, planned entry-into-force dates in the second last columns and whether measures are included in the final preferred option as well be substantiated later in Section 8.1 to avoid repetition of the same table.

Table 1 Overview of all measures considered

* Entry-into-force of the Regulation; Pref. is preferred option, see Section 8.1

** Included in the preferred option, Y = YES, N = NO, See Section 8.1, X = Discarded, See Section 5.3

5.2.1Policy Options 1A, 1B and 1C (related to specific objective 1 ‘design circular’) 

PO1A, PO1B and PO1C are designed to meet the specific objective 1 ‘Design Circular’, with an increasing level of ambition. These options are cumulative (i.e., PO1B = PO1A + additional measures; PO1C = PO1B + additional measures).

“PO1A - Better compliance verification” includes first the adaptation of 3R type-approval process to the new Framework Regulation on type approval and market surveillance 84 , including the possibility to perform conformity of production and market surveillance tests. It includes the possibility to recall vehicles, withdraw type-approval certificates and sanction manufacturers in case of non-compliance (M1). It includes an empowerment for the Commission, within 3 years, to review the calculation methodology on how vehicles manufacturers should demonstrate compliance with their obligations on recyclability and re-usability of new vehicles. This could be done through supporting a change to the current ISO standard on this point, or through the development of standards at EU level, and would be preceded by an impact assessment. (M2). PO1A also requires manufacturers to provide treatment operators and consumers, through existing platforms, with detailed and user-friendly repair, reuse and safe dismantling instructions (M3) and the location of the parts/components in their vehicles containing CRMs 85 . See Annex 7.2.1 for more details.

“PO1B – Circularity strategy” contains the measures in PO1A, with additional requirements for vehicle manufacturers to develop a specific circularity strategy for each new vehicle which is type-approved (“type-specific strategy”). The strategy would foster cooperation between vehicle manufacturers and actors in the dismantling and recycling sectors. The objective of this “type-specific strategy” would be for vehicle manufacturers to demonstrate how they will follow-up on their obligations to ensure that the requirements on re-usability, recyclability and recoverability for this vehicle are met, with a particular focus on materials such as CRMs, for which no recycling technology is currently available at commercial scale or that need to be removed prior to shredding. The findings from the strategy should be used to inform the recycling/dismantling sector, as well as by the vehicle manufacturer to improve the circular design of future vehicles. This strategy should contain a nontechnical summary which should be publicly available.  To provide transparency and allow for monitoring of the progress made by the sector toward circularity, the Commission will establish regular reports on circularity in the automotive sector, drawing notably from these strategies (M6). In addition to these measures, PO1B includes provisions on design for dismantling and recycling, especially a requirement that batteries, electric drive motors from EVs and other CRM-containing parts/components are designed in such a way that professional dismantlers can remove them safely without excessive costs (M7).  This also includes an empowerment for the Commission to develop standards or specific requirements on the design for dismantling and recycling of selected parts or components from vehicles, especially those made of plastics or containing CRMs, to be adopted within 6 years after the adoption of the new legislation. Additionally, vehicle manufacturers are requested to provide evidence of the share of recycled content (plastics and steel, but also aluminium and copper) used in each vehicle type as relevant and necessary for the attainment of the objectives of the future legislation 86  (M4b). Finally, PO1B clarifies that all new restrictions of substances in vehicles, due to reasons related primarily to their chemical safety, will be carried out under REACH 87  or, for the specific case of substances in batteries used in vehicles, under the new Batteries Regulation 88 . It addresses the call to ensure a legal coherence, as highlighted in F4F opinion 89 . Under this policy option the existing restrictions on lead, mercury, hexavalent chromium and cadmium in vehicles, as well as their specific exceptions in Annex II, remain with enhanced provisions 90 under the new ELV Regulation with a planned reassessment, at 8 years, of their potential full take-up by REACH (M5). See Annex 7.2.1 for more details. 

PO1C: Circularity Vehicle Passport for circular vehicles: PO1C builds on PO1B and includes in addition the requirement that each vehicle needs to be accompanied by a digital Circularity Vehicle Passport (M8), containing information provided by the manufacturer on the composition of vehicles and its components, relevant for repair, maintenance, dismantling, re-use, remanufacturing and recycling as a single entry for consumers and treatment operators. This development responds to the suggestion of the F4F opinion and is fully consistent with the corresponding provisions that are included in the proposal for Battery Regulation (battery passport) 91 , the ESPR proposal (product passport 92 ) and the proposal for the Euro 7 standard (Environmental Vehicle Passport 93 ). As part of the digital information, recycled content levels for all should be declared allowing for verification of manufacturer’s claims (M4c) to monitor actual decarbonisation results as explained in 5.2.2 and Annex 7.2.2 in more detail. The Commission would be tasked to develop the technical features of this passport within 7 years from entry into force of the new legislation, ensuring further consistency with other similar initiatives under development in the ESPR framework and the Euro7 regulation. See Annex 7.2.1 for more details.  

5.2.2Policy Options 2A, 2B and 2C (related to specific objective 2 ‘use recycled content’) 

PO2A, PO2B and PO2C target the specific objective 2 ‘use recycled content’, with an increasing level of ambition. These options are alternative and not cumulative.

In view of the low recycling and recycled rates of plastics from ELVs, these options would have a focus on recycled content for plastics, but also address recycled content for metals (steel, aluminium, CRMs). Only recyclates from post-consumer waste 94 would be eligible to be accounted for the targets presented below. Increasing pre-consumer (or post-industrial) recycled content does not contribute as much to decarbonisation and scrap quality improvement as post-consumer recycled content. Due to lower costs and higher quality of pre-consumer content, the likelihood it is recycled is much higher than for post-consumer and basically part of the baseline as manufacturers are increasingly incorporating more. The proposed targets would only apply to new M1 and N1 vehicle types 95 entering the EU market and excluding L3e-L7e category vehicles, lorries, buses and trailers not covered by the current ELV Directive. A specific methodology for the calculation and verification of recycled content for plastics would also be established, similar to what is implemented or in development in other legislative proposals 96 . This is especially relevant to distinguish the differences in average carbon footprint of post- versus pre-consumer waste and to establish a harmonised and consistent mass-balance approach for fair accounting of recycled content volumes. In the case of plastics, this is required to address future developments in chemical recycling 97 . This does not jeopardise setting a target level as it incentivises mechanical treatment first. With chemical recycling maturing, there is possibly upwards potential in the future when chemical recycling is more mature to deal more polluted and mechanically difficult to recycle plastics as specified in the JRC study. See Annex 7.2.1 for more details.

PO2A includes a requirement for recycled content targets for plastics 98 in new vehicles of at least 6% of the overall plastics contained in the vehicle fleet by 2031, and 10% by 2035 (M9a) 99 , of which 25% of recyclates originates from closed loop recycling from ELVs. PO2A includes an empowerment allowing the Commission to lay down a future target for recycled content for steel for newly type approved vehicles 3 years after entry into force of the Regulation, based on a dedicated feasibility study particularly focusing on the determining an appropriate target level. The study will investigate i) the current and forecasted availability of steel recycled from post-consumer sources of steel waste; ii) the current share of post-consumer waste in various steel semi-products and intermediates used in vehicles; iii) the potential uptake of post-consumer recycled steel by manufacturers in vehicles to be type-approved in the future; and iv) the relative demand of the automotive sector in comparison to the demand for post-consumer steel waste of other sectors. The necessary calculation and verification rules should be laid down at the same time. Actual targets would start to apply 7 years after entry into force of the Regulation (M10a). Under PO2A, no other mandatory recycled content targets for other materials would be set, but a mandatory declaration regarding the share of recycled materials embedded in new vehicle types at type-approval stage (see M4b for the declaration to this point).

PO2B includes mandatory recycled content targets for plastics in newly type-approved vehicles of 25%, of which 25% from closed loop (M9b). This would represent an annual growth of 30% until 2031 compared to the average baseline in 2022 100 . The target for plastic would apply from 6 years after into force of the Regulation. PO2B would set a mandatory recycled content target for steel at 20% for newly type approved vehicles in the Regulation with the target to be achieved 7 years after entry into force. A review clause is foreseen in case supply and demand of steel is rapidly increasing or decreasing as material choices may be subject to change (M10b). 

PO2C includes mandatory recycled content targets for plastics in newly type-approved vehicles of 30% of recycled content of which 25% from closed loop 101 (M9c). PO2C would further include a recycled content target for steel of 30% for newly type approved vehicles, including a 15% closed loop percentage (M10c). In addition, the Commission would be (i) tasked to assess the desirability, feasibility and impacts of setting out recycled content targets in new vehicles for other materials, especially aluminium alloys, copper and CRMs such as rare earth elements or magnesium (M11), and (ii), based on a feasibility study, empowered to set out recycled content targets for the materials in question. The study shall investigate both technical limitations in supply and demand similar to the feasibility study for steel and focus additionally at the wider economic viability, technical and scientific progress, including changes in the availability of recycling technologies concerning the type of materials recycled; their material specific recycling rates and investigate the risk of disproportionate negative impacts on the affordability of vehicles containing these other materials derived from post-consumer recycled content. This feasibility study is planned 3 years after entry into force.

5.2.3Policy Options 3A, 3B and 3C (related to specific objective 3 ‘treat better”) 

PO3A, PO3B and PO3C target the specific objective 3 ‘Treat better’, with increasing levels of ambition. These options are cumulative.

PO3A modernises the current provisions of the ELV Directive to improve clarity and enhance the quality of the treatment of waste. The first element is aligning the ELV Directive with the more recent and stricter definition of recycling used in other sectoral waste legislation (M12) which explicitly excludes backfilling 102 . A clearer methodology for the calculation of recycling rates would also be established, similar to what is implemented or in development in EU law and ensuring that what is accounted as “recycled” only includes materials which are effectively recycled and not just collected for recycling. As a supporting element, a ban on the landfilling of the residues from shredding operations (“automotive shredder residue” or ASR) would be included (M16a) 103 to ensure increased metal and plastics recovery and use of remaining non-inert materials for energy recovery. The option would also clarify the obligation (currently unclear in the ELV Directive) that some parts and components 104  are to be removed prior to the shredding phase, as to facilitate high quality recycling or re-use (M13a). Finally, to support reuse and remanufacturing of spare parts, a definition of remanufacturing (including conditions for warranty) would be introduced in the new legislation, as well as clearer instructions for reporting on the level of re-use and remanufacturing from ELVs (M14a). All these measures follow the suggestions provided in the F4F opinion focussing on retrieving higher volume and quality of secondary materials from the automotive sector 105 . See Annex 7.2.3 for more details.

PO3B: This Policy Option contains the measures in PO3A and, in addition, new enhanced measures to promote the re-use and recycling of relevant metals, plastics and certain CRMs. The list of parts/components to be removed prior to shredding (mentioned in P03A) would be extended with parts and components with high concentrations of valuable materials or CRMs (M13b) 106 . A derogation to this removal requirement would apply if evidence can be provided by the dismantlers that the materials/parts/components will be separated with the same efficiency as manual dismantling/ semi-automated disassembly by post shredding technologies (PST). For monitoring purposes, Member States are to report on established and used capacities of PST plants. The option also foresees that incentives should be put in place to support the market for re-used and remanufactured parts, building on legislation and best practices in some Member States 107 (M14b). To improve warranty conditions of used spare parts, information on their origin should be made mandatory as a condition for their sales (i.e., through the provision of the VIN number of the ELV the parts come from). 

To boost plastic recycling and ensure a sufficient supply of recyclates to meet the demand for recycled plastics in vehicles (see PO2), a specific plastic recycling target 108  of 30% by 2031 would be established (M15b). To ensure improved quality of steel and aluminium scraps from ELVs, a ban on the mixing of ELV scraps with WEEE scraps (such as white goods and refrigerators) and packaging waste (such as aluminium cans) would be established for shredders (M16b), reducing (copper) impurities and improving traceability notably for the closed loop share of automotive plastics recycling 109 . See Annex 7.2.3 for more details.

PO3C contains the measures in PO3B and, in addition, specifically targets higher quality of recycling for specific materials. Additional components and novel lightweight materials would be added to the list of parts/components to be removed prior to shredding (M13c) 110 . For glass, a material specific recycling target of 70% would be set, accompanied with quality criteria to ensure that only recyclates to container glass or equivalent quality are accounted towards the recycling target (M15c). The Commission would be required within 5 years to develop specific and additional requirements to improve the efficiency of post-shredder treatment (PST) operations by setting minimum quality standards (M16c). This may be needed in case novel sorting technologies for aluminium, magnesium or CRMs are insufficient. See Annex 7.2.3 for more details. 

5.2.4Policy Options 4A, 4B, 4C and 4D (related to specific objective 4 ‘collect more’) 

PO4A, PO4B and PO4C target the specific objective 4 ‘Collect more’, with different policy strategies and scope. PO4D is a cumulative combination of both the collection and export measures under PO4A, PO4B and PO4C. See Annex 7.2.4 for more details.

PO4A focuses on enhanced reporting and enforcement of existing rules. Member States are required to keep better track of their national vehicle fleets and ELVs by mandatory annual reporting on the number vehicles registered, de-registered, treated as ELVs and shipped outside the Member State of registration (M17a) 111 . To facilitate better traceability, a new obligation would be established for dismantlers to issue a certificate of destruction (CoD) for each ELV treated and report it digitally to the competent authorities of their Member State, and for shredders to only accept ELVs with a corresponding CoD and then to notify final destruction to the same competent authorities (M18). This is in line with the suggestions from the F4F platform which stressed that the delivery and registration of CoD need to be improved 112 . Member States are encouraged to exchange best practices on the use of incentives to achieve higher ELV collection numbers 113 . To strengthen enforcement, there is a definition of minimum requirements for sector inspections and enforcement actions (M19a). Finally, reporting on sanctions applied by the Member States with respect to violations of the rules set out in the future legislation is added to the national reporting requirements (M17a).

PO4B provides new measures designed to improve exchange of information between Member States on missing vehicles and to foster harmonised enforcement. With regard to the exchange of information between Member States, PO4B consists in provisions to ensure that Member States (i) provide additional information in their national vehicles registers on elements which are necessary to track de-registered vehicles and ELVs 114 and (ii) provide access through digital means to their national registers to all other Member State competent authorities to improve traceability (M20) 115 . This would allow for better control of the vehicle status and strengthen the ability of enforcement authorities to carry out more stringent checks on compliance, as stressed in the F4F opinion 116 . These provisions could be added either in Directive 1999/37/EC on the registration documents for vehicles or in the new legislation on 3R type-approval and ELV. For the export of vehicles, the definition of ELVs will be clarified by introducing mandatory criteria which will make it easier to distinguish waste vehicles from used vehicles (M19b) and hence avoid that ELVs are exported as used vehicles. It corresponds with the suggestion of the F4F opinion, acknowledging the illegal export of vehicles outside of the EU being one of the major issues with regard to the implementation of the ELV Directive 117 . Finally, Member States would be required to establish appropriate sanctions for breaches of the legislation, in case of selling ELVs to illegal dismantlers, illegal export, illegal sales of used spare parts (M17b). 

PO4C: Under this option, new provisions would be established with regard to the export of used vehicles outside the EU. First, exporters would be required to make available to customs the vehicle identification number (VIN)and the information on the validity of the roadworthiness status of used vehicles (M19c). Secondly, only those used vehicles which are verified to be roadworthy would be authorised to be exported to non-EU countries. In addition, the future legislation would foresee development of a complementary control mechanism to check how the EU vehicles comply with the rules on imports of used vehicles imposed by third countries 118 regarding the environment and road safety. (M21).

PO4D: Under this option, all measures (M17 to M21, see Table 1) from PO4A, PO4B and PO4C are combined to most effectively achieve the objective ‘Collect more’. The combination thus includes incentives and / or penalties to make use of CoDs, improvement of registration and deregistration procedures, better statistics / monitoring on vehicle stock and import / export and the fight against illegal export of ELVs and environment, health and safety problems in the receiving countries.

5.2.5Policy Options 5A, 5B and 5C (related to specific objectives 1 to 4) 

PO5A, PO5B and PO5C aim at establishing economic incentives and organisational arrangements contributing to meeting the first four specific objectives of the initiative to ensure proper implementation. They are cumulative.

PO5A requires Member States to establish specific Extended Producer Responsibility (EPR) schemes for vehicles 119 , aligned with the minimum requirements applicable to other sectoral waste streams, as specified in the Waste Framework Directive 120 . This means that Member States would require vehicles manufacturers to bear financial and organisational responsibility for the management of the waste stage of the vehicle life cycle, including sorting and treatment operations, in addition to cost coverage which is already part of the requirements of the current ELV Directive. The F4F opinion particularly recommended to focus on proper implementation of polluter pays principle through addressing the mandatory treatment operations that are not economically viable 121 . Member States would have to establish such schemes, or extend the scope of existing ones, to ensure that vehicle manufacturers provide for advanced measures to guarantee that legal requirements for collection and treatment of ELVs are achieved (M22). When it comes to collection of ELVs, this would include digitalisation of reporting of ELVs collected and treated in ATFs and shredders, and dedicated awareness-raising campaigns designed to improving the collection of ELVs. When it comes to treatment, vehicle manufacturers will be made responsible for the costs related to the difference between revenues generated by the sale of parts/components/materials resulting from the dismantling/recycling processes and the costs linked to their mandatory dismantling and recycling and other treatment requirements that are net cost negative (M23). Producer responsibility may be organised collectively or individually, while setting uniform conditions for the modulation of the financial contributions to avoid distortion of the internal market and to limit administrative burden, where necessary. See Annex 7.2.5 for more details.

PO5B: Policy option 5B complements the obligation for Member States to establish EPR schemes for ELV with harmonised requirements designed to ensure a uniform and fair implementation across the EU single market. To avoid that Member States apply diverging methodologies relating to the responsibilities of the vehicle manufacturers, harmonised criteria for the modulation of fees to be paid by vehicle manufacturers would be set, based on circularity features, such as the weight of a vehicle, the dismantling time for key parts/components like batteries, the expected level of recyclability/re-usability, the share of materials preventing high-quality recycling process and the level of recycled content  (for metal, plastics and CRM) (M24). These elements comply with the recommendations of the F4F recalling that including recyclability and durability criteria in vehicle design can facilitate dismantling and lift implementation burden from ATFs 122 . Taking into account the large volume of used cars shipped within the EU and the need for fair cost allocation between economic actors in different Member States, specific requirements are put in place to make sure that vehicle manufacturers contribute to the costs of dismantling and recycling of vehicles which become ELVs in a Member State different from the Member State where it was first registered (“cross-border EPR”) (M25). See Annex 7.2.5 for more details.

PO5C includes advanced economic incentives to increase the collection of ELVs and promote the market for vehicles manufactured in a circular manner. It gives the discretion for the Member States to establish “deposit return schemes” based on the common EU wide criteria, whereby a lump sum of money is given to the last owner of an ELV upon its delivery to an ATFs (M26). This measure reflects the suggestion of F4F platform 123 . The second component of this option is the possibility to establish harmonised Green Public Procurement (GPP) criteria for the purchase of all vehicles, based on circularity criteria described for PO5B, and consistent with the Clean Vehicles Directive 124 (M27). See Annex 7.2.5 for more details.

5.2.6Policy Options 6A, 6B and 6C (related to specific objective 5 ‘cover more vehicles’)

PO6A, PO6B and PO6C target the specific objective 6 ‘Cover more vehicles’ with an increasing level of ambition. These options are cumulative.

PO6A includes a limited extension of the scope of the new legislation to additional categories of vehicles including L3e-L7e-category vehicles, buses (M2,M3), lorries (N2,N3) and trailers (O) 125 . The manufacturers of these vehicles would be required to provide information to dismantlers and recyclers, through existing or new platforms, to facilitate depollution, dismantling and recycling of these vehicles (M28). This shall include at the minimum information on the location of substances of concern, of CRMs as well as instructions on dismantling. These requirements would not be applicable to special purpose vehicles, multistage and vehicles produced in small series. See Annex 7.2.6 for more details.

PO6C: Policy sub-Option 6C includes a full scope extension, with all requirements for M1 and N1 vehicles equally applying to the additional vehicles categories as well in the medium term. This implies full application of the modernised 3R type approval procedure and requirements on reusability, recyclability and recoverability as specified in PO1A-C, the recycled content requirements of PO2A-C, the advanced waste treatment requirements of PO3A-C (M33) and finally, the establishment of EPR schemes, including compliance cost offsetting and the other minimum EPR requirements as under PO5A-C, for L3e-L7e category vehicles, lorries, buses and trailers (M34). See Annex 7.2.6 for more details.

5.3Measures discarded at an early stage

These measures were screened to identify those that should be retained for further analysis. Annex 7.3 provides a detailed list of individual discarded measures and the rationale behind their screening out from further consideration. A short summary of discarded measures per intervention area and the reasons for discarding are presented here:

Design circular (specific objective 1): A range of voluntary measures, non-binding guidelines and pledges by manufacturers to increase circularity are discarded due to low effectiveness and higher results expected from the circularity strategy measure under PO1B. Setting obligatory due diligence requirements for materials used in vehicles is discarded as being covered under the Corporate Sustainability Due Diligence Directive (CSDD) 126 . Setting overall carbon footprint requirements for the entire vehicle is not included, but this problem is addressed through direct measures in Policy Option 2. See Annex 7.3.1 for more details.

Use recycled content (specific objective 2): Setting levels of plastics recycled content above 30% in 2031 is discarded as they are not attainable without serious supply – demand misbalances and disproportionate costs. Setting at this point in time recycled content targets for glass, rubber, CRMs and other metals (such as copper and aluminium) is also discarded, in view of other measures under PO3. However, the possibility to set such targets at a later stage is foreseen in case market failures would not be sufficiently addressed (M11). See Annex 7.3.2 for more details.

Treat better (specific objective 3): Setting material-specific recycling rates for steel, aluminium or copper was discarded since the recycling rates are already high (steel, aluminium) and the main concerns are related more to scrap qualities. Here, other measures such as mandatory removal of parts and improving sorting and waste treatment are more effective and indirectly improve copper recycling rates. The same counts for other materials like glass, plastics and specific components such as electronics. Setting recycling targets for CRM was also discarded at this stage, but recycling should be considerably enhanced through other measures, especially relating to the design of new vehicles (obligation to declare location and dismantling information for CRM), improved waste treatment (obligation to remove parts and components containing CRM to ensure their recovery) and EPR schemes (fee modulation taking into consideration amount of CRM and recycled CRM in new vehicles). See Annex 7.3.3 for more details.

Collect more (specific objective 4): A range of voluntary measures are discarded due to low expectations on their effectiveness, important feasibility challenges, subsidiarity reasons or legal obstacles, including the setting of an EU-wide Deposit Refund Scheme (DRS), which would require strict rules for registration and deregistration and be sensitive to fraud. Setting collection targets at Member State level is discarded as other measures are expected to be more directly effective. As an alternative to the requirement for the exporters to non-EU countries to provide the information on the roadworthiness status of the used vehicles, another measure was considered, according to which a maximum age of the vehicle or a minimum EU emission standard would be established for the export of all used vehicles from the EU to third countries. However, such regulatory approach was not followed, as it could have a disproportionate effect of banning all the export of used vehicles, in manner which would not allow to take into account the specific import requirements for the used vehicles, when these are officially applied by the import countries. Instead, it was decided to base the export of used vehicles on the requirement to have a valid ‘roadworthiness’ status in accordance with Directive 2014/45/EU. The assessment showed that this approach is the most effective as it allows to prove whether these vehicles comply with the EU stringent environmental and safety standards. Moreover, such approach would ensure that the vehicles which are exported with the aim to continue their service in third countries, are not of lower quality than those which are authorised to be on the EU public roads See Annex 7.3.4 for more details.

Provide appropriate financial and organisational incentives (specific objectives 1-4): Mandatory collection of vehicles at holder’s premises and collection of abandoned vehicles free of charge are discarded as cost-ineffective and not stimulating vehicle owners to hand in vehicles at designated facilities. The option that vehicle manufacturers could set up EU-wide EPR schemes (rather than at national level) was discarded due to (i) subsidiarity constraints, as the organisation of the waste management systems, the relations between waste operators, the vehicle registers and the management of EPR schemes are currently operated at national level (ii) concerns that it would not be politically acceptable by Member States and (iii) lack of EU staff and funds available to set up the required EU instance to manage such a scheme. For more information see the description of this discarded measure M48 in Annex 7.3.5. However, vehicle manufacturers would still have the option to set up individual schemes within the national schemes put in place by Member States (M22). In addition, the Member States would need to make sure that the “cross-border” dimension of the problem (i.e. large number of vehicles dismantled in a Member State different from the one where they were put on the market for the first time) is properly addressed (M25). This would make it easier for vehicle manufacturers to develop an EU-wide approach for their extended responsibility, even when this is based on national EPR schemes. See Annex 7.3.5 for more details.

Cover more vehicles (specific objective 5): Extension of the vehicle category scope to special purpose vehicles, multistage vehicles and vehicles produced in small series is discarded as, on the basis of available information the measure appears disproportionate. See Annex 7.3.6 for more details.

6What are the impacts of the policy options?

6.1Methodological considerations

The quantification of the impacts of the policy options relies on studies and quantitative models complemented with qualitative assessments for those cases where data is scarce. The information sources include in particular a study by Oeko-Institut 127  which includes a custom-made impact assessment model for the purpose of this revision, a dedicated report by the JRC on recycled plastic in vehicles 128 and a JRC study on CRMs in vehicles 129 . Data on the number and types of vehicles placed on the market are the same as in the Euro 7 impact assessment, complemented by an assessment of the number of vehicles becoming waste, collected and exported annually 130 . The model computes a variety of policy options individually and the effect of combinations of them for the preferred options proportional to the mass flows involved. Detailed information can be found in Annex 4. To improve robustness of the analysis, the estimated impacts and their underlying assumptions were presented in stakeholder workshops and verified by independent experts, the JRC and concerned stakeholders. In the following sections, the individual tables summarise the main environmental and economic impacts for each of the policy options. The impacts presented are for the year 2035 131 .

For the environmental impacts, avoided greenhouse gas emissions and the amount of materials recovered (at higher quality compared to the baseline) are chosen as the main categories to summarise results. Some of the measures target an improvement in the quality of materials recycled from vehicles and not just an increase in quantity. These different recycling qualities have a financial significance which is captured in the calculation of revenues from recycled material as well environmental benefits which are quantified as far as possible. Data for other years, broken down per vehicle, are available in Annex 8.

For economic impacts and how stakeholders are affected, cost and revenue redistributions between operators are taken into account. The main ‘reallocation’ elements are the future value of plastic recyclates from the plastics recycled content, the value of cleaner steel scraps and the revenues derived from dismantled materials at ATFs. The reduced value of dismantled ‘hulks’ is accounted for by reduced payments of shredders to ATFs. Another significant effect relates to the value of vehicles not exported anymore. The impact assessment takes account the effect on prices of vehicles, as additional costs on vehicle manufacturers and other economic operators are ultimately passed on (partially or in full) to consumers.

In the tables below, when referring to monetary impacts, the minus (-) symbol is used when referring to a cost (a negative monetary impact) and a plus (+) in case of a revenue (a positive monetary impact). All values are presented as net present values. Economic data presented reflects how costs and revenues are expected to be allocated to various stakeholder, including underlying assumptions and sensitivities.

6.2Environmental impacts 

6.2.1Design circular: Improve reusability, recyclability and recoverability, 3R type-approval

The strength of the 3R type-approval approach is that a vehicle type cannot be placed on the EU market unless it complies with all type approval requirements. The actual benefits of measures to improve recyclability, reusability and recoverability of vehicles are of a mid- or long-term prevention nature when vehicles become waste many years later. It is therefore difficult to quantify the exact environmental benefits and values in the future. Nonetheless, the value of the measures can be compared qualitatively against the current baseline, since past vehicle design choices frequently hinder current recycling possibilities.

The general reusability and recyclability of vehicles placed on the market following the PO1A - improved 3R type-approval compliance verification requirements are expected to improve the level of reuse and recycling by about 5% in the long term. PO1B - Circularity Strategy (incl. PO1A measures) will have more immediate effect. The design for dismantling requirements and increased cooperation with recyclers will enhance recycling of increasing shares of lightweight, difficult-to-recycle materials in the medium-term. PO1C – Circularity Vehicle Passport (incl. PO1A and PO1B measures) ensures that necessary reuse and dismantling information to address existing information gaps to match supply and demand is delivered using digital technology. Reuse and recycling rates will increase further in the long term due to repairability requirements on the use of digital keys and interchangeable components. The additional mandatory declaration on the use of recycled content for all materials provides better substantiation of related claims to the consumer, supporting greener vehicle purchase decisions and providing an incentive for further decarbonisation achievements in the supply chains. For substance restrictions, the ‘transfer to REACH’ and the ‘hybrid approach’ will have effectively similar impacts given either ELV, under REACH or in a hybrid approach a comprehensive approach to restrict these substances is introduced. More detailed information can be found in Annex 8.1.1.

6.2.2Use recycled content: increase recycling and decarbonise production for selected materials

PO2A – plastic recycled content targets 132  of 10% in 2035 based on the fleet level create a final demand for recyclates in the automotive industry of 240 ktons in 2035 133 . PO2B – targets of 25% 134  starting in 2031 for newly type-approved vehicles correspond to an additional demand of recyclates of 713 ktons for 2035. This should boost the recycling of plastics from ELVs, as this means that 53% of ELV plastics recyclates would have to be reintroduced in the automotive sector. PO2C – targets of 30% in 2035 correspond to a demand of recyclates of 872 ktons in 2035 135 . The target would represent an effective recycling rate of available ELV plastics of 64% which poses a supply – demand imbalance risk. The GHG savings linked to PO2B would be 314 ktons of CO2-eq, and 376 ktons of CO2-eq for PO2C. 

For steel, a recycled content target under PO2B and PO2C provide an additional push to integrate higher quality scrap into new vehicles, assuming such scrap becomes available, with roughly 585 ktons of GHG savings in comparison to the baseline for 2035 and 900 ktons towards 2040 for PO2B. Compared to PO2A, PO2B and PO2C would reduce the demand for natural gas, coal and iron ore and increase the demand for electricity by 2035 as displayed in Table 2. The summary of the main environmental impacts for the PO1 and PO2 affecting the design and production stages are visualised in Table 1. For more information see Annex 8.1.2.

Table 2 Environmental impacts of Recycled Content targets for plastics and steel, 2035

6.2.3Treat better: Improve treatment quality and quantity 

All three options under PO3 bring significant environmental benefits from higher quantities and qualities of recycling. For PO3A, the effect of better implementation of the current Annex I of the ELV Directive has a significant positive effect of about 1 million tons of materials recovered at higher quality, corresponding with 1.5 million tons of CO2 savings compared to the baseline. In order of magnitude of GHG savings, improved aluminium and steel recycling contributes the most, followed by the environmental benefits of improved plastics recycling 136 . PO3B (incl. PO3A) and PO3C (incl. PO3B measures) bring even higher benefits. The increased separation of (cast) aluminium components provides significant gains for PO3B of around 3.7 million tons of CO2-eq saved, primarily due to reuse and corresponding aluminium production avoided. Initial assessment for the e-drive motors mandatory removal prior to shredding shows that circa 1 million ELV in 2030 and 5 million ELVs in 2040 will be affected by this provision 137 , respectively, compared to baseline scenario. Copper recovery from e-drive motors would increase by 97% and would decrease contamination of secondary base metals, hence increasing quality. The mandatory removal and separate recycling of e-drive motors would also thrive the permanent magnet recycling value chain and generate new flows of CRMs for further recycling. It is estimated circa 4.2 kton of permanent magnets, including 1.5 kton of REEs, to be available in 2040 for high quality recycling from future EU ELVs. For PO3C, the advanced quality targets provide savings equivalent to 2.9 million tons of CO2-eq.  

The update of the recycling, reuse and remanufacturing definitions proposed in the revision would exclude some recycling processes that yield very-low quality recyclates. A more consistent definition of recycling in particular provides an incentive for the improved recycling of plastics and glass contributing to 600 kton and 200 kton of annual GHG savings respectively. The results are excluding the effect of increased collection from PO4 but already includes the PO5 effect of EPR measures in the last column of Table 3. See Annex 8.1.3 for a detailed assessment per material and other years.

Table 3 Environmental impacts of improved treatment quantity and quality, 2035

6.2.4Collect more: Improve collection quality and quantity

Under policy options PO4A to PO4C, improved collection of ELVs increases the number vehicles treated at ATFs and reduces extra-EU exports, leading to more higher quality recycling the EU. The cumulative PO4D, which combines all measures from PO4A to PO4C, is the most effective as it generates synergies from this combination, which are higher than a simple addition. The resulting summary of environmental impacts shows significant additional material recovery and corresponding GHG savings. PO4B, with improved enforcement and harmonised national registers, significantly reduces the number of vehicles of unknown whereabouts and improves the quality of treatment at ATFs, resulting in 1.5 million tons of CO2-eq from recycling plus 0.1 million tons CO2-eq. from better recovery of air conditioning refrigerants. PO4C, which focusses on export regulatory measures, is expected to save up to 3.2 million tons of CO2-eq from recycling plus 0.2 million tons CO2-eq. from better recovery of air conditioning refrigerants. The CO2 savings take account of the fact that the CO2 emissions generated by the dismantling of old vehicles as waste in the EU and the production of new cars to replace them are offset by the reduction of CO2 emissions achieved when taking into consideration the emissions generated, during their use phase, by newly produced vehicles, compared to much older ones. The highest impacts are achieved with PO4D, a combination of all measures, with savings of 5.6 million tons of CO2-eq. In addition to GHG savings, eliminating the export of non-roadworthy used vehicles from the EU to third countries will decrease the external environmental and heath related costs associated with air pollution 138  as well as with the informal dismantling of vehicles (linked for example to improper treatment of waste oil, tyres, refrigerants from air-conditioning systems and lead-acid batteries, which is a significant source of lead pollution in developing countries 139 ) in the receiving countries. The measure is likely to lead to changes in the overall vehicle fleet imported in receiving countries: the replacement of old used vehicles with more modern ones would lead reduced air pollution and increase road safety. In addition, as the lifetime of modern vehicles is longer than the lifetime of old ones, there would less vehicles becoming waste in the recipient countries 140 . This would therefore reduce the pollution caused by the unsound treatment of ELVs in the countries concerned 141 .This will reduce the EU external pollution footprint and support the development of policies and actions supporting a more sustainable, safer and efficient transport system in these countries. More information is available in Annex 7.2.4 under M21.

Table 4 Environmental impacts of improved collection, 2035

6.2.5Provide appropriate financial and organisational incentives to improve collection and waste treatment

The assessment of the EPR and economic incentives related measures, described in PO5A, PO5B (incl. PO5A) and PO5C (incl. PO5B), is based on their amplifying effect on the measures for recycling (under PO3A - PO3C) and on collection (under PO4A to PO4C), and previously displayed in the Tables 3 and 4. The amplifying effect of EPR on the compliance level for collection and recycling is calculated and shows an additional 12% reduction in export of non-roadworthy used vehicles and ELVs, or 385,000 fewer vehicles exported, plus an extra 320,000 units brought to ATFs in the EU at end of life. The combined effect is an additional 284 kton of materials and 1.1 million tons of CO2-eq, which includes 56 kton of equivalent CO2 savings from improved refrigerant recovery. More details are available in Annex 8.1.4 and 8.1.5.

6.2.6Cover more vehicles: Extend the vehicle category scope 

The main indicator used to assess the environmental and economic impacts of PO6A, PO6B (incl. PO6A) and PO6C (incl. PO6A and PO6B measures) is the number of additional vehicles which would be treated in ATFs in the EU compared to the baseline, as well as the corresponding materials which would be recovered. For the environmental impact assessment, the GHG savings linked to such recovery is then calculated for L3e-L7e category vehicles, buses (M2, M3) and lorries (N2,N3), but not for trailers due to lack of information. For PO6C, the export reduction effect of a full EPR system (M31c) can be determined as well, however, the full scope extension to 3RTA, recycled content targets cannot be quantified (M33). On that basis, the assessment shows that the environmental benefits of PO6A are modest, as it would result in a limited number of additional lorries, buses and L3e-L7e category vehicles dismantled in ATFs compared to the baseline, and of the corresponding materials recycled or re-used. PO6B would provide higher environmental benefits, including 510 ktons (PO6B) and 660 ktons (PO6C) of material reused or recycled at higher quality. This corresponds with 1,1 million respectively 1.4 million tonnes of CO2eq as GHG savings. This is the result from:

(I)the obligation to treat all lorries, buses and L3e-L7e category vehicles in ATFs, which would reduce increase the number of vehicles treated by ATFs by 39% and reduce those treated by the informal sector in the EU under less environmentally efficient conditions (M30a). This measure would particularly affect L3e-L7e category vehicles;

(II)the new requirements on the export of used lorries and busses, which could lead to a drop in export in non-roadworthy vehicles of up to 19% and subsequent treatment of these vehicles in ATFs in the EU (M30b);

(III)the basic requirements for manufacturers of lorries, buses and L3e-L7e category vehicles to facilitate collection and reporting on end-of-life vehicles (M31).

The environmental benefits of PO6C are expected to be larger than for PO6B, as PO6C would entail a much broader range of measures affecting the design, type-approval and treatment of lorries, buses and L3e-L7e category vehicles. However, there is insufficient information on parameters (for example on the feasibility to set up recyclability target under the type-approval framework, as well as an overall recycling target for the whole vehicle at end-of-life stage; on current rate and possible increase in the use of recycled materials; on the feasibility to require that a list of “difficult-to-recycle materials” are removed prior to shredding) which are key to calculate the environmental benefits of the measures under PO6C. It is therefore not possible to quantify the additional impacts of M33.

Table 5 Environmental impacts of the scope extension, 2035