COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the documents Proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 443/2009 to define the modalities for reaching the 2020 target to reduce CO2 emissions from new passenger cars and Proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 510/2011 to define the modalities for reaching the 2020 target to reduce CO2 emissions from new light commercial vehicles
TABLE OF CONTENTS 1........... Procedural Issues and
Consultation of Interested Parties.................................................. 5 1.1........ Procedural issues............................................................................................................ 5 1.2........ External expertise and
consultation of interested parties.................................................... 5 1.3........ Consultation of the Impact
Assessment Board................................................................. 6 2........... Policy context, problem
definition, evaluation of the existing legislation and subsidiarity...... 8 2.1........ Policy context................................................................................................................. 8 2.2........ The nature of the problem............................................................................................. 10 2.3........ The underlying causes of the
problem............................................................................ 11 2.4........ Evaluation of the existing
legislation................................................................................ 12 2.5........ How will the problem evolve?....................................................................................... 16 2.5.1..... How is the problem likely to
evolve without new EU action?.......................................... 16 2.5.2..... The Adaptation to Lisbon Treaty................................................................................... 26 2.5.3..... Form and stringency of legislation
beyond 2020............................................................. 26 2.6........ Who is affected and how?............................................................................................. 27 2.7........ The EU's right to act and
justification............................................................................. 27 3........... Objectives.................................................................................................................... 29 4........... Policy Options.............................................................................................................. 32 4.1........ Methodology................................................................................................................ 32 4.2........ Do nothing option......................................................................................................... 32 4.3........ Confirmation of feasibility of
the 2020 target for LCVs.................................................. 32 4.4........ Policy options for the modalities
of meeting the car and van targets................................. 34 4.4.1..... Policy options for the limit value
curve........................................................................... 34 4.4.2..... Policy options for other
modalities in the Regulations...................................................... 39 4.4.3..... Alternative modalities considered.................................................................................. 45 4.4.4..... Simplification and reduction of
administrative burden...................................................... 45 4.4.5..... Conclusions of the preliminary
assessment..................................................................... 46 4.5........ Adaptation to new test cycle......................................................................................... 48 4.6........ Form and stringency of
legislation beyond 2020............................................................. 48 5........... Assessment of policy options........................................................................................ 50 5.1........ Criteria to compare the options..................................................................................... 50 5.1.1..... Main criteria................................................................................................................. 50 5.1.2..... Detailed aspects of assessment...................................................................................... 51 5.2........ Utility parameter - cars................................................................................................. 52 5.3........ Slope of the limit value curve -
cars............................................................................... 58 5.4........ Utility parameter - vans................................................................................................. 61 5.5........ Slope of the limit value curve -
vans............................................................................... 65 5.6........ Derogations for cars and vans....................................................................................... 69 5.7........ Summary of the economic impacts
for cars and vans...................................................... 71 5.8........ Summary of the environmental
impacts for cars and vans............................................... 72 5.9........ Summary of the social impacts for
cars and vans............................................................ 72 5.10...... How do the main options compare in
terms of effectiveness, efficiency and coherence?.. 72 5.11...... Comparison of options.................................................................................................. 73 6........... Monitoring and Evaluation............................................................................................. 77 6.1........ Core indicators of progress........................................................................................... 77 6.2........ Monitoring arrangements............................................................................................... 77 7........... Annexes (see Part II of the
Document).......................................................................... 78 COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the documents Proposal for a regulation of the
European Parliament and of the Council amending Regulation (EC) No 443/2009 to
define the modalities for reaching the 2020 target to reduce CO2 emissions from
new passenger cars
and
Proposal for a regulation of the European Parliament and of the Council
amending Regulation (EU) No 510/2011 to define the modalities for reaching the
2020 target to reduce CO2 emissions from new light commercial vehicles
Introduction Regulation (EC) 443/2009 and Regulation
(EU) 510/2011 set mandatory fleet-based CO2 reduction targets for the
new car and van fleets respectively. They are the main tools of the 2007
Strategy to reduce Light Duty Vehicle (LDV) CO2 emissions. The Regulations include two reduction
steps: short-term targets phased-in from 2012 to 2015 for cars and 2014 to 2017
for vans; and long-term targets to be met in 2020. Article 13(5) of Regulation (EC)
443/2009 and Article 13(1) of Regulation (EU) 510/2011 request the Commission
to review the "modalities"[1]
of achieving the targets set for cars and vans for 2020 and to make proposals
to amend the Regulations in a way that is "as neutral as possible from the
point of competition, socially equitable and sustainable".[2] The Commission is also asked to
assess the feasibility of attaining the 2020 target for vans. As part of this review, the Commission could
consider alternative car and van CO2 targets for 2020. Several stakeholders,
mainly environmental NGOs, component suppliers and many individuals who took
part in the public consultation, argued that the 2020 targets should be
tightened. In view of the updated cost curves, and in the case of vans lower
baseline emissions compared to those assumed in the original proposal, more
ambitious 2020 targets could be considered, in particular for vans. However, neither of the Commission's original proposals
contained a target for 2020, these were introduced and agreed during the
co-decision process. That process was fairly recent: the 2020 car target
was established three years ago, the van target one year ago. Establishing
these targets involved balancing at a political level many varying interests
and the outcome of the political process sent an important signal to industry.
It would be extremely destabilising to propose alternative values so soon after
the current values have been agreed. Doing so would effectively undermine the
value of any new long-term targets that are set, since it would send a signal
that these too might be altered after a few years. While manufacturers can relatively easily
adapt vehicle specifications and alter incentives so as to affect their average
sales emissions, the less time that is available for this, the more costly
would be any change. More substantial adaptations of the target could require
longer lead times for product planning. For vans, there is an additional
uncertainty relating to the implementation of a procedure to measure emissions
from multi-stage vehicles[3]
which is currently under development. It is also clear that the stringency of
any future targets beyond 2020 and how the manufacturers choose to meet them
may have direct implications on the average 2020 emissions from vans. In view of these considerations, in
particular the fact that any change to the targets would undermine manufacturer
certainty, the current review and this Impact Assessment do not consider any
alteration to the level of the 2020 car and van CO2 targets.
However, in view of the benefits of planning certainty for industry, the need
for an understanding of developments beyond 2020 and potential future is
discussed.
1.
Procedural Issues and Consultation of Interested
Parties
1.1.
Procedural issues
The review of the car and van Regulations
is a strategic initiative on the 2012 Commission Work Programme 2012/CLIMA/016. The Impact Assessment Steering Group (IASG)
established in July 2011 was composed of the following DGs: COMP, ECFIN, ENER, ENTR,
ENV, LS, MOVE, RTD, SANCO, SG, TAXUD. Five meetings of the IASG took place between
July 2011 and April 2012.
1.2.
External expertise and consultation of
interested parties
· External expertise Two external studies[4] have provided the main analysis
underlying this impact assessment. These are: 'Support for the
revision of Regulation (EC) 443/2009 on CO2 emissions from cars'[5] referred to as 'the car
study' and 'Support for the revision of Regulation (EU) 510/2011 on CO2
emissions from light commercial vehicles'[6] referred to as 'the van study'.
Both reports present an evaluation of different modalities and assess their
costs. The PRIMES-TREMOVE model has been used to assess
the overall impacts of the 2020 targets. · Consultation of interested parties Stakeholders have been formally consulted
through an online questionnaire and through a stakeholder meeting. In addition
there has been a continuing dialogue with interested stakeholders in bilateral
meetings. Input from stakeholders has been taken into account in assessing the
different possible options to regulate CO2 emissions from light-duty
vehicles, particularly with regard to the design of the legislation, possible
unwanted effects, and implications for competition on automotive markets,
global industrial competitiveness and environmental outcome. External expertise
was used to assess the various options available including aspects raised
during the consultation process (the external contractor attended the public
hearing). –
Public consultation An on-line public consultation was carried
out between 19 September and 9 December 2011 (12 weeks). A total of 3233
replies were received including 137 stakeholder organisations. The majority of
responses came from three Member States (UK, DE, FR). Overall the responses
give a generally clear message that regulating LDV emissions is important,
should be carried out in line with long term greenhouse gas (GHG) goals, be
based on new vehicle average emissions and be technologically neutral. Opinion
was highly divided on whether the current legislation is working well. The main
reason appears to be that many think that the current legislation is not
sufficiently robust. There is strong support for setting targets beyond 2020,
regardless of other measures that may be implemented, and that these should
consider the whole energy lifecycle and include other GHGs, not just CO2.
Finally there was support for considering alternative approaches to vehicle
based GHG regulation either now or in the future. The results of the public
consultation are summarised in Annex 7.2. –
Stakeholder meeting A stakeholder meeting was held on 6
December 2011 with 76 participants. The list of participants is given in Annex
7.3. The completed car study and the preliminary conclusions of the van study[7] were presented as well as an
outline of the work that will be carried out looking beyond 2020. Participants did not express any
substantial disagreement with the analysis presented. Environmental NGOs argued
that since costs are lower than had previously been thought, and in the case of
vans emissions are substantially lower than anticipated, the targets should be
tightened. Regarding regulation post-2020, there was acknowledgement of the
contradiction between industry's need for certainty versus the difficulty of
knowing what level of CO2 reductions may be cost effective. Setting
out a pathway forwards in line with the EU's long term GHG reduction goals was
largely supported. Participants generally recognised the necessity to consider
whether the current regulatory approach is optimal or will need to be changed
in future, although no stakeholder took a definitive position on this. The
presentations from the meeting are at http://ec.europa.eu/clima/events/0048/index_en.htm
along with a summary of the discussion, the latter is attached in Annex 7.4.
1.3.
Consultation of the Impact Assessment Board
A draft Impact Assessment was submitted to the Impact Assessment
Board (IAB) on 25 April 2012 which issued its opinion on the document on 23 May
2012. The opinion stated that the Impact Assessment should strengthen the
problem definition by providing a more detailed policy context, focussing more
on the underlying problem drivers and presenting thoroughly the evolution of
the situation without new EU action. The IAB recommended establishing a clearer
intervention logic by better linking the problems, their drivers, objectives
and policy options. The objectives were recommended to be made SMARTer.
Futhermore, the IAB concluded that a more substantiated and differentiated
impact analysis were needed. Finally, some aspects regarding future monitoring
and evaluation arrangements were to be clarified. These comments were taken into account in the resubmitted Impact
Assessment as follows: · Restructuring of text and further clarifications regarding the
nature of the problem, the underlying drivers and the policy context resulting in
a more consistent problem definition, SMARTer objectives and clearer intervention
logic. · The description of the baseline scenario was restructured and
extended to better explain the evolution of the current situation without the
new EU action. · The presentation of options has been clarified and the impact
analysis and presentation have been restructured to assist readability and
enhance the link with the objectives. · The description of monitoring arrangements has also been
strengthened. · Additional information has been presented on the under-valuation of
light-weighting with a mass-based utility parameter. · A glossary of technical terms has been added. The IAB gave its final opinion on 12 June 2012. The final opinion
requested that some aspects be further strengthened. In particular this
concerns explaining the intervention logic, quantifying the objectives,
explaining the balance between social, enviornmental and economic impacts and
further explaining the monitoring arrangements. These comments have been taken into account in the final Impact
Assessment as follows: · Addition of a graphic illustrating the intervention logic. · Changes to the objectives to include the 2020 CO2 targets
and footnotes explaining how social equity and inter-manufacturer competition are
measured. · A further explanation of why the main impacts from the options for
the modalities will be economic as opposed to social or environmental. · Additional text explaining how the annual monitoring process enables
the required evaluation of progress.
2.
Policy context, problem definition, evaluation of the
existing legislation and subsidiarity
2.1.
Policy context
· General policy context The review of the Regulations takes place in the following policy
context: –
The EU has a stated objective of limiting global
climate change to a temperature increase of 2ºC above pre-industrial levels. –
While emissions from other sectors are generally
falling road transport is one of the few sectors where emissions have risen
rapidly. Between 1990 and 2008 emissions from road transport increased by 26%. –
The Commission 'Roadmap for moving to a
competitive low carbon economy in 2050'[8]
outlines a plan to meet the long-term target of reducing domestic emissions
by 80% by mid-century in the most cost-effective way. According to the Roadmap
and the underlying analysis every sector of the economy must contribute and,
depending on the scenario compared to 1990, transport emissions need to be
between +20 and -9% by 2030 and decrease by 54-67% by 2050 (excluding
international maritime emissions). –
The Commission's 'Roadmap to a Single
European Transport Area – Towards a competitive and resource efficient
transport system' sets out future transport strategy within a frame
of achieving a 60% reduction in transport GHG emissions by 2050. –
The EU is committed to innovation and boosting
industrial competitiveness. Research and innovation
drive productivity growth and industrial competitiveness. A transition towards
a sustainable, resource efficient and low carbon economy is paramount for
maintaining the long-term competitiveness of European industries. –
In view of the concerns of increasing scarcity
of oil and increasing price volatility, measures that
further reduce energy consumption in transport are desirable for increasing the
energy security of the EU. A detailed description of the general policy context for the review
is set out in Annex 7.5. · Specific policy context Implementation of the 2020 targets by defining the "modalities"
to reach the targets The car and van Regulations function in a
similar manner (see Annex 7.6 for a detailed summary of the car and van
Regulations). The Regulations include two steps of reduction: short-term
targets to be phased-in from 2012 to 2015 for passenger cars and 2014 to 2017
for light commercial vehicles; and long-term targets to be met in 2020. For the
van Regulation the feasibility of the 2020 target is to be confirmed. For both,
cars and vans, the modalities of reaching the 2020 targets must be defined to
implement the targets. The Regulations contain a number of "modalities"[9] or parameters which impact on
how the targets are achieved and may be considered for amendment in view of
implementation of the 2020 targets. The following modalities are currently
employed: ·
Utility parameter, shape and slope (these
together define the limit value curve ); ·
Excess emissions premium; ·
Derogations; ·
Manufacturer pooling; ·
Eco-innovations; ·
Phase-in of targets; ·
Super-credits. The Regulations function by establishing a
fleet-average CO2 emission target for each vehicle manufacturer.
This target is calculated by aggregating a nominal CO2 emission
value for each vehicle registered in the EU (in gCO2/km) which is
interpolated from a curve of CO2 emission versus vehicle mass (the
'limit value curve' where mass is the "utility parameter"). The limit
value curve is a function specified in Annex I of the Regulations and is
based on vehicle mass. The utility parameter, shape and slope of the function
do not have an impact on the stringency of the target but influence the
distribution of the reduction effort between vehicles of different utility. The
current car and van formulae are based on the short-term target. To
implement the 2020 targets it is necessary to introduce, in Annex I to the
Regulations, new formulae for 95 gCO2/km for cars and 147 gCO2/km
for vans. The modalities concerning the limit value curve are therefore
considered the most important. A description of the other modalities is
given below. The excess emissions premium aims at
ensuring compliance with the target. An excess emissions premium is payable in
a particular calendar year if the actual average vehicle emissions for a
manufacturer's entire fleet are above the manufacturer's target. The
Regulations set the premia for both cars and vans at €95 per gCO2/km
as of 2019. Without further intervention this premium would remain valid for
2020 and beyond. Derogations
allow certain manufacturers (small volume up to 10,000 annual registrations and
niche between 10,000 and 300,000 annual registrations) to have targets which
are independent of the limit value curve, and in case of the small volume
manufacturers are based on their individual reduction potential. For
small-volume manufacturers a second five year compliance period to 2020 could
be foreseen. However, for niche manufacturers no new post-2015 target is set by
the current Regulation. The possibility for manufacturers to form a
pool is a flexibility allowing a less costly way to meet the targets. It
is neutral as regards the overall stringency of the legislation and the CO2
reductions achieved. This flexibility is independent from other modalities but
its use may be influenced by the limit value curve shape or slope, the utility
parameter and the scope for derogations. It is not phased-out thus with no
change it would continue in 2020 and beyond. Eco-innovations contribute towards reaching the targets since they cover
technologies which reduce CO2 outside the test procedure. A
manufacturer will deploy an eco-innovation only if it is cost-effective thus
the provision is expected to reduce overall compliance costs and the existence
of the modality encourages innovation. The legislation specifies that this
provision should phase-out once the new test-procedure is in place. However, it
is likely that there will also be technologies not covered by the new procedure
in the future. Phase-in sets
a period over which compliance with the target is progressively tightened. This
means for example that achieving new car fleet average emissions of 130 gCO2/km
for 100% of the fleet is delayed until 2015. Super-credits in principle
lower the stringency of the legislation since they effectively allow emissions
from vehicles that do not receive them to be higher. These are all phased out
before 2020. In short, of these modalities the limit
value curve is the most important because on its basis the individual
manufacturers' targets are calculated. Excess emissions premia, derogations and
pooling are significant for manufacturers to whom they apply. The other
modalities are considered rather less important.
2.2.
The nature of the problem
· The need to reduce CO2 emissions from light-duty vehicles As described in section 2.1, road transport
is one of the few sectors with rapidly rising emissions and between 1990 and
2008 emissions from the sector increased by 26%. This trend is not sustainable
in view of the EU's climate policy. According to the Commission's 'Roadmap for
moving to a competitive low carbon economy in 2050'[10] and
Transport White Paper, road transport has to significantly reduce its CO2
emissions by 2050. Light-duty vehicles are responsible for a
significant part of the overall transport emissions and emit around 13.5% of
total EU emissions of CO2 and about 15% when the emissions from
supplying the fuel are included. In view of the expected increase in the
light-duty vehicle fleet (see section 2.3), a continuation of the effective
application of the EU mandatory CO2 targets is necessary to ensure
further reduction of road transport emissions of CO2. · The modalities of the 2020 target and planning certainty The two-step approach of the Regulations
requires that the Commission proposes detailed modalities of meeting the 2020
targets by end of 2012. This necessitates updating the formulae in Annex I to
the Regulations for the 2020 targets. In addition, the
vans target for 2020 requires confirmation of feasibility. The modalities of
meeting the 2020 CO2 emission limits, and indications of how those
limits will evolve beyond 2020, are needed to guide the automotive industry. Without
this, uncertainty may discourage investments in innovation and delay bringing
new technologies to the market. Because the cost of adapting to change for
manufacturers is likely to increase as the time available for them to plan
decreases, and in view of the time schedules for vehicle platform and
powertrain developments[11],
it is important to establish as soon as possible the modalities for 2020. The two Regulations leave uncertainty for
the period beyond 2020. However, the automotive industry works to planning
cycles that suggest the need to know approximately ten years in advance the
broad framework within which vehicles need to be designed, and a shorter period
of around five years for more precise decisions on variants that will actually
be produced. It is thus important to provide indications as to the future
reductions early enough to allow for appropriate planning certainty.
2.3.
The underlying causes of the problem
The overall annual CO2 emissions
from usage of light-duty vehicles are a result of the multiplication of the
vehicle stock, the annual mileage of LDVs, and their emissions per km.
Therefore, each of these factors has a direct impact on the scale of the
problem. · Stock of the LDV fleet The number of LDVs in the EU continues
increasing. The stock of passenger cars has increased by 45% since 1990 and by
17.5% since 2000[12].
There is no evidence to indicate that this trend will stop. The stock of vans
increased by 24% between 2000 and 2007[13]
but this trend has somewhat stabilised during 2008-9 when new registrations of
vans in the EU started decreasing. According to ACEA[14] the most recent decrease
especially concerned Spain and Italy, followed by the UK whereas sales in other
major markets, such as France and Germany, were more stable. However, a reverse
trend is expected to occur once the economic outlook improves and businesses
currently deferring new vehicle purchases resume their orders. · Distance travelled by light-duty vehicles There is evidence that the average annual distance
travelled by LDVs has stabilised. EU transport in figures shows between 2000
and 2009 passenger km per car dropped slightly from 21,000 to 20,000 per year.
There could have been a reduction in average load factors, but this suggests
little overall change. The ODYSEE project[15]
shows figures suggesting that average car distance driven is just above
12,000km per year and has decreased by 750km since 2000. The FLEETS study assessed national data for
different vehicle categories. Based on this it is possible to produce EU
weighted average annual mileages. In the car study these are shown for 2005 as
being: Vehicle type || Petrol small || Petrol medium || Petrol large || Diesel small || Diesel medium || Diesel large Total annual mileage (km) || 14,438 || 16,772 || 16,839 || 23,041 || 24,574 || 26,318 Lifetime mileage (km) || 250,592 || 285,222 || 300,347 || 379,465 || 362,316 || 444,662 Average life || 17 years || 17 years || 18 years || 16 years || 15 years || 17 years The
PRIMES-TREMOVE model assumptions for private car use are broadly consistent
with the ODYSEE data, using average annual private car activity of just under
12,000km over the period 2020 to 2030. The average annual mileage assumptions
used for the cost benefit calculations throughout the Impact Assessment are at
the low end of the FLEETS data. The driving patterns for vans are slightly
different than for cars. The FLEETS study shows that vans are mostly used in
urban conditions (shorter distances, lower speeds, many restarts and periods of
idling) which results in higher fuel consumption and therefore generates more
CO2 emissions than extra-urban, motorway driving. However, the EU
average annual mileage of the whole fleet (old and new vehicles) has been found
to be similar between cars and vans. This Impact Assessment assumes the average
annual mileage of new vans at 23,500 km. Overall, this evidence illustrates that
while there is some uncertainty over annual driving distances by LDVs, there is
little indication that they are changing significantly. · Rebound effects There is risk of a perverse effect from
increasing fuel efficiency of vehicles whereby lower fuel costs lead to the
vehicles being driven more. This phenomenon is called a rebound effect. This
effect could offset some of the tailpipe emission reduction and could be
minimised in case of major increases in fuel costs. · Regulatory instrumens Taken together, the increasing stock and
assumption of constant annual mileage would lead to increasing fuel use and CO2
emissions without there being a further reduction in LDV emissions per km. The
main EU instruments impacting on this problem are the existing Regulations setting
CO2 emission standards for LDVs. At Member State level other
policies with an important impact include vehicle circulation and registration
tax policies. Fuel taxation is an important factor affecting the problem.
Higher levels of taxation would be expected to encourage the purchase of more
fuel efficient vehicles. In view of current developments it is clear
that EU CO2 emissions standards are essential to constrain and
reduce LDV CO2 emissions. · The two-step approach of the Regulations Finally,
the other underlying cause of the problem is that the two LDV CO2
Regulations have a two-step operation. In the first period (up to 2015 for cars
and 2017 for vans) the modalities of compliance with the targets have been
established. However for the second phase (2020 in both cases) the formulae in
Annex I of the Regulations to incorporate the 2020 targets as well as other
modalities are left to be determined in the current review.
2.4.
Evaluation of the existing legislation
The
effectiveness of the legislation The targets in the existing car and van Regulations
are phased-in from 2012 and 2014 and enter fully into force in 2015 and 2017
respectively. This means the effectiveness of the legislation with respect to
its main goal of reducing CO2 emissions from new cars and vans
cannot be fully evaluated at present. However, based on EU passenger car registration
monitoring data it is clear that average new car CO2 emissions are
falling as shown in figure 1 below. Figure 1 Long term
trend in car CO2 emissions. Prior to the current CO2
standards, the European, Japanese and Korean car manufacturers' associations voluntarily
agreed to reduce CO2 emissions to 140 gCO2/km by 2008 or
2009. However, average emissions were still 154 gCO2/km in 2008 and
146 gCO2/km in 2009 (see Table 1). The greatest reduction progress
has been seen after 2007 when the Commission adopted its proposal for a Regulation
on CO2 emissions from cars (the bottom row of Table 1 shows year on
year improvement). This illustrates the need for, and effectiveness of,
mandatory CO2 emissions limits. While part of the reductions in 2009
and 2010 might be due to the financial and economic crisis and scrappage
schemes implemented in several Member States in that period, the decreasing
trend is evident. Table 1 Average
CO2 emissions from new cars registered in the EU[16] Year || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009 || 2010 || 2011 grams CO2/km || 172.2 || 169.7 || 167.2 || 165.5 || 163.4 || 162.4 || 161.3 || 158.7 || 153.6 || 145.7 || 140.3 || 135* % yearly change || na || 1.45 || 1.47 || 1.02 || 1.27 || 0.61 || 0.68 || 1.61 || 3.21 || 5.14 || 3.71 || 3.06 * Source: 2011
EU monitoring data subject to final confirmation by the Commission Procedures to measure CO2 from light-duty vehicles Measurement of the CO2
performance of new cars and vans is carried out as part of the type approval
procedure. Tests are carried out by manufacturers on the basis of the New
European Driving Cycle (NEDC) and following the procedures set out in the type-approval
legislation. There is growing evidence that vehicle performance under real
world driving conditions is increasingly diverging from the test procedure
results. More detailed investigations have also illustrated the difficulty of
repeating road load measurements carried out by manufacturers which provide a
key input to the NEDC test. There are likely to be a range of factors
contributing to these divergences which are discussed in more detail in Annex 7.7. In spite of these problems, the Commission
does not have evidence that light-duty vehicle test cycle CO2
results are not correlated with real world CO2 emissions. Addressing
the problems inherent with the test procedures is outside of the scope of the
current review and this Impact Assessment. The Commission is working to develop
a better understanding of the factors contributing to the divergence, in
particular where this results from flexibility inherent in the mandated
procedures. In particular it is important to ensure that any updates to the
test procedures result in no greater flexibility or margins with regard to
measurement of CO2 emissions. While challenges to ensure that
measured CO2 emissions better reflect real driving emissions remain,
the fact that test results are still correlated with real world emissions
ensures that the Regulation continues to work appropriately. In view of this it
is concluded that the underlying basis for the regulatory approach is robust. Implementation
of the car and vans Regulations Secondary legislation is needed to
implement the two Regulations. Implementation of the cars Regulation is more
advanced than the vans Regulation. The latter will however be consistent with
the approach of the former. The following implementing measures have been
adopted so far: –
Implementing Regulation on CO2
monitoring from cars[17]
The monitoring scheme is now operational
and is working well and, despite the need for some further adjustments, the
overall quality of the data is satisfactory. The Commission is currently
evaluating the database error margin and developing a methodology to calculate it.
The additional administrative burden of the monitoring scheme differs
significantly between Member States and is linked to the cost of amendments to
the preceding scheme established in Decision 1753/2000 to monitor new car CO2
emissions. Article 8(9) of Regulation 443/2009 enables the Commission to
introduce any necessary amendments to the monitoring scheme in the light of
experience through the comitology procedure. In view of this and the limited
experience so far, there is no need for action in the current review. –
Implementing Regulation on CO2
monitoring from vans[18] Based on the monitoring scheme for cars,
the Member States are required to provide data on van registrations from 2012.
The implementing regulation is based on the one for cars appropriately adapted.
Similarly to the car monitoring scheme the Commission is enabled to introduce
any necessary amendments through comitology, therefore it is not further
discussed in this review. –
Monitoring of CO2 emissions from
multi-stage vans One of the most urgent implementation tasks
for vans is the monitoring of multi-stage vehicles (MSV). MSVs are vehicles
built in stages by different manufacturers, often to a client's specification[19]. According to Article 13(4)
and Annex II of the vans Regulation, the Commission is to propose a new
procedure to obtain a representative value of the final vehicle CO2
emissions. This proposal is currently under discussion with the Member States.
The proposal foresees that the manufacturer of the base vehicle will be
responsible for the final CO2 emissions of the completed vehicle.
These emissions are to be established based on a simplified method to avoid
burdensome measurement of emissions of each MSV while ensuring the OEM has
access to the information on the vehicles under its responsibility. –
Implementing Regulation setting out a procedure
for derogations applications[20]
for cars The derogation scheme for small-volume registrations
(up to 10,000 cars per year) and niche manufacturers (10,000 to 300,000 per
year) is operational. In 2011 the Commission received 23 applications (3 niche,
20 small volume) for the derogation period starting in 2012. These were
assessed and 18 small-volume and 2 niche derogation decisions adopted. The
remaining applications were submitted too late for decisions to be taken in
2011. The targets proposed by small-volume manufacturers mostly represent
reductions. Small-volume applications must provide
supporting evidence of the manufacturer's economic and technological potential.
Most information required, especially regarding the economic situation of the
companies, should be readily available to them. Other supporting evidence concerning
market characteristics and technological potential is needed to allow an
assessment of the proposed targets against competitors. For the two categories different issues
arise: For small-volume manufacturers, the
procedure is relatively cumbersome and creates an administrative burden for the
Commission and manufacturers. It could be desirable to reduce these burdens as
far as possible. The absence of a minimum threshold means that even where a
very small number of cars of a brand may be placed on the EU market the
manufacturer is covered by the Regulation. For niche manufacturers, the procedure is
straightforward. A fixed baseline and reduction is set in the legislation,
however, if these are not updated, manufacturers falling under this derogation
would have no further target beyond 2015. In addition, the suitability of the
upper threshold of 300,000 cars per year could be reconsidered as it would
potentially enable a new entrant to supply up to 2.5% of the EU market while
being in an advantaged competitive position compared to incumbent
manufacturers. –
Van derogations The van Regulation contains only one type
of small volume derogation which concerns manufacturers of less than 22,000 vans
per year. The procedure has not yet been put in place but will be based on the
equivalent car procedure. –
Implementing Regulation for cars setting out a
procedure for application and approval of eco-innovations[21] The Implementing Regulation was adopted in
2011 however no complete eco-innovation application has yet been received.
The regulation includes a review clause committing the Commission to revise the
scheme by 2015 at the latest and inter alia to consider ways of
simplifying the application and approval procedure in the light of experience.
Similar rules are to be adopted for vans. –
Practical arrangements on application for
pooling for car and van manufacturers Manufacturers are requested to apply for
pooling via a straightforward application form available on the DG CLIMA
website[22].
No supporting evidence is required resulting in a small administrative burden. –
Decision on excess emissions premium for cars[23] The decision states that the procedure to
be used for collecting premiums are the rules for recovery of receivable
amounts, i.e. of fixed amount, certain and due, set out in the Financial
Regulation and its Implementing Rules.
2.5.
How will the problem evolve?
2.5.1.
How is the problem likely to evolve without new EU action?
Without action the 2020 car and van CO2
targets could not be implemented and no reduction beyond respectively 2015 and
2017 would be required. This is because neither 2020 target can take effect
without legislation defining and implementing the modalities for 2020. This can
only be done via the amendment of the relevant Regulations in the ordinary
legislative procedure. Without further EU action in this field it
is likely there would be little additional substantial CO2 reduction
from new light-duty vehicles. Some reduction would still be expected beyond
2020 due to the continuing renewal of the existing fleet with newer cars and
vans meeting the current CO2 standards. In addition, the formulae
setting the current targets would be regularly adjusted to take account of
changes to the average mass of the fleet preventing any increase in average new
car and van CO2 emissions per km. However, based upon evidence from the EU
and US for periods when there was no administrative requirement for fuel
efficiency or CO2 emissions to improve and no significant changes in
oil price, it is concluded that car emissions and fuel efficiency improve on
average by the order of 0.1 to 0.2% per year. There may be certain expectations
that in view of the current CO2 requirements and expected regulatory
action in this field in third countries to which European vehicles are
exported, the fuel efficiency improvement of vehicles may continue somewhat
beyond this rate. However, as seen in the EU in the period between 1995 and
2006 for cars, in the absence of the mandatory CO2 standard this
progress is likely to be offset at least to some degree by the increase in
power, size or comfort of new cars.[24]
When combined with the expected increase in the vehicle fleet and static travel
distances (described in section 2.3), overall CO2 emissions from the
LDV fleet would continue increasing. This 'do nothing' option forms the baseline
scenario for the modelling used and is implemented in the modelling as Scenario
1 described in Annex 7.8. For the purpose of assessing this option,
improvements in CO2 emissions beyond the mandatory targets in 2015
and 2017 are assumed to continue at historical rates when there was no
requirement to reduce emissions. The following paragraphs present the overview
of the estimated impacts of implementation of the 2020 targets as compared to
the 'do nothing option', effectively presenting the benefits that would be
foregone in case of no new EU action. ·
Environmental impacts Introduction of the 95 gCO2/km target
represents a 27% reduction in CO2 tailpipe emissions per vehicle km
relative to do nothing by 2020 and beyond. The 2020 target for vans is a 16%
reduction per vehicle km relative to do nothing by 2020, and for subsequent
years. Total emissions between 2010 and 2030 are estimated to reduce by 24% for
cars and 13% for vans.[25]
PRIMES-TREMOVE modelling shows aggregate CO2 emission reductions for
cars and vans of around 422 Mt CO2 in the period up to 2030. In
addition, these savings are expected to reduce requirements for EU ETS
allowances in the order of 0.5% to 1% in the period up to 2030 due to lower
refinery emissions caused by decreased fuel demand. ·
Macro-economic impacts EU crude oil consumption was 656 Mt in 2008
of which 598 Mt were imports[26].
Of this some 300 Mtoe is used for road transport, approximately two thirds of
which is for light duty road transport. EU oil consumption for LDVs costs approximately
€100bn per year. The main macro-economic impacts of
implementing the 2020 targets are linked to reducing fuel consumption and
avoided fuel expenditure, financing additional vehicle technology and other
economic activity. This is discussed in
Annex 7.8. Avoided fuel use increases
progressively over the decade 2020 to 2030 from €27bn per year in 2020-2025 to
€36bn per year in 2025-2030. Energy use is around 25 mtoe per year lower in
2030, saving in total almost 160 mtoe to 2030.[27] The impact of this reduced fuel expenditure
depends on alternative spending patterns. To achieve the fuel savings, a part
of this resource needs to be allocated to innovation and investment and
manufacturing of more complex vehicles. These will have a positive economic impact
due to an investment multiplier effect[28].
These aspects are explored in detail in Annex 7.10 which indicates that spending
on employment could rise by around €9bn and GDP by around €12bn. However, if
total imports decrease due to lower oil demand, the exchange rate rises until the
balance of trade is restored, making EU goods more difficult to sell abroad in
the long run. Some of the initial positive economic impact may be lost due to
this rebound effect. ·
Energy security Reducing energy consumption contributes to
energy security. The full value of this is uncertain, however two aspects are
noted: –
Reduced energy consumption (principally crude
oil) means that energy-security related costs (the so-called ‘oil premium’)
decrease. The lower oil premium has two effects. Firstly, a lower demand for
oil in the EU has a downward impact on the world oil price and secondly,
macro-economic disturbances from oil price shocks are reduced. This has a
positive economic effect[29].
–
The JRC estimated a value for the economic
benefits of improved energy security from increased biofuel use by calculating
the cost of achieving a similar improvement in energy security through the
establishment of a (additional) strategic stock of oil[30]. The cost was estimated to be
about €130 per tonne of oil equivalent, although this estimate is considered to
be the upper bound value. Based on this, the estimated aggregate energy
security benefit between 2020 and 2030 of introducing the 2020 car and van
targets is some €20bn. ·
Impact on taxation revenues Fuel taxes are the most relevant category
of taxation in this respect, as fuel consumption will be lower compared to the 'do
nothing option' (as described above). The impact on vehicle registration taxes
depends on their structure. If dependent on vehicle prices, revenue will go up if
the average retail prices increases due to CO2 standards. If
dependent on CO2 emissions revenues from sales taxes will decrease. Total fuel expenditure avoided will be approximately
€27bn per year in the period 2020-2025 rising to €36bn per year in the period
2025-2030.[31]
Tax represents a large proportion of fuel costs. It is estimated that if tax
rates are not changed government fuel tax revenues (excise and VAT) would decrease
by around €15bn per year in the period 2020-25 and around €22bn per year over
the period 2025-30. This decrease could be avoided by altering tax rates or by
replacing them with alternative transport pricing mechanisms. Since the effects on tax revenues are
predictable and manageable, they are not considered to be crucial. Any changes
that occur are likely to relate primarily to the level of ambition of the 2020
targets rather than any of the modalities under consideration. The net effect on
government revenue is unknown and any loss due to decreased consumption of fuel
may or may not be compensated by higher VAT revenue or vehicle taxes. The
approach taken by government to replace these revenues may have a strong effect
on the eventual outcome in terms of employment. A decrease or reduction in
fiscal stimuli for fuel efficient cars could compensate these negative effects
in part or in full, depending on the pre-regulation stimulus level. ·
Net costs and benefits for consumers and
society Ø
Savings on fuel spending to end-user The largest single economic impact on
consumers of no EU action to implement the 2020 car and van targets is foregone
benefit of fuel saving for vehicle purchasers. The level of fuel savings per
vehicle is purely driven by the existence of the 2020 targets and their overall
level of ambition. The impact of implementation of the 2020 CO2
targets on fuel savings for private consumers and business owners is evident. Moving
to 95 gCO2/km and
147 gCO2/km in the
new car and van fleets implies reductions in annual fuel consumption of about
27% and 16% respectively (with equal mileage). However, fuel savings may be
lower than expected due to rebound effects, as lower running costs may lead to
higher distances driven. In aggregate, these amount to around €27bn
per year in 2025 rising to €36bn in 2030. For an average car, and depending on
the price of fuel, the end-user will save from €2904 to €3836 over its lifetime[32] as compared to retaining the
130 gCO2/km target (i.e. a 'do nothing' option). For vans these
savings are expected to range from €3363 to €4564[33] as compared to 175 gCO2/km
(see Table 2). Table 2 User perspective - lifetime fuel cost
savings for cars and vans relative to the short-term targets and relative to
2009/10 situation [in €] Oil price [$/barrel] || || 90 || 100 || 110 || 120 || 130 || 140 Relative to 130 gCO2/km || Cars || 2904 || 3091 || 3277 || 3463 || 3650 || 3836 Relative to 2009 || 4411 || 4694 || 4977 || 5259 || 5542 || 5825 Relative to 175 gCO2/km || Vans || 3363 || 3603 || 3843 || 4083 || 4324 || 4564 Relative to 2010 || 4040 || 4329 || 4617 || 4906 || 5194 || 5483 Ø
Cost-effectiveness to society Equally, no implementation of the 2020
targets will result in foregone economic benefits to society linked to no
further fuel savings resulting from increasing efficiency. Based on the central
cost scenario (i.e. scenario 2)[34]
which in view of the results of a thorough analysis undertaken by the US
Environmental Protection Agency[35]
and factual evidence seems most appropriate, Table 3 shows that both
2020 targets have negative abatement costs which means that society overall
saves from implementation of the targets. The higher the oil price the greater
the overall savings. Table 3 Societal perspective[36] - Annual and lifetime fuel
savings, NPV of lifetime fuel savings and abatement costs for society || Oil price [$/barrel] || 90 || 100 || 110 || 120 || 130 || 140 Cars || Diesel price (ex taxes) [€/l] || 0,74 || 0,82 || 0,90 || 0,99 || 1,07 || 1,15 Petrol price (excl. taxes) [€/l] || 0,67 || 0,75 || 0,83 || 0,91 || 0,99 || 1,07 Lifetime fuel cost savings[37] (excl tax) [€] || 1695 || 1893 || 2091 || 2290 || 2488 || 2687 Abatement costs[38] [€/tonne CO2] || -82 || -112 || -142 || -173 || -203 || -234 Vans || Lifetime fuel cost savings (excl tax) [€] || 2198 || 2448 || 2699 || 2950 || 3201 || 3451 Abatement costs [€/tonne CO2] || -172 || -196 || -221 || -246 || -270 || -295 Figure 2
to Figure 5 show graphically the net present value (NPV) of fuel cost
savings compared with additional vehicle costs for the end-user[39] and society with four
different cost scenarios for cars. These figures not only show that during the
lifetime of the vehicle, fuel cost savings greatly outweigh additional costs
for the level of the limits envisaged but also demonstrate that this will
happen within a five year period. These conclusions hold for both passenger
cars and vans. Figure 2 NPV of
fuel savings for an average medium petrol passenger car compared to cost curves
constructed in the car study.
Figure 3 NPV of fuel savings for an average
medium diesel passenger car compared to cost curves constructed in the car study.
Figure 4 NPV of
fuel savings (incl. VAT) for an average Class II diesel LCV compared to
cost curve constructed in the van study (assuming annual mileage of 23,500km
and 13 years vehicle lifetime). Figure 5 NPV of fuel
savings (excl. VAT) for an average Class II diesel LCV compared to cost
curve constructed in the van study (assuming annual mileage of 23,500km and 13
years vehicle lifetime). ·
Impacts on international trade and
competitiveness The
'do nothing' option is expected to have a potential
negative impact on international trade and competitiveness. This is mainly due
to a potential weakening of the competitive position of the EU automotive
industry on the third markets. These impacts are presented by outlining the
expected benefits of implementation of the 2020 targets. Ø
Effect on
international market / trade balance The
implementation of the 2020 targets will have two main impacts on international
trade: energy consumption and automotive sector sales. A positive
effect on the trade balance is expected in relation to energy as LDVs would
consume less oil in the EU. The new CO2 targets may affect the
competitiveness of vehicle manufacturers and component suppliers on the
international export market. If those markets value lower fuel consumption then
competitiveness will be improved, if not it could deteriorate. There is a clear
tendency towards greater LDV fuel efficiency in countries outside the EU with
countries accounting for over 65% of EU automotive exports already having 2020
targets. Figure 6 shows how CO2 standards are evolving globally. This suggests that the EU is a
frontrunner in producing low CO2 vehicles giving EU manufacturers a competitive edge (specialisation)
in this domain which is valued increasingly highly. The stakeholders are also
largely in agreement that retaining this leading position is essential for the
competitiveness of the EU automotive industry (see section 4 of Annex 7.2). At
the same time it is clear that the international standards are converging,
putting increasing competitive pressure on the EU industry. Figure 6 Evolution of
LDV CO2 standards in different countries (ICCT) Ø
Impacts on competitiveness and innovation The potential impacts of the Regulations on
competitiveness are explored in detail in Annex 7.9. The main effect comes from
the implementation of the 2020 targets. Introducing the targets may impact on
the automotive sector (vehicle manufacture and component supply) and on all
other sectors of the economy which use LDVs. The latter effect is due to lower
LDV total costs of ownership (see Figure 2 to Figure 5). For the automotive sector, the detailed
assessment shows that for many of the indicators the impacts are unlikely to be
significant (e.g. compliance costs, capital, labour, consumer choice,
restructuring). Where impacts are expected to be significant they will lead to
reduced energy and vehicle operating costs which will be beneficial to
competitiveness for the EU as a whole. The targets will stimulate innovation. It
is clear that the automotive sector has a large capacity for innovation and
enjoys a substantial comparative advantage. The industry continues to improve
its labour productivity and remains globally competitive, ensuring a trade
surplus. This trend has continued following the introduction of CO2
regulations, as it has in Japan[40],
and there is no reason to believe they will be fundamentally altered by the
introduction of the 2020 targets or any of the modalities. The European automotive industry is
considered to be a global technology leader - largely due to substantial
investments into innovation, but also as a result of a demanding home market.
In the responses to the public consultation (see Annex 7.2), 72% of
stakeholders and 83% of individuals agreed or partly agreed that EU regulation
of road vehicle emissions stimulates innovation in the automotive sector and
helps keep Europe's automotive industry competitive. The main challenges facing the industry
appear to derive from other factors. The current
situation shows large differences per manufacturer, plant or country, with
some, not only premium brands, in good shape and having announced record
financial results for 2011[41]. The current Regulations have not had a negative impact on
competitiveness and the analysis suggests that, if anything, the implementation
of the 2020 targets will further stimulate innovation in the EU automotive
sector and enhance its competitiveness in particular making it better placed to
benefit from CO2 and fuel efficiency regulations that will be
implemented in other major vehicle markets over the next decades as shown
above. ·
Effect on job market / employees The European automotive industry is a major
employer of a skilled workforce, directly employing over 6 million people (1.2
million employed by car manufacturers and 4.8 million by suppliers) and
indirectly responsible for approximately 12.6 million jobs in large companies
and SMEs (2.3 million jobs are directly related to manufacturing, 1.2 million
jobs in closely related activities, 4.9 million jobs related to road transport
and 4.2 million in various services of automobile use).[42] A number of reports cite that fuel
efficiency could have a beneficial effect on employment[43]
as fuel efficiency increases the value of cars manufactured and leads to
proportionally higher labour demand. Avoided fuel costs are spent on other
goods and services. Table 4 gives
an overview of the relative labour intensity (RLI) of some key sectors in the
EU. The first column represents the percentage of the total wages each sector
pays to employees, the second column represents the percentage of the monetary
value of output each sector generates. The relative labour intensity is the
fraction of labour compared to the fraction of output generated by each
industry. Increasing fuel efficiency leads to a decrease in demand of
relatively non-labour intensive sectors (refineries, extraction) and a shift
towards the more labour intensive manufacturing of motor vehicles as well as
other goods. The manufacturing sector however is still quite capital intensive. Table 4 Relative labour intensity (RLI) of
sectors (% of compensation / % of output in total economy), source: EU
input-output table Sector || % labour || % output || RLI Coke, refined petroleum products and nuclear fuels || 0.002 || 0.012 || 0.18 Crude petroleum and natural gas; services incidental to oil and gas extraction excluding surveying || 0.00 || 0.00 || 0.31 Manufacture of motor vehicles, trailers and semi-trailers || 0.017 || 0.024 || 0.70 Other transport equipment || 0.007 || 0.007 || 0.98 Construction work || 0.064 || 0.062 || 1.02 Service of land transport; transport via pipeline services || 0.025 || 0.019 || 1.32 Trade, maintenance and repair services of motor vehicles and motorcycles; retail sale of automotive fuel || 0.021 || 0.015 || 1.40 Research and development services || 0.012 || 0.006 || 1.81 Health and social work services || 0.093 || 0.039 || 2.37 Public administration and defence services; compulsory social security services || 0.086 || 0.034 || 2.52 An indication of
how changes to fuel consumption and purchase of vehicles affect other sectors
of the European economy can be derived from EU Input-Output tables. A detailed
description and results can be found in Annex 7.10. Substitution of fuel by
capital and technology increases domestic demand. As illustrated in Annex 7.10
in Table 13 this can be expected to increase GDP by around €12bn and
annual expenditure on labour by around €9bn. A major contribution to this comes
from the fact that vehicle manufacturing is more labour and export intensive
and purchase of fuels is import intensive.[44]
These results are supported by assessments in a number of reports (see footnote
43). The conclusion of this assessment is that an
increase in vehicle consumption has a proportionally large effect on production
and labour demand. The need for improvements in fuel efficiency will have
positive impacts on the demand for basic metals, wholesale trade, chemicals and
rubber. Other sectors will be largely unaffected. Conclusion Without new EU action the 2020 car and van
CO2 targets could not come into effect and the problem of increasing
CO2 emissions from light-duty vehicle would not be tackled by EU
policy. Further progress in fuel efficiency could not be assumed as evidence
from the EU and US indicates that in the absence of regulatory requirements or
large fuel price increases, LDV fuel consumption improves at only a modest
rate. This is included in the modelling as Scenario 1 described in Annex 7.8.
As described in the section above and in the abovementioned annex, no new EU
action results in substantially higher EU oil consumption, greater CO2
emissions and reduced GDP and EU employment. It would also mean abandoning the
strategy of reducing LDV emissions and would be counter to current goals.
2.5.2.
The Adaptation to Lisbon Treaty
Regulation 443/2009 was adopted prior to
the coming into force of the Lisbon Treaty. As a result the comitology
provisions need to be updated and brought into line with the Treaty as part of
agreement between the Commission, the Council and European Parliament. This is
a mandatory requirement and is therefore not further assessed.
2.5.3.
Form and stringency of legislation beyond 2020
As indicated in section 5 of the car study,
vehicle manufacturers have approximately 7 year timetables for complete changes
to vehicle platforms and 10 to 15 year cycles for completely new engines. Much
shorter timeframes apply for adaptations to these. The two-step approach that
has been taken to date in the Regulations has been to fix a short term
mandatory target approximately 6 years in the future[45] and provide a longer term
target with a requirement to confirm the associated modalities at a later date.
This is compatible with manufacturers' needs. It is relatively easy to calculate the
required level of CO2 emissions from different types of vehicles to
be compatible with a certain level of overall emissions. However, the assessment
of the costs of the technology needed to achieve those emission levels become
increasingly uncertain the further ahead the projection is made. In view of
this it becomes increasingly difficult to know whether the likely required
level of emission reductions is best achieved through technology or through
alternative policy instruments. This supports setting longer term targets
subject to confirmation of feasibility. To enable the most cost-effective planning
of R&D and investments, it is desirable for manufacturers to have a
sufficiently long lead time with regard to the future stringency of CO2
legislation so that they can adequately allocate resources and effort. This
will be particularly important as manufacturers need to introduce different
types of powertrain further into the future. In respect of the latter, it is
also desirable to consider whether in the future the method of regulation would
need adjustment to best ensure a technology neutral approach. Without a continuation of the 2020 targets
and without a communication discussing the Regulations beyond 2020, the
automotive industry will not be provided with the necessary information for
cost effective planning and investment.
2.6.
Who is affected and how?
Major stakeholder groups affected include
the general population, vehicle purchasers, vehicle manufactures, automotive
component suppliers and fuel suppliers. The main impacts are: ·
The EU population is increasingly affected by
climate change through increased climate variability, more frequent extreme weather
events, and their related impacts. ·
Buyers of vehicles, both individuals and
businesses, are affected by possible increases in the price of vehicles and
reduced running costs, due to stricter CO2 emission requirements and
the related fuel consumption improvement. Fuel saving benefits are expected to
outweigh the cost of compliance with the standards. ·
Vehicle manufacturers will be affected by the
obligation to reduce CO2 emissions, and will have to introduce
technical CO2 reduction measures. In the short-term, this is likely
to result in increased production costs and could affect the structure of their
product portfolios. However, demand for low CO2 vehicles is expected
to increase throughout the world as climate change policies develop and other
countries introduce similar standards, manufacturers have an opportunity to
gain first mover advantage and the potential to sell advanced low CO2
vehicles in other markets. ·
Component suppliers are expected to benefit from
higher demand for advanced technologies. Along with vehicle manufacturers they
will benefit from the possibility to export these advanced technologies to
other markets. ·
Fuel suppliers will be affected as they are
likely to see lower demand for transport fuels in the future as a result of the
legislation. ·
Other users of fuel and oil-related products
(e.g. chemical industry, heating) are expected to benefit from lower prices if
demand from the transport sector decreases. ·
Sectors other than transport that emit GHGs will
avoid demands to further reduce emissions to compensate for increased transport
emissions. In so far as these sectors are exposed to competition, this will be
important for their competitiveness.
2.7.
The EU's right to act and justification
The EU has already acted in this area when
it adopted Regulations 443/2009 and 510/2011 based upon the environment chapter
of the Treaty (cars on Article 175 of TEC[46]
and vans on Article 192(1) of TFEU[47]). The single market
also provides grounds to act at EU level rather than at Member State level so as
to ensure common requirements across the EU and thus minimise costs for
manufacturers. This is made clear in the recitals of the current Regulations
whose objectives include: "…establishing CO2 emissions
performance requirements..… in order to ensure the proper functioning of the
internal market and to achieve the Union's overall objective of reducing
emissions of greenhouse gases …" EU action is necessary in order to avoid
the emergence of barriers to the single market in the automotive sector and
because of the transnational nature of climate change. Without EU level action there
would be a risk of a range of national schemes to reduce light duty vehicle CO2
emissions. This would particularly disadvantage vehicle manufacturers and
component suppliers as differing ambition levels and design parameters would
require a range of technology options and vehicle configurations, diminishing
the economies of scale. Manufacturers hold differing shares of the vehicle
market in different Member States and would therefore be differentially
impacted by various national legislations. Costs of compliance would increase
and consumers would not benefit from lower costs and economies of scale that an
EU wide policy delivers.
3.
Objectives
GENERAL The general objective which flows from the
Treaty and various EU policies outlined in the policy context in section 2.1 is to: Provide for a high level of
environmental protection in the European Union and contribute to reaching the
EU's climate change targets while reducing oil consumption, thus improving the
security of energy supply in the EU, stimulating innovation and boosting
competitiveness of the EU industry. SPECIFIC In line with the general objective but
focussing on the scope of this review, the specific objective is to: Ensure the continued
and effective application of the car and van CO2 regulations
particularly in respect of the 2020 targets. OPERATIONAL In designing
the operational objectives the criteria for a review outlined in Article 13(5)
of the car Regulation and Article 13(1) of the van Regulation that the
Commission's proposal should be "as neutral as possible from the point of
view of competition, socially equitable and sustainable" were taken into
account. Furthermore, the operational objectives are also designed to be
specific, measurable, achievable, realistic and time-dependent (SMART) to the
possible extent. As a result, the operational objectives are as follows: ·
Ensure that the 2020 van CO2
target is feasible. ·
Ensure that the CO2 emission
targets for 2020 of 95 gCO2/km for cars and 147 gCO2/km
for vans are achieved cost-effectively. ·
Ensure the modalities of achieving the 2020
targets do not have unacceptable social impacts[48]. ·
Ensure the modalities of achieving the 2020
targets do not have undesired competitiveness impacts for the EU automotive
sector[49]. ·
Create sufficient certainty for the
automotive sector with regard to future light duty vehicle CO2
requirements. ·
Minimise where possible the administrative
burden and costs for SMEs of the Regulations. The problem described in section 2 and the
objectives outlined in this section fit together to provide an intervention
logic. This is shown in the graphic below, illustrating how the various
modalities employed in the existing legislation impact on the main objectives
sought.
4.
Policy Options
4.1.
Methodology
This impact assessment supports the amendment
of two Regulations. These Regulations have a structure that has been decided on
the basis of the Commission's original proposal and the co-decision process. In
view of this, the aspects considered for amendment focus on potential
modalities that can be altered within the agreed policy framework. A broad approach has been taken to
identifying policy options. This covers issues raised in the legislation, those
arising with implementation and those assessed in the studies analysing
possible approaches to improve the legislation's effectiveness. For each aspect
an assessment is made of the options available. A preliminary assessment is
then made of these options, primarily based upon the analysis carried out in
the external studies and on the input from stakeholders. Based on this
assessment it is determined which options should be taken forward for detailed
analysis.
4.2.
Do nothing option
This option implies that the 95 and 147 gCO2/km
targets for 2020 for cars and vans respectively would not be implemented. Further
to the extensive assessment of the 'do nothing' option in section 2.5 it is
clear that this option would be counter to the general, specific and
operational objectives (see section 3). The positive economic, social and
environmental effects of reduced CO2 emissions, savings on fuel
spending and resulting macroeconomic impacts, net benefits to consumers and
business of increased fuel efficiency of vehicles, as well as positive impacts
on international competitiveness of the EU industry would not materialise. The conclusion to take action, and
therefore dismiss this option, is reinforced by the results of the public
consultation (see Annex 7.2) whereby 95% of individuals agreed that it was
important to set greenhouse gas emission standards as part of overall EU
action, and a majority of respondents agreed that these standards should be in
line with the GHG targets set out in the Commission's 'Roadmap for moving to a
low carbon economy in 2050' and the Transport White Paper . Finally, in case of a 'do nothing' option
the comitology provisions in the car Regulation cannot be brought into line
with the Lisbon Treaty. In view of the arguments outlined above
this option is discarded from further analysis.
4.3.
Confirmation of feasibility of the 2020 target
for LCVs
The option considered in this section is whether or not the feasibility of the vans 2020 target can be confirmed. Article 13(1) of the van Regulation requires confirmation of the
feasibility of the 2020 van target on the basis of an updated impact
assessment. This is assessed from the point of view of the baseline emissions
and absolute reduction required to meet the target, the costs of achieving it
and the leadtime available to manufacturers to prepare for compliance. These
three aspects are discussed below. (a)
Distance to target The 2010 emissions data indicates that the
gap to the 2020 target reduced significantly as compared to the situation in
2007 without a major technological change. Average CO2
emissions in 2010 are reduced relative to 2007 for all van segments although
the level of reduction differed between classes (see Table 5). Table 5 Comparison of 2007 and 2010 data for all van classes || Petrol || Diesel || Average I || II || III || I || II || III 2010 mass || 1117 || 1455 || 1846 || 1173 || 1497 || 1966 || 1641 2010 CO2 emissions (gCO2/km) || 138 || 168 || 240 || 121 || 161 || 223 || 181.4 2010 sales || 28,837 || 9,771 || 1,972 || 189,195 || 352,993 || 477,577 || 1,062,090 Share of sales || 1.72% || 0.91% || 0.19% || 17.81% || 33.24% || 44.97% || 100% 2007 mass || 1110 || 1455 || 1958 || 1191 || 1556 || 1975 || 1731 2007 CO2 emissions (gCO2/km) || 165 || 198 || 271 || 144 || 179 || 231 || 203 2007 sales || 20,992 || 6,590 || 3,761 || 287,710 || 429,805 || 998,287 || 1,747,145 Share of sales || 1.20% || 0.38% || 0.22% || 16.47% || 24.60% || 57.14% || 100% Difference in emissions 2010 vs. 2007 (in gCO2/km) || -27 || -30 || -31 || -23 || -18 || -8 || -21 (b)
The costs of achieving the target The updated cost curves in the van study
show greater reduction potential and lower costs compared to the previous
analysis based on 2007 data (see Table 6). Table 6 The
reduction needed and cost of achieving 147 gCO2/km target for diesel
vans Diesel || Class I || Class II || Class III || Average Maximum reduction possible (in gCO2/km) || 50.6 || 73.4 || 107.1 || 84.4 Reduction required to meet 147 gCO2/km (in gCO2/km) || 14.6 || 18.0 || 29.6 || 22.7 Reduction in emissions for 2020 as % of the 2010 baseline vehicle emissions || 12.06% || 11.30% || 13.33% || 12.54% Cost of meeting the 2020 targets from the 2017 target (in €) || 330.1 || 382.8 || 565.2 || 456.1 (c)
Time needed to comply with the target The timeframe over
which this reduction needs to occur (10 years from the date of adoption of
Regulation (EU) 510/2011) is consistent with the time needed for the
development of a new van which is considered to be around 7 years[50]. Conclusion In view of these considerations it is
concluded that the vans target of 147 gCO2/km is feasible. The
remaining sections of this Impact Assessment will therefore focus on the
assessment of modalities of implementing this level of the 2020 target for
vans.
4.4.
Policy options for the modalities of meeting the
car and van targets
This section
undertakes a preliminary assessment of the following policy options for each
modality currently included in the Regulations as well as options for inclusion
of the alternative modalities: The limit value curve (section 4.4.1) || Other modalities in the Regulations (section 4.4.2) || Alternative modalities considered- not in the current Regulations (section 4.4.3) Utility parameter || Excess emissions premia || Banking and borrowing Shape of limit value curve || Eco-innovations || Mileage weighting Slope of limit value curve || Derogations || Combining van and car targets || Phase-in || Vehicle based limits || Super credits ||
4.4.1.
Policy options for the limit value curve
The utility parameter and the function
describing the relationship between the utility parameter and CO2
emissions (setting the shape and slope) are the most important modalities as
concluded in section 2.1 and define the limit value curve . This section analyses
alternative policy options for each composite of the limit value curve. Utility
parameter The options considered for this modality are: (1) Retention of the current utility parameter (2) Change of the utility parameter Both Regulations currently
use mass as the utility parameter. This parameter was extensively debated prior
to adoption of the legislation, in particular for cars, and the Regulations
request other parameters to be assessed. A large range of possible parameters
have been considered. Cars Nine different possible utility parameters were
assessed[51]
which were: footprint, wheelbase, footprint times height, mass (used currently),
payload, composite of seats expressed in volume and volume of boot space, a
composite of number of seats and boot space, price, a composite of payload with
seat and boot volume, a composite of footprint and mass in running order, a
composite of payload with seat and boot volume, footprint and mass in running
order. The preliminary assessment[52]
of the various options discards all options other than mass and footprint. Various assessments in the car study are
performed using both mass and footprint as the utility parameter to enable a
thorough comparison. It can be seen[53]
that there is relatively little cost difference between the two parameters based
upon size of vehicle, or fuel, with larger vehicles having slightly higher cost
for footprint. Only mass (option 1) and footprint (option
2) are retained for further analysis. Vans Three utility parameters are assessed[54]: mass (used currently),
payload and footprint. A preliminarily assessment of their fit with fleet CO2
emissions, their suitability for further analysis and other practical
aspects, concludes that all are suitable proxies of vehicle utility. However, the analysis subsequently discards
payload despite its good correlation with fleet CO2 emissions
(although less representative for vehicles above 1900 kg) and its close link to
the utility of a commercial vehicle. The main reason underlying this decision
is that payload is a parameter derived from the maximum technically permissible
vehicle laden mass, i.e. the maximum the loaded vehicle can weigh. This is
declared by the manufacturer rather than measured and could therefore be
manipulated. In addition, the CO2 impact of vehicle modifications to
increase payload could be relatively small creating a potential perverse
incentive. In view of the arguments above, only mass
(option 1) and footprint (option 2) are retained for further analysis. Shape of the
limit value curve The options considered for this modality are: (1) Retention of the linear limit value curve (2) Shift to an alternative limit value curve (flat, non-linear, curved) The shape of the
limit value curve affects the distribution of effort between different vehicles
depending on their position on the curve. The existing Regulations are based on
a linear function (option 1). The linear function can be truncated at either
top or bottom or both (as in the US) to ensure that manufacturers of smaller vehicles
need to make less reductions or to ensure that manufacturers of larger vehicles
have to make more effort. A curved function achieves a similar objective but
avoids the gaming problems associated with a sudden change in slope of the
function. Cars A range of relevant, conceivable limit value
curve shapes are assessed[55].
Four useful functions are identified: flat, linear, truncated linear and curved,
and compared[56].
It is shown that the linear function (option 1) has the lowest compliance cost
per vehicle and that total compliance costs are lower. The curved shape (variant
of option 2) approaches the costs associated with the linear function as the CO2
target is reduced. Since the analysis shows that most options are more
expensive and that there is no clear benefit from a change, option 2 is
discarded and option 1 is retained. Vans Drawing on the car analysis, only linear
(option 1) and non-linear (variant of option 2) limit value curve shapes are
assessed for vans [57]. For mass, a linear function (option 1) fits
the scatter of CO2 values of the van fleet well and seems
appropriate. Since the current van limit value curve is linear this option
would avoid change. For footprint two different trend lines are observed in the
scatter of CO2 emissions suggesting a non-linear correlation[58]. This is the effect of CO2
emissions levelling off above about 7m2 which is largely due
to the testing procedure[59].
As a result a linear footprint function is judged inappropriate and a
non-linear footprint function (option 2) is assessed (see Annex 7.15 for
explanation of non-linear function). During consultations stakeholders did not
express a clear preference for any alternative shape of the limit value curve
for cars or vans. The automotive manufacturers favoured the current scheme. Option 1 for mass and option 2 for
footprint are retained for further analysis. Slope of limit
value curve The options considered for this modality are: (1) Retention of the current slopes of the limit value curves: 60% for cars, 100% for vans (2) Shift to different slopes from the range 60% to140% The slope of the limit
value curve (see Annex 7.11 for more detailed explanation) affects the
distribution of effort between vehicles depending on their position on the
curve. Because of this differential effect, changing the slope alters the
amount of effort required from different manufacturers and impacts on the
overall cost of meeting the target. The slope also affects the possibility for
perverse incentives – steeper slopes increase the risk. The studies[60] provide detailed assessments
of the implications of changing the slope of the curve with mass or footprint
as the parameter. The analysis in the car study was performed in comparison to
the average slope of the 2009 fleet, which is taken as 100%. The range from 60
to 140% slope was analysed. In absolute terms, slopes in the range from 0.0296
to 0.0691 for mass and 17.6 to 41.1 for footprint have been considered. It is
important to recognise that the choice of slope is ultimately a decision on an
appropriate sharing of burden amongst manufacturers whilst still delivering the
overall target for the EU fleet of new cars. This choice of slope can as
equally be derived from and related to data from the 2006 fleet, 2009 fleet or
an average of the two. [61]
The van study analysis was performed in
comparison to the average slope of the 2010 fleet, which is taken as 100%. The
range from 60 to 140% for mass[62]
and footprint[63]
and linear and non-linear function respectively was analysed. During consultations stakeholders did not express
a clear preference for any alternative slope of the limit value curve for cars
or vans. The automotive manufacturers favoured the current scheme. Cars The percentage new car price increase as a
result of the target is higher for small than large cars. A slope below 100%
would be more socially equitable since this slightly reduces the small car
percentage price increase and the converse for larger cars. However, even at
60% slope this makes only a few percentage points difference compared to a 100%
share. When the Regulation was adopted a slope
below a certain level was needed to avoid incentivising mass increases. The
100% line for 2009, depicting the actual distribution of fleet in that year,
already has a lower slope than that required in the current Regulation meaning
that any slope below this 2009 baseline will avoid this incentive. Slope has a distributional impact between
manufacturers, depending on their sales mix. For slopes below 100%, costs
increase for 10 manufacturers and decrease for 10. Manufacturers are conversely
affected for slopes above 100%. In view of these considerations both
options are retained for further analysis. However, option 2 will consider only
slopes in the 60 to100% range. Vans The percentage price increase for meeting
the 2020 target is shown to be higher for larger vans in the study. However,
this does not mean it is more expensive to reduce emissions from larger
vehicles. The effect is due to the cost model optimising the reduction level
across manufacturers' fleets. The results suggest larger vans have more
reduction potential and therefore OEMs will seek a larger contribution from
these to meet their overall targets. Mass-based
function To avoid perverse incentives, it is
desirable for the slope to be no steeper than in the current Regulation. The
100% slope derived from 2010 sales is only slightly steeper than that currently
in use. The relative price increase (and additional manufacturer cost) is
distributed most evenly over manufacturers around 100% slope. The average costs
for meeting the 147 gCO2/km target are lowest at 80% slope but the
cost difference is negligible. In view of these factors the van study recommends
a slope in the range 80-100%. Footprint-based
function Although differences are very small, the lowest
overall average additional manufacturer costs for footprint occur at the 110%
slope (see Table 10). The distribution of additional cost per
manufacturer is most even around the 100% slope. Since changes to vehicle footprint are much
easier to implement in vans than cars, perverse incentives to adjust footprint
are more important for vans. This is especially important for vans with low
footprint, as the non-linear limit function is relatively steep at this part of
the footprint range. Extension of footprint may lead to more loading area and
extra space, which when used effectively may be beneficial. However, if done to
increase the CO2 target it could lead to increasing average
footprint and non-compliance with the overall target. In order to avoid this
perverse incentive a lower slope seems more desirable for vans. However, a
lower slope increases the difference in cost distribution between manufacturer
groups that sell typical vans representing the majority of the market, in
contrast to those selling pick-ups or all-terrain vehicles. Both options are retained for further
analysis. However, option 2 will consider only slopes in the 80 to 100% range.
4.4.2.
Policy options for other modalities in the
Regulations
Excess
emissions premia The options considered for this modality are: (1) No change to the current level of the excess emissions premium (2) Adjustments to the current level of the excess emissions premium The excess
emissions premia (EEP) are to ensure that manufacturers comply with their CO2
reduction obligation. The level at which the premia are set needs to be high
enough to ensure that manufacturers undertake the necessary technical
innovations to ensure compliance rather than just pay EEP. They were originally
set at the level of the upper range of marginal cost of compliance with 130 gCO2/km
for mainstream car manufacturers. In reality it is likely that the marginal
cost to manufacturers to comply with that target will be substantially lower. Cars For cars, the EEP was set to €95 per gCO2/km,
but to allow manufacturers time to adjust to the new regulatory scheme, the
first 3 gCO2/km above the target would receive a lower EEP
(increasing from €5 to €25 per gCO2/km) in the period 2012-2018. The analysis shows maximum marginal costs
for different manufacturers[64],
based upon cost scenario 1[65]
(see Figure 7), with the average marginal cost of reaching 95 gCO2/km
being €91 per gCO2/km, which is around the level of the current EEP
(option 1). Marginal costs will be lower assuming that the middle cost curves
(for more explanation see Annex 7.13) are likely to be more realistic. For most manufacturers, marginal costs are
similar to or below the €95 per gCO2/km level currently in place.
For Spyker and Chrysler, costs are only substantially above the level if
footprint is used as the utility parameter. Tata, Subaru, Suzuki, Porsche,
Hyundai, Mazda and Mitsubishi have marginal costs quite substantially above the
current premium level but most of these are currently covered by niche
derogations. Figure 7 Marginal
costs per manufacturer for reaching the average of 95 gCO2/km (based
on cost scenario 1) Option 2 would be to update the EEP to
reflect likely upper marginal costs of compliance with the 2020 targets.
According to the cars study, if this logic was followed, the EEP might need to
be increased to €130-150 for mass as a parameter and possibly higher for
footprint. This would increase the probability of meeting the target. Porsche
would still have costs above these levels. EEP needs to be paid by a manufacturer
(group) per gCO2/km of emissions exceeding the target times the
number of cars registered. A premium that is too low runs the risk of being an
attractive alternative for not reducing emissions, which undermines the
environmental objective. A premium that is set too high may also be
inappropriate as the objective of the EEP – apart from providing an incentive
for manufacturers to comply - is to provide a ‘safety valve’. Another
consideration is the fact that manufacturers cannot fully control the exact
composition of their sales. In case of large unexpected shifts in consumer
demand, the penalty is a buy-out option for complying with the Regulation. In view of the above, and based on the
likelihood that for some manufacturers, average marginal costs of compliance
will be below €95 per gCO2/km it is not considered necessary to
change the level of the EEP, especially for a mass-based limit value curve.
Therefore, option 2 is discarded from further analysis. Vans For vans the EEP in the Commission's
proposal[66]
was set at the level of the upper range of the marginal cost of compliance
which was around €120 per gCO2/km for the target of 175 gCO2/km.
However, in co-decision the level of EEP was lowered to equal that of cars (€95
per gCO2/km) with a similar introductory regime for the first 3 gCO2/km
above the target in the period 2014-2018. The maximum marginal cost for different
manufacturers[67]
has been analysed based upon a new methodology and a more adequate database. It
can be seen (Figure 8 and Figure 9) that the marginal costs of
meeting the 2020 van target for both mass and footprint-based functions is
slightly below €40 per gCO2/km if Tata[68] is excluded, quite
substantially lower than had originally been estimated. Figure 8 Marginal costs per manufacturer for reaching the average 147 gCO2/km (mass as utility parameter) Figure 9 Marginal
costs per manufacturer for reaching the average 147 gCO2/km
(footprint as utility parameter) For certain van and car classes a
regulatory overlap exists where some large cars can potentially be type-approved
as light commercial vehicles and benefit from a more lenient target which is
expected to be cheaper to meet. If the van EEP is lowered (option 2) this
incentive would be further strengthened. In view of this, option 2 is
discarded. Retaining the current EEP level (option 1) provides a strong
compliance incentive and ensures continued alignment with the EEP for cars. Derogation
scheme The options considered for this modality are: (1) Stopping the derogation scheme (2) Continuation of the scheme (3) Update of the niche derogation scheme Option 1 is not
seen as a practical solution. As concluded in the previous car impact
assessment, manufacturers selling a relatively small number of vehicles with a
limited and specialised portfolio may find it very challenging and costly to
meet the overall targets set via the limit value curve. In addition, the
manufacturers covered by the derogation tend to sell vehicles which are driven
shorter distances than cars sold on the mass market. The overall contribution
in terms of CO2 emissions of cars sold by small-volume manufacturers
is estimated to be below 0.01%. Therefore option 2 is preferred over option 1. The niche category has a fixed target of
25% reduction from the 2007 average emissions of each niche manufacturer.
Option 3 considers certain updates to the scheme. The baseline in Article
11(4)b of the car Regulation could be updated to ensure a comparable level of
effort for niche manufacturers compared to the main fleet. This would imply approximately
27% reduction compared to 2015 or a 45% reduction compared to 2007 for the same
level of reduction as larger manufacturers. Analysis shows that manufacturers in
this segment are technically able to continue making CO2 reductions
beyond 2015. It should be reconsidered whether
manufacturers of up to 300,000 cars per year should have a differential
treatment in terms of CO2 reduction obligation beyond 2015. This can
create unfair competitive distortions in markets where they compete. For
example Honda and Suzuki which are both major global manufacturers currently
sell around 175,000 cars per year in the EU and therefore fall under this
derogation. In addition, there is a possibility that new entrant manufacturers
from outside the EU[69]
might gain a competitive advantage through use of this derogation. Option 3 could
therefore be considered further. There
are several aspects of the derogations procedure that have been identified as
meriting further evaluation in view of simplification, these are discussed
further in section 4.4.4. Eco-innovations The options considered for this modality are: (1) Phase-out of eco-innovations (2) Prolongation of eco-innovations The purpose of including
eco-innovations in the legislation was to ensure that manufacturers could also
receive credit for innovations that reduce CO2 emissions during
vehicle operation even when these are not measured in the normal vehicle test
procedure. Article 13(3) of the car Regulation and Article 13(6) of the van
Regulation require that once a new vehicle test procedure has been introduced
eco-innovations should no longer be approved (option 1). Ideally the new test procedure will require
operation closer to that experienced in real world conditions including
accessories, thus ensuring that reported emissions are more realistic and
avoiding the need for eco-innovations. A new test procedure is under
development, however its introduction cannot be expected to completely
eliminate the possibility that innovations not measured in the test procedure can
be implemented. In fact, unless the new test procedure requires a more
realistic approach to the operation of various vehicle accessories and
equipment, much of the energy using elements will not play any role in
determining vehicle CO2 emissions. In view of this, improvement to
these elements would not bring any credit to the manufacturer. An option to consider is to prolong the
possibility for manufacturers to propose eco-innovations under the scheme
currently in place (option 2). Implementation of this would be straightforward
and the nature of the scheme means that manufacturers would still only be able
to claim credit for elements that would not otherwise be counted in the test
procedure. Since manufacturers will not develop such
innovations and propose them as eco-innovations if it is not cheaper to do this
than to introduce other improvements which are measured in the test procedure
it follows that eco-innovation measures should bring CO2 benefits at
lower cost than alternatives available to the manufacturer. It can be concluded
therefore that eco-innovations will not be proposed by car and van manufacturers
unless they are an efficient route to reduce CO2 emissions. The
design of the measure ensures that eco-innovations are novel and therefore it
can be concluded that this modality promotes innovation. It can therefore be
concluded that the concept of eco-innovations is both efficient in that
approved innovations will reduce CO2 emissions and effective in that
their cost should be lower than alternative options. This view is also
supported by the automotive industry, including the producers of automotive
components. Therefore, option 2 could be more appropriate than option 1. Phase-in The options considered for this modality are: (1) No phase-in of the 2020 target (2) Inclusion of phase-in of the 2020 target over the period 2017 - 2020 or 2020 - 2023 The short-term
cars and vans targets are currently phased-in over a period of 4 years. It was
argued that this was necessary to give manufacturers time to adapt their product
portfolio. For vans, an additional argument was the economic crisis which hit
the sector in 2009 and 2010. Option 2 would involve a phasing-in of the
2020 target. This might be carried out over a period of 3 years, comparable to
the previous targets. Two variants are considered: a) the phase-in occurs over
the period 2017-2020; b) the phase-in occurs over the period 2020-23. Based on
the preliminary assessment shown in Annex 7.14 option 2 is discarded for both
cars and vans. Super-credits The options considered for this modality are: (1) No prolongation of super-credits (2) Prolongation of super-credits (3) Modification of super-credits The Regulations
are based upon CO2 emissions from the vehicle and ignore those from
other parts of the energy supply chain. Therefore certain types of vehicles,
essentially using substantial proportion of hydrogen or electricity for their
propulsion during the test procedure will be measured as having very low
emissions[70].
The Regulations incorporate provisions that count vehicles with emissions below
50 gCO2/km a multiple number of times for the period up to 2016 for
cars and 2018 for vans. It was argued that this multiplier would provide a
strong incentive for vehicles meeting this criterion to be marketed. Option 2 and
3 would introduce multipliers for low emission vehicles up to 2020 for cars and
vans. Based on the preliminary assessment shown
in Annex 7.14 options 2 and 3 are discarded for both cars and vans because they
increase CO2 emissions, reduce the stringency of the target below that
politically agreed, reduce the cost-effectiveness of the Regulations and do not
respect the principle of technological neutrality. It
is however also clear that the magnitude of these negative impacts can be
somewhat limited by the use of low multipliers and a threshold on the number of
vehicles which could benefit from super-credits.
4.4.3.
Alternative modalities considered
Options for additional modalities considered in this section: (1) Banking and borrowing (2) Combining car and van targets (3) Mileage weighting (4) Vehicle based limits In addition to
the existing modalities, a further range of modalities has been assessed to
consider whether they merit incorporation in the Regulations for 2020. Based upon the preliminary assessment shown
in Annex 7.14 it is concluded that these options should be discarded for both
cars and vans.
4.4.4.
Simplification and
reduction of administrative burden
Options for simplification of the current Regulations considered in this section include: (1) Reduction of the number of modalities (2) Simplification of the implementing measures (3) Simplification of rules for SMEs and micro-SMEs (4) Simplification of the derogation procedure to reduce the administrative burden Simplification is
assessed from a number of angles. Option 1 is based on the conclusion that the
number of modalities should be kept as small as practicable to minimise the
complexity of the legislation. This suggests a presumption against proposing
modalities for inclusion in the Regulation. This logic is consistent with the
analysis which led to the majority of the options considered for modalities,
including the alternative approaches, being discarded. Many aspects of the implementation of the
Regulations have been achieved through secondary legislation and these are not
affected by the modalities implemented for 2020. These contain their own review
provisions and possible simplifications (option 2) can be considered when those
take place. Accordingly simplification possibilities for these are not
considered in this Impact Assessment. The potential for simplifying rules for
SMEs and micro-SMEs should be considered (option 3). There are many of these
companies in the component supply sector that will benefit indirectly through
the opportunity to develop new technology and components. However, since they
are only indirectly impacted, there is no potential for simplification in
relation to them. The only SMEs that could be impacted directly would be SMEs
producing a very limited number of vehicles. These by their size would fall
under the scope of the small volume derogations in both Regulations. It could
be considered to establish a de minimis threshold for the registration of cars
and vans below which manufacturers are exempt from the requirements of the
Regulation. An alternative to a de minimis registration threshold could be to
exempt manufacturers that are SMEs. It may be preferable to reduce the
administrative burden the small volume application and assessment process is likely
to cause for the Commission and manufacturers for the period from 2015 onwards
(option 4). The possible improvements include clarification that derogations
may be renewed or extended for another period; and clarification of the applicability
of the derogation (i.e. in relation to which annual targets it applies). Lack
of flexibility in the current provisions (e.g. the derogation in order to be
applicable for a given calendar year must be granted in the preceding calendar
year) may lead to small-volume manufacturers having to pay excess emissions
premiums in case their applications cannot be assessed on time due to
resubmissions or the need to complete the submitted application, even if they
comply with the proposed targets. Options 3 and 4 are taken forward for
further consideration.
4.4.5.
Conclusions of the preliminary assessment
Results of the preliminary assessment of the options: Section || Modalities || Policy options for each modality Cars || Vans 4.4.1 || Utility parameter || Mass and footprint options retained for analysis in section 5; Other options discarded; || Mass and footprint options retained for analysis in section 5; Payload discarded; Shape of limit value curve || Linear function option retained for analysis in section 5; Other options discarded; || Linear function option for mass retained for analysis in section 5; Non-linear function option for footprint retained for analysis in section 5; Slope of limit value curve || Slope options in the range 60%-100% retained for analysis in section 5; || Slope options in the range 80%-100% retained for analysis in section 5; 4.4.2 || Excess emissions premia || Alternative options discarded; || Alternative options discarded; Eco-innovations || Modality retained in its current format; || Modality retained in its current format; Derogation schemes || Small-volume derogation retained; Option to continue CO2 reduction for niche manufacturers retained for analysis in section 5; || Small-volume derogation retained; Phase-in || Modality discarded; || Modality discarded; Super credits || Modality discarded; || Modality discarded; 4.4.3 || Banking and borrowing || Modality discarded; || Modality discarded; Mileage weighting || Modality discarded; || Modality discarded; Combining van and car targets || Modality discarded; || Modality discarded; Vehicle based limits || Modality discarded; || Modality discarded; 4.4.4 || Simplification/ reduction of administrative burden || Simplification of rules for SMEs and micro-SMEs to reduce the administrative burden retained for analysis in section 5. || Simplification of rules for SMEs and micro-SMEs to reduce the administrative burden retained for analysis in section 5.
4.5.
Adaptation to new test cycle
New vehicle CO2 emissions for
the purposes of the Regulations are assessed as part of the type approval
procedure using the New European Driving Cycle (NEDC)[71]. Article 13(3) of the car
Regulation and Article 13(5) of the van Regulation request the test cycle to be
updated to reflect the real CO2 emissions behaviour of vehicles and
to include eco-innovations within the test procedure. Work is proceeding on the
World Light Duty Test Procedure (WLTP), but it is uncertain when this will be
finalised and implemented. It is clear that the 95 gCO2/km
and 147 gCO2/km targets established in the Regulations were intended
by the co-legislators to be applied with an equivalent stringency to the 130 gCO2/km
and 175 gCO2/km targets, i.e. measured under the NEDC. This means
that in theory manufacturers could continue testing their vehicles under NEDC
conditions till 2020 for the purpose of compliance with the Regulations.
However, this would be burdensome and costly once the WLTP has been adopted and
would not respond to the desire for emissions to better relate to real world
conditions. Information on the divergence between test
and real-world emissions and underlying reasons is provided in Annex 7.7. It is
not clear to what extent the WLTP will ensure that test emissions represent
real world conditions. It is also clear that exploitation of flexibility in the
test procedures has provided some proportion of the measured CO2 reductions.
It is important for the integrity of the legislation that any adaptation to a
new testing procedure should not result in an increased amount of flexibility. These
factors cause uncertainty for manufacturers. The Regulations already empower the
Commission to adapt the formulas in Annexes I to a new test procedure. However,
since the revised test procedure is unlikely to be adopted prior to the coming
into force of the amended Regulations this cannot be done at present. To minimise uncertainty, it could be
possible to describe in outline the principles and procedure that will be used
for adaptation of the legislation in the legislation. This could potentially
increase manufacturer certainty and thereby lower compliance costs.
4.6.
Form and stringency of legislation beyond 2020
In view of the two-step nature of the
Regulations, greater certainty for manufacturers will be created by setting
indicative targets or target ranges for the period beyond 2020 as soon as
possible. In consultations, setting these future targets in line with the EU's
climate policy goals received a large degree of support. A number of
stakeholders such as parts manufacturers and environmental NGOs have called for
tighter targets to be set for 2025. Transport and Environment has stated that
it believes a car target of 60 gCO2/km should be set for 2025 and a
van target of around or below 100 gCO2/km for 2025 would be needed
to ensure roughly equivalent technical effort in the car and van sectors. Earlier,
the European Parliament in its Resolution of 24 October 2007 on the strategy to reduce CO2 emissions from
passenger cars and light-commercial vehicles[72]
had indicated the need for
further emissions reductions for cars to 70 gCO2/km or less by 2025. The Commission recently
indicated in a staff working paper[73],
that it would in the period to 2014 "consider, based on a thorough
impact assessment, proposing a target for passenger car emissions to be reached
by 2025". It noted that this would include assessing the European
Parliament's proposed goal. In a consultancy study that has been carried out
for the Commission, indications of the range of vehicle CO2 emission
targets for the period beyond 2020 were established that would be compatible
with the Transport White Paper[74].
Further work is needed and in particular the Commission is currently studying
the impacts of alternative regulatory metrics, particularly on the cost of
meeting future targets. In view of the various aspects that need to
be assessed it is considered that the optimal solution would be to publish a
consultative Communication setting out the Commission's analysis of the
implications of alternative regulatory approaches. The Communication would also
provide an illustration of the likely range of stringency that would be
required for future CO2 limits compatible with the longer term
climate objectives of the EU. Future changes to the regulatory approach and
making the level of emission reductions mandatory would be carried out at a
later stage through a legislative proposal. The approach combines the merits of
allowing for the necessary further analysis and consultation, while providing a
reasonable degree of certainty for manufacturers, albeit not as great as if the
mandatory level and regulatory approach were already defined.
5.
Assessment of policy options
5.1.
Criteria to compare the options
5.1.1.
Main criteria
The retained
policy options for the modalities of meeting the targets and options linked to
simplification and reduction of administrative burden are analysed further in
this section. It should be noted that the Regulations request that the
Commission's proposal should be "as neutral as possible from the point of
view of competition, socially equitable and sustainable." These criteria
are contained in the operational objectives and employed in the three aspects
of the assessment. Neutrality
from the point of view of competition is assessed within the economic
assessment by comparing manufacturer costs per vehicle. Social equity primarily
relates to the relative impacts on different classes of vehicle users and
whether these are differentially impacted. Sustainability flows from a
combination of the three elements whereby environmental benefits are ensured in
a cost effective and socially beneficial manner. The table below shows how the operational objectives link to the
following economic, environmental and social assessments. Operational objective || Economic || Environmental || Social Ensure the environmental benefits of the 2020 light duty vehicle CO2 targets are achieved cost-effectively. || X || X || Ensure the modalities of achieving the 2020 targets do not have unacceptable social impacts. || || || X Ensure the modalities of achieving the 2020 targets do not have undesired competitiveness impacts for the EU automotive sector. || X || || Create sufficient certainty for the automotive sector with regard to future light duty vehicle CO2 requirements. || X || || Minimise where possible the administrative burden and costs for SMEs of the Regulations. || X || X || X It is clear from this table that the majority of the objectives have
most relevance for assessment under the economic criterion. As already
illustrated in section 2.5, the largest part of the expected impacts arise from
implementation of the 2020 targets. The modalities that are considered in this
impact assessment only alter the manner in which those 2020 targets will be
implemented. As a result their effect in the areas other than economic is small
or minimal. For example, while there might be social impacts in relation to skills
and employment that would arise from implementing the 2020 targets, no
discernible change in these is anticipated as a result of altering any of the
modalities. To the degree that social equity and competitiveness impacts will
arise from the modalities, these arise principally as a second order effect
resulting from the economic impact of the options. For example, social equity
may be affected by changes in vehicle prices that impact more or less heavily
on different social groups. Similarly changes in the competitive position of
manufacturers arise as a second order effect of the cost impact on different
classes of vehicle. In view of this, while social and environmental aspects are
explored for the different modalities, these impacts are small or insignificant
and therefore these sections are short.
5.1.2.
Detailed aspects of assessment
The
options can have economic, environmental and social impacts through a variety
of mechanisms. The main aspects that have been assessed are outlined below: Expected economic impacts Aggregate
manufacturer compliance costs are primarily driven by the level of ambition.
Thus the implementation of the targets will have the following economic
effects: –
Additional investments in R&D and production
by vehicle manufacturers and component suppliers. –
Possible additional purchase costs to vehicle
purchasers which bring them economic benefits from the lower costs of use. –
Fuel savings for users and energy security
benefits. –
A possible change in the competitive position of
vehicle manufacturers and component suppliers vis-à-vis their global
competitors. These
effects are described in detail in section 2.5.1 and Annex 7.8. However, the
options for modalities considered in this chapter can also cause economic impacts
in a number of ways. These are assessed as follows: · Cost-effectiveness to society To decrease the burden
of environmental protection, CO2 emissions reductions should be
undertaken at the lowest cost to society. This implies a comparison of costs
(e.g. investment in new technologies) and benefits to society (e.g. fuel
savings) of different policy options. The assessment in section 2.5.1 has shown
that the fuel savings substantially exceed the costs. However, some options may
reduce the overall cost effectiveness. · Manufacturer compliance costs The Regulations aim to
be competitively neutral taking account of the diversity of the EU automotive
industry and avoiding unjustified distortion of competition between
manufacturers. Options that affect the distribution of effort will change the
relative impacts on different vehicle manufacturers although these are unlikely
to impact on component suppliers. Options should therefore also be compared
based on the average cost of compliance faced by different manufacturers
present on the EU market. This will feed through into costs for consumers. · Other economic impacts: certainty for industry, innovation,
competitiveness In order to minimise
compliance costs and create incentives for the automotive industry, including
manufacturers and component suppliers, to invest in new technologies, it is
important to ensure long-term regulatory certainty. Options that undermine
previous expectations or reduce future certainty can cause wasted investment and
unnecessarily lock-up capital. Therefore, policy options undermining previous
expectations or reducing future certainty are less preferable to alternatives
without such effects or with a smaller negative impact. In addition, policy
options incentivising innovation and strengthening the competitiveness of EU
industry are preferable. · Impacts on SMEs No disproportionate
regulatory burden should be put on small and medium enterprises and options
should therefore be assessed from this aspect. Expected environmental impacts The direct environmental impact covers CO2
emissions, which is the main greenhouse gas emitted by LDVs, as well as
emissions of air pollutants. The most important environmental impact of the
Regulations stems from the implementation of the 2020 targets and their level
of stringency (see sections 2.5.1 and 4.2). Policy options might
lead to changes in the level of reductions in these emissions which is
assessed. The effect on air pollutant emissions is indirect but it is assumed
that reductions in vehicle fuel consumption should lead to a reduction in
pollutant emissions. Expected social impacts The Regulations specify
that they should be revised in a socially equitable way implying that policy
options without disproportionate impacts on certain social groups are
preferable. This impact can arise from the differential effect of the policy
options on different vehicle classes and this is analysed. The policy options
can also have an impact on the level and the quality of employment. The major social
impacts arise from the level of ambition and implementation of the 2020 targets.
The deployment of CO2 reducing technology is likely to lead to
increased manufacturing costs and given a certain cost pass-through to an
increase in purchase price. As shown in the economic analysis, fuel efficiency
improvements flowing from the revised targets more than compensate for any
increase in vehicle purchase prices, given the high price of fuel.
5.2.
Utility parameter - cars
Two options are assessed – mass or
footprint. A.
Economic impacts ·
Average costs of compliance and distribution
between car segments Additional car manufacturer costs compared
to the 130 gCO2/km target are shown in Table 7 for these
alternative utility parameters and two selected slopes for the most likely cost
scenario. Table 7 Additional average manufacturer cost per
car compared to 130 gCO2/km Utility parameter || Slope || Cost (€) Mass || 60% a=0.296 || 1219 100% a=0.494 || 1218 Footprint || 60% a=17.6 || 1164 100% a=29.4 || 1168 Note – Costs shown for mass have been
adjusted to take account of the average undervaluing of light-weighting in the
original study methodology (for details see Annex 7.12). On aggregate it can be seen that there is
little change in average additional manufacturer cost per vehicle for either
utility parameter for different slopes of the limit value curve. However there
is a larger difference when looking at vehicle size as shown in Table 8
below. Table 8 Additional manufacturer cost (€) per car for
different car categories relative to 130 gCO2/km legislation showing
cost difference between mass and footprint parameter || || Petrol || Diesel Utility function || Slope || Small || Medium || Large || Small || Medium || Large Mass || 100% of 2009 a=0.494 || 1222 || 1283 || 1452 || 943 || 1067 || 1248 Footprint || 100% of 2009 a=29.4 || 1195 || 1275 || 1706 || 907 || 1094 || 1678 Cost difference (mass-footprint) || 100% of 2009 || 27 || 8 || -254 || 36 || -27 || -430 Mass || 60% of 2009 a=0.296 || 1150 || 1308 || 1577 || 865 || 1118 || 1634 Footprint || 60% of 2009 a=17.6 || 1135 || 1304 || 1769 || 845 || 1133 || 1870 Cost difference (mass-footprint) || 60% of 2009 || 15 || 4 || -192 || 20 || -15 || -236 Note – Costs shown for mass have not been
adjusted to take account of the undervaluing of light-weighting in the original
study methodology (for details see Annex 7.12). It can be seen that manufacturer costs are lower
for footprint than mass except for large cars, in which case mass is
substantially cheaper. The cost difference between the options is less
pronounced with a lower slope. In the case of mass the cost per car is more
evenly distributed over the different vehicle segments (diesel-petrol,
small-large) which leads to a higher percentage relative price increase for
smaller cars. This is clearly shown in Figure 10 and Figure 11
which show the additional manufacturer cost (including mark-up) as a percentage
of new car prices for each car segment[75]. Figure 10 Relative
price increase per car segment with mass as utility parameter, compared to maintaining
130 gCO2/km between 2015 and 2020 (cost scenario 2). Figure 11 Relative
price increase per car segment with footprint as utility parameter, compared to
maintaining 130 gCO2/km between 2015 and 2020 (cost scenario 2). ·
Distribution of costs between manufacturers A change in
utility parameter can have an impact on competition between different
manufacturers. This is most clearly seen by comparing Figure 12 Figure 12and Figure 13 which show the relative price increase for
different manufacturers. For some, such as Chrysler and Spyker the change of
parameter could quite significantly alter their costs compared to the average.
However, for many manufacturers the difference is relatively small for example
Volkswagen and Fiat. Figure 12 Relative retail price increase per manufacturer per car with
mass as utility parameter compared to the average price increase (cost
scenario 2). Figure 13 Relative retail price increase per manufacturer per car with
footprint as utility parameter compared to the average price increase
(cost scenario 2). ·
Certainty With regard to certainty, the current
Regulation is based upon mass as the utility parameter. While it is clear in
the Regulation that alternatives should be considered, it is understood that
manufacturers have planned their compliance pathways to 2020 on the basis of a
continuation of the current utility parameter. In view of this, if a decision
were taken to change parameter, it would provide greater planning security if
this was linked to the discussion of the regime beyond 2020. ·
Innovation With regard to
innovation, there is unlikely to be an impact on most routes to meet the 2020
target with the exception of light-weighting. In this respect using mass as the
utility parameter does not treat all options equally, as mentioned by various
stakeholders during the consultation. This is undesirable since it does not
enable manufacturers to optimally balance the costs and benefits of all
alternative CO2 reduction measures. In addition it impacts on the
competitiveness of suppliers who can provide lightweight components for
vehicles since the CO2 benefit from using their products will be
undervalued. ·
Competitiveness With regard to EU
industry competitiveness, it might be argued that alignment of the utility
parameter with other global markets might assist EU manufacturers. However, while
the USA uses footprint as its utility parameter, other markets use mass (e.g.
Japan, China, South Korea). Nevertheless, during consultations manufacturers
have not argued for alignment as a reason to retain or change the parameter and
so this aspect can be assumed to be of minor importance for them. ·
Conclusions In conclusion, the choice of utility
parameter impacts on manufacturers in different ways and therefore cannot be
said to be entirely competitively neutral. It can be concluded that footprint
is slightly more cost-effective than mass as the utility parameter.
Nevertheless, a change from mass runs against the objective of ensuring
certainty for industry if the change were to be made for implementation of the
2020 targets. The choice of utility parameter is not expected to have any
impact on competitiveness, trade or SMEs and any impact on innovation would be
minor. It is therefore concluded that the balance of these impacts favours the
option of retaining mass as the utility parameter for 2020, but suggests that a
debate on a future change to footprint is desirable. B.
Environmental impacts Provided that the fleet composition remains
constant, the choice of the utility parameter does not affect overall CO2
emissions. However, as has been shown before, it can affect the
cost-effectiveness of these savings. The choice of the utility parameter would
not be expected to have any effect on air quality. Autonomous changes need to be taken into
account. With mass as the utility parameter there would be practically no
change in target CO2 emissions caused by autonomous weight increase
because the overall average mass is adjusted every third year. In the case
where footprint was chosen as a parameter a similar provision could be
envisaged. With such a provision in place a change to footprint would lead to
no change in CO2 emissions, relative to using mass, or any impact on
air quality.[76] It can be concluded that the choice between
utility parameters does not have a direct significant environmental impact. C.
Social impacts A shift from mass to footprint as the utility
parameter might lead in the longer term to impacts on employment in the
automotive suppliers sector, for example in the metal industries and automotive
parts suppliers. However, these would represent shifts between sectors rather
than employment losses and so on balance this is considered negligible. Social equity
impacts can arise with a shift due to the differential cost impact on different
classes of car. As shown in Table 8 and visible in Figure 10 and Figure
11, there is a significant difference in relative price increase with
smaller cars having a larger percentage increase. Mass seems to lead to a more
equal distribution of relative price increase between different size classes.
However, footprint leads to smaller relative price increase for small vehicles
which may be desirable from the social perspective (i.e. buyers of smaller cars
tend to be more price sensitive). Set against this is the fact that the total
cost of ownership for all car classes is expected to reduce due to the fuel
savings outweighing the additional costs. In view of these impacts, footprint
seems to be more socially equitable than mass.
5.3.
Slope of the limit value curve - cars
The options considered are for a range of
limit value curve slopes between 60 and 100% of the 2009 fleet line of best
fit. In terms of absolute slope, this spans the range of parameter 'a' from
0.0296 to 0.0494. This range also covers the most obvious slopes derived from
the fleet data for other years (including 2006 or the average between 2006 and
2009) applying the same methodology as was used to determine the slope in the
current Cars Regulation. In the case of mass, a 100% slope for 2020
(based on 2009 data), in absolute terms equal to 0.0494, is much flatter than a
100% slope based on 2006 data of 0.0762, and flatter than the current 60% slope
based on 2006 data for the 130 gCO2/km target for 2015 (in absolute
terms 0.0457). These changes illustrate the way that manufacturers have already
responded to the need to reduce CO2 emissions. A.
Economic impacts ·
Average costs of compliance and distribution
between van segments The additional average manufacturer cost
for the new car fleet for different slopes are shown in Table 7. On
average there is only a minor difference in these average costs between 60 and
100% slope. Table 9 below shows the difference in cost by car segment
depending on whether a 60% or 100% slope is chosen. It can be seen that the
effect is broadly the same for both possible utility parameters and shows that
for the lower slope the cost increase is smaller for small cars and larger for
larger cars. Table 9 Additional manufacturer cost (€) per car
for different car categories relative to 130 gCO2/km target showing
cost difference for different slopes. || || Petrol || Diesel Utility function || Slope || Small || Medium || Large || Small || Medium || Large Mass || 100% of 2009 (a=0.0494) || 1222 || 1283 || 1452 || 943 || 1067 || 1248 60% of 2009 (a=0.0296) || 1150 || 1308 || 1577 || 865 || 1118 || 1634 Cost difference (100%-60%) || || 72 || -25 || -125 || 78 || -51 || -386 Footprint || 100% of 2009 (a=29.4) || 1195 || 1275 || 1706 || 907 || 1094 || 1678 60% of 2009 (a=17.6) || 1135 || 1304 || 1769 || 845 || 1133 || 1870 Cost difference (100%-60%) || || 60 || -29 || -63 || 62 || -39 || -192 Manufacturer
costs on average increase with increasing slope for both mass and footprint,
although the effect is small. However, the percentage cost increases for
smaller cars are greater than for larger ones as shown in Figure 10 and Figure
11. For petrol, small cars have between 3 times (slope 60%) and 4 times (slope
140%) the percentage increase of large petrol cars. For diesel, small cars have
between 2 and 3 times the percentage increase of large diesel cars. Since the
lower slope results in a lower divergence, this illustrates that for least
competitive impact between segments a lower slope is desirable. Increasing slope also leads to decreasing
cost-effectiveness since it requires more effort from smaller rather than from
larger cars. This is because larger cars tend to be driven further than smaller
ones, and therefore investment in their fuel efficiency delivers more CO2
savings overall. ·
Distribution of costs between manufacturers Different
manufacturers have different portfolios and the share in their sales of
different segments of cars varies. Because of the effects illustrated on
different car segments the choice of slope of the curve will result in
distributional impacts between manufacturers. These impacts for manufacturers
are illustrated in Figure 12 (for mass) and Figure 13 (for
footprint) which show the difference in relative price increase compared to the
average price increase due to achieving the 130 gCO2/km target for
different manufacturers. In general it can
be seen that the variation between individual manufacturers' relative price
increases and the average relative price increase is smallest the lower the
slope. This suggests that these would be the ones with the lowest distortionary
impact on inter-manufacturer competition. ·
Perverse incentives A slope above 100% is undesirable in the
case of both parameters as it provides perverse incentives to manufacturers,
i.e. increasing the parameter for the car in order to be able to comply with
the specific target more easily, which in fact results in additional emissions.
In the case of mass, a slope below 100% based on 2009 data should avoid a
serious risk of gaming. ·
Impacts on innovation, competitiveness, trade,
SMEs The slope is not expected to have any
significant effect on innovation, competitiveness, trade or SMEs. There has
been no previous expectation of which slope would apply for 2020 so certainty
is also not affected. ·
Conclusion In view of the above, it is concluded that
a lower slope is most desirable on economic grounds. B.
Environmental impacts Changing the slope of the limit value curve
does not directly cause any change in overall new car fleet CO2 emissions
per km. However, because larger cars are driven further than smaller cars, a
lower slope leads to lower overall CO2 emissions. A lower slope
effectively helps to partly compensate for the lack of mileage weighting. There is a risk of a secondary effect of
growth in emissions in the case where the overall average mass of the fleet
increases. This secondary effect can happen in between the periods when this
average mass is adjusted and is expected to be rather small (+0.25% over three
years). See Annex 7.17 for more details. There is also a possible indirect impact on
CO2 emissions caused by behavioural change which depends on the
slope of the curve. If the slope is made steeper it would require smaller
relative CO2 emissions reductions from heavier vehicles and thus these
vehicles could become more interesting to sell.[77] In view of these factors, a lower slope is
desirable on environmental grounds. C.
Social impacts The slope chosen is not expected to have
any significant impact on employment. The lower the slope the more relative
effort is required from larger vehicles, which would feed through into greater
technology needs for them, but have a correspondingly lower impact on smaller
vehicles. The slope of the limit value curve impacts
on the distribution of effort between different segments of vehicles. In the case
where the standards result in increased vehicle prices it is expected to have a
differentiated effect on different social groups. The relative price increase
expected due to compliance with the target is highest for small vehicles
because of their relatively low price. The result of such price increases for
smaller vehicles would be a relatively high impact on the buyers of cheaper
small cars, which is likely to be less socially equitable. This effect is
slightly alleviated with lower slopes of the limit value curves for both
parameters. In view of these
impacts, a lower slope is desirable to minimise the distributional impact on
relative new car prices and be more socially equitable.
5.4.
Utility parameter - vans
Two options are assessed, mass or
footprint. A.
Economic impacts ·
Average costs of compliance and distribution
between van segments As with cars, the distributional effects of
the vans Regulation vary with the utility parameter chosen. Table 10
shows the average additional manufacturer costs for meeting the 147 gCO2/km
target. The costs are very similar for both parameters and the overall average
compliance cost for the target at 100% slope is around €15 cheaper with
footprint, with the mass-based function resulting in a 3 to 16% increase in
average costs as compared to footprint for slopes from 80% to 140%
respectively. This is due to the costs increasing relatively more for
manufacturers like Renault or GM with higher slopes of the mass-based function. Table 10 Average additional manufacturer costs per
van relative to 175 gCO2/km target for utility parameter and slope
options. Cost in € || 60% || 70% || 80% || 90% || 100% || 110% || 120% || 130% || 140% Linear mass-based limit function || 457 || 452 || 450 || 451 || 456 || 463 || 473 || 485 || 500 Non-linear footprint-based limit function || 463 || 455 || 448 || 444 || 441 || 440 || 442 || 445 || 449 Cost difference footprint vs. mass || 6 || 3 || -2 || -7 || -15 || -23 || -31 || -40 || -51 ·
Distribution of costs between manufacturers Overall, the relative
retail price increase is more evenly distributed over manufacturers in the case
of mass than in the case of footprint where a number of manufacturers face
higher costs of meeting their targets (i.e. Isuzu, Mitsubishi, Toyota) due to
large sales of pick-up trucks and all-terrain vehicles which have a relatively
high average mass relative to their average footprint (see Table 11 and Figure
15). This high mass translates into relatively high
energy consumption and therefore high CO2 emissions. For these
producers, it costs less to comply with a mass-based target. Daimler and Iveco
are relatively sensitive to slope changes, particularly with footprint as the
utility parameter. Table 11 Additional manufacturer costs relative to
2010 for all van manufacturers for the 100% slope of the mass- and
footprint-based functions (in absolute terms 0.096 for linear curve based on
mass and 27.3 and 3.9 for non-linear curve based on footprint) Additional manufacturer cost relative to 2010 [€] || Daimler AG || Fiat || Ford || General Motors || Isuzu || Iveco || Mitsubishi || Nissan || PSA || Renault || Toyota || Volkswagen Mass || 555 || 583 || 633 || 561 || 636 || 419 || 779 || 1048 || 456 || 580 || 807 || 426 Footprint || 616 || 469 || 668 || 367 || 1768 || 773 || 1576 || 1272 || 422 || 340 || 1209 || 601 Cost difference footprint vs. mass || 62 || -113 || 34 || -193 || 1132 || 354 || 797 || 225 || -34 || -240 || 402 || 175 Figure
14 Relative retail
price increase per manufacturer for mass as utility parameter, compared to the
average price increase. Figure 15 Relative
retail price increase per manufacturer for footprint as utility parameter, compared
to the average price increase. ·
Perverse incentives The footprint of
vans can be easily increased without large negative implications for CO2
emissions (or performance). The fact that such changes can be easily made makes
gaming with footprint relatively easy. The incentive for gaming would be especially
strong for vehicles with a relatively low footprint, as the non-linear limit
function[78]
is relatively steep at this part of the curve. ·
Certainty With regard to certainty, the current
Regulation is based upon mass as the utility parameter. The time between
compliance with the target of 175 gCO2/km based on mass (for 2017)
and the 147 gCO2/km target (for 2020) is only three years. If
footprint was selected as the utility parameter for the 2020 target,
manufacturers with deviant mass-footprint ratios (as explained above) would
have to drastically change their CO2 reduction strategies in a
relatively short period. As a result, while a change to footprint has a
relatively small aggregate impact on cost, it has a large differential impact
on manufacturers undermining competitive neutrality. It is evident that
choosing the option of changing the utility parameter to footprint would
undermine certainty. This concern was strongly expressed during the stakeholder
consultation by automotive manufacturers concerned that changing utility
parameter would be counter to the objective of a stable regulatory scheme and
make compliance with the 2020 van targets more expensive ·
Innovation With regard to
innovation, there is unlikely to be an impact on most routes to meet the 2020
target with the exception of light-weighting. In this respect using mass as the
utility parameter does not treat all options equally, as mentioned by various
stakeholders during the consultation. This is undesirable since it does not
enable cost optimal balancing of alternative reduction options, and in
particular reduces the competitiveness of industries that can supply lower mass
alternatives. ·
Competitiveness, trade, SMEs With regard to EU industry competitiveness
and similarly to the discussion on cars, it might be argued that alignment of
utility parameter with other global markets might assist EU manufacturers.
However, while the USA uses footprint as its utility parameter, other markets
use mass (e.g. Japan, China, South Korea). Nevertheless, during consultations
manufacturers have not argued for alignment as a reason to retain or change the
parameter. Overall, the utility parameter for vans is
not expected to have any impact on competitiveness, trade or SMEs and any
impact on innovation would be minor. ·
Conclusion In view of the
arguments outlined above, on economic grounds footprint seems less desirable
than mass due to the difficulties for manufacturers implicit in a change of
approach within a three year period, the increased risks of perverse
incentives, the need to use a non-linear limit function and the large
distributional impact. The average cost to manufacturer is quite similar for
both parameters in case of slopes of 100% and below. It is thus concluded that
retention of mass as utility parameter is to be favoured on economic grounds. B.
Environmental impacts The impact of changing the utility
parameter from mass to footprint would be CO2 neutral over the fleet
provided its composition remains constant. As for cars, changing the utility
parameter to footprint would make electric vehicles slightly less advantageous
because they would no longer have a high target as a result of their higher
mass compared to their conventional (ICE) counterpart. Use of footprint could, in the medium term,
lead to an overall increase in CO2 emissions as it is considered to
be easier to manipulate in vans. Footprint can be increased by stretching a van
or increasing its wheelbase without large negative implications on CO2
emissions of that van or its performance. This footprint increase would allow
in aggregate more CO2 emissions and could put at risk meeting the
overall CO2 reduction objective. This risk could be mitigated for
larger vans by using a non-linear function levelling off above a certain
footprint (see Annex 7.15 and section 5.5). This would remove the perverse
incentive to build ever larger vans because they could no longer benefit from a
proportionate increase of the CO2 target. For vans, whose primary purpose is to move goods
rather than people, expectations of autonomous mass increase are limited
because this would compromise the load carrying potential of these vehicles.
Therefore, the direct benefit of changing the utility parameter from mass to
footprint would be even less important. It can be concluded that the options have
no direct significant environmental impact. C.
Social impacts Similarly to cars, a shift from mass to
footprint as the utility parameter might lead in the longer term to impacts on
employment in the automotive suppliers sector, for example in the metal
industries and automotive parts suppliers. However, these would represent
shifts between sectors rather than employment losses and so on balance this is
considered negligible. Contrary to cars, no social equity impacts
linked to differential cost impacts per van class are expected as vans are used
for business purposes and chosen based on their utility. It can be concluded that the choice between
utility parameters does not have a direct significant social impact.
5.5.
Slope of the limit value curve - vans
The options assessed are slopes between 80
and 100%. A.
Economic impacts ·
Average costs of compliance The relative price increase in case of mass
is distributed most evenly over the manufacturers and vehicle segments around a
slope of 100%. Furthermore, the average costs for meeting the 147 gCO2/km
target are the lowest with a slope of 80-90%. This makes a slope value in the
range 80-100% preferable from a distributional perspective. With footprint as the utility parameter the
lowest overall average additional manufacturer cost occurs with a 110% slope,
as shown in Table 10. Around this slope the additional manufacturer
costs are distributed most evenly over the manufacturers and segments. This is
influenced by a limited number of manufacturers with relatively high sales
selling mostly large vans (e.g. Daimler and Iveco) that benefit from a higher
slope as it results in a higher CO2 target that they can comply with
more easily. ·
Distribution of costs between van classes The way the additional manufacturer costs
and relative retail price increases75 are distributed over the
segments in case of mass and footprint is heavily influenced by the shape of
the cost curves. Although the additional manufacturer costs as a function of
the relative CO2 reduction are quite similar for the three segments,
the absolute and marginal costs for a given absolute CO2 reduction
are in most cases higher for larger vehicles than for smaller vehicles. This is
due to the assumptions of the model[79] which solves for the
optimum distribution of costs between segments, and predicts that manufacturers
are likely to apply larger reductions to larger vehicles in their sales
portfolio because it is more cost-effective. In the case of the mass-based limit value
curve, differences in relative price increases between classes do not differ
much with different slopes but tend to be the largest with lowest (60%) and
highest (above 100%) slopes. Class I vans tend to have slightly higher relative
price increase as compared to other classes in the case of slopes above 100%
and the opposite for lower slopes. The difference is however very small, apart
from the extreme cases analysed. The most even distribution is seen for the
100% slope (see Figure 16) and amounts to around 2.5% for all classes.
In the case of the footprint-based limit function the most even distribution
across van classes is seen with the slope of around 100-110% (see Figure 17). Figure 16 Relative retail price increase
compared to 2010 per segment for mass as utility parameter per manufacturer. Figure 17 Relative retail
price increase compared to 2010 per segment for footprint as utility parameter
per manufacturer. As already mentioned, the most optimal way
for manufacturers to meet their specific target implies that manufacturers
apply larger absolute reductions to the larger vehicles in their portfolio (see
footnote 79). As a consequence in the case of both utility parameters, the
absolute and relative cost increase for large vehicles will tend to be larger
than for small vehicles. The absolute cost increase (Figure 18 and Figure
19) will be slightly higher for all classes when mass is used as utility
parameter. Figure 18 Manufacturer cost increase compared to 2010 per segment for mass
as utility parameter per manufacturer, compared to maintaining 175 gCO2/km
until 2020. Figure 19 Manufacturer
cost increase relative per segment for footprint as utility parameter per
manufacturer, compared
to maintaining 175 gCO2/km until 2020. ·
Perverse incentives With mass as the utility parameter, the risk
of perverse incentives increases with increasing slope of the limit value
curve. Therefore it is desirable to implement a slope not steeper than that
currently used for the 175 gCO2/km target for 2017. The 100% limit
function based on the 2010 sales database is only slightly steeper than that
for 2017 and therefore a slope of 100% or less relative to the 2010 data is
desirable. In section 5 of the van study an 80% slope has been shown to be
optimal with this respect. The risk of gaming with footprint leading
to undesirably large vehicles suggests that in this respect a lower slope would
be desirable. However, a lower slope (below 100%) increases the differences in
cost impacts, especially for the manufacturer groups that sell typical vans -
rather than pick-ups or all-terrain vehicles - and these represent the majority
of the market. This trade-off needs to be taken into account in the choice of a
slope value for the limit value curve. ·
Competitiveness, trade, SMEs, innovation The slope is not expected to have any
impact on competitiveness, trade, SMEs or innovation. ·
Conclusion The slope of the limit value curve
preferable for a mass-based function is in the range 80-100% from the cost and
distributional perspective. For footprint, the lowest cost occurs with 110%
slope however such a steep slope is likely to give a perverse incentive to
increase footprint, therefore, a slope around 100% seems preferable. B.
Environmental impacts Changing the slope of the mass-based limit
value curve does not directly cause any change in overall new van fleet CO2
emissions per km. There is no evidence that larger vans have higher
mileage thus it cannot be concluded whether this would result in lower overall
emissions. Similarly to the analysis for cars,
autonomous mass increase, could lead to similar effects in the period in
between adjustments of the overall average mass (as described in Annex 7.17).
In the case of a shift to a footprint-based function the incentive to increase
footprint is more pronounced although could be somewhat limited by the choice
of a non-linear function and introduction of an autonomous footprint increase
adjustment (similar to the autonomous mass increase). Therefore, the environmental impact of
changing the slope is likely to be small or negligible. C.
Social impacts Because light commercial vehicles are
mainly purchased for business use and therefore the vehicles are chosen based
on the utility needed and their price, no social impact is expected for users
from the cost increase. The choice of slope is also not expected to have any
impact on overall employment. As a result the slope will have no impact on the
social impacts expected from implementation of the targets. As a result the slope is not expected to
have any social impacts
5.6.
Derogations for cars and vans
The options considered are whether or not
to introduce a de minimis element to the small-volume derogation and whether to
continue CO2 reduction requirements under the niche derogation
beyond 2015. A.
Economic impacts ·
Small-volume derogation - cars and vans Establishing a de-minimis threshold for the
registration of cars and vans below which the manufacturers are exempt from the
scope of the legislation would be in line with simplification objectives and
reduction of burden on SMEs. Based on monitoring information[80], excluding manufacturers of
below 1000 cars from the scope of the legislation would eliminate about 50% of
small-volume manufacturers, yet account for about 0.05% of new car sales. If
the limit were 100 cars it would apply to about 30% of these manufacturers and
less than 0.005% of new cars.[81]
The introduction of a minimum threshold to small volume derogation is estimated
to save each of these manufacturers about €25,000[82] and the Commission about €10,000
in administrative costs. While the threshold would not be
competitively neutral, since it reduces the administrative burden and the
obligations on the affected companies, these represent a tiny part of the market
and are not considered to be effectively in competition with mainstream
manufacturers. Allowing for more flexibility regarding the
date of granting the derogation and the date of its entry into force would
reduce compliance costs and the burden of assessments on the Commission. It
would allow for a smoother assessment process and would help to avoid
unnecessary premiums for manufacturers willing to meet their individual
targets. Other than the benefits for the companies
directly affected, the de minimis threshold is not expected to have any impact
on competitiveness, trade, SMEs or innovation. ·
Niche derogation - cars Continuing the niche derogation CO2
reduction requirements beyond 2015 would be in line with the competitive
neutrality objective. The upper limit of the niche derogation means that a
manufacturer can hold about 2.5% of the EU car market before being subject to
the normal CO2 regulatory regime. This includes potentially well
known manufacturers such as Honda and Suzuki. If these manufacturers are not
subject to any CO2 reduction requirement, it represents a
significant distortion of competition and could even be damaging to EU
manufacturer competitiveness and trade balance in respect of new entrants to
the EU car market. By its nature the niche CO2 requirements would
not have any direct SME impact although they may have benefits for SMEs in
supplying niche manufacturers with CO2 reducing technology. As
regards certainty, while the Regulation is silent on continued CO2
requirements for niche manufacturers beyond 2015, the competitive neutrality
objective means that it is likely to be have assumed that such a derogation
with CO2 obligation would continue beyond 2015. ·
Conclusion In view of the above, on economic grounds
it may be desirable to set a de minimis limit for the small volume derogation
and to continue with a CO2 reduction requirement for manufacturers
under the niche derogation. B.
Environmental impacts The scale of CO2 emissions from
vehicles produced by manufacturers registering less than 100 cars per year,
even if these manufacturers were to make no further progress, is estimated to
be around 500 tonnes per year[83]
and roughly ten times greater if set at 1000 cars per year, which is a marginal
impact. In case of vans, it is expected to be even less important because the
number of small-volume producers in this category is much lower. Simplification
of administrative procedures is not expected to have any environmental impacts. Continuing the CO2 reduction
requirement for manufacturers under the niche derogation will lead to
additional CO2 savings. If the requirement is made of a comparable
stringency to the mainstream manufacturers, it could be expected to lead to around
50,000 tonnes CO2 avoided per year by 2020 for a manufacturer
registering 100,000 vehicles. In view of the above, the de minimis
threshold will lead to possibly minutely higher CO2 emissions from
affected manufacturers than in its absence. The continuation of the niche
reduction requirement will lead to an environmental benefit and is therefore
desirable to take forward on environmental grounds. C.
Social impacts Simplification of the small cars derogation
will free some resources in the affected manufacturers for other uses. This
might have a very small impact on employment within the companies. However,
since these vehicles are not purchased in the mass market, but in principle
because of their special appeal, there is no social equity impact. Any amendment to the cars niche derogation
scheme is not expected to have any significant social effects. Overall, the options for amending the
derogations are not expected to have noticeable social impacts.
5.7.
Summary of the economic impacts for cars and
vans
While there are economic reasons to argue
that a shift to footprint is desirable for the passenger car utility parameter,
such a change needs to be signalled far enough in advance for adaptation. The
need for manufacturer certainty to avoid unnecessary costs argues to retain
mass for now as the utility parameter for cars. A range of arguments relating
to cost effectiveness and competitive neutrality suggest that the slope
selected should be as low as possible. A 60% slope is identical to that which
was adopted for 2015 and seems appropriate for 2020. There is a risk of significant perverse
incentives with the option of using footprint as utility parameter for vans.
While these can be overcome, a change of utility parameter has strong impacts
on inter-manufacturer competition which when coupled with the fact that there
is no strong overriding reason for a change suggest that mass should be
retained as the utility parameter for vans. The analysis suggests that the
best slope would be around 100% in line with that previously adopted for 2017. Simplification of the small-volume
derogation through introduction of a de minimis threshold is economically
beneficial for SMEs without other adverse impacts and therefore desirable.
Continuation of the niche CO2 requirement ensures competitive
neutrality with affected manufacturers and is therefore also desirable.
5.8.
Summary of the environmental impacts for cars
and vans
The major impact of all the options for
cars and vans as compared to 'do nothing' relates to GHG emissions from the
introduction of the 2020 targets. The policy options considered for the various
modalities are assessed as either causing no further change, provided certain
assumptions are met, or having a very minor impact. There are potential secondary
and behavioural impacts caused by vehicle-km being slightly differently
distributed across the fleet. The impact on air quality is similarly
largest due to introduction of the 2020 targets but this is less direct since
emissions of air quality pollutants need not scale directly with fuel use. The
impacts of all the other policy options were assessed as either causing no
further change, provided certain assumptions stated were met, or had a very
minor impact.
5.9.
Summary of the social impacts for cars and vans
It can be concluded that the main expected
social impacts arise from implementing the 2020 targets and are increased
employment (in both the automotive and other sectors) and the equity impact due
to the different relative price increase of different car classes. For the van
modalities and the derogation aspects no significant social impacts are
expected.
5.10.
How do the main options compare in terms of
effectiveness, efficiency and coherence?
As has been shown above, there is no
significant difference in effectiveness between the various limit value
curve options. All can be designed in a manner to achieve the CO2
targets. For cars, a lower slope is slightly more effective as a result of the
higher mileages of larger cars. For vans, the difficulties and complexity of a
non-linear footprint based function suggest that this would be likely to be
less effective than a linear mass-based function. Continuation of the niche CO2
requirement contributes to the effectiveness of the Regulations while the de
minimis changes to the small volume requirements have negligible effect. With regard to efficiency, there is
a minor difference in cost between footprint and mass, which suggests that for
cars footprint is slightly more efficient as the utility parameter once the
costs are corrected for undervaluing light-weighting. However the average cost
hardly varies at all with slope. For vans, the situation is slightly more
complex, since the relative costs vary depending on the slope. At the likely
values to be chosen there is little difference in efficiency of the two utility
parameter options. Continuation of the niche CO2 requirement
improves the efficiency of the Regulations while the de minimis changes to the
small volume requirements have negligible effect. With regard to coherence with
overarching EU objectives, strategies and priorities, all the options implement
the goal of reducing CO2 emissions from cars and vans with more or
less identical effects and stimulate innovation, employment and resource
efficiency. Therefore, the options that result in the least competitive
distortion and greatest certainty should be the most coherent with overall EU
objectives. The de minimis changes to the small volume requirement are coherent
with simplification objectives and reduction of burden on SMEs.
5.11.
Comparison of options
Table 12 Comparison
of impacts of different options of modalities - cars CARS – summary assessment of options Modalities || Options || Advantages || Disadvantages Utility parameter || Mass || Regulatory certainty- no change from current Regulation. More even cost distribution between segments. || Greater risk of perverse incentives than for footprint. Not fully technology neutral since light-weighting is disadvantaged. Average additional manufacturer cost is about 2% greater than with use of footprint since light-weighting is not rewarded. Footprint || Average additional manufacturer cost is about 2% cheaper than with mass. Provides greater incentive for light-weighting. || No regulatory certainty- change from current Regulation. Less even cost distribution between segments. Adjustment costs linked to shift to another utility parameter. Slope of the limit value curve || Slope<100% || Costs slightly lower overall. Avoides serious risk of perverse incentives. Compensates for lack of mileage weighting. Beneficial impact on overall CO2 and pollutant emissions. More socially equitable (lower relative price increase for smaller vehicles). || Actual cost increase per vehicle less even between segments. Slope>100% || Actual cost increase per vehicle more even between segments. || Costs slightly higher overall. Increased risk of perverse incentives. Less socially equitable (higher relative price increase for smaller vehicles). Derogations || De minimis threshold || Reduced administrative burden for SMEs and for the Commission. || Marginal reduction of emissions savings. Update niche derogation || More competitively neutral. Slightly higher CO2 savings. || Higher cost for manufacturers benefitting from niche derogation. In conclusion, as set out in Table 12,
it is considered that retaining mass as the utility parameter for cars should
be preferred for 2020. The slope should be lower than 100% and the analysis
suggests that a slope around 60% is desirable. Introducing a de minimis
threshold for small volume manufacturers may be desirable as is a continuation
of the niche manufacturer CO2 requirements beyond 2015. Table 13 Comparison of impacts of different options of modalities - vans VANS – summary assessment of options Modalities || Policy options || Advantages || Disadvantages Utility parameter || Mass || Regulatory certainty- no change from current Regulation. More even cost distribution between segments. Limited perverse incentives to increase mass. || Average additional manufacturer cost slightly higher than footprint, especially for slopes above 100%. Not fully technology neutral since light-weighting is disadvantaged. Footprint || Average additional manufacturer cost slightly lower for footprint for slopes above 80%. Provides greater incentive for light-weighting. || No regulatory certainty- change from current Regulation. Requires a non-linear limit value function. Less even cost distribution between segments, especially between class I and III. The cost increase of changing to footprint especially high for some manufacturers. Easier to manipulate than mass but it can be limited by a shape and slope of the limit value curve. Adjustment costs to a target based on the new utility parameter can be expected to be higher due to 3-year gap between the targets. The limit value curve || Slope<100% || Minimises risk of perverse incentive for both functions. Slopes 80-100% lowest costs for mass-based function. Costs lowest and most evenly distributed around 100% slope for mass-based function. || Slopes 60-80% highest costs for footprint-based function. Slopes below 80% lead to uneven distribution of costs between segments. Slope>100% || Lower costs for footprint-based function above 100%. More even distribution for footprint-based function between segments above 110% slope. || Increased risk of perverse incentives for both parameters. Highest costs and less even distribution between segments for mass-based function above 110% slope. Derogations || De minimis threshold || Reduced administrative burden for SMEs and for the Commission. || Marginal reduction of emissions savings. As outlined in Table
13, retaining mass as the utility parameter for vans is the preferred
option. The balance of advantages and disadvantages suggests that a slope of
around 100% is optimal. Introducing a de minimis threshold for small volume
manufacturers may be desirable.
6.
Monitoring and Evaluation
6.1.
Core indicators of progress
The core indicators of progress are linked to the evolution of the
average new car and van fleets. They cover data relating to: ·
specific CO2 emissions as measured under
the EU test procedure, to assess the performance of the automotive industry
towards the respect of the mandatory targets, ·
utility (mass), to provide an analysis of the
evolution of the EU car and van market e.g. in case a shift in utility would
require an adaptation of the utility curve in the future. Further utility
parameters such as footprint or payload are part of a mandatory monitoring
regime in order to assess the appropriateness of such parameters, especially
footprint for cars. In addition, the Commission will collect
information regarding the number of derogation applications and the reduction
targets proposed by the manufacturers. Based on the EU monitoring scheme the
Commission will follow the reduction progress of manufacturers granted a derogation. Furthermore, the Commission will collect
information regarding the number of eco-innovation applications and granted
eco-innovation credits. The credits will be taken into account for calculation
of manufacturers' overall compliance with their individual targets.
6.2.
Monitoring arrangements
As explained in section 2.4 the monitoring
scheme for passenger cars is now operational and is working well considering
the challenges of first years of operation. The scheme for vans is based on the
one for passenger cars and 2012 is the first year of monitoring. In the case of vans the changes resulting
from adoption of the new procedure for multi-stage vehicles (see section 2.4)
are not expected to have an impact on the design of the current monitoring
scheme. These changes will most likely concern the information included in the
certificate of conformity which is the basis for CO2 monitoring
rather than the monitoring scheme itself. Therefore, no significant additional
administrative burden to that from setting up the monitoring and reporting
scheme is expected. The Commission will continue to produce
annual monitoring reports on the basis of the monitoring data gathered. These
reports will provide measureable indication of progress towards the van and car
CO2 targets as well as providing information on other relevant
parameters such as average mass. In view of the fact that it is not possible to
define a baseline against which elements such as new vehicle prices can be
measured, monitoring of social equity or competitive distortion is infeasible. In the light of experience the Commission
may propose to revise the scheme however it is not considered at this stage.
7.
Annexes (see Part II of the Document)
[1] A glossary of this and other terms is set out in
Annex 7.1.Error! Reference source not found. [2] Article 13(5) of Regulation (EC) 443/2009 and Article
13(1) of Regulation (EU) 510/2011 [3] Multi-stage vehicles are vans that are sold as
chassis-cabin combinations only and are completed with a dedicated build-up
after the vehicles are sold by manufacturers to final users or third companies
installing these build-ups. These structures are often constructed to buyers'
specifications. [4] Under framework contract ENV.C.3/FRA/2009/0043 on
vehicle emissions [5] http://ec.europa.eu/clima/policies/transport/vehicles/cars/docs/study_car_2011_en.pdf [6] http://ec.europa.eu/clima/policies/transport/vehicles/vans/studies_en.htm [7] These preliminary conclusions were subsequently
confirmed and included in the final report published on DG CLIMA's website (see
footnote 6). [8] COM/2011/0112 final [9] See article 13(5) and recital 30 of Regulation (EC)
443/2009, and article 13(1) and recital 30 of Regulation (EU) 510/2011 [10] COM/2011/0112 final [11] See for example section 5 of the car study [12] EU transport in figures; statistical pocketbook 2011 [13] See section 2.4.1 of the 2009 Impact Assessment
accompanying the proposal for a Regulation setting CO2 emissions
standards for light commercial vehicles; SEC(2009) 1455 [14] ACEA figures on new registrations available at http://www.acea.be/collection/statistics [15] Energy Efficiency Trends in the Transport
Sector in the EU, Lessons from the ODYSSEE MURE project; January 2012 [16] The data for years 2000–2009 was monitored and reported
under Decision (EC) 1753/2000 establishing a scheme to monitor the average
specific emissions of CO2 from new passenger cars. From 2010 it is
replaced by monitoring and reporting under Regulation (EC) No 443/2009 and its
implementing Commission Regulation (EU) No 1014/2010. [17] Commission Regulation (EU) No
1014/2010 on monitoring and reporting of data on the registration of new
passenger cars pursuant to Regulation (EC) No 443/2009 [18] Commission Implementing Regulation
(EU) No 293/2012 of 3 April 2012 on monitoring and reporting of data
on the registration of new light commercial vehicles pursuant to Regulation
(EU) No 510/2011 [19] The OEMs usually build a basic chassis-cabin structure
which receives dedicated bodywork built by another manufacturer. [20] Commission Regulation (EU) No 63/2011 laying down
detailed provisions for the application for a derogation from the specific CO2
emission target pursuant to Article 11 of Regulation (EC) No 443/2009 [21] Commission Implementing Regulation establishing a
procedure for the approval and certification of innovative technologies for
reducing CO2 emissions from passenger cars pursuant to Regulation
(EC) No 443/2009 [22] Standard
declaration of pooling members available at: http://ec.europa.eu/clima/policies/transport/vehicles/cars/docs/pooling_declaration_en.doc [23] Commission Decision of 17 February
2012 on a method for the collection of premiums for excess CO2
emissions from new passenger cars pursuant to Regulation (EC) No 443/2009 [24] See the 2007 Commission Impact Assessment accompanying
the Proposal for a Regulation to reduce CO2 emissions from passenger
cars, SEC(2007)1724 [25] PRIMES-TREMOVE modelling [26] http://ec.europa.eu/transport/publications/statistics/doc/2011/pocketbook2011.pdf [27] Source: PRIMES-TREMOVE modelling [28] The multiplier effect results from the spending of
business and employees resulting from the initial investment. [29] Paul
N. Leiby (2007), Estimating the Energy Security Benefits of Reduced U.S. Oil
Imports [30] JRC (2007) Biofuels in the European Context: Facts and Uncertainties
http://ec.europa.eu/dgs/jrc/downloads/jrc_biofuels_report.pdf [31] Source: PRIMES-TREMOVE modelling [32] Assuming 14,000km and 16,000km annual distance driven
by petrol and diesel and vehicles' lifetime of 13 years with 8% private
discount rate [33] Assuming 23,500km annual distance driven and vehicles'
lifetime of 13 years [34] Cost scenarios are presented in detail in Annex 7.13 [35] Analysis available at http://www.epa.gov/otaq/climate/regulations.htm#1-1 [36] 4% discount rate used [37] Assuming 14,000km and 16,000km annual distance driven
by petrol and diesel and vehicle lifetime of 13 years [38] Based on cost scenario 2, using mass as utility
parameter with 60% slope. For detailed explanation of the cost scenarios see
Annex 7.13. [39] For end users a private discount rate of 8% is used [40] See the section on 'Overview of the affected sectors'
in Annex 7.9 [41] See "Economic situation & competitiveness of
the car industry"; support document for CARS21 Sherpa meeting; 18 April
2012 [42] ACEA 'The automobile industry pocket guide 2011' [43] Fraunhofer-ISI, 2010,
Strukturstudie BWE mobil:Baden-Wurttemberg auf dem Weg in die Elektromobilitat CERES, 2011,
More jobs per gallon, How Strong Fuel Economy/GHG Standards Will Fuel American
Jobs TNO, 2011,
Support for revision of regulation No 443/2009 on CO2 emissions of
Cars [44] See JRC report, 2007, Technological
studies on contribution to the report on guiding principles for product market
and sector monitoring, Working paper on competitiveness and sustainability;
See Nemry F.,
Vanherle K., Zimmer Z., Uihlein A., Genty A. et al., 2009, Feebate and
scrappage policy instruments. Environmental and economic impacts for the EU 27,
JRC scientific and technical reports. [45] Car target set in 2009 for 2015, van target set in 2011
for 2017. [46] Treaty of the European Communities amended by TFEU (see
footnote 47) [47] Treaty on the Functioning of the European Union [48] The main social impacts are
likely to arise from different impacts on car prices. In
view of this a particular aim is to minimise the divergence in relative retail
price increase between different car segments [49] A range of competitiveness
aspects are relevant. However, a key goal is to avoid excessive distortion in
competition between manufacturers. This is best assessed through the divergence
between the relative retail price increase for a manufacturer compared to the
average. Minimising this divergence will lead to the least competitive
distortion. [50] Source: The van study [51] Sections 7 and 8 of the car study [52] Section 9 of the car study [53] Figures 50 and 59 in the car study [54] Section 4 of the van study [55] Section 9 of the car study [56] Annex K of the car study [57] Section 5 of the van study [58] Section 4 of the van study [59] See Annex E of the van study [60] Section 10 of the car study and section 5 of the van
study [61] For example, the most obvious slopes derived from
different data sets are as follows: - the slope
from the current Cars Regulation of 0.0457 but adapted to meet the 95g/km
target in 2020 would equal to 0.0333; - the 2009
fleet data and a slope of 60% relative to this baseline would result in a
parameter of 0.0296; - the 2009 fleet data with a 100% slope relative to this
baseline would equal to 0.0494; - the average
of the fleet data from 2006 and 2009 and a slope of 60% relative to this
baseline would result in a parameter of 0.0315. [62] In absolute terms a range from 0.057 to 0.134 was
considered for linear mass-based function. [63] For a non-linear footprint-based limit value curve two
ranges of slopes were considered: in absolute terms from 16.4 to 38.2 to the
left from the bending point and an equivalent range of 2.3 to 5.4 to the right
from the bending point. [64] Section 13.4.4 of the car study [65] For detailed description of cost scenarios see Annex
7.13. [66] COM(2009)593 [67] Section 5.8 of the van study [68] TATA (including Land Rover) is likely to be covered by
the small-volume derogation and may have a separate reduction target. [69] For example manufacturers such as Great Wall Motors
(500,000 global sales) or Dongfeng Motor Corporation (2 million vehicle sales) [70] For example the Opel Ampera has combined test cycle
emissions of 27 gCO2/km. [71] See section 2.4. [72] http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P6-TA-2007-0469&language=EN
[73] "A European strategy for clean and
energy efficient vehicles” state of play 2011;SEC(2011) 1617 [74] See figure 4.6: http://www.eutransportghg2050.eu/cms/assets/Uploads/Reports/EU-Transport-GHG-2050-II-Task-6-Draft-Final-Report-16Mar12.pdf
[75] Relative retail price increase is calculated by
multiplying the additional manufacturer costs by a mark-up factor and dividing
by the average retail price for the segment or manufacturer. It excludes sales
taxes. [76] Changing utility parameter to footprint would make
electric vehicles slightly less attractive for manufacturers compared to the
use of mass. This is because generally electric vehicles are heavier than their
conventional (ICE) counterpart, because of the batteries (by 62 kg for medium
and large vehicles). This increases their specific CO2 emissions
target with a mass based parameter (which would allow the manufacturer to have
higher emissions from other vehicles). This increase would be 3.5 gCO2/km,
but it only applies to that fraction of overall sales that are for electric
vehicles. [77] This secondary effect would lead to a further small
increase in CO2 emissions (although this would be compensated by the
autonomous mass increase adjustment). However, evidence from the actual
analysis of passenger car sales profiles for 2006 and 2010 suggests that such a
shift should not happen. [78] For more information on the non-linear limit function
see Annex 7.15. [79] In the model used in [TNO, 2012] it is assumed that
manufacturers strive to minimise the additional manufacturer costs for meeting
their average CO2 emission target. The optimum distribution is
characterised by equal marginal costs over the three size segments. Therefore,
the model predicts that manufacturers are likely to apply larger reductions to
the larger vehicles in their sales portfolio than to the smaller vehicles. [80] See Table 16 in Annex 7.6. [81] In the US rulemaking similar procedures exist for lower
volume manufacturers (i.e. less than 400 000 sales per year) who are
provided with temporary alternative standards (25% reduction), manufacturers
with less than 5,000 sales per year do not have targets in the first period up
to 2016 but this will be reconsidered for future targets. [82] Cost estimated by ESCA [83] Based on an average annual mileage of 5000km suggested
by ESCA TABLE OF CONTENTS 7........... ANNEXES.................................................................................................................... 2 7.1........ Glossary......................................................................................................................... 2 7.2........ Summary of the public
consultation.................................................................................. 5 7.3........ List of participants in the
stakeholder meeting 6 December 2011.................................... 17 7.4........ Summary of the stakeholder
meeting of 6 December 2011............................................. 19 7.5........ General policy context.................................................................................................. 25 7.6........ Summary of car and van CO2
Regulations.................................................................... 28 7.7........ Test cycle CO2 emissions............................................................................................. 35 7.8........ Description of the baseline
modelling scenario................................................................ 39 7.9........ Impacts on competitiveness........................................................................................... 53 7.10...... Impacts on the economy and
employment – input-output model..................................... 71 7.11...... The limit value curve – explanation
of the slope.............................................................. 72 7.12...... Explanation of the effective
change of the distance to target when applying light-weighting technologies in
case of a mass-based limit function, and its impact on costs for meeting the
2020 target................ 72 7.13...... Cost scenarios in the car analysis................................................................................... 72 7.14...... Discarded options......................................................................................................... 72 7.15...... Description of non-linear limit
value curve for LCVs...................................................... 72 7.16...... List of possible environmental
impacts........................................................................... 72 7.17...... Effect on emissions of slope and
autonomous mass increase........................................... 72 COMMISSION
STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the documents Proposal for a regulation of the
European Parliament and of the Council amending Regulation (EC) No 443/2009 to
define the modalities for reaching the 2020 target to reduce CO2 emissions from
new passenger cars
and
Proposal for a regulation of the European Parliament and of the Council
amending Regulation (EU) No 510/2011 to define the modalities for reaching the
2020 target to reduce CO2 emissions from new light commercial vehicles
7.
ANNEXES
7.1.
Glossary
Autonomous mass
increase (AMI) – is an indicator of an average
increase of mass of the fleet resulting from factors which are external to the
Regulation, for example additional comfort and safety measures. Banking and borrowing – is a scheme whereby the manufacturers are allowed to bank
over-compliance in some years and borrow by under-complying in others, while
still achieving the end goal. This means that a desired outcome should be
achieved by a certain time but the optimal route to that point may differ
between economic actors. To enable banking and borrowing it is necessary to
define an expected trajectory of compliance and then assess borrowing or
banking against that baseline. Car – a
motor vehicle which is of category M1 as defined in annex II to Directive
2007/46/EC and therefore is designed and constructed for the carriage of
passengers and has no more than eight seats in addition to the driver’s seat. Eco-innovations – are innovative technologies which reduce real
world CO2 emissions from vehicles but whose effect is not measured
in the type approval test. The current Regulations permit manufacturers to be
granted a maximum of 7 gCO2/km emission credits for their fleet on average if they equip vehicles
with innovative technologies, based on independently verified data. Footprint (as utility parameter) – is a measure of a vehicle's size obtained by multiplying its track
width by its wheelbase. Light Commercial Vehicle (LCV) – An alternative term for vehicles referred to in this Impact
Assessment as vans. Light-duty vehicles (LDVs) – are vehicles consisting of passenger cars and light commercial
vehicles (vans). Legally they are
vehicles in M and N classes with reference mass below 2,610 kg. Limit value curve – the utility based approach adopted in the legislation results in
the CO2 reduction obligation being defined as a function of a
"utility" parameter (e.g. mass or footprint) reflecting the utility
of vehicles. The CO2 targets are set according
to this limit value function expressed as a formula (annex I to the
Regulations). The function can take different shapes although in the current
Regulations it is linear. The limit value curve approach ensures that vehicles
with a larger utility parameter (currently mass) are allowed higher emissions
than lower utility vehicles while ensuring that the overall fleet average meets
the target. To comply with the Regulation, a manufacturer has to ensure that
the overall sales-weighted average emissions of all its new cars or vans is not
above the point on the limit value curve for its average utility parameter. Mass (as utility parameter) – means mass of the vehicle in running order which is the reference mass of the vehicle less the
uniform mass of the driver of 75 kg and increased by a uniform mass of 100 kg. Mileage weighting – takes account of differences in distance driven annually and over
their lifetime by different classes of vehicles. The ultimate goal of lowering
total vehicle CO2 emissions might be more cost effectively achieved
from a larger reduction in vehicles that travel further and a corresponding
reduction in effort for vehicles that travel less. Mileage weighting would in
practice mean introducing a mileage weighting factor to the CO2
emission values based on an estimate of the relative distances travelled by
different vehicle classes and fuels. Modalities – are the parameters established in the legislation which impact on
how the targets are achieved. The modalities currently employed in the Regulations
include a limit value curve, excess emissions premium, derogations,
manufacturer pooling, eco-innovations, phase-in of targets and super-credits.
According to the Regulations the modalities may be considered for amendment in
view of implementation of the 2020 targets. NEDC – New
European Drive Cycle. This is a driving cycle supposed to
represent the typical usage of a car in Europe, and is used, among other
things, to assess the CO2 and pollutant emission levels of new LDVs. Phase-in – means
a gradual increase in the percentage of the fleet required to meet the target.
The phase-in for passenger cars means that in 2012, 65% of each manufacturer's
newly registered cars must comply on average with the limit value curve set by
the legislation. This will rise to 75% in 2013, 80% in 2014, and 100% from 2015
onwards. If 100% compliance is set beyond the target date, e.g. 2020, in
reality phase-in leads to delay in implementation of the target. Slope of the limit value curve – when defining the formulae depicting the limit value curve it is
necessary to decide on its slope. A 100% slope is based on the observed trend
in a base year (2009 for cars and 2010 for vans), scaled down by an equal
relative reduction to reach the desired target. Once the curve is scaled down
to a desired level one can rotate it around the point of average utility and
the targeted CO2 level, which means that even though the slope
changes the average target remains the same. The rotation can make the curve
flatter (below 100%) in which case vehicles with higher utility would have to
reduce more in order to meet the target, or steeper (above 100%) for which
smaller vehicles would be asked to make more effort. Super credits – are a multiplier used in the Regulations for
vehicles with extremely low tailpipe emissions (below 50 gCO2/km). In the current car
Regulation each low-emitting car will be counted as 3.5 vehicles in 2012 and
2013, 2.5 in 2014 and 1.5 in 2016. Similarly, each low-emitting van will
benefit from the following multiplier 3.5 in 2014 and 2015, 2.5 in 2016 and 1.5
vehicles in 2017. Utility parameter – to establish CO2 emissions targets for different
vehicles an objective means is needed to distinguish between them. Without
this, all vehicles would have the same target. Distinguishing between vehicles based
upon their utility as perceived by buyers or users has been considered to be
most appropriate. Different means can be used to assess utility and some
examples include the vehicle's mass, area, volume or carrying capacity. Mass is
the utility parameter used in the current car and van Regulations. Van – a motor vehicle designed
and constructed for the carriage of goods which is of
category N1 as defined in Annex II to Directive 2007/46/EC and to vehicles of
category N 1 to which type-approval is extended in accordance with Article 2(2)
of Regulation (EC) No 715/2007.
These vehicles have a maximum mass not exceeding 3.5 tonnes. WLTP – World Light-duty Test Procedure. This is being developed by UNECE
and aims to establish a globally accepted methodology
to measure light duty vehicle emissions and energy consumption.
7.2.
Summary of the public consultation
1.
EU policy on road-vehicle greenhouse
emissions (evaluation of Part B) Analysis of responses to Questions
B.1-B.5 B.1 Setting
greenhouse emission standards for road vehicles is an important aspect of EU
action to reduce such emissions. B.2 These
standards should be in line with the greenhouse targets in the EU's roadmap to
a low carbon economy and Transport White Paper. B.3 Road
vehicle greenhouse gas emissions standards should be set based on the average
greenhouse gas emissions of new vehicles entering the vehicle fleet. B.4
Standards for road vehicles should apply equally to different technologies used
for powering road vehicles. B.5 EU
regulation of road-vehicle emissions stimulates innovation in the automotive
sector and helps keep Europe's automotive industry competitive. In general, the responses to section B of
the consultation questionnaire were quite similar amongst stakeholders and
individuals. For most questions, there was stronger support amongst individuals
towards entirely agreeing with the policy statements, while with stakeholders
there was more of a split between those who entirely agreed and those who
partly agreed with the policy statements set out in section B. Of individuals, 95% agreed that it was
important to set greenhouse gas (GHG) emission standards as part of overall EU
action to reduce such emissions while 55% of stakeholders entirely agreed and
31% partly agreed. A majority of respondents (89% of individuals
entirely/partly and 77% of stakeholders entirely/partly) agreed that these
standards should be in line with the GHG targets set out in the EU's roadmap to
a low carbon economy and Transport White Paper. The choice of the appropriate
measurement approach for setting GHG emission standards provoked a broader
range of responses. While 64% and 59% of individuals and stakeholders
respectively were in favour (entirely/partly agreed) of using the (current)
fleet average approach, 33% of all respondents were either neutral or disagreed
to some extent with setting targets based on the average GHG emissions of new
vehicles entering the entire fleet. Stakeholders (72% entirely/partly agreed)
and individuals (69% entirely/partly agreed) were mainly supportive of applying
standards equally to different technologies used for powering road vehicles,
while 72% of stakeholders and 83% of individuals agreed or partly agreed that
EU regulation of road-vehicle emissions stimulates innovation in the automotive
sector and helps keep Europe's automotive industry competitive. The number of
stakeholders who disagreed or partly disagreed that standards should be applied
equally to different technologies or that EU regulation had had a positive
impact in terms of innovation and competitiveness (12% and 13% respectively)
was proportionately higher than that of individuals. These results are shown graphically in
charts 1 and 2. Chart 1: Answers from all citizens to questions in Part B Chart 2: Answers
from organized stakeholders to questions in Part B 2.
Light-duty vehicles (cars and vans) (evaluation
of Part C) Analysis of responses to Question
C.1 C.1 Do you
think the current legislation is working and delivering tangible benefits? There was a mixed assessment of the impact
of the current legislation on light duty vehicles (cars and vans) by both
stakeholders and individuals. While 38% of stakeholders agreed that the
legislation was working, 28% felt that the legislation was not working or
delivering tangible benefits. With regard to individuals more people felt that
the legislation was not working (35 %) as opposed to those who agreed that it
was delivering benefits (30%). Quite a significant proportion of stakeholders
(34%) and individuals (35%) had no opinion in relation to question C1. This may
partly be due to the fact that the legislation has only been in force for a
short period of time (particularly the legislation on vans), and thus it is
difficult to conclusively assess the impact it has had to date. Chart 3: Answers
to question C.1 in Part C Summary of responses to Question C.2
(only answered by respondents answering no to question C1) C.2 Please
specify why the current legislation is not working and delivering tangible benefits. The respondents who felt that the
legislation was not working or delivering tangible benefits mostly argued that
the targets within the current legislation were not ambitious enough (almost
500 responses raised this point, including six from organisations). The
majority of these respondents felt that the targets should be more stringent in
order to have a greater impact on the reduction of CO2 emissions and
to encourage and stimulate the development of new technologies. Indeed over 80
respondents specifically argued that the legislation does not force technology
change, while over 50 respondents felt that non-technical policies, including
the promotion of alternative forms of transport, education and taxation, were
required to complement technical policies in reducing CO2 emissions and
affecting a culture change in the use of transport. A significant number of
these respondents also argued that progress was being made too slowly and that
greater enforcement of the current legislation and future legislation was
required (over 50 individuals). Around 40 respondents felt that the legislation
should do more to promote the use of alternative fuels. A large number of respondents (almost 200
individuals) felt that the resistance of manufacturers to fully embrace greener
technology and produce and promote cleaner and more efficient cars was a major
factor in the legislation not being effective. Indeed many of these respondents
felt that manufacturers are too powerful, have too much influence over
politicians and policymakers and are profit-driven. On the other hand, a small
number of manufacturers and individuals felt that the markets were driven by
customer needs and consumer demand and thus influencing this would be the
driver for change rather than regulation. Over 30 respondents highlighted the
need for creating incentives to purchase more efficient, greener vehicles. For
some respondents (over 60 individuals), a perceived increase in the number of
new cars in general and, in particular, high performance and 4x4 cars being
sold, indicated that the legislation was having no effect. A number of organisations (including World
Autosteel) questioned the use of tailpipe measurements, arguing that the
legislation should focus on well-to-wheel emissions to enable a better
assessment of overall vehicle emissions. Around 60 individuals also argued
that more benefits could be obtained through focussing on other initiatives,
including imposing more stringent standards on other industries and regulating
emissions of other pollutants. Over 20 respondents highlighted that the current
legislation was undermined by the fact that it does not regulate older cars, of
which there are still a large amount in use. Other comments raised by a small
number of respondents (individuals) included the need for alternatives to fleet
average measurements, weight of vehicles relative to emissions, distortion
between implementation of the legislation in member states, black carbon and
the lack of a global market for low CO2 vehicles. Analysis of responses to Question C.3 C.3 If the
Commission's analysis demonstrates that the 2020 target of 147 gCO2/km
for light-commercial vehicles is technically achievable, at reasonable cost,
should the target be confirmed? In response to this question, 83 % of
individuals and 62% of stakeholders felt that the 2020 target of 147 gCO2/km
for light commercial vehicles should be confirmed. A relatively small
proportion of stakeholders (26%) and individuals (12%) had no opinion in
relation to question C3. Chart 4 Answers to question C.3 in Part C Summary of responses to Question C.4
(only answered by respondents answering no to question C3) C.4 Please specify why the 2020 target of 147 gCO2/km for
light-commercial vehicles, if technically achievable, should not be confirmed. The respondents who did not agree that the
2020 target of 147 gCO2/km for light commercial vehicles should be
confirmed mostly argued for a more ambitious level of reductions. A large
number of individuals (over 80) claimed that, if the target can be achieved and
it is not set at the limit of feasible reductions, it may not be ambitious
enough and thus hinder innovation and delay the necessary CO2
reductions. Furthermore a small number of individuals (around 10) felt that
greater support and investment should be given to developing other
technological solutions and cleaner technology. Some individuals (around 20)
indicated that the target should be lowered to between 100-130gCO2/km
or suggested (around 10) that the target date should be shifted to an earlier
date than 2020 (e.g. 2015). On the other hand, International Road Transport
Union (IRU) and some other organisations linked to IRU (e.g. German Bus and
Coach Association) questioned the practicality of CO2 efficiency
standards claiming a fuel efficiency standard would be more appropriate and
would give greater incentives for transport operators to invest in more
efficient vehicles. Some respondents also pointed out the fact that
well-to-wheel emissions should be part of the 2020 target (City of Stockholm
and 5 individuals) or that the CO2 standard should rather become an energy
efficiency standard accompanied by standards on carbon content of fuels (2
individuals). Other comments raised by a small number of individuals (less than
5) included the need to focus on other areas in reducing CO2, the benefits
of reducing the number of vehicles on the road and the importance of not
allowing 'reasonable cost' to be a barrier to setting ambitious targets. 3.
Future developments – beyond 2020 Analysis
of responses to Questions E.1 and E.3 E.1
Road-vehicle emissions may be reduced by changes in other policies, such as
taxation. Should targets for road vehicles continue to be set, regardless? E.3 Should
the approach to regulating road-vehicle emissions consider emissions from the
whole energy lifecycle? With regard to developments beyond 2020,
there was a slight variation in the views expressed overall between
stakeholders and individuals. A majority of individuals (81% entirely/partly
agreed) and stakeholders (64% entirely/partly agreed) felt that targets for
road vehicles should be set, regardless of the potential impact of other
measures on road-vehicle emissions. Quite a significant number of stakeholders
(20%) partly or totally disagreed that targets should continue to be set for
road vehicles while less than 5% of individuals made similar responses. There was general support for a life cycle
energy approach to regulating road-vehicle emissions from individuals, with 66%
entirely agreeing that this approach should be taken and 11% partly agreeing.
Proportionally a smaller number of stakeholders were in favour of such an
approach (69% entirely/partly in favour), with 13% either being neutral on the
issue or disagreeing that a life-cycle energy approach should be adopted. Chart 5: Answers
to questions E.1 & E.3 in Part E Summary
of responses to Question E.2 E.2 In your
opinion, which are the policies in which changes might affect the setting of
greenhouse gas targets for road vehicles? Respondents to this question highlighted a
range of general policy areas in which changes might affect the setting of GHG
targets for road vehicles. A common theme in a large number of responses (over
300 individual responses and over 30 responses from organisations) was a belief
that taxation or fiscal policies could have a significant effect on the setting
and achievement of targets. Many organisations listed taxation as a key policy
area without providing further detail while some individuals highlighted
specific tax policies including general taxes on fuel/cars/maufacturers, tax
reductions/exemptions for company cars, lower taxes for low emitting vehicles,
taxation on alternative fuels and carbon taxes. A large number of respondents
(over 200 individuals) argued that policies promoting the use of alternative
transport for freight, such as rail and river, and for people, such as walking,
cycling, electric and hybrid vehicles, would have a significant effect on the
setting of GHG targets. Furthermore over 100 respondents (inc. 5 from
stakeholders) felt that policies promoting, developing and improving public
transport would be important. In addition over 60 respondents argued that
congestion policies, including environmental zoning and road charging, would
reduce overall road usage and influence the setting of GHG targets. Further
policy areas aimed at reducing road usage and long distance travel, such as
general foreign & trade policies and the promotion of local production and
consumption (over 75 individuals) were highlighted as being influential on the
setting and achievement of targets. Improved industrial and employment policies
and practices were also considered to be potential mechanisms through which
road usage could be reduced. A large number of respondents (over 120, including
Transport & Logistiek Vlaanderen (Road Haulage Association) and European
Road Haulers Association (UETR)) identified policies concerning the design,
manufacturing and sale of vehicles as being areas in which further changes and
improvements could impact on the setting of GHG targets. Policies in respect of
research, development and promotion of alternative fuels (over 90 respondents)
and energy/renewable energy (over 70 individuals) were also highlighted by
respondents as important. A number of individual respondents (over 40) and
organisations (including International Council on Clean Transportation,
European Tyre & Rubber Manufacturers Association (ETRMA), Fédération
nationale des transports routiers (FNTR), Federeation
Internationale de l'Automobile (FIA)) felt that policies concerned with
improving public education/awareness of emissions/green technology and
behavioural campaigns could have an impact on the setting of GHG targets. A
large number of respondents also felt that R&D and innovation (over 75,
including 18 organisations) and investment in infrastructure and improved urban
planning (over 60) could affect the setting of GHG targets. Organisations such as Transport for London,
Jumbocruiser Limited, International Association of Public Transport (UITP) and Verband
Deutscher Verkehrsunternehmen (VDV) highlighted emission policies such as the
EURO classes legislation as an area which could affect the setting of targets
while a significant number of individuals (over 90) provided general comments on
the actual setting of emission limits and targets. Respondents also highlighted
other general policy areas as being significant. These included general
transport policy (150+), environment policy (70+), climate change policy (20+),
air quality policy (8+), agricultural policy (10+), economic policy (75+),
social policy (30+) and health policy (10+). Analysis
of responses to Question E.4 E.4 Should
other road-vehicle greenhouse emissions also be measured, alongside carbon
dioxide (CO2)? Individuals tended to be more demanding
with regard to the issue of other road-vehicle greenhouse emissions being
measured alongside CO2. 70% of individuals agreed that other
greenhouse emissions should be measured with 5%, 3% and 4% specifically
agreeing that methane, nitrogen oxides and black carbon respectively should be
measured. Less than 1% of individuals felt that other greenhouse emissions
should not be measured. 53% of stakeholders agreed that other greenhouse
emissions should be measured with 6%, 4% and 6% specifically agreeing that
methane, nitrogen oxides and black carbon respectively should be measured. 16%
of stakeholders specified that other road-vehicle greenhouse emissions should
not be measured. Chart 6: Answers
to question E.4 in Part E Analysis of responses to Questions
E.5 & E.6 E.5 Should
longer-term indicative targets (for after 2020) be set? E.6 Please
specify for what time period (following adoption of the related legislation)? While the majority of both stakeholders
(67%) and individuals (80%) agreed that longer term indicative targets should
be set for after 2020, there was more opposition to this amongst stakeholders
with 23% disagreeing with the setting of longer term indicative targets as
opposed to only 3% of individuals disagreeing with the setting of longer term
targets. 17% of individuals and 10% of stakeholders provided no opinion on
question E5. Responses in relation to the time frame for
such legislation were quite mixed amongst both stakeholders and individuals. A
quarter of all individuals chose not to answer question E6 or expressed no
opinion, but of those that did 32% felt that the time frame for targets
(following adoption of the related legislation) should be within 5 years, 29%
specified 10 years, 15% specified 15 years and 33% specified that 20 year
targets should be set. With regard to the stakeholder responses, 63% provided
an answer to E6. Of these respondents, 17% felt that the time frame for targets
(following adoption of the related legislation) should be within 5 years, 43%
specified 10 years, 15% specified 15 years and 24% specified that 20 year
targets should be set. Chart 7: Answers to questions E.5 & E.6 in Part E Summary of responses to Question E.7
(only answered if respondents answered No to Question E5) E.7 Please
specify why long term indicative targets for after 2020 should no be set The respondents who did not agree that long
term indicative targets (for after 2020) should be set mostly argued that it
was more appropriate to focus on implementing action in the short term to
reduce CO2 and achieve the targets already set for 2020. Around 10
organisations (including representatives of the car industry) and 20
individuals questioned the practicality of setting indicative targets for
beyond 2020 without having knowledge of the developments in technology which
may or may not materialise between now and then. In addition, 10 respondents
claimed that short term targets are more achievable than unrealistic long term
targets. The International Road Transport Union further stated that, in the
absence of new procedures for the declaration of fuel consumption and CO2 generation
of complete transport units being designed, voluntary targets set by the
transport industry should be encouraged. Other comments raised by a small number
of respondents (<3) included the setting of conditioned fleet targets, the
limited positive impact of legislation on small business, the restriction of
private vehicle use and the inconvenience for hauliers of too many policy
changes. Chart 8: Answers to questions E.8 in Part E Analysis of responses to Question
E.8 E.8 The
current legislation contains vehicle-based targets until 2020. For post-2020,
should we consider alternatives to vehicle-based greenhouse gas regulation? In relation to question E.8 and the
possible consideration of alternatives to vehicle-based targets post 2020,
responses were generally quite similar amongst stakeholders and individuals.
34% of stakeholders and 29% of individuals agreed that alternatives to vehicle
based regulation post 2020 should be considered. 31% of stakeholders and 28% of
individuals felt that alternatives to vehicle based regulation should not be
considered now but be reconsidered in the future, while 15% of stakeholders and
10% of individuals felt that alternatives to vehicle based regulation should
not be considered. A significant number of stakeholders(20%) and
individuals(32%) had no opinion or chose not to answer the question. Summary of responses to Question E.9 E.9 Please
specify which alternatives The respondents who provided comments on
alternatives to vehicle based greenhouse gas regulation (post 2020) highlighted
a number of other policy areas and initiatives in which further measures could
be implemented to reduce the emission of greenhouse gases. A common theme in a
number of responses from individuals (around 65) was a desire for the promotion
and development of improved rail and river networks for the transportation of
both people and goods. These individuals argued that a reduction of road usage
is key to reducing pollution and a proportion of these respondents also
recommended that more widespread, targeted congestion measures and
road-charging policies should be implemented in towns and cities. In tandem
with these comments, a significant number of other respondents (around 40)
highlighted the importance of developing, promoting and incentivising the use
of public transport, walking and cycling as viable, affordable and safe
alternatives to the use of private vehicles. Further promotion and development
of electically powered vehicles was supported by organisations including Shecco
and Going Electric as well as individuals, as was the research, development and
promotion of alternative fuels and more sustainable/renewable energy sources
(individuals). The promotion of local production and consumption was also
considered to be economically and enviromentally advantageous by individuals. A large number of respondents (greater than
60) argued that a holistic approach was required with regard to the regulation
of all industries/sources of pollution in society, with particular reference
being made by some to the airline and energy production industries. A number of
transport and motoring organisations, including Transfrigoroute International
and IRU, highlighted the importance of implementing a wide range of initiatives
in the field of transport, energy and fiscal policy as well as industry led
initiatives to reduce fuel consumption. Taxation policy was also viewed as a
key tool by individual respondents (around 40), who argued that further
initiatives, ranging from the introduction of a carbon tax to having higher
taxes on companies/consumers producing/purchasing high emitting vehicles and
vice versa, could have a significant effect on the manufacturing, promotion and
sale of goods (in particular vehicles) with a subsequent effect on the
environment. Some respondents (around 30) also pointed
out the fact that well-to-wheel emissions should be part of all future targets
(City of Stockholm), while other respondents (around 15) supported the
introduction of a personal carbon allowance (or cap and trade) scheme. Both individual (around 15) and
organisational (including ETRMA) respondents supported the undertaking of
further research and stakeholder engagement on possible alternative policy
options and the development of new technology for reducing pollution. A number
of individuals (around 15) supported measures to regulate and improve the
design and production of vehicles, with particular focus on the energy costs
and emissions from vehicle production, the weight of vehicles and the type and
recyclability of materials used in vehicle production. 4.
Additional comments (evaluation of part
F) The comments provided as additional input
covered a wide range of issues concerning light-duty and heavy-duty vehicles. Light-Duty Vehicles A substantial number of individuals (almost
300) felt that it was essential for Europe to continue to lead by example in
making efforts to reduce GHG emissions from transport. The majority of these
respondents felt that binding legislation, which forces manufacturers to
develop, produce and promote more efficient vehicles, is key to reducing
overall transport emissions. Furthermore, a large number of individuals (around
100) specifically called for the setting of more ambitious targets and the
taking of more urgent action to reduce the impact of transport emissions,
raising concerns about the environmental consequences of delayed action on
emissions or a lack of action. Some respondents (around 20), including the
consumer organisation, highlighted the benefits to consumers of greater fuel
efficiency of light-duty vehicles and thus affordable mobility in the context
of increasing fuel prices, and called for greater use of vehicle regulation rather
than, for example, targets on share of biofuels. A similar number of
respondents (individuals) noted other co-benefits of increased fuel efficiency
such as greater energy security, better air quality, and savings on fuel
spending. Greenpeace and a significant number of individuals (around 50) called
for targets for both cars and commercial vehicles to be set for 2025 which
should be in line with the effort needed to decarbonise transport by 2050.
Public authorities generally stated that the indicative targets for 2025 and
2030 should be set prior to 2015 to give sufficient planning certainty to the
industry. A large number of individuals (over 80) felt that the car industry
had too much influence and lobbying power and that it was essential that vehicle
manufacturers were led by policymakers rather than the reverse. On the other hand, representatives of
vehicle manufacturers raised concerns over setting long-term targets and called
for the focus on implementation of the existing legislative framework.
Representatives of the automotive industry highlighted that the targets in
place are already challenging. According to these contributions, the targets
should not be dismissed as unambitious because the good progress the industry
has made is due to the substantial investments of car manufacturers in the
recent past. They called for taking account of duration of the life cycle of
products and the necessity to set the targets which are known to be achievable
already today. A delivery company raised concerns of a possible extra burden on
the vehicle users in case the legislation is unbalanced and discriminatory
across transport users. Some respondents (around 10) highlighted
the need to change the current scheme and base the legislation on the
size-based utility parameter rather than mass. The problem of unrepresentative
results of the official measurement of fuel consumption and the need to bring
it closer to reality was brought up on several occasions (including by 5
individuals). One automotive manufacturer claimed the need to shift to a
well-to-tank approach in evaluating the emissions from different sectors and
sources, e.g. electricity generation for upstream emissions and automotive
producers for tailpipe emissions. A number of individuals (around 20) and
organised stakeholders were in favour of regulating life-cycle emissions i.e.
taking into account pollution resulting from the vehicle production phase, and
involving a range of stakeholders- auto manufacturers, fuel suppliers and
users- into action to reduce CO2. Other individuals (around 35) felt
that it was important for manufacturers to continue to invest in research and
development and to improve the design and use of technology in vehicles. A lot of respondents (individuals) referred
to the need for a wider integrated legislative approach leading to behavioural
change (over 50) and greater transport efficiency e.g. incentives to shift from
personal to public transport (around 75), a reduction in road usage and
congestion (around 70), appropriate fiscal incentives (around 80), alternative
modes of freight transport such as rail and river (around 80), incentives for
and promotion of alternative fuels and energy sources (around 80) including
those in the early phase of development, a sustainable mobility policy (around
30), and the promotion of local production and consumption (around 40).
Respondents representing transport operators claimed the incentives to upgrade
their fleets to increase efficiency should be allowed to ease the burden of
upfront investments, e.g. financial incentives etc. The same respondents were
against speed limiters for light commercial vehicles claiming these could lead
to reverse modal shift to other less efficient modes of transport. Transport
associations were also concerned by the impact of legislation on SME's and lack
of coherent approach of EU transport policies. Other comments raised by a small number of
individuals (less than 10) included the need to review the current scheme by
including upstream emissions from production of fuels, extension of the scope
of CO2 standards to other categories of vehicles (e.g. non-road
mobile machinery), labelling of vehicles, personal carbon quotas, the need for
a worldwide international approach to fighting climate change, the need to
reduce emissions of all pollutants and a reduction in speed limits. 5.
6.
7.
7.1.
7.2.
7.3.
List of participants in the stakeholder meeting
6 December 2011
European Aluminium Association European Hydrogen Association Industry Grouping for a Fuel Cells and Hydrogen Joint Undertaking European Association for Battery, Hybrid and Fuel Cell Electric
Vehicles Association for Emissions Control by Catalyst European Car Manufacturers Association Conservation of Clean Air and Water in Europe Japan
Automobile Manufacturers Association HONDA
(JAMA Europe) SUZUKI
(JAMA Europe) European Renewable Ethanol Association Association of European Small Volume Manufacturers McLaren (ESCA) LOTUS Cars (ESCA) ASTON MARTIN (ESCA) Burson-Marsteller (consultant to ESCA) PEUGEOT CITROEN TOYOTA VOLKSWAGEN FIAT DENSO BOSCH European Association of Automotive Suppliers Johnson Controls International HYUNDAI Motor Company Transport and Environment European Climate Foundation Greenpeace EU Greenpeace UK DAIMLER VOLKSWAGEN
Organisme
Technique Central RENAULT BETTER PLACE Ministry of Interior, HUNGARY Ministry for Ministry of Infrastructure and Transport, ITALY Environment and Nature Policy Section of the Permanent
Representation of the NETHERLANDS to the EU Ministry of Infrastructure and the Environment, Directorate General
of the Environment, section Climate and Air Quality, NETHERLANDS Leaseurope Ministry of Economy, Trade and Business Environment; ROMANIA Ministry of Science, Industry And Technology, Automotive Industry
Department; TURKEY Office for Low Emission Vehicles, UK LEV Department for Business, Innovation and Skills, UK Department for Transport, UK The Society of Motor Manufacturers and Traders Limited Low Carbon Vehicle Partnership The International Council on Clean Transportation Verband der Automobilindustrie Ministry of Transport, BELGIUM Ministry of Environment, BELGIUM
7.4.
Summary of the stakeholder meeting of 6 December
2011
Chairman: Philip Owen, DG Climate Action The aim of this
meeting was to present to stakeholders the work carried
out so far by contractors (TNO consortium)[1] which will underpin the reviews of the modalities of achieving the 2020 targets set in Regulation
443/2009/EC (CO2/cars) and Regulation (EU) 510/2011 (CO2/vans).
In addition, the Commission also presented its intentions for
considering these emissions beyond 2020. 1.
Introduction The European
Commission, DG Climate Action opened the meeting and outlined the context of
the discussion highlighting the EU's objective of 80-95% GHG reduction by 2050
and the ongoing Commission initiatives such as 'Roadmap for the competitive
low carbon economy in 2050' and the 'Transport White Paper'. The
role of transport decarbonisation in meeting the EU 2050 targets, as well as
co-benefits of increased energy security and competitiveness of the EU
automotive industry were highlighted. 2.
Presentation of car analysis The contractor
presented the main findings of the study 'Support for the revision of
Regulation 443/2009 on CO2 from cars'. Data on vehicle fleets, technologies, costs and projections
of the likely cost and technological means of achieving the 2020 targets had
been gathered. The study analysed the cost impacts and distribution of effort
between manufacturers depending on the choice of modalities i.e. the utility
parameter (mostly mass and footprint), different shapes and slopes of the limit
value curve, and some other flexibilities (e.g. super credits, banking and
borrowing). Stakeholders
were invited to ask questions and make comments. Summary of
discussion
Costs
Stakeholders
asked for clarification regarding the differences between the alternative cost
curves included in the report, notably the differences between the curves based
on input from ACEA and those based on US EPA analysis. The environmental groups
(T&E, Greenpeace, ECF) praised an approach of looking at alternative cost
curves in particular using data from other parts of the world, and also taking
account of additional progress in average CO2 emissions in 2002-09
not explained by the technological improvements. The issue of
unexplained progress was discussed. The contractor explained that the progress
not due to technologies on the cost curve was believed to have arisen using
other technologies, powertrain optimisation and utilisation of flexibilities in
the test procedure. A significant part of the reductions were not from the
technology cost curve and it was likely that each scenario had elements of
truth. While US data was key, EU industry data could not be ignored. ECF argued
that the scenarios including this unexplained progress had to be the central
assumptions for the Commission's further analysis. ESCA stated
that in the period before the CO2/cars legislation, manufacturers
did not have so much incentive to reduce CO2 emissions and this
sudden improvement of average emissions is probably linked to careful engine
tuning, cheap technological improvements and exploiting test-cycle
flexibilities, and these would have been essentially cost free. An extensive
discussion took place regarding the extent to which the costs of meeting
emissions targets are passed through to consumers via vehicle prices. The
contractor explained that the relationship between these factors is not
straightforward, especially since the prices of vehicles have not increased
despite substantial improvement in car fuel efficiency seen in the last decade.
Even though these reductions required investment by manufacturers, the
efficiency gains in other aspects of vehicle production could have outweighed
these costs. A further Commission study[2] on this
subject was mentioned.
Utility parameter
Several
participants (SMMT, LowCVP, ESCA) enquired about the impacts of changing the
utility parameter from reference mass to footprint and the additional cost of
this shift. The consultant explained the methodology underlying the analysis
and highlighted the conclusion that the additional average cost of changing the
parameter to footprint would be only €10 higher than maintaining mass, and that
this effect is due to the usage of the same cost curve for both parameters. If
a separate cost curve was constructed for footprint it would result in lower
cost of light weighting which is more effective for footprint. The result would
therefore be a somewhat lower average cost for footprint (estimated at around
€60 less than for mass). LowCVP
expressed regret that a similar analysis based on alternative cost curves from
the US EPA analysis was not carried out in view of their much lower weight
reduction costs. The consultant explained that further work was needed to ensure
the appropriateness of the US analysis for the characteristics of the EU fleet.
A discussion regarding differences in expected costs of light weight
technologies in the EU and US followed, with an indication of a wide range of
different approaches underlying the EU and US cost assumptions.
Limit value curve
The
representative from ESCA questioned whether the linear curve was a proper
function, especially for vehicles at the extremes which are usually produced in
low volumes and have a negligible impact on total CO2. The
contractor explained that overall for the purpose of defining limit functions
there is no convincing alternative, for example non-linear curve or other
function, and that for this reason small-volume manufacturers have a separate
provision under the current scheme.
Co-benefits
T&E and
Greenpeace asked the Commission to take a proper account in the impact
assessment of the benefits resulting from greater fuel efficiency of vehicles
such as fuel savings to consumers, impact of lower demand for oil imports on
prices of oil, shift of oil expenditure to other sectors of the EU economy and
increases in employment in R&D and manufacturing.
Other interventions
The ICCT explained that the US legislation
sets a target of 50% reduction by 2025 which is supported by 13 manufacturers.
This target when translated to the EU fleet characteristics means an equivalent
of 70-80 gCO2/km. ICCT also explained that in January it will have
new information on technology cost, which seems likely to show lower costs than
the TNO analysis. Better Place stated that in their view
battery cost assumptions used were too high making electrified powertrains
appear less attractive than they already are. ACEA noted that
the study covers the issues well. It highlighted that this microeconomic
analysis should be put in the macroeconomic context of the EU economic
situation and uncertainties as to how the market will look in 2020. ACEA
expressed preference for a stable regulatory scheme and expressed concerns if a
shift from mass to footprint was favoured arguing that the correlation between
CO2 and mass is better than with footprint. Footprint may be similar
for vehicles with different design thus it does not necessarily reflect the
utility of the vehicle as claimed. ACEA stated that the majority of countries
in the world (including China, Japan, South Korea) base their CO2 or
fuel economy standards on mass. It also outlined its main concerns regarding CO2
monitoring. Finally, ACEA argued that manufacturers should have flexibility as
to how they reach the long-term target and therefore intermediate targets are
not desirable. 3.
Presentation of van analysis The contractor
presented the interim results of the equivalent analysis carried out for light
commercial vehicles (vans). The feasibility of the 2020 target for vans needs
to be confirmed and according to the updated analysis the target can be met at
an additional average cost of €550. This is lower than assumed in the 2008
report, partly due to a shorter distance to the target (the fleet average
emissions of 203g CO2/km in 2007 dropped to 181g CO2/km
in 2010). In addition, the consultants have analysed the possibility of using
the alternative utility parameters of footprint and payload. Stakeholders
were invited to ask questions and make comments. Summary of
discussion
The 2020 target
In view of the 22 gCO2/km drop
in average emissions from 2007 to 2010, T&E expressed concern as to the
discrepancy between the reduction effort expected from cars and vans and lack
of sufficient incentives to use reduction technologies that will be used in
cars. The contractor explained that the answer lies partly in the lower quality
of 2007 data and partly in a possible overestimation of the baseline. The environmental groups claimed that a
more stringent 2020 target may be necessary.
Utility parameter
The European Aluminium Association
highlighted that the utility parameter should primarily be correlated with
utility rather than CO2 and called for technological neutrality in
regulatory design. They argued that using mass as the parameter disadvantages
lightweighting. T&E argued that it was important to move away from mass
since this could reduce compliance costs and it was difficult to see why
manufacturers oppose it. The ICCT confirmed that the 2010 average in
LCV market was 180 gCO2/km according to their database, and
suggested that in order to overcome the difficulties of using footprint as a
utility parameter for vans the fleet could be split into 3 sub-segments. The
consultant highlighted possible perverse incentives for gaming due to separate
limits per category within the same legislation. Daimler highlighted that payload is one of
the most important purchasing criteria thus there is still a benefit of making
the vehicles lighter in case of a mass-based parameter. In addition, it stated
that manufacturers have been improving fuel efficiency for years leading to the
drop in average emissions. VDA also stated that the argument against mass
giving a lower incentive for lightweighting is theoretical. The contractor
disagreed with this statement claiming that some manufacturers have stopped
development in this area while in the longer term lightweighting will be an
increasingly important reduction technology. If mass is retained as a utility
parameter some of this potential will be lost.
Other issues
The representative from the Department for
Transport (UK) asked to what extent the cross-over between cars and vans was
taken into account in the cost curves. The consultant explained the cross-over
cars/vans exists and the resulting cost reductions of wide-scale application of
certain technologies in both categories. The cost curves include these learning
effects where possible but whenever reduction technologies have a different
potential in vans it is taken into account. ACEA stated that they do not see any major
change in cost estimates from the previous analysis. They also mentioned the
problems with CO2 data for vans, especially for multi-stage
vehicles. 4.
Post-2020 issues The Commission
presented its intentions for work on the post-2020 perspective for light duty
vehicles. The presentation listed the concerns associated with this timeframe,
i.e. the uncertainty as to the costs of technologies and the optimal reduction
potential, as well as the conflict between these and industry's need for
planning certainty. The presentation outlined the main points for upcoming
analysis that will look at possible alternative regulatory metrics to the
current approach of tailpipe emissions, and their impact on the attractiveness
of different technologies. Finally, the Commission explained that a certain
indication of a possible post-2020 reduction level is necessary in order to
provide the industry with planning certainty as had been the case with the 2020
target. Such indication of a potential future level of ambition could be
included in a Commission communication accompanying the proposals. Summary of
discussion LowCVP highlighted that a technology
neutral approach would mean that the entire life cycle analysis would be needed
and mentioned a study on this topic available on their website. Metrics
alternative to the tailpipe approach would give a lot more opportunities for
manufacturers to decide how to reduce their emissions. T&E supported discussion on this topic
and added that in addition to a change of metric two other issues needed to be
taken into account: change of test-cycle and revision of the Labelling
Directive. The appropriate order for these actions should be established. It
also questioned why trading schemes were included as no stakeholder was
requesting these. Greenpeace support setting intermediate targets in line with
a 95% decarbonisation objective. They stated that the car sector is able to
achieve zero emissions and that it may be necessary to accelerate reductions
beyond 2020. ACEA said that agreement was needed on
where to go, but there was no industry position on this topic yet. ACEA called
for a new integrated approach post-2020 whereby all actors involved would
contribute towards the emission reductions. Finally, ACEA expressed preference
for setting a long-term perspective first and allowing for the flexibility as
to the ways of achieving these targets. ECF highlighted the role the transport
sector has to play in decarbonisation, and highlighted that road transport can
deliver a big share of these reductions. ECF urged the Commission to set an
ambitious pathway, especially in view of expected wider penetration of electric
vehicles. VDA raised the issue of uncertainty in the
long-term perspective and questioned the possibility of defining an optimal
reduction target without knowing what is possible. The Commission explained
that the thought had been for a Communication accompanying the proposals to
contain indicative targets or ranges with a further step of detailed analysis a
few years later. It was highlighted that US legislation defines a target for
2025 already now. UK argued that a vision for emission
reductions is needed and pointed out that some of the embedded and lifecycle
emissions are regulated even if not within the vehicle Regulations. ESCA supported the view that further work
on well-to-wheel reductions is needed and would also like to see a
technology-neutral scheme, also from the point of view of emissions covering
other GHGs not just CO2. ESCA stated that trading would introduce
uncertainty. 5. Other issues Mileage weighting – in view of the potential improvement in cost effectiveness, is it
worth considering taking account of vehicle lifetime mileage in the regulatory
scheme? The participants were unenthusiastic about
this option and referred to difficulties of obtaining mileage profiles for
different categories of vehicles and EU Member States, and the need for a
robust monitoring of mileage. T&E highlighted a trade-off between complexity
and effectiveness, the danger of loopholes and the need to ensure the
environmental integrity of such a scheme. LowCVP raised concern over potential
market distortion and a lower reduction pressure on larger vehicles. VDA
mentioned the complexity, lack of data and potential disadvantages to certain
manufacturers based on their portfolio. Better Place had concerns over data,
future changes in mileage and its belief that a shift from oil was the key
objective. Eco-innovations
– is there a need to continue this flexibility? VDA and CLEPA stated that there will always
be off-cycle technologies and that it is important to provide incentives for
such innovative technologies. T&E argued that a new test-cycle that
requires all devices to be operated would remove the need for such flexibility.
Greenpeace were critical and stated that the best incentive for innovative
technologies are tough targets. UK supports the principle of eco-innovations
but thought the process could be improved and costs reduced. SMMT said that eco-innovations
help to keep the cost of compliance with the legislation down. Super-credits – in view of the fact that they lead to an increase in overall CO2
emissions, are these a desirable feature? Better Place was in favour of keeping the
super-credit scheme to advance market penetration of alternative powertrains
and phase-out oil use in transport. T&E argued the main objective of the
legislation is to save CO2 emissions with oil reduction as a
co-benefit. Greenpeace opposed super-credits and stated that EVs would already
be cost effective according to the study and so tough targets would be enough
to see more low emitting cars on the road. Other comments VDA asked the Commission to reopen the
discussion on how to incentivise consumers to make use of the technologies
appropriately (e.g. ecodriving). T&E asked for the issue of speed limits
to be considered in view of the evidence from Spain showing a 9% reduction in
fuel use following slightly lower speed limits. ICCT asked for consideration to be given to
how consumers can be encouraged to buy efficient cars and the use of
intelligent feebates and labelling. 6. Closing comments The Chairman summarised the discussion,
outlined the next steps and closed the meeting.
7.5.
General policy context
· EU commitment to reduce GHG emissions To avoid the most dangerous impacts, the EU
has a stated objective of limiting global climate change to a temperature
increase of 2ºC above pre-industrial levels. The Copenhagen Accord[3] included reference to this objective. In order to have a likely
chance to limit long term global average temperature increase to 2°C or less
compared to pre-industrial levels, global emissions need to peak by 2020 and be
reduced by at least 50% globally by 2050 compared to 1990. The EU has endorsed
this GHG emission reduction objective. The European Council reconfirmed the EU
target of 80-95% by 2050 compared to 1990 in the context of necessary
reductions according to IPCC by developed countries as a group, with the aim of
keeping average global temperature rise below 2 degree Celsius as compared to
pre-industrial levels. However, current EU policies would only lead to ca. 40%
reduction in GHG emissions by 2050. Therefore, the European Commission proposed
the 'Roadmap for moving to a competitive low carbon economy in 2050'[4] (hereinafter 'the Roadmap') looking beyond the 2020 objectives and
setting out a plan to meet the long-term target of reducing domestic emissions
by 80% by mid-century. The Roadmap provides guidance on how this transition can
be achieved in the most cost-effective way. According to the Roadmap and the
underlying analysis every sector of the economy must contribute and, depending
on the scenario compared to 1990, transport emissions need to be between +20
and -9% by 2030 and decrease by 54-67% by 2050[5]. In March 2011 the Commission also adopted
the 'Roadmap to a Single European Transport Area – Towards a competitive and
resource efficient transport system' (hereinafter the White Paper on
Transport) which outlines the main challenges facing transport, including
scarcity of oil in future decades, extreme volatility of oil prices and the
need to drastically reduce world GHG emissions. It sets out future transport
strategy within a frame of achieving a 60% reduction in transport GHG emissions
by 2050. Improving energy efficiency of transport is one of the major
contributors to the decarbonisation goal. The White Paper on Transport
complements and is fully consistent with the Roadmap. CO2 emissions from transport
have been growing over the last 20 years with an exception of 2008 and 2009
where a drop in CO2 was combined with lower transport activity due
to the economic slowdown. In 2008 around 70% of transport CO2
emissions came from road transport[6]. As a
result, it is the second biggest source of greenhouse gas emissions in the EU, after power generation and contributes about one-fifth of the EU's
total emissions of CO2. Producing the fuel consumed by road transport adds
about a further 15% to these emissions. While emissions from other sectors are
generally falling road transport is one of the few sectors where emissions have
risen rapidly. Between 1990 and 2008 emissions from road transport increased by
26%. This increase acted as a brake on the EU's progress in cutting overall
emissions of greenhouse gases, which fell by 16%. The share of LDV emissions as
a proportion of road transport emissions is not known exactly, but is believed
to lie between 66% and 75% of the total. Because the share is not known exactly
it is not possible to be certain whether overall car emissions are increasing
or decreasing. In order to tackle road transport
emissions, the European Commission implemented a comprehensive strategy
designed to reach an objective of limiting average CO2 emissions
from new cars to 120 grams per km by 2012. In a progress report[7], adopted in November 2010, the European Commission concluded that
most of the measures contained in the 2007 strategy have already been
implemented or are in the process of being implemented. The goal of reducing
new car emissions to 120 gCO2/km by 2012, as defined in the
strategy, is however not likely to be achieved because of changes to the
timeline of some measures. In addition to the measures mentioned above, a
number of complementary policies exist at EU and Member State level that assist
in achieving the Regulations' goals. These include at EU level Directive
2009/33 on public procurement of vehicles, and at Member State level sales
taxation, circulation taxes, other incentives (e.g. separate lanes or free
parking spaces) and subsidies to procure low CO2 emitting vehicles. · Innovation and competitiveness The EU is committed to innovation and
boosting industrial competitiveness. Research and
innovation drive productivity growth and industrial competitiveness. A transition
towards a sustainable, resource efficient and low carbon economy is paramount
for maintaining the long-term competitiveness of European industries. Competitiveness would be strengthened by favouring energy
and raw material efficiency and promoting innovation and deployment of cleaner
technologies along value chains with the use of long term incentives that
encourage market creation and facilitate the participation of SMEs in these
processes. The automotive industry is faced with a
number of challenges. Constraints on energy supply may exacerbate price
volatility and lead over time to higher prices which can impact on demand for
vehicles. Globally the market for LDVs is growing, however the geographical
location of demand is changing with traditional markets such as the EU and USA
stabilising but other parts of the world, Asia in particular, experiencing
significant growth in demand for LDVs. This growth is accompanied by expanding
LDV production in those areas of the world. New local manufacturers compete
primarily for market share in those new markets at present but can be expected
to compete more in the future in more traditional markets such as the EU. The benefits of ensuring alignment between fighting climate change
and encouraging innovation thus boosting competitiveness is summed up in the
Roadmap for a competitive low carbon economy which states that "…action,
sometimes more ambitious than what countries would be ready to commit to
internationally, is driven to a significant extent also by other domestic
agendas: to accelerate innovation, increase energy security and competitiveness
in key growth sectors and reduce air pollution. A number of Europe's key
partners from around the world, such as China, Brazil and Korea, are addressing
these issues, first through stimulus programmes, and now more and more through
concrete action plans to promote the "low carbon economy". Standstill
would mean losing ground in major manufacturing sectors for Europe." Increasing production and sales of LDVs in
parts of the world other than the EU, North America and Japan are likely to
result in increased competition in the automotive market. Evidence from US
suggests that failure to innovate weakens manufacturers' competitiveness.
Increased global competition for energy resources is likely to lead to higher
and more volatile prices. Parts suppliers compete globally. EU suppliers who
have developed technology for application in the EU market will be better
placed to sell this technology to manufacturers in other regions, especially if
there is a short time lag between the requirement from EU regulations and those
brought in other areas. · Energy use Oil, the main source of energy for road transport, is a limited
resource and so will become increasingly scarce in future decades. Despite
becoming more energy efficient, transport still depends on oil for 96% of its
energy needs. Gasoline and diesel supply 95% of energy
use in road transport. Road transport uses about 26% of all energy in the EU.
For every unit of energy used in road transport, the process of extracting and
refining the oil consumes a further 15%. While measures to improve performance
in that sector are outside the scope of the current policy, that energy use and
associated emissions will decrease as the energy used in vehicles reduces. This
means that cars and vans combined (hereinafter
light-duty vehicles) consume about 35% of EU oil consumption (including the
energy used in refining the fuel) and about 18% of total EU final energy
consumption. Their use results in the emission of approximately 13.5% of total
EU CO2 emissions including refinery emissions. The sourcing of oil and the market structure may lead to increasing
price volatility. While there are substantial sources of alternative fossil
fuels, these mostly result in higher greenhouse gas emissions than oil making
their use unviable in a climate constrained world. In 2005 oil prices were
around $59/barrel, since then they have been consistently higher and are
projected to more than double from 2005 levels by 2050. Globally, the number of
cars is projected to increase from around 750 million today to more than 2.2
billion by 2050[8]. Over that time transport is projected to account for almost 90% of
increased oil use. Energy security is an ongoing concern. The
share of oil expenditure as a proportion of EU GDP has reduced dramatically
since the 1970s. This has helped to improve the EU's resilience to oil price
shocks. Measures that further reduce energy consumption in transport and thus
reduce the energy needed per unit of activity in the economy, such as increased energy efficiency of vehicles, will
further strengthen the EU's energy security.
7.6.
Summary of car and van CO2
Regulations
As part of the EU's overall strategy to reduce
GHG emissions from cars and vans, two Regulations were adopted specifically
aimed at setting CO2 emission targets for new vehicles. Regulation
(EC) No 443/2009, setting emission performance standards for new passenger cars
was adopted by the European Parliament and the Council in 2009. The overall aim
of the legislation is to ensure that average emissions from new passenger cars
in the EU do not exceed 130 gCO2/km by 2015 and should decrease to
95 gCO2/km by 2020. Similarly, in May 2011,
the EU adopted legislation (Regulation (EU) No 510/2011) to reduce emissions
from vans ('light commercial vehicles'). The vans Regulation will cut emissions
from vans to an average of 175 gCO2/km by 2017 – with the reduction
phased in from 2014 - and to 147 gCO2/km by 2020 although the latter
target is subject to confirmation of feasibility. Key elements of the adopted legislation are as
follows: Limit value curve The targets in the Regulations are set
according to the limit value curves expressed as formulae (in annexes I to the
Regulations). The limit value curves differ for cars and vans and are designed
in such a way that that heavier cars/vans are allowed higher emissions than
lighter cars/vans while preserving the overall fleet average. This means that only the fleet average is regulated, so manufacturers are
still able to make vehicles with emissions above their indicative targets if
these are offset by other vehicles which are below their indicative targets. In
order to comply with the regulation, a manufacturer will have to ensure that
the overall sales-weighted average of all its new cars or vans does not exceed
the relevant limit value curve. The limit value curve has a certain slope
(parameter 'a' in the formulae). The slope of the curve
does not change the overall outcome in terms of average gCO2/km, it
only defines the distribution of reduction effort between vehicles with
different values of utility parameter, in this case mass. The curve is rotated
around the point set by the average vehicle parameter (1372 kg in case of cars
and 1706kg for vans) and the average CO2 target to be achieved by
the overall fleet (130 gCO2/km for cars and 175 gCO2/km
for vans). This ensures that the same overall target is achieved. If the curve
has a lower slope, the degree of effort required is proportionately greater
from vehicles with a larger parameter (mass or footprint). If the curve is
steeper then the effort required is proportionately greater from vehicles that
have a smaller parameter. The curve for passenger cars is set in such a
way that, compared to today, emissions from heavier cars will have to be
reduced by more than those from lighter cars (lower slope). The limit value
curve for cars is illustrated in the graph below. The limit value curve for vans is different in
its value and its slope because cars are lighter and emit less CO2
than vans. As compared to the cars limit value curve, the one for vans is
steeper. As a result a similar level of reductions is required of vans of
different sizes. The precise formula for the limit value curve
for cars is: Permitted
specific emissions of CO2 = 130 + a × (M – M0) Where:
M = mass in kg
M0 = 1372.0
a = 0.0457
The precise
formula for the limit value curve for vans is: Permitted
specific emissions of CO2= 175 + a × (M – M0) Where:
M = mass in kg
M0 = 1706.0
a = 0.093
Phasing-in of
requirements In terms of passenger cars, in 2012, 65% of
each manufacturer's newly registered cars must comply on average with the limit
value curve set by the legislation. This will rise to 75% in 2013, 80% in 2014,
and 100% from 2015 onwards. With regard to vans, as of 2014, manufacturers
must ensure that 70% of the new vans registered in the EU each year have
average emissions that are below their respective targets. In 2015, the
percentage rises to 75% and in 2016 to 80%, reaching 100% in 2017. Lower penalty payments
for excess emissions until 2018 In case of cars and vans, if the average CO2
emissions of a manufacturer's fleet exceed its limit value in any year from
2012 or 2014 respectively, the manufacturer has to pay an excess emissions
premium for each car or van registered. For both cars and vans, this premium
amounts to €5 for the first gCO2/km of exceedance, €15 for the second gCO2/km, €25 for the third gCO2/km, and €95 for each subsequent gCO2/km. From 2019, already the first gCO2/km of exceedance will cost €95. Long-term target Targets of 95 gCO2/km for new passenger cars and 147 gCO2/km for vans are
specified for 2020. Details of how these targets are to be reached, including
the excess emissions premium, are presented in a proposal accompanied by this
Impact Assessment. In addition, the 2020 target for vans is subject to
confirmation of feasibility. Eco-innovations Because the test procedure used for vehicle
type approval is outdated, certain innovative technologies cannot demonstrate
their CO2-reducing effects under the type approval test. The
manufacturers can be granted a maximum of 7 gCO2/km of emission credits on average for their fleet if they equip vehicles
with innovative technologies, based on independently verified data. Super credits Both Regulations give manufacturers additional
incentives to produce vehicles with extremely low emissions (below 50 gCO2/km). Each low-emitting car van
will be counted as 3.5 vehicles in 2012 and 2013, 2.5 in 2014 and 1.5 in 2016.
Similarly, each low-emitting van will benefit from the following multiplier 3.5
in 2014 and 2015, 2.5 in 2016 and 1.5 vehicles in 2017. This approach will help
manufacturers further reduce the average emissions of their new car and van
fleets. In case of vans, the manufacturers will be able to claim this 'super
credit' for a maximum of 25 000 vans over the 2014-17 period. Pools acting jointly to
meet emission targets Manufacturers can group together to form a
pool which can act jointly in meeting the specific emissions targets. In
forming a pool, manufacturers must respect the rules of competition law and the
information that they exchange should be limited to average specific emissions
of CO2, their specific emissions targets, and their total number of
vehicles registered. Derogations Independent manufacturers of passenger cars
who sell fewer than 10,000 vehicles per year, and who cannot or do not wish to
join a pool, can instead apply to the Commission for an individual target
consistent with their reduction potential. Manufacturers selling between 10,000
and 300,000 cars per year can apply for a fixed target of a 25% reduction from
their 2007 average emissions. Independent manufacturers of vans which sell
fewer than 22,000 vehicles per year can also apply to the Commission for an
individual target consistent with their reduction potential instead of joining
a pool. The tables below show derogations granted
in 2011 for 2012 onwards. Table 1 List of manufacturers
granted a niche derogation in 2011; *Pooling 2012-2016 No || Niche OEM derogations granted in 2011 || Registrations in 2010 1 || Fuji Heavy Industries Ltd || 30 655 2 || Tata Motors* Jaguar Cars* Land Rover* || 3582 23740 65534 Table 2 List
of manufacturers granted a small-volume derogation in 2011 No || Small volume OEM derogations granted in 2011 || Registrations in 2010 1 || Aston Martin Lagonda Ltd || 1415 2 || Caterham Cars Ltd || 135 3 || Ferrari S.p.A. || 2361 4 || Great Wall Motor Company Ltd || 344 5 || Koenigsegg Automotive AB || - 6 || Lotus Cars Ltd || 825 7 || MG Motor UK Ltd || 264 8 || Morgan Motor Company Ltd || 415 9 || Proton || 792 10 || Ssangyong Motor Company || 4785 11 || Wiesmann GmbH || 8 12 || KTM-Sportmotorcycle AG || 57 13 || Litex Motors AD || - 14 || Marussia Motors LLC || - 15 || McLaren Automotive Ltd || - 16 || Noble Automotive Ltd || - 17 || Spyker Automobielen B.V || - 18 || Mahindra Europe SRL || 48 Monitoring CO2
emissions from new passenger cars and vans Under the cars legislation, the Commission
sets down rules on the data required to monitor the CO2 emissions of
new cars. The relevant national authorities in each Member State report annual
registration figures for new cars to the European Commission, which collates
the data. Manufacturers are invited to check that the data is correct. On that
basis the Commission publishes, by 31 October each year, a list showing the
performance of each manufacturer in terms of its average emissions and
compliance with the annual emissions target. This allows for the manufacturers'
progress to be tracked. With regard to vans, the Commission laid down similar
rules on the data required to monitor the CO2 emissions of new vans.
The Member States are required to monitor and deliver this data as of 2012. For information the table below based on
monitoring data provides reported registrations by manufacturing entity for
2010 where the number of vehicles registered is below the 300,000 registrations
upper threshold for the niche derogation. The average vehicle mass and CO2
emissions are also provided. Table 3 List of manufacturers below
300 000 annual registrations (data for 2010) excluding manufacturers pooling
with OEMs larger than 300 000 registrations Manufacturer Name || Pools (P) and Derogations (D-small volume; ND- niche) || Number of registrations || Average mass || Average CO2 (100%) SEAT || || 288629 || 1278.38 || 131.162 Kia Motors Europe GmbH || || 253706 || 1399.30 || 143.272 Automobile Dacia SA || || 251938 || 1237.01 || 144.989 Volvo Car Corporation || || 204926 || 1662.43 || 156.948 Mazda Motor Corporation || || 170007 || 1339.67 || 149.458 GM Daewoo Auto u. Tech. Comp. || || 146117 || 1253.96 || 143.544 Honda Motor CO || P1 || 102890 || 1343.77 || 143.823 Honda Pool || || 174637 || 1345,28 || 146,902 Magyar Suzuki Corporation Ltd. || || 87204 || 1177.91 || 136.665 Suzuki Motor Corporation || || 85177 || 1176.15 || 144.109 BMW M GmbH || || 77120 || 1652.88 || 156.242 Mitsubishi Motors Corporation (MMC) || P2 || 72594 || 1560.20 || 165.144 Mitsubishi Pool || || 89124 || 1463,58 || 158,122 Land Rover || D || 65534 || 2351.43 || 231.494 Honda of the UK Manufacturing || P1 || 47840 || 1446.21 || 162.280 GM Italia S.r.l. || || 37670 || 1272.82 || 124.405 Dr.Ing.h.c.F. Porsche AG || || 34512 || 1855.34 || 238.859 Chrysler Group LLC || || 31121 || 1973.32 || 215.200 Fuji Heavy Industries Ltd. || ND || 30655 || 1608.03 || 179.332 Chevrolet Italia || || 25442 || 1073.45 || 117.607 Jaguar Cars Ltd || D || 23740 || 1900.33 || 199.016 Honda Automobile China CO || P1 || 20876 || 1133.46 || 126.094 Saab Automobile AB || || 19979 || 1676.64 || 175.341 Maruti Suzuki India Ltd. || || 19577 || 932.36 || 104.287 Daihatsu Motor Co. Ltd. || || 18972 || 1108.86 || 145.374 Mitsubishi Motor R&D Europe GmbH || P2 || 16530 || 1039.25 || 127.284 Dr Motor Company S. r. l. || || 4943 || 1167.22 || 138.566 Ssangyong Motor Company || D || 4785 || 2023.10 || 215.728 Autovaz || || 3911 || 1293.44 || 219.516 Tata Motors Limited || D || 3582 || 1293.00 || 151.987 Quattro GmbH || || 2596 || 1899.39 || 299.034 Ferrari || D || 2361 || 1751.12 || 322.468 The London Taxi Company || || 1662 || 1902.13 || 227.739 Maserati S.p.A. || || 1626 || 2009.18 || 362.557 Honda Turkiye AS || P1 || 1587 || 1274.84 || 156.624 General Motors Company || || 1490 || 1847.93 || 296.400 Honda Automobile Thailand CO || P1 || 1444 || 1171.03 || 142.615 Aston Martin Lagonda Ltd || D || 1415 || 1860.72 || 348.372 Bentley Motors Ltd || || 1187 || 2495.92 || 395.925 Geely Europe Ltd || || 918 || 1592.50 || 131.466 Lotus Cars Limited || D || 825 || 1159.21 || 196.596 Proton Cars United Kingdom Ltd. || D || 792 || 1394.89 || 153.557 Perodua Manufacturing Sdn Bhd || || 690 || 1013.88 || 140.230 Morgan Motor Co. Ltd. || D || 415 || 1113.67 || 189.278 Rolls-Royce Motors Cars LTD || || 413 || 2494.48 || 332.063 Santana Motor S.A. || || 382 || 1498.15 || 204.921 Great Wall Motor Company Limited || D || 344 || 1919.52 || 224.314 Automobili Lamborghini S.p.A || || 265 || 1619.11 || 357.362 MG Motor UK Limited || D || 264 || 1180.16 || 184.717 ALPINA Burkard Bovensiepen GmbH + Co. KG || || 173 || 1753.38 || 210.341 Think || || 144 || 1158.61 || 0.000 Caterham Cars Limited || D || 135 || 712.15 || 179.826 Sovab || || 94 || 2162.34 || 230.138 OSV - Opel Special Vehicles GmbH || || 67 || 1595.36 || 136.836 KTM-Sportmotorcycle AG || D || 57 || 882.89 || 179.000 Iveco S.p.A || || 49 || 2471.90 || 216.694 Mahindra Europe S.r.l. || || 48 || 2029.38 || 251.500 O.M.C.I. S.r.l. || || 46 || 1169.78 || 167.848 Shijiazhuang Shuanghuan Automobile Company || || 44 || 1874.20 || 267.682 Tesla Motors Ltd || || 40 || 1335.00 || 0.000 Potenza Sports Cars || || 31 || 715.00 || 178.000 Pgo Ingenierie || || 29 || 1058.14 || 189.828 Secma || || 26 || 658.00 || 155.000 Bugatti Automobiles S.A.S || || 8 || 2011.50 || 589.250 Wiesmann GmbH || D || 8 || 1409.88 || 257.250 Micro-Vett SpA || || 4 || 1448.75 || 0.000 Westfield Sports Cars || || 3 || 715.00 || 178.000 Artega Automobil GmbH & Co. KG || || 2 || 1420.00 || 220.000 Gumpert Sportwagenmanufaktur GmbH || || 2 || 1435.00 || 310.000 The review clause The co-legislators asked the
Commission to review the Regulations and, if appropriate, amend the existing
legal acts. Article 13(5) of the cars Regulation states: "By 1 January 2013, the Commission shall complete a
review of the specific emissions targets in Annex I and of the derogations in
Article 11, with the aim of defining: —the modalities for reaching, by the year 2020, a long-term
target of 95 gCO2/km in a cost-effective manner; and —the aspects of the implementation of that target, including
the excess emissions premium. On the basis of such a review and its impact assessment,
which includes an overall assessment of the impact on the car industry and its
dependent industries, the Commission shall, if appropriate, make a proposal to
amend this Regulation in a way which is as neutral as possible from the point
of view of competition, and which is socially equitable and sustainable.." Article 13(1) of the vans Regulation states: "By 1 January 2013, the Commission shall complete a
review of the specific emissions targets in Annex I and of the derogations in
Article 11, with the aim of defining: — subject to confirmation of its feasibility on the basis of
updated impact assessment results, the modalities for reaching, by the year
2020, a long-term target of 147 gCO2/km in a cost-effective manner,
and — the aspects of the implementation of
that target, including the excess emissions premium. On the basis of such a review and its
impact assessment, which includes an overall assessment of the impact on the
car industry and its dependent industries, the Commission shall, if
appropriate, make a proposal to amend this Regulation, in accordance with the
ordinary legislative procedure, in a way which is as neutral as possible from
the point of view of competition, and which is socially equitable and
sustainable."
7.7.
Test cycle CO2 emissions
Vehicle type approval procedures include
testing on a chassis dynamometer, to assess compliance with standards for
exhaust emissions, and measure CO2 emissions. The reported emissions
provide the data to assess manufacturer compliance with the CO2
Regulations Diverging real world and test cycle
emissions It has for some time been reported that
fuel consumption experienced in real world conditions is substantially higher
than measured in the test cycle with comparable effects on CO2
emissions. A comparison of type approval values for cars in Germany with user
reported consumption is shown in the figure below. Over the decade the
divergence is seen to have increased from 7 to 17% of type approval values. Figure 1 Illustration
of discrepancy between the test-cycle and real-world emissions; Source ICCT[9] An analysis in the Netherlands using
fuel-card data illustrates a larger absolute divergence for lower than higher
CO2 emitting cars. The graph below illustrates this increasing
divergence at lower test cycle emissions. Figure 2 Illustration
of discrepancy between the test-cycle and real-world emissions; data sourced
from TNO[10] Underlying reasons for divergence Type approval tests do not require that all
energy consuming devices in the vehicle are operating. Therefore the battery
does not need to end up at the same state of charge at the end as the
beginning, air conditioning does not need to be operated and other energy
consuming options turned off. In aggregate these elements can result in a
substantial reduction in fuel consumption and CO2 emissions compared
to real driving. As more energy consuming devices are incorporated in vehicle
this will lead to a greater absolute divergence. However, the TNO data shows
that the absolute divergence is greater for lower emitting cars (it is only
around 20g for higher emitting vehicles) so this cannot be explained by only
the unmeasured energy using equipment. As average emissions reduce, any existing
absolute divergence will become a higher percentage of the test cycle
emissions. In the case of the German data, a 7% divergence in 2001 would be an
8.5% divergence in 2010 for this reason alone. The vehicle type approval procedure is
intended to represent a typical vehicle and driving conditions. Because this
part of the procedure is performed on a single vehicle, manufacturers are
allowed some flexibility in preparing vehicles and carrying out the tests.
These flexibilities can also contribute to the divergence. Flexibilities Some examples of the potential
flexibilities available cover issues such as: –
Preconditioning; –
Running-in period; –
Test track design; –
Reference mass; –
Brakes; –
Wheel and tyre specification, and rolling
resistance; –
Tyre pressure; –
Ambient conditions; –
Laboratory altitude (air density); –
Temperature effects; –
Coast down curve or use of default load values; –
Battery state of charge; –
Gear change schedule and definition; –
Driving technique; –
DPF regeneration rates; –
Declared CO2 value. The aggregate effect of all these
flexibilities if they were all employed to reduce measured CO2
emissions might be substantial[11]. Illustration of the impact of one
flexibility Type approval tests are based on inertia
class rather than actual measured mass. It is estimated to provide a few
percent benefit to a manufacturer if the vehicle has a mass just below the
inertia class threshold rather than being evenly distributed. Actual reported
new car mass in 2010 illustrates clear bunching just below the inertia class
thresholds as shown in the figure below and analysis shows the likelihood of
mass being slightly below the thresholds is five times greater than being just
above[12]. Figure 3 Distribution
of vehicles in between inertia steps Implications for the review As shown, there has always been a deviation
between test cycle and real world CO2 emissions. However, the fact
that test procedure and real world emissions remain correlated means that using
test procedure emissions as a basis for the Regulations is sound. Assumptions
about the divergence are incorporated in the modelling carried out by the
Commission. Nevertheless, the increasing divergence
between real world and test cycle emissions has implications for the analysis
performed. The German data shows that the real world – test procedure
divergence has grown from 13g to 27g over the time period against which the car
study is carried out (since that is based on a 2002 baseline). It is not known what proportions of this
divergence are due to greater deployment of energy using equipment in cars or
to exploitation of flexibility in the test procedures. However, on the
assumption that some part of the divergence is due to greater exploitation of
flexibilities, it means that part of the progress seen since 2002 has not been
delivered through the deployment of technology on vehicles. This with other factors
leads to the "unexplained progress" when comparing vehicle CO2
performance with the technologies deployed on them. The original cost curve produced for the
analysis did not take this factor into account. However alternative cost curves
(shown in the study as (a) and (c) and referred to in this Impact Assessment as
cost scenario 2 and 4) have been prepared that do take account of this. These
show lower costs to achieve the targets because less technology is needed.
These are described in Annex 7.13.
7.8.
Description of the baseline modelling scenario
(1) Business as usual developments up to 2050 Modelling framework The Commission
has carried out an analysis of possible future developments in a scenario
at unchanged policies, the so-called “Reference scenario”. The “Reference
scenario” was used in the impact assessment accompanying A Roadmap for
moving to a competitive low carbon economy in 2050[13], the impact assessment
accompanying the White Paper - Roadmap to a Single European Transport Area –
Towards a competitive and resource efficient transport system[14] and the impact
assessment accompanying the Energy Roadmap 2050[15]. The Reference scenario is a projection of
developments in the absence of new policies beyond those adopted by March 2010.
In order to take into account the most recent developments (higher energy
prices) and the latest policies on energy taxation and infrastructure adopted
by November 2011, an additional scenario (named
Scenario 0 here) was modelled to serve as a business as usual scenario for the
present impact assessment. The business as
usual scenario (Scenario 0) is a projection, not a forecast, of developments in
the absence of new policies beyond those adopted by November 2011. It therefore
reflects both achievements and limitations of the policies already in place.
This projection provides a benchmark for evaluating new policy measures against
developments under current trends and policies. Scenario 0
builds on a modelling framework including PRIMES energy model and its transport
model (the PRIMES-TREMOVE model), PROMETHEUS and GEM-E3 models. All these
models as well as other models used by the Commission in the context of
energy-transport-climate modelling are described together with additional
information on the website: http://www.euclimit.eu/Default.aspx?Id=2.
The starting point for developing Scenario 0 is the “Reference scenario”. This
“Reference scenario” has already been extensively described in: Ø
The documentation on the website of
DG Energy, Market observatory: Energy Trends to 2030[16]. Ø
The impact assessment accompanying A Roadmap
for moving to a competitive low carbon economy in 2050, which also provides
in its Annexes additional information on PRIMES modelling undertaken in the
decarbonisation framework. Ø
The impact assessment accompanying the White
Paper - Roadmap to a Single European Transport Area – Towards a competitive and
resource efficient transport system, Appendix 3 (pages 130-152). The list
of policy measures included in the “Reference scenario” is provided in Appendix
4: Inventory of policy measures relevant for the transport sector included
in the 2050 Reference scenario (pages 153-155). Ø
The impact assessment accompanying the Energy
Roadmap 2050, Part A of Annex 1, which describes assumptions, results and
sensitivities in many details with respect to the Reference scenario
(pages 49-97)[17]. It is thus
deemed not necessary to reproduce all information contained in the above listed
references, but rather to discuss the common and different assumptions included
in Scenario 0 relative to the “Reference scenario” and to provide the most
relevant information with respect to the subject of this Impact Assessment. Due to the
detailed structure of the data by transport mode in the PRIMES-TREMOVE model
and the lack of statistics, detailed data are not available for periods before
2005 and thus not shown in this section, even if data on aggregated level are
shown prior to 2005 elsewhere. (2) Key assumptions of Scenario 0 The population
projections draw on the EUROPOP2008 convergence scenario (EUROpean POPulation
Projections, base year 2008) from Eurostat, which is also the basis for the
2009 Ageing Report (European Economy, April 2009)[18]. The key drivers for demographic
change are: higher life expectancy, low fertility and inward migration. The macro-economic
projections reflect the recent economic downturn followed by sustained economic
growth. Scenario 0 assumes that the recent economic crisis has long lasting
effects, leading to a permanent loss in GDP. The recovery from the crisis is
not expected to be so vigorous that the GDP losses during the crisis are fully
compensated. In this scenario, growth prospects for 2011 and 2012 are subdued.
However, economic recovery enables higher productivity gains, leading to
somewhat faster growth from 2013 to 2015. After 2015, GDP growth rates mirror
those of the 2009 Ageing Report. Hence the pattern of Scenario 0 is consistent
with the intermediate scenario 2 “sluggish recovery” presented in the Europe
2020 strategy[19].
The medium and long term growth projections follow the “baseline” scenario of
the 2009 Ageing Report (European Economy, April 2009)18, which
derives GDP growth per country on the basis of variables such as population,
participation rates in the labour market and labour productivity. The population
and macroeconomic assumptions used in Scenario 0 are common with those of the
“Reference scenario”. Table 4: EU27 growth rates
for key Scenario 0 assumption annual growth rates [%] || 2010 > 2020 || 2020 > 2030 || 2030 > 2040 || 2040 > 2050 Population || +0.29 || +0.12 || +0.00 || -0.09 Number of households || +0.65 || +0.40 || +0.31 || +0.23 GDP || +2.21 || +1.74 || +1.50 || +1.45 Household income || +1.91 || +1.43 || +1.58 || +1.55 The energy
import prices projections in Scenario 0 are based on a relatively high oil
price environment and are similar to reference projections from other sources[20],[21]. The Scenario 0 price
assumptions for the EU27 are the result of world energy modelling (using the
PROMETHEUS stochastic world energy model[22])
that derives price trajectories for oil, gas and coal under a conventional
wisdom view of the development of the world energy system. The price
development to 2050 is expected to take place in a context of economic recovery
and resuming GDP growth without decisive climate action in any world region.
Prices were derived with world energy modelling that shows largely parallel
developments of oil and gas prices[23].
The actual assumed prices for fuel import prices are shown in Table 5
and resulting end-user prices are shown in Figure 4. Table 5: Energy import
prices $'10 per boe(*) || 2010 || 2020 || 2030 || 2040 || 2050 Oil || 85.2 || 89.0 || 106.6 || 116.9 || 127.6 Gas (NCV) || 53.8 || 62.5 || 77.1 || 87.4 || 99.0 Coal || 22.8 || 28.9 || 32.8 || 32.8 || 33.7 (*) $'10 = U.S.
Dollar of year 2010; boe = barrel oil equivalent Similarly to
the “Reference scenario”, the price of the CO2 emissions
allowances in the EU Emissions Trading Scheme reaches 15 €'10/tCO2 by 2020 and is further projected to reach and
stay around 50 €'10/tCO2 in period 2040-2050 in Scenario 0.
This price evolution is fully consistent with price
evolution in Reference scenario used in the impact assessments referenced
beforehand. Figure 4: Fuel prices
and taxes in Scenario 0 Table 6 lists the policy assumptions which are included in
Scenario 0 in addition to the policy assumptions of the "Reference
scenario”. Table 6: Additional
policy assumptions Area || Measure || How it is reflected in the model Efficiency standards || Update of the CO2 standards for vans according to the adopted regulation[24] || Implementation of CO2 standards for vans (175 gCO2/km by 2017, phasing in the reduction from 2014, and to reach 147 gCO2/km by 2020). Taxation || Energy Taxation Directive (proposed revision in 2011) || Changes to minimum tax rates to reflect the switch from volume-based to energy content-based taxation and the inclusion of a CO2 tax component. Where Member States tax above the minimum level, the current rates are assumed to be kept unchanged. For motor fuels, the relationships between minimum rates are assumed to be mirrored at national level even if the existing rates are higher than the minimum rates. Tax rates are kept constant in real terms. Internalisation of local externalities || Eurovignette Directive (Directive 2011/76/EU) || Introduction of infrastructure charges in Poland (starting with 2011) and the announced introduction of distance based infrastructure charges in Denmark and Belgium (from 2014). Infrastructure || TEN-T guidelines (revision 2011) and Connecting Europe Facility || Reflected through the increase in the capacity and performance of the network resulting from the elimination of bottlenecks and addition of missing links, and increase in the train length (to 1.5 km) and maximum axle load (to 22.5 tonnes), reflected through decreases in operation costs and time costs and higher load factors for freight. Internal market || Recast of the first railway package (2010) || Reflected through a reduction of average operating costs for railway undertakings. Energy import prices || || Short-term increase reflecting price evolution up to 2010 as in the Energy Roadmap 2050. Technology assumptions || Higher penetration of EVs reflecting developments in 2009-2010 national support measures and the intensification of previous action programmes and incentives, such as funding R&D projects to promote alternative fuels. || Slightly higher penetration of EVs. Assumed specific battery costs per unit kWh in the long run: 390-420 €/kWh for plug-in hybrids and 315-370 €/kWh for electric vehicles, depending on range and size, and other assumptions on critical technological components[25]. Figure 5: Real world
emissions estimates implementations in Scenario 0 Figure 6: Real world
efficiency of new medium sized passenger cars in Scenario 0 (b)
Implementation of Regulations (EC) 443/2009
and (EU) 510/2011 Regulation (EC)
433/2009 and Regulation (EU) 510/2011 were discussed and agreed in the
co-decision process while the previous modelling framework was updated. Since
there were some adjustments to the Regulations before they were agreed, these
Regulations might be implemented with some minor deviation from the
implementation presented here in the impact assessments
which accompany A Roadmap for moving to a competitive low carbon economy in
2050, White Paper - Roadmap to a Single European Transport Area – Towards a
competitive and resource efficient transport system and the Energy
Roadmap 2050. There is
growing evidence of increased discrepancy between test cycle and real world
emissions. These are for example described in a JRC study: Parameterisation
of fuel consumption and CO2 emissions of passenger cars and light
commercial vehicles for modelling purposes[26].
Also real world evidence was documented and analyzed by
TNO Industrie en Techniek: CO2 uitstoot van personenwagens in
norm en praktijk – analyse van gegevens van zakelijke rijders[27]. Figure 5
shows the discrepancy between estimated real world emissions and the test cycle
emissions in Scenario 0 of the PRIMES-TREMOVE model. Figure 6
shows an example of assumed development in the Scenario 0 of energy efficiency
for medium sized passenger cars over time for various technologies. It has to
be noted that this is tank-to-wheel efficiency and thus efficiency of the fuel
manufacturing is not included. As noted in the impact assessment accompanying
the Low Carbon Economy Roadmap: There is a strong correlation between what
can or should be done in the transport sector, and what can or should be done
in the power sector if the economy is to be decarbonised, i.e. reduce GHG
emissions with around 80%. ... This is due to the impact of electrification
itself on both the emissions in the transport sector (a lowering effect on
emissions) as well as the power sector (an increasing effect on emissions due
to the increased demand for electricity). The sum of emissions from both
sectors follows a rather consistent path towards decarbonisation, independent
of the scenario chosen. … in the future all ETS sectors will be impacted by
developments in the transport sector, such as electrification, even if the road
transport sector is not part of the ETS. Thus it has to be kept in mind
that transport evolution analyzed in our scenario is following the Ceteris
paribus principle and in our analysis we do not assume any further
decarbonisation of other economy sectors than those indicated in Scenario 0. (c) Scenario 0 results (focusing on cars and vans) Total transport
activity is projected to grow in the next 40 years. Even though some
decreases were observed recently as a consequence of the recent economic and
financial crisis, the recovery foreseen is reflected by transport activity
returning to its long-term trends. Road transport is expected to maintain its
dominant role in both passenger and freight transport within the EU. Passenger
transport by rail is projected to grow faster than passenger transport by road,
while the growth rates in road and rail freight transport are expected to be in
the long run more similar. Air transport and fast passenger trains are foreseen
to grow significantly (and roughly at the same rate) and thus increase their
shares in transport demand. Table 7: Transport
activity growth rates in Scenario 0 || 2010 > 2020 || 2020 > 2030 || 2030 > 2040 || 2040 > 2050 Activity changes measured in Gvkm Road transport || 1.35 || 0.68 || 0.60 || 0.38 Public road transport || 0.87 || 0.44 || 0.41 || 0.24 Busses || 1.76 || 1.18 || 0.43 || 0.22 Coaches || 0.47 || 0.07 || 0.39 || 0.26 2Wheelers || 1.39 || 1.02 || 0.60 || 0.41 Private cars (M1) || 1.33 || 0.69 || 0.55 || 0.36 Small cars || 1.22 || 1.10 || 0.67 || 0.40 Medium cars || 1.93 || 0.27 || 0.27 || 0.22 Big cars || -2.02 || 1.76 || 1.80 || 0.95 Passenger LDV (N1) || 1.58 || 0.78 || 0.62 || 0.38 Road Freight Transport || 1.46 || 0.65 || 0.82 || 0.52 Trucks (HDV) || 1.66 || 0.53 || 0.80 || 0.50 HDV 3.5 - 7.5 tons || 1.52 || -0.08 || 1.03 || 0.43 HDV 7.5 - 16 tons || 2.10 || 0.67 || 0.63 || 0.52 HDV 16 - 32 tons || 1.57 || 0.79 || 0.88 || 0.49 HDV >32 tons || 1.56 || 0.55 || 0.62 || 0.54 Freight LDV (N1) || 0.69 || 1.16 || 0.99 || 0.65 Activity changes measured in Gpkm for passenger and Gtkm for freight Passenger rail transport || 1.87 || 1.95 || 1.05 || 0.72 Freight trains || 2.34 || 1.35 || 0.78 || 0.58 Aviation || 3.79 || 2.55 || 1.50 || 1.28 Passenger inland navigation || 0.96 || 0.86 || 0.47 || 0.31 Freight inland navigation || 1.45 || 1.43 || 0.56 || 0.27 As can be seen
from Figure 9, the energy use of cars and vans is projected to
continue to decrease between now and 2050, despite increased activity (Figure
8). This is due to the observed recent decrease in the efficiency of new
cars and vans in the EU as well as the expected effects of the Regulation (EC)
433/2009 and Regulation (EU) 510/2011. The use of alternative fuels (LPG, CNG,
electricity and hydrogen) is expected to remain limited in Scenario 0. Their
share is foreseen to increase from 3.3% in 2005 to 8.0% in 2050. However this
is not mostly due to increases in their energy quantities consumed, but rather
due to decrease in gasoline and diesel use. The gasoline/diesel ratio for use
in cars and vans (including respective biofuels blends) drops from 1.3 in 2005
to nearly 1 in 2020, but it is expected to rebound back to 1.2 by 2050. Figure 7: Transport
activity of light duty vehicles (cars & vans) Figure 8: Energy use
of light duty vehicles (cars & vans) Figure 9: Energy use
of light duty vehicles (cars & vans) by fuel Figure 10: TTW CO2
emissions of light duty vehicles (cars & vans) Figure 11:
Decomposition of TTW CO2 emissions of cars Reductions in CO2
emissions (Figure 10) are somewhat bigger than reductions in energy
use due to the anticipated small increase in the use of biofuels and expect
future use of electricity in electric vehicles and plug-in hybrids (these fuels
are counted as zero emissions fuels in transport sector as their emissions are
accounted elsewhere). Compared to 2005, CO2 emissions from cars and
vans in Scenario 0 are 26% lower in 2030 and 36% lower in 2050. While detailed
official historical statistics of CO2 emissions from cars and vans
within road transport sector are not available, estimates suggest that between
1990 and 2005 the CO2 emissions of cars and vans increased by around
20%. With that in mind, one can roughly estimate CO2 emissions
changes with respect to 1990: in 2030 at around -10% and in 2050 at around
-20%. A decomposition
of passenger cars CO2 emissions into the product of population,
average annual distance driven per capita, energy per kilometre (approximation
for the energy efficiency) and carbon intensity of fuels is shown in Figure 11
(variant of the Kaya identity). While in the last 20 years (period 1990-2010)
the improvements in energy efficiency and carbon intensity of fuels where not
able to offset the increases in population and distances driven, as a
consequence of the implemented regulations and directives (on vehicles as well
as on fuels) some significant improvements can be seen in the period 2010-2030.
While several policies have long lasting effects even after 2030, the rate of
efficiency improvements and fuel carbon intensity are assumed to slow down
significantly (period 2030-2050) in the absence of any additional policy
measures. (3) Scenario 1 - sensitivity: lower efficiency improvements Scenario 1 is a
counter-factual scenario whereby a hypothetical situation without 2020 CO2
regulation target for cars and vans in place and considerably lower efficiency
improvements in cars and vans to those assumed in Scenario 0 up to 2050. Such
scenario quantifies how much the 2020 targets and further efficiency
improvements bring in terms of energy and CO2 savings. In Table 11
the exact rates of improvements in Scenario 0 and Scenario 1 are compared. While in general the impact on total
passenger transport activity is small, modelling results suggest that if there
were no regulation standards in 2020 and beyond, there would be more transport
activity of big passenger cars replacing some of the medium passenger cars'
activity. Some shift to buses could also be observed but it would be very
limited (slightly less than 1% additional activity by buses), as the transport
by cars is more expensive. One has to keep in mind that Scenario 0 activity
increase is slightly above 30% between 2010 and 2050 for passenger cars. The increase in CO2 emissions is
roughly the same as the increase in energy use, however due to slightly
different structure of fuel use there is a minor discrepancy between increased
energy use and CO2 emissions (the gasoline to diesel use ratio for
cars and vans in Scenario 0 is 1.21 in 2050, however in scenario 1 this ration
is 1.15). Table 8: Key
differences for passenger cars in Scenario 1 compared to Scenario 0 cars || 2020 || 2030 || 2040 || 2050 vehicle-km || -0.6% || -0.8% || -0.9% || -1.0% energy || +6.1% || +11.9% || +15.5% || +18.6% TTW CO2 || +6.0% || +12.1% || +15.9% || +19.1% There is no significant direct impact on
air pollutant. Air quality standards (EURO) are assumed to be independent of
fuel consumptions and CO2 emissions in the modelling and as total
distance driven is not significantly changed and is partly compensated by modal
shift to buses, effect on air pollutant emissions is very small. It is important to note that increased
energy costs (fuel spending) in Scenario 1 are directly proportional to energy
use increases as the change in fuel use composition is only very minor. A similar magnitude of changes for light
duty vehicles (vans) can be observed as for cars (Table 9). Table 9: Key
differences for light duty trucks (vans) in Scenario 1 compared to Scenario 0 vans: all || 2020 || 2030 || 2040 || 2050 vehicle-km || -0.7% || -1.4% || -1.6% || -1.6% energy || +2.9% || +8.5% || +14.6% || +17.8% TTW CO2 || +2.9% || +8.4% || +14.6% || +17.8% vans: passenger || 2020 || 2030 || 2040 || 2050 vehicle-km || -0.8% || -1.3% || -1.3% || -1.2% energy || +2.8% || +8.7% || +15.3% || +18.9% TTW CO2 || +2.8% || +8.7% || +15.3% || +18.8% vans: freight || 2020 || 2030 || 2040 || 2050 vehicle-km || -0.6% || -1.6% || -2.3% || -2.5% energy || +3.0% || +8.0% || +13.1% || +15.7% TTW CO2 || +3.0% || +7.9% || +13.1% || +15.6% Overall we can conclude that implementing
2020 targets for cars and vans saves 27 Mt CO2 already in year 2020
due to the gradual adaptation of vehicles beforehand (difference in CO2
emissions in Scenario 1 and Scenario 0). These savings increase to 39 Mt CO2
in years 2025 and to 49 Mt CO2 savings in 2030. The cumulative
savings in period 2020-2030 can be estimated (based on the modelling results)
at around 422 Mt CO2, which is equivalent to annual CO2
emission of passenger cars and vans in 2030 in Scenario 0 (424 Mt CO2).
Total cumulative savings in period 2020-2050 are at 1.6 Gt CO2. Compared to Scenario 0, the CO2
emissions of passenger cars in year 2020 are 24.9 Mt CO2 higher in
Scenario 1 (aka in case 2020 targets are not implemented). For vans this
difference is 1.3 Mt CO2 and 0.6 Mt CO2 for passenger and
freight respectively. In 2030 the CO2 emissions in Scenario 1 are
further increased compared to Scenario 0: 43.6 Mt CO2 for passenger
cars, 3.7 Mt CO2 for passenger vans and 1.6 Mt CO2 for
freight vans. Table 10: Additional CO2
emissions in Scenario 1 compared to Scenario 0 Mt CO2 || in year 2020 || in year 2030 || in period 2020-2030 || in period 2020-2050 passenger cars || 24.9 || 43.6 || 383.6 || 1 437.2 vans: passenger || 1.3 || 3.7 || 26.5 || 140.8 vans: freight || 0.6 || 1.6 || 11.7 || 57.8 Total || 26.8 || 48.9 || 421.8 || 1 636.7 Table 11: Improvements
in modelled average efficiency of new vehicle registrations shown by category
and decade for the period between 2010 and 2050 for scenario 0 and 1 % p.a. || Scenario 0 || Scenario 1 10>20 || 20>30 || 30>40 || 40>50 || 10>20 || 20>30 || 30>40 || 40>50 Small cars Diesel Conventional || -1.01 || -0.80 || -0.52 || -0.63 || -0.38 || -0.18 || +0.01 || -0.16 Diesel Hybrid || -0.92 || -0.60 || -0.40 || -0.58 || -0.35 || +0.02 || +0.13 || -0.03 Gasoline Conventional || -1.80 || -0.62 || -0.64 || -0.08 || -0.86 || -0.26 || -0.20 || +0.04 Gasoline Hybrid || -0.77 || -0.88 || -0.53 || -0.07 || -0.26 || -0.27 || -0.03 || +0.16 Medium cars Diesel Conventional || -2.99 || -0.81 || -0.53 || -0.84 || -1.67 || -0.49 || -0.11 || -0.25 Diesel Hybrid || -2.15 || -0.60 || -0.33 || -0.58 || -1.24 || -0.15 || +0.14 || -0.06 Gasoline Conventional || -1.39 || -1.11 || -0.89 || -0.76 || -0.66 || -0.60 || -0.27 || -0.25 Gasoline Hybrid || -2.07 || -1.20 || -0.55 || -0.45 || -1.35 || -0.49 || -0.03 || -0.01 Large cars Diesel Conventional || -1.84 || -1.27 || -0.21 || -0.62 || -0.96 || -0.62 || +0.35 || -0.24 Diesel Hybrid || -1.69 || -0.54 || -0.55 || -0.58 || -0.88 || +0.07 || -0.02 || -0.20 Gasoline Conventional || -1.10 || -0.98 || -0.88 || -0.87 || -0.52 || -0.65 || -0.23 || -0.25 Gasoline Hybrid || -2.35 || -0.88 || -0.46 || -0.52 || -1.32 || -0.45 || -0.02 || -0.03 Light duty vehicles-passenger Diesel Conventional || -1.11 || -1.22 || -0.84 || -0.54 || -0.45 || -0.31 || -0.22 || -0.11 Diesel Hybrid || -1.19 || -1.03 || -0.81 || -0.50 || -0.50 || -0.03 || -0.20 || -0.14 Gasoline Conventional || -0.89 || -0.55 || -0.64 || -0.69 || -0.36 || -0.21 || -0.23 || -0.18 Gasoline Hybrid || -1.46 || -0.80 || -0.58 || -0.54 || -0.92 || -0.24 || -0.14 || -0.02 Light duty vehicles-freight Diesel Conventional || -1.12 || -1.18 || -0.87 || -0.56 || -0.47 || -0.28 || -0.25 || -0.14 Diesel Hybrid || -1.14 || -1.10 || -0.84 || -0.52 || -0.49 || -0.12 || -0.22 || -0.15 Gasoline Conventional || -0.88 || -0.35 || -0.60 || -0.61 || -0.31 || +0.02 || -0.18 || -0.13 Gasoline Hybrid || -1.21 || -0.52 || -0.51 || -0.55 || -0.66 || +0.00 || -0.06 || -0.07
7.9.
Impacts on competitiveness
Introduction In analysing impacts on competitiveness a distinction
should be made between different affected sectors and different markets. There
may be an effect on the competitiveness of European businesses, relative to
each other or to companies from outside the EU, on the European market and on
other, global markets. Impacts on competitiveness may be viewed from the
perspective of the European economy as a whole based on the competitiveness of
European companies on global markets. Overall economic impacts, as discussed in chapter 5, do not
directly lead to impacts on competitiveness. To analyse these it needs to be
assessed, for different categories of companies, whether various economic
impacts are different for different companies operating on the same market. All affected sectors will be discussed but the focus of
this annex will be on competitiveness impacts in the automotive sector. This annex first identifies the sectors which are possibly
affected. Then an assessment is given of impacts with respect to general
drivers that may affect competitiveness. In addition to that impacts on the
capacity of affected companies to innovate are assessed. Based on these general
evaluations and additional information from available studies the impacts on
competitiveness of businesses in different affected sectors are analysed in
more detail. After that specific attention is paid to impacts on SMEs. Which are the affected sectors? The main sectors directly affected are light duty vehicle
manufacturers and component suppliers. These sectors need to develop and
apply new technologies in order to reduce the CO2 emissions of new
passenger cars and light commercial vehicles. Many of the technologies included
in the cost curves for 2020 are already available today and are being applied
or are starting to be applied in production vehicles. The main actions required
by the vehicle manufacturers and component suppliers therefore are to further
increase the technical and commercial maturity of new technologies required to
meet the 2020 targets and to timely develop vehicles in which these
technologies are applied to the required extent. There may be an effect on the competitiveness of European
businesses in the automotive manufacturing sector, relative to each other or to
companies from outside the EU, on the European market and on other, global
markets. Indirect impacts on other sectors in the vehicle
manufacturing supply chain might e.g. arise due to demand for different
materials. While there may be economic impacts on car dealers and
distribution networks (e.g. through pressure on dealer margins) it is not
expected that their mutual competitiveness will be directly affected. Indirect effects
could result from the impacts of the implementation of the 2020 targets on the
car manufacturers represented by these dealers, but such effects are not
considered intrinsic to the nature of the regulation. Indirect impacts on sectors outside the supply chain
are likely to be mainly felt in the fuel supply sector and in sectors using
light duty vehicles. The competitiveness of companies in the fuel supply
sector might be affected as a result of the reduction in fuel consumption. Users of passenger cars and light commercial vehicles will generally benefit from the lower total
cost of vehicle ownership. This is especially the case for light commercial
vehicle users, where the payback period of the additional vehicle costs
associated with applying CO2-reducing technologies is very short.
These changes will lead to further indirect impacts as costs of using energy
and of carrying out the transport elements of business will decrease. This is
not expected to affect the competitiveness of companies competing on the
European market, but may to some extent benefit the global competitiveness of
internationally operating companies and of the European economy as a whole. Overall changes in the price of passenger transport by car
and goods transport by LCVs could affect the competitiveness of road transport
relative to suppliers of alternative forms of passenger mobility or goods
transport. This could result in modal shifts. Overview of the affected sectors The automotive
industry is one of Europe’s key industrial sectors, and its importance largely
derives from its linkages within the domestic and international economy and its
complex value chain. In 2007, the automotive sector had a turnover of over €780
billion[28] and value added in the automotive sector amounted to around €140
billion, representing about 8% of European manufacturing value added. The
sector directly employs more than 2.3 million people (or around 6% of
manufacturing employment) and is responsible in total for more than 12 million
jobs across Europe, about 5.5% of EU-27 employment. Most of the employees (ca.
60-70%) are engaged in skilled (or semi-skilled) manual work, while 30-40% are
trained professionals or technicians (e.g. engineers, business and sales
specialists, IT, quality control, marketing, management). Automotive
industry employment in manufacturing is particularly important in Germany (≈
13% of manufacturing employment), Sweden (≈ 9%) and in France, Belgium, the
Czech Republic and Spain (≈ 8% each). Before the financial crisis, there had
been a trend of increasing employment in the automotive sector in the new
Member States, where some manufacturers have been installing substantial
additional production capacity, while declines have been observed in some EU-15
countries. New Member States offered location advantages based on their skilled
labour, lower labour costs and tax policy, which, combined with the EU
regulatory framework context and proximity to major markets, led to a high
level of automotive-related investment into the region. In recent years most of
investment in new EU production capacity was in the new Member States. A decline in
demand and production since mid-2008, due to the financial crisis, brought a
significant number of job cuts. The industry has strived to preserve its core
and most-skilled staff by reducing its temporary and agency workforce and
short-term measures (temporary shut-downs, shorter working weeks, salary cuts,
voluntary departures and early retirement). In the first quarter of 2009, a net
loss of more than 21,000 jobs in the sector was reported following a net loss
of almost 32,000 in the last quarter of 2008. It should be noted that although
these figures are heavily impacted by the crisis they also reflect the
restructuring effort undertaken by the industry. Recent statistics, such as
those in the European Competitiveness Report 2011, have indicated that market
conditions improved in 2010 with a subsequent increase in production following
the decline in the previous two years. The number and distribution of firms in the
automotive sector including the share of SMEs The automotive
sector can be divided into suppliers (who, in turn are split into different
“tiers” depending on the complexity of the contribution to the automotive
product) and Original Equipment Manufacturers (OEMs, who are responsible for
the final product itself). Supply chain management (process innovation) is one
of the key strengths of the European automotive industry and major European
suppliers are among the world leaders. Typically,
about 75% of a vehicle’s original equipment components and technology are
sourced from the automotive suppliers. According to CLEPA (the European
Association of Automotive Suppliers), the supplier sector includes some 3000
companies, of which 2500 are SMEs employing over 3 million people. European
suppliers are recognised as world leaders in technology and innovation,
particularly in electronics, powertrain and driveline components. The
automotive value-chain provides an important outlet for sectors such as
mechanical and electrical engineering, electronics, steel, metal-working,
chemicals and rubber. It is estimated that for €1 of value added by the
automotive industry itself, supporting industries generate approximately €2.7
of additional value added. The automotive
aftermarket consists of approximately 665,000 companies[29], the vast majority of which are SMEs and employs approximately 3.5
million people and provides around €82 billion worth of components (spare
parts, tyres, accessories, etc.). EU motorists are estimated to spend around
€140 per year on components and services for passenger cars. Labour productivity or total factor productivity In 2010, the
European automotive industry produced about 16.4 million cars and light
commercial vehicles, equivalent to about 27% of total production worldwide (15
million of which were cars). The sector has on average produced 16.4 million
passenger light duty vehicles over the period 2008-2010, which, considering
that this covers the financial downturn, is an indication of overall strength
and robustness. For the recent past, it is difficult to disentangle the
evolution of the industry from the effects of the economic downturn. In view of
this the figures given below for the period 2005-10 should be treated with
caution since they cover the period of extreme turbulence.
Average annual
growth rate of employees was -2.4%.
Average annual
growth rate of hours worked was -2.6%.
Average annual
growth rate of labour productivity per person employed, which measures
output divided by the number of people employed was 1.4%.
Labour
productivity per hour worked average annual growth rate was 1.5%.
Average annual
growth rate of unit labour cost, which measures the average cost of labour
per unit of output was 0.3%.
Market share of the world market In 2007, the EU
automotive industry held a global market share of about 27% and this remains
relatively stable. Exports and imports vary but in 2010 it was estimated that
EU-27 car exports amounted to €83 billion and imports €26 billion, giving a
trade surplus of €57 billion[30]. Germany is by far the
biggest vehicle exporting EU Member States, and is responsible for around half
of the EU total. In 2008, only Japan exported more cars than the EU. In terms of car
trade the four main partners with which the EU has a surplus are NAFTA, EFTA,
China and the Middle East. In 2009, more than 40% of EU car trade surplus came
from EU exports to NAFTA, 21.4% to EFTA, 19.7% to China and 12.4% to the Middle
East. Japan is the fifth largest destination of EU exports (5.6%) but is also
the EU’s biggest car trade deficit (€ -5.2 bn), as EU imports are about five
times its exports. Other trading partners with which the EU car trade balance
is in deficit are South Korea (€ -1.8 bn), India (€ -1.4 bn) and Turkey (€ -1.2
bn), as its imports are 3, 15 and 1.5 times higher than the value of its
exports to those countries. Within the EU
significant net exporters are Germany, France and Spain, whereas net importers
are UK and Italy. Germany produces about 50% more vehicles than it sells
domestically, while Italy has been producing about half the number of units
sold in the country. Central and Eastern Europe countries have been producing
about 11 vehicles for every 10 consumed in their markets (Czech Republic,
Slovakia and Poland produce each at least twice as many vehicles as consumed
domestically). However, due to the important and intensified international
division of labour along the value chain, especially within the European Single
market, the story-line behind production and trade figures is much more
complex. Indeed, it is estimated that for car manufacturers in bigger EU
countries such as Germany, France or Italy about 40% (in value terms) of the
components of a car assembled has been imported, 25% of which from other EU
countries. For manufacturers in smaller countries, this share is estimated to
be significantly higher. The revealed
comparative advantage index, which compares the share of a given industry's
exports in the EU's total manufacturing exports with the share of the same
industry's exports of a group of reference countries, was 1.22 in 2007 and 2008
and 1.3 in 2009. In comparison, the revealed comparative advantage index in the
USA in 2009 was 0.96 and in Japan was 2.13. An RCA index greater than one
indicates that the EU vehicle manufacturing industry continues to be very
competitive at an international level. The implementation of the 2020 targets
is unlikely to change this position. In the
long-term, European manufacturers are therefore well placed to take advantage of
any market opportunities and Community trade policy plays a supportive role in
terms of enabling fair market access. In terms of market share, production
volumes, value added, employment levels and net trade position, the industry
has maintained its global competitiveness in recent years. The EU has
traditionally enjoyed a significant trade surplus in automotive industry
products and it is not expected that the 2020 targets will impact on this. Foreign Direct Investment (ratio of
inward/outward FDI stock to value added) In 2008, Eurostat estimated that the level of inward FDI
(stocks), which measures the direct investment from outside the EU in the EU27
in respect of vehicles and other transport equipment to be €22.9 billion. The
outward investment, which indicates the level of investment of EU companies in
foreign markets, was estimated to be €60.4 billion. Indirectly affected sectors Indirect impacts on sectors outside the supply chain are
likely to be mainly felt in the fuel supply sector and also by vehicle users
who will benefit from lower total cost of ownership. These changes will lead to
further more indirect impacts as the cost of energy and the transport elements
of business decrease. Fuel supply sector[31] In terms of the fuel supply sector, the two
main types of enterprises which will be affected are filling stations and fuel
refineries. In 2006 there were around 74,000 enterprises classified as retail
sale of automotive fuel in the EU-27, less than 10% of all motor trade
enterprises (which includes the wholesale, retail sale and repair of motor
vehicles and motorcycles, as well as the retailing of automotive fuels and
lubricants). These enterprises generated €178 billion of turnover, from which
resulted €14 billion value added, 13.4 % and 8.6 % of the motor
trades total respectively. The sector employed half a million people,
11.8 % of the motor trades workforce. Contributions from some Member
States (e.g. France) may be low, due to a large proportion of fuel being sold
through service stations that belong to retailers classified under retail trade
rather than retailing automotive fuels. The pattern of turnover for the retail sale
of automotive fuels in the EU-27 was less steady than motor trade as a whole,
particularly between 1998 and 2005. The retail sale of automotive fuels grew
strongly to 1999 flattened out from 2000 to 2002, at a time of continued growth
across motor trades as a whole. This was followed by much stronger growth
through to 2005. However oil prices changes should be taken into account when
analysing these findings, as the volume of automotive fuel may have fallen
while sales in value terms rose (due to significant price increases). In 2006 there were around 1100 enterprises
classified as concerned with fuel processing and the refining of petroleum
products in the EU 27, of these around 100 are refineries. Turnover was
estimated to be around €476 billion with around €30 billion value added. Over
128,000 people were employed in the sector. Between 1997 until 2007 average
growth for the refined petroleum products sector was 0.8% per year. It is likely that implementing the 2020
targets will impact negatively on the fuel supply sector due to a lower demand
for fuel. However, in the case of the filling stations, there is a trend of
steadily reducing numbers of filling stations and increasing diversification
with a major part of their revenues coming from activities other than selling
fuel. Modelling indicates a reduction in demand for fuel resulting from the
impact of the 2020 targets of up to 15% by 2030. However, there is no evidence
to suggest that this will lead to a proportionate decline in turnover and
employment in relation to filling stations and refineries. What is the overall effect on cost and price
competitiveness? The impacts on costs are extensively discussed in chapter 5
of the main text. The total impact on costs comprises changes in the costs of
manufacturing vehicles, possible additional compliance costs for manufacturers
and changes in the usage costs of vehicles, mainly associated with possibly
increased purchase prices and reductions in fuel consumption. Does the assessed proposal cut or increase
compliance costs of the affected sector(s)? There is not expected to be any additional costs of
compliance with the legislation over and above those associated with the
development and application of the technologies required to meet the CO2
target. Existing legislation already contains monitoring provision
so there are not expected to be any additional costs associated with this. No
new monitoring equipment is needed and no additional staff time or business
services are needed. No enterprises or sectors are at a disadvantage under the
existing monitoring provisions. Derogations do give slightly different
monitoring and reporting requirements but are judged to not be distortive of
competition. Does the proposal affect the prices and cost of
intermediate consumption? Intermediate consumption is an accounting flow which
consists of the total monetary value of goods and services consumed or used up
as inputs in production by enterprises, including raw materials, services and
various other operating expenses. A distinction needs to be made between
impacts on the amount of intermediate consumption (amount of products or
services used in production) and the costs or price of intermediate consumption
(cost or price of a given product or service used in production). For vehicle manufacturers the amount of intermediate
consumption is expected to increase relative to a situation without the
implementation of the 2020 targets. A significant part of the additional
technologies to be applied to new vehicles is likely to be purchased from
suppliers. Whether this leads to a net increase in the cost of intermediate
consumption depends on the extent to which additional technology costs are
compensated by reductions in the costs of other supplied products and services
due to other drivers. As part of the applied technologies (e.g. advanced
transmissions or hybrid propulsion systems) may also provide added value to the
user the gross added value may increase. If manufacturers are able to increase
the sales price accordingly an increase in the cost of intermediate
consumption, therefore, does not necessarily lead to an increase in the share
of intermediate consumption in the gross turnover. For sectors that use vehicles the costs of intermediate
consumption are expected to decrease as the net cost of using vehicles
decreases. As indicated earlier, however, this impact is considered to be small
or negligible. Does the proposal affect the cost of capital? As the implementation of the 2020 targets does not directly
affect the financial sector, there are no direct effects to be expected on the
cost of capital. Indirect impacts could occur if the proposed legislation would
lead to drastic (i.e. sudden or very large) changes in the need for investment
capital by automotive manufacturers, suppliers or other affected sectors or if
the risks associated with providing such investment capital would increase. As there will be an acceleration in innovation and the
application of new technologies an increased demand for investment capital is
to be expected. However, compliance only involves the introduction and gradual
increase in the level of application of additional technical adaptations in
vehicles. It does not require major restructuring of the automotive sector’s
operations or structure. There are no negative impacts expected on the demand for
passenger cars and vans. Also, meeting the 2020 targets does not yet require
large investments in alternative technologies such as electric, plug-in hybrid
or fuel cell vehicles for which the market success is still uncertain. The
additional investments therefore are not expected to increase the risk for
financial institutions to provide investment capital. As a consequence, and given the long lead time, there is no
reason to believe that the implementation of the 2020 targets will lead to
significant impacts on the cost of capital. Does the proposal affect the cost of labour? The only possible changes in the cost of labour would be
those resulting from the additional or new labour demand (e.g. due to new
skills requirements). In the automotive R&D departments there may be some
shift in competences from mechanical to electrical engineering, but if
shortages in new engineering disciplines would affect wages the impact on
average labour costs for vehicle manufacturing of the manufacturing industry in
general would be small. As far as requirements for labour skills in the actual
manufacturing of components and vehicles are concerned, no significant
deviations from the existing situation are expected. As the implementation of the 2020 targets does not affect
labour law or labour conditions, there would be no additional compliance costs
related to employment. Does the proposal affect the cost of energy? The objective of the proposals is to reduce CO2
emissions. The implementation of the 2020 targets does not directly affect the
costs of producing energy carriers for the transport sectors or for other
sectors. Achieving the CO2 reduction goal, however, will indirectly
reduce energy use. This will have a dampening or even lowering effect on energy
prices, which will be beneficial to the transport sector as well as to other
sectors. Does the policy proposal affect consumer’s
choice and prices? The proposals will not limit consumer choice directly. Cost
assessments as presented in section 5 are carried out under the assumption that
CO2 emission reductions are achieved without affecting the
performance of vehicles and the distribution of new vehicle sales over
different marketing segments, and show that meeting the targets set in the
proposals is technically and economically feasible without violating this
assumption. In their strive to meet the targets in a cost-optimal way
manufacturers, however, may decide to adjust their product portfolio, and e.g.
terminate production of specific types of vehicles or reduce the performance of
specific models. But the implementation of the 2020 targets as such is technology
neutral and does not prevent the placing on the market of any particular type
of vehicle. Companies using vehicles are likely to benefit indirectly
since their costs of vehicle operation are expected to decrease. In TNO et al. 2011[32] assessments have been made of the impact on
vehicle prices relative to a reference situation without the 2020 targets.
Compared to such a reference the implementation of the 2020 targets will
increase costs of manufacturing vehicles and is thus in the end expected to
lead to increased vehicle prices, as increased costs can only temporarily be
absorbed by manufacturers and at some point need to be passed on to consumers.
Price impacts of the 2020 targets, however, are superimposed upon autonomous
price trends. As discussed in chapter 14 of TNO et al. 2011, there are a
multitude of drivers that tend to have a downward effect on the price of cars.
The net impact of regulation on the price of vehicles depends on the ratio of
the additional manufacturing costs and the cost reductions due to other
drivers, whereby the cost of applying CO2 reducing technologies
might even enhance the strive for achieving cost reductions. Recent evidence
shows that while CO2 emissions have been consistently declining over
the last decade, so have vehicle prices. Public information from vehicle
manufacturers suggests that vehicle prices have may also not increase in real
terms as a result of the implementation of the 2020 targets. Would the impacts above require a major
restructuring of affected enterprises’ operations? For some of the technologies that are expected to be
applied in some innovations in production processes may be necessary. But there
is no reason to believe that any major restructuring of the automotive
industry’s operations would be required. Effect on enterprises’ capacity to innovate? The automotive sector invests significantly in R&D.
According to the 2011 EU Industrial R&D Investment Scoreboard the R&D
expenses of European automotive manufacturers were just over €21 billion in
2010, 4.4% of their turnover.
According to CLEPA, component suppliers invest about €15 billion in R&D,
which is approximately 5% of turnover and receive the majority of the patents.
This is complemented by investments in the production process and fixed assets
amounting to over €40 billion per annum. European automotive firms are leaders
in some transitional drive-train and fuel technologies and are investing in
ground-breaking technologies, such as battery-powered hybrid vehicles, electric
vehicles and hydrogen. As products are becoming increasingly complex from a
technological point of view (e.g. the role of electronics), the industry is
focusing increasingly on advanced, high technology products which necessarily
rely on a highly skilled workforce. Overall the implementation of the 2020 targets promotes
innovation and may as such be expected to increase rather than decrease the
automotive sector’s capacity to innovate. The issues are what the size of the
additional demand for innovative capacity is that the regulation requires,
whether the sector will be able to mobilise this in time, or whether increased
focus on innovation with respect to efficiency improvement and CO2
emission reduction would go at the expense of innovation in other important
areas. A significant proportion of this R&D will already be
related directly or indirectly to measures reducing CO2 emissions.
This proportion may increase in future. However, given the rates of CO2
reduction in the passenger car sector over the last decade (approximately 2%
per year) and the projected ongoing rate of reduction needed to meet the target
(approximately 3% per year) it seems unlikely that the amount of R&D
required will exceed the existing capacity of the industry. Without expansion
in R&D capacity the increased need for R&D into CO2 reducing
technologies, could require some shift in priorities of R&D departments at
the expense of other innovations. There is no evidence of a shortage of skills needed either
for the development of the technologies required or for their application in
vehicle production. There does not appear to be any issue relating to IPR
protection specific to the automotive sector. The automotive sector is constantly innovating its
products. Marketing new vehicle types and new technologies forms a key aspect
of encouraging vehicle purchase. This will continue and as a part of this trend
CO2 reducing technologies will be incorporated in a somewhat higher
pace than before. Overall it is considered that the additional demand for
innovation with respect to CO2 reducing technologies can be catered
for within the industry’s R&D capacity or by a manageable increase in this
capacity. Distribution, marketing and after-sales services are also
well developed in the automotive sector and the necessary management and
organisational skills and talents are demonstrably available and are expected
to be able to adequately deal with the new technologies applied to reduce CO2
emissions of vehicles. In the on-line consultation, 72% of stakeholders and 83% of
individuals supported the view that EU regulation of road vehicle emissions
stimulates innovation in the automotive sector and helps keep Europe's
automotive industry competitive. It is likely that the sector will continue to
invest in similar levels of R&D to remain competitive and to develop more
efficient vehicles. What is the effect on the competitiveness of car
manufacturers? As discussed in section 5 there will be different impacts
on different manufacturers. The additional manufacturer costs per vehicle for
meeting the manufacturer specific target depend on a manufacturer’s historical
average CO2 emissions (the 2002 resp. 2010 baseline) and on its
product portfolio (division of sales over different segments). Differences in the costs for meeting the 2015 / 2017
targets for cars and vans respectively are dominated by differences in the
distance to target for different manufacturers, as their starting points were
very different. In moving from the manufacturer average values in 2015 / 2017
for cars and vans to the manufacturer specific 2020 targets the differences in
distance to target are greatly reduced. How much an individual manufacturer
needs to reduce between 2015 / 2017 and 2020 depends on the choice of utility
parameter and on the position (determined by target level and slope) of the
utility based limit function for the 2020 target relative to the limit function
for the 2015 / 2017 targets. As a result of the non-linearity of the cost curves for CO2
reduction, however, manufacturers which need to achieve similar relative
reductions between 2015 / 2017 and 2020 may see markedly different costs
depending on the amount of CO2 reducing technologies they already
had to apply in order to achieve their 2015 / 2017 targets. For manufacturers
with a larger distance to their 2015 / 2017 target the additional vehicle costs
for moving from the 2015 / 2017 target to the 2020 target will generally be
higher. This results in a longer payback period (or higher increase / lower
reduction of the total cost of ownership- TCO) for the users of their vehicles
and thus a reduced attractiveness of these vehicles compared to products from
other manufacturers. Changes in TCO can thus be a basis for assessing impacts
of the implementation of the 2020 targets on mutual competitiveness of car
manufacturers on the EU market. In principle therefore the implementation of the 2020
targets may affect the mutual competitiveness of vehicle manufacturers on the
European market. Such changes in mutual competitiveness may in turn affect the
extent to which different companies are able to pass through the costs of
additional technologies applied to meet the 2020 target. This impacts on the
profitability of automotive manufacturers and may more indirectly also affect
their competitiveness on global markets. Figure
12 Change in TCO for
the passenger car end user in the first five years of vehicle use with
reference mass as utility parameter[33] Figure 12 shows the change in TCO of passenger cars
marketed by different manufacturers as a result of moving from their 2015
targets to the manufacturer specific targets for 2020 based on mass as utility
parameter. Figures are based on the increased vehicle price minus the net
present value of the fuel cost savings achieved in the first 5 years. Generally
the payback time of the additional vehicle price is shorter than the vehicle
lifetime (see Figure 16), leading
to net lifetime cost savings. But for this example savings over a shorter
period are included to reflect consumer myopia, which generally leads to an
increased TCO. For mass as utility parameter changes in TCO are generally
larger for Japanese and Korean manufacturers (with the exception of Honda) than
for European manufacturers. TCO changes for manufacturers with a product
portfolio focussing on smaller or larger cars are very sensitive to the slope
of the limit function. TCO changes for BMW are markedly lower than for
Mercedes. The mutual competitiveness of more mainstream manufacturers such as
Ford, GM, PSA and Volkswagen is not significantly affected. Following the same approach Figure
13 presents the change in total cost of ownership of passenger cars
from different manufacturers for a 2020 targets based on footprint as utility
parameter. Figure 13 TCO difference for the passenger
car end user in the first five years of vehicle use with footprint as utility
parameter33 For footprint as utility parameter the picture is quite
different. Still on average the changes in TCO seem larger for Japanese and
Korean manufacturers (with the exception of Honda) than for European
manufacturers, but the difference between Japanese and Korean manufacturers are
larger. The TCO change for Mercedes is larger than for some Japanese and Korean
manufacturers, but as these are not direct competitors this may have limited
impact on mutial competitiveness. Especially for manufacturers with a product portfolio
focussing on larger cars TCO changes are less sensitive to the slope of the
limit function than is the case for mass as utility parameter. TCO changes for
BMW are again markedly lower than for Mercedes. The mutual competitiveness of
more mainstream manufacturers such as Ford, GM PSA and Volkswagen is
significantly affected with TCO changes for Ford much lower than for the other
three. Figure 14 and Figure 15 show the change in TCO as seen by
users of light commercial vehicles from different manufacturers, resulting from
moving from the 2017 target of 175 gCO2/km to the 2020 target of 147 gCO2/km, based on mass resp. footprint as utility parameter. For mass as utility parameter the differences in impacts on
TCO for different manufacturers are quite small. Sensitivities with respect to
the slope are in line with the manufacturers’ average mass compared to the
overall average mass of vans sold in Europe. No distinction is visible between
European manufacturers and Japanese and Korean companies. A target based on
mass as utility parameter, therefore, does not appear to have significant
impacts on mutual competitiveness of LCV manufacturers. Figure 14 Change in
TCO for the LCV end user in the first five years of vehicle use with reference
mass as utility parameter[34] Figure 15 Change in TCO
for the LCV end user in the first five years of vehicle use with footprint as
utility parameter34 For footprint (Figure 15) the impacts on TCO are
much more scattered. For this utility parameter the attractiveness of products
from European manufacturers is markedly increased compared to those from
Japanese and Korean manufacturers. Sensitivity to the slope of the limit
function is particularly high for Daimler AG and IVECO, and to a somewhat
lesser extent for Toyota. What is the effect on competitiveness of
incumbents compared to new entrants? Incumbents on the EU market have the advantage of large
sales and a wide product portfolio allowing them to optimise costs for meeting
the target through internal averaging. This options is generally not or less
available to new entrants. New entrants could apply for derogation. In the absence of
a historical sales-averaged CO2 emission value the Commission shall
determine an equivalent reduction target based upon the best available CO2
emissions reduction technologies deployed in passenger cars of comparable mass
and taking into account the characteristics of the market for the type of car
manufactured. New entrants focussing on electric or fuel cell vehicles
could have an advantage, as these vehicles count as zero emissions. They also
pool their target with other manufacturers. In this way the emission credits
resulting from selling zero-emission vehicles could be “sold” to incumbent
manufacturers. If these are willing to pay for such credits, this would prove
that pooling is also beneficial for them, so that costs for compliance are
reduced for both the new entrant and the incumbent manufacturers. What is the effect on the competitiveness of
component suppliers? The implementation of the 2020 targets is expected to have
positive economic impacts for component suppliers in the automotive industry,
resulting from the demand for additional components. As the current Regulations
are technology neutral and affect all manufacturers, further implementation of
the 2020 targets is expected to have negligible impacts on the mutual
competitiveness of European component suppliers. Impacts on competitiveness between European suppliers and
companies from outside on the European market and on foreign markets may depend
on the extent to which other regions adopt similar CO2 regulation.
This aspect is more generally assessed in the next section. The demand for new advanced components may spur competition
among suppliers, whereby the most innovative companies are expected to be able
to capture a larger share of the market. This is to be considered an indirect
but generally positive consequence of the implementation of the 2020 targets. What might be the effect on the automotive
sector’s international competitiveness? What is the likely impact of the assessed option
on the competitive position of EU firms with respect to non-EU competitors? According to the Porter hypothesis
advanced national / regional environmental policy stimulates innovation which
in the longer term improves the competitiveness of the region / country.
Whether this is also true for regulation on a market with a large number of
foreign suppliers is debatable. Nevertheless, as a result of EU regulation on CO2 emissions from
light duty vehicles EU vehicle manufacturers might have a competitive advantage
over non-EU companies, as the regulation affects their home market which
generally represents a large part of their total sales. For manufacturers
without or with less stringent CO2 regulation on their home market
it might be more expensive to adapt a small share of their production to comply
with the EU regulation. However, as is shown in Figure 6 CO2
standards in different markets are rapidly converging. The Japanese standard
for 2020 is close to the EU target. Only for South Korea the 2015 target is
still in the proposal phase and no 2020 target has been proposed. In the short
term this could mean a competitive disadvantage for Korean manufacturers on the
EU market. It is likely, however, that Korea will adopt the 2015 and a target
for 2020 may be expected. This means that non-EU manufacturers have to achieve quite
similar CO2 emission values on their home markets, which reduces the
possible competitive advantage of EU manufacturers on the EU market. At the
same time, however, this also implies that the EU regulation does not place EU
manufacturers in a disadvantageous position in markets outside the EU. The fact
that the EU legislation is still slightly ahead of targets in other countries
might even give them an advantage in other markets with CO2
legislation. This would be most prominent on the US market, where many EU
manufacturers are active, while US companies are generally niche manufacturers
on the EU market. The competitive position of European component suppliers
relative to non-EU competitors might be improved. As the EU legislation is
still slightly ahead of targets in other countries the technology-readiness of
suppliers based in these countries may be expected to lag behind that of
European companies. This improves the attractiveness of European suppliers for
EU vehicle manufacturers and might also provide them a competitive edge in
other markets. Given that EU manufacturers need the new technologies to meet
the targets might also allow EU-based suppliers to increase their margins and
improve their profitability. This would bring them in a better position to
expand business to other markets. As argued above the impacts of the implementation of the
2020 targets on the costs of purchasing and using vehicles affects the costs of
business operations for all similar vehicle users alike. For EU firms using
vehicles therefore no change in competitive position with respect to non-EU
competitors on the EU market is to be expected. What is the likely impact of the assessed option
on trade and trade barriers? In line with what is argued under the previous point, the
regulation is not effectively causing trade barriers for non-EU manufacturers.
The regulation is not expected to have an impact on existing trade barriers. Possible impacts on trade volumes and balances could result
from changes in competitiveness of vehicle manufacturers and component
suppliers as described above. Improved competitiveness of EU-firms on the EU
market may lead to lower imports, while improved competitiveness of EU-firms on
non-EU markets may lead to higher exports. Does the option concern an area in which
international standards, common regulatory approaches or international
regulatory dialogues exist? There are no international standards for new vehicle CO2
emissions. However, there are international approaches to measuring fuel
consumption and CO2 emissions established under UNECE. Development
of a new World Light Duty Vehicle test procedure (WLTP) is on-going. The
implementation of the 2020 targets is consistent with the existing,
internationally agreed test procedure and is intended to be amended to become
consistent with a new procedure as soon as this is adopted. Is it likely to cause cross-border investment
flows, including the relocation of economic activity inward of outwards the EU? There are no constraints on cross-border investments in the
automotive sector. Since projections are for a generally stagnant market for
LDVs in the EU, it is unlikely that there will be substantial inward
investment. What investment flows there are do not seem likely to be affected
by the Regulations. What is the effect on the competitiveness of
other sectors in the automotive supply chain? Indirect impacts on other sectors in the vehicle
manufacturing supply chain might arise due to demand for different materials.
However, the levels of light-weight construction assumed in the cost curves,
used to assess the feasibility of the 2020 targets, do not yet require
widespread application of alternatives for steel. In as far as advanced steels
and innovative construction technologies are required, various projects by the
steel industry have shown that this sector is ready and able to supply such new
products and assist the automotive industry with their application[35]. Due to transport costs there might be some
preference for European car manufacturers to source steel from steel companies
within the EU. Innovations in light-weight construction might require closer
cooperation between automotive and materials industry which could increase car
manufacturer’s interests to work with EU producers. Together with the fact that
the regulation is spurring innovation in the materials production sector, this
may improve the long term competitiveness of the European industry in this
sector. What is the effect on the competitiveness of car
dealers and distribution networks? While the implementation of the 2020 targets may have
economic impacts on car dealers and distribution networks (e.g. through
pressure on dealer margins) it is not expected that their mutual
competitiveness will be directly affected. Indirect effects could result from
the impacts of the regulation on the car manufacturers represented by these
dealers, but such effects are not considered intrinsic to the nature of the
regulation. What is the effect on the competitiveness of
suppliers of complementary
or alternative goods? It is not expected that there will be major impacts on
markets for complementary goods, i.e. suppliers of alternative forms of
passenger mobility or goods transport. For passenger mobility alternatives are
bicycles and motorcycles on one side and collective transport services such as
public transport or aviation on the other side. Changes in the costs of driving
cars are too small to have significant impacts on the modal split. For goods
transport by means of light commercial vehicles there are hardly any
alternatives. What is the effect on the competitiveness of
vehicle users? The implementation of the 2020 targets may also directly or
indirectly affect the competitiveness on the EU market of European businesses
which use passenger cars and light commercial vehicles. Direct effects could
exist for companies with a large share of transport activities in their
operations. The use of light duty vehicles for passenger or goods transport or
for providing other types of services, however, will mainly be part of
operations undertaken by such companies on the European market or even on
national markets. Possibly affected competitiveness of such companies using
light duty vehicles will thus mainly concern competition relative to each other
on the European and national markets. The implementation of the 2020 targets
impacts on the costs of purchasing and using vehicles and may thus affect the
costs of business operations, but it affects the costs of vehicles for all
similar users alike, as companies competing on the same market will have
similar fleets and vehicle use patterns. Consequently a change in overall costs
resulting from the regulation is not expected to have significant impacts on
the mutual competitiveness of companies which use light duty vehicles. Users of passenger cars and light commercial vehicles will
benefit from the lower fuel costs and the lower total cost of vehicle
ownership. This is especially the case for light commercial vehicle users,
where the payback period of the additional vehicle costs associated with
applying CO2-reducing technologies is of the order of 1 year (see Figure 16). These changes will lead to
further indirect impacts as costs of using energy and of carrying out the
transport elements of business will decrease. As mentioned above this is not
expected to affect the competitiveness of companies competing on the European
market, but may to some extent benefit the global competitiveness of
internationally operating companies and of the European economy as a whole. Figure 16 Period in
which the fuel cost savings break even with the price increase resulting from
the 2020 targets relative to the situation of maintaining the 130 gCO2/km
target for passenger cars beyond 2015 resp. the 175 gCO2/km target
for van beyond 2017. What is the effect on the competitiveness in the
fuel supply sector? As mentioned in section 2.5.1 the proposed policy leads to
a 25% reduction in the consumption of oil-based fuels by light-duty vehicles.
This is to be considered a desired consequence of achieving the policy’s goals
with respect to reduction of GHG emissions and improvement of energy security.
In first order this reduced demand is expected to affect different fuel
producers alike. The consequences for individual companies in terms of the
resulting impacts on business (profitability, market share, etc.) will be
different and will depend on their individual ability to respond to the
challenge of declining sales in Europe. As such the impacts on individual fuel
producers can be considered a consequence of the companies’ current
competitiveness rather than an impact of the regulation on their
competitiveness. Nevertheless oil companies with a
large market share in Europe might be affected more strongly than oil companies
that are mainly focussed on the US or Asia. So from a global perspective,
regulation may affect the competiveness of these companies. Table 12
shows that there is a large number of smaller feul supply companies that
operate largely or entirely on the European market. These companies might be
expected to be affected more than larger, globally operating companies such as
ExxonMobil, BP and Shell. Table 12 Sales of
petrol and diesel in Europe as share of the total petrol and diesel sales of
various fuel supply companies[36] What is the effect on the competitiveness of
other businesses? More generally
the implementation of the 2020 targetsmay
change the costs of intermediate products and hence also the costs of final
products through changes in transport costs. On the EU market this will only
affect the competitiveness of companies operating in the same market if they
have very different shares of transport costs in their product costs. For
products offered on a global market, the change in transport costs due to
regulation may also affect global competitive position of European companies.
For both situations, however, it must be stated that transport costs are
generally a small share of overall product costs. Furthermore the implementation of the 2020 targets only affects the
costs of transport by passenger cars and vans, which may be expected to be only
a fraction of total transport costs. Direct or indirect impacts on
competitiveness in the EU market through changes in the cost price of
intermediate and final products are therefore assumed negligible. In any case
impacts on other businesses from the implementation
of the 2020 target for vans can generally be considered positive due to
the fact that the regulation reduces the total cost of ownership of light
commercial vehicles in Europe. If at all significant, the impact on the
competitiveness of European companies on the global market would improve as a
result of this. For companies
using passenger cars as part of their operations the TCO may increase relative
to the situation in which the 130 gCO2/km is maintained, although
this depends on the depreciation period (e.g. 3 or 5 years) and the extent to
which the increased vehicle price also results in increased residual value.
Generally, however, personnel costs vastly outweigh costs of driving in
professional applications of passengers cars, so that impacts of the implementation of the 2020 targets on
competitiveness can be considered insignificant for these applications. What is the effect on SME competitiveness? There are two main categories of SMEs that might be
affected by the implementation of the 2020 targets. One category is SMEs
operating as small volume vehicle manufacturers or as suppliers to the
automotive industry. The other category consists of SMEs which use passenger
cars of light commercial vehicles. ESCA, representing the smallest vehicle manufacturers, has
been involved in the consultation process and has indicated that it does not
have particular concerns with the 2020 targets. Small volume manufacturers are
eligible for derogation and will be allowed to set individual targets that are
compatible with their innovative and economic capabilities. As already
mentioned in section 4.4.2, this will avoid strong increases in production
costs for these SMEs, so that competitiveness of their projects with respect to
purchase price will not be affected or could even be improved. At the same time
the derogation will imply that fuel consumption of vehicles manufactured by
SMEs will not go down at the same pace as that of products from large volume
manufacturers. From the perspective of usage costs, therefore, the
competitiveness of products from SMEs may deteriorate. In the light commercial
vehicle market, which is more sensitive to fuel costs, this could be a relevant
impact. In the passenger car market small volume manufacturers mainly produce
sports vehicles, for which fuel consumption is less of an issue. The main indirect effects could arise for SMEs that supply
components to vehicle manufacturers. SMEs represent a significant number of
companies in this sector (≈ 3000). The main impact will be an increased demand
for CO2 reducing technologies and other measures to be deployed in
vehicles. However, it is difficult to foresee how that would affect the
competitiveness of such SMEs. First of all it should be noted that the technologies
required to meet the 2020 targets only concern a limited share of all
components supplied to the automotive manufacturing industry. And many of the
key-technologies, especially those related to engine and powertrains, may be expected
to be produced by the larger Tier-1 suppliers. Only the drive to reduce weight
could affect specifications of a larger number of vehicle components (e.g.
including seats, dash-boards, etc.). SMEs seem equally well placed to cater for
such innovations as large companies. In general SMEs are more flexible with
respect to minor changes in products and production processes. On the other
hand they may have more difficulty to obtain financial means to deliver more
radical product innovations or invest in major changes their production
process. Other indirect effects can arise from the use of vehicles.
Since the impact of the implementation of the 2020 targets is beneficial in
terms of total vehicle cost of ownership (with especially short payback times
for vans) this indirect effect is likely to benefit SMEs along with other
vehicle operators. Overall their competitiveness compared to other SMEs or to
larger companies is not expected to change as a result of this regulation. As European SMEs may be assumed to be mostly operating on
the European market, impacts on competitiveness in other, global markets is
less relevant for this category of companies. Conclusions
- the
conclusions of this annex are outlined in section 2.5.1.
7.10.
Impacts on the economy and employment –
input-output model
An input-output model is essentially based on the work of Leontief,
who developed a way to connect changes in final demand to changes in output,
based on matrices of monetary flows between industries. Leontief used a matrix
of intermediate demand coefficients (A), of final demand (D) and of output (X). Given that
demand and production need to be in balance (correcting for import and export),
the basic equation is: (1) Equation (1)
can be inverted, to give (2) (2) Equation 2 is
the basis of a methodology to analyse effects of changes in final demand
(consumer demand) and its effect on output. It results in the level of output
necessary to satisfy a certain final demand. On the basis of equation 2 multipliers
can be calculated showing how 1€ extra demand leads to additional expenditure
in production. The numbers
shown in the two scenarios in Table 13 are based on the inverse of the
Leontief matrix for the EU-27 matrix. The tables show how extra consumption changes
macroeconomic indicators relating to production, labour, GDP, exports and
imports. Each column represents a weighted increase in household consumption,
keeping the demand for other goods constant. 'Other goods' category covers all
sectors except fuel and vehicles. Two tables are
presented because of the difficulty to know how the targets will impact on
imports and exports. The two scenarios show the extremes of the range. In
Scenario A, both imports and exports are set to zero as shares of production and
demand. In Scenario B it is assumed that exports are a fixed share of
production and imports are a fixed share of final demand. In reality the impact
will be somewhere between these scenarios, and so they can enable the likely
range of impact to be calculated. Table 13: Total effect of extra consumption on
macro-economic indicators in two scenarios Scenario A* || Vehicles || Fuels || Other goods Consumption || 1 || 1 || 1 Labour || 0,55 || 0,31 || 0,45 Production || 3,00 || 2,73 || 1,98 GDP || 1,17 || 1,13 || 1,21 Export || 0,00 || 0,00 || 0,00 Import || 0,00 || 0,00 || 0,00 * In scenario A exports
and imports are set at zero for the affected sectors. Scenario B* || Vehicles || Fuels || Other goods Consumption || 1 || 1 || 1 Labour || 0,82 || 0,18 || 0,46 Production || 4,36 || 1,47 || 2,01 GDP || 1,69 || 0,68 || 1,22 Export || 0,70 || 0,19 || 0,14 Import || 0,19 || 0,63 || 0,13 * In scenario B exports and imports remain a fixed
proportion of expenditure in the sectors as overall expenditure varies. Table 13 shows that fuel consumption has only a small effect on production,
relative to other sectors. Increased vehicle consumption has a proportionally
large effect on production, labour and demand. In scenario B, replacing €1 of
fuel expenses by €1 of vehicle purchase causes a total effect on labour expenditure
of €0.64 (0.82€ – 0.18€), the total effect on GDP is 1.01€ (1.69€– 0.68€). The
comparable effects in scenario A are €0.24 impact on labour and €0.04 on GDP.
Where there is no perfect substitution between fuel and vehicle purchase the
multiplier for other goods is used in the calculation. It should be
noted that there are limitations with this type of analysis, in particular: ·
Input-output tables are partial models and do not
take full market equilibrium into account. ·
The impacts demonstrated are short term. Over the
longer term adjustments will take place in the economy which will adjust the
underlying consumption relationships. ·
The changes are assumed to take place at the
same time. However fuel savings accrue over the life of the vehicle. To adjust
for this the NPV of the fuel savings is used. ·
Leontief methodology assumes fixed input-output
coefficients, meaning that no substitution between inputs to the production
process is possible. The same is true for labour and capital. The effect on
labour is calculated by multiplying the change in output from the Leontief inverse,
with the share of wage. ·
The numbers presented are scale independent, no
returns to scale are taken into account. ·
The analysis calculates the effect on trade
surplus and government budget, but does not calculate the secondary effects of
changes in these accounts on expenditures and/or investment. This requires
additional assumptions which increase the complexity of the analysis
substantially. ·
The calculations do not take into account
potential losses in consumer utility, as consumer preferences are forced from
fuel to vehicle purchase. ·
The impact on exports should be treated with
caution since this factor is assumed to remain constant for each sector. It
cannot necessarily be assumed that this will remain the case if vehicle
technology changes. Despite these limitations Input-Output
analysis gives a good insight into the macro-economic linkages flowing from
improvements in vehicle fuel efficiency. A number of Input-Ouput based studies
have been performed exploring the macro-economic impacts of vehicle efficiency
standards[37], many of which look at the US market. These studies tend to show
comparable effects to those reported here. To establish
the impact of the 2020 car target for one car, the net present value (NPV) fuel
savings are taken from Table 3 assuming an oil price of $110/barrel. Tax
is excluded since tax reductions would need to be compensated elsewhere and
would not be expected to affect the overall government expenditure. The
additional car purchase cost of €1158 is the average of the cost scenario 2
values given in Table 8. The excess fuel savings over vehicle purchase
cost are assumed to be spent on other goods. These values are multiplied by
total car sales to establish the aggregate impact on the economy. In 2011 some 13,111,209
cars were registered in the EU and this value is used. The impact of
these changes on the indicators is shown in Table 14 below. Table 14: Aggregate
macro-economic impact of implementing 2020 targets || Scenario A || Scenario B || Central value Labour || €5,5bn || €13bn || €9bn Production || -€5bn || €50bn || €22bn GDP || €1,6bn || €22bn || €12bn As can be seen there is predicted to be a substantial increase in
production, labour, and GDP. Since it is clear that the correct result is
between both scenarios, a central value is given as the best estimate. These macro-economic changes can be disaggregated
across different sectors. Table 15 shows how changes in fuel or vehicle
production will impact on other sectors, enabling a calculation of which would benefit
from increased fuel demand or vehicle purchase respectively. The table illustrates
the clear link between vehicle manufacturing and demand for basic metals,
wholesale trade, chemicals and rubber. Fuel consumption has relatively limited
effect on other sectors. Table 15: Disaggregated
impact of extra fuel or vehicle technology consumption Sector || Leontief multiplier for fuel || Sector of economy || Leontief multiplier for vehicle purchase Refined petroleum || 0.52 || Motor vehicles, trailers and semi-trailers || 1.63 Crude petroleum || 0.30 || Basic metals || 0.32 Other business || 0.08 || Other business services || 0.27 Chemicals || 0.07 || Fabricated metal products, except machinery and equipment || 0.19 Trade || 0.04 || Wholesale trade and commission trade services, except of motor vehicles and motorcycles || 0.15 Auxiliary transport || 0.03 || Chemicals, chemical products and man-made fibres || 0.15 Electrical energy and gas || 0.03 || Machinery and equipment n.e.c. || 0.14 Other sectors || 0.39 || Rubber and plastic products || 0.13 TOTAL || 1.470 || Electrical machinery and apparatus n.e.c. || 0.12 || Auxiliary transport || 0.08 Other sectors || 1.190 TOTAL || 4.37
7.11.
The limit value curve – explanation of the slope
The limit value curve
approach The utility based approach adopted in the
legislation results in the CO2 reduction obligation being defined as
a linear function of a so-called "utility" parameter (e.g. mass or
footprint) reflecting the utility of vehicles. The
Regulation targets are set according to this limit value function expressed as
a formula (annex I to the Regulations). The limit value curve approach ensures
that vehicles with a larger utility parameter (currently mass) are allowed
higher emissions than lower utility vehicles while ensuring that the overall
fleet average meets the target. The result of this approach is that only a manufacturer's
fleet average is regulated, they are still able to make vehicles with emissions
above their indicative targets if these are offset by other vehicles which are
below their indicative targets. To comply with the Regulation, a manufacturer has
to ensure that the overall sales-weighted average of all its new cars or vans does
not exceed the point on the limit value curve for its average utility parameter.
Defining the slope To define the slope, the starting point is
the observed trend in terms of market distribution of vehicles' sales in a base
year. For the current car study, the analysis performed was in comparison to
the average slope of the 2009 fleet. This line is the 100% limit value function
for 2009. To translate that to the 100% limit value
function for a future year with a given target, the base year line is moved
downwards by an equal percentage emissions reduction across the range of the
utility parameter to reach the desired limit value. The effect of this is to
slightly rotate the curve clockwise. This is shown in Figure 17. The
resulting line is the 100% limit value function for the target year and new
fleet CO2 target. Figure 17 100%
limit value function for 2009 baseline (dotted) and translation to 95 gCO2/km target limit value function
(solid) To facilitate
discussion and setting the relevant slope of the curve, a horizontal line which
passes through the fleet average utility parameter and CO2 target is
defined as the 0% limit value function. This is shown for illustrative purposes
in Figure 18 below. For such a limit value function every manufacturer
regardless of the composition of their fleet would need to achieve the target
level of CO2 emissions and there would be no account taken of
utility. Figure 18 Illustrative curves showing
variation between 0 and 150% slope The straight line
function is described mathematically with a formula of the form Y = aX +
b. The parameter a determines how steeply the line slopes. If a=0
the line is horizontal (called 0% slope). If a has the value determined
by establishing the 100% slope then the line is the 100% function. If a
is greater than this the slope is greater than 100%, if it is less then the
slope is less than 100%. The formula in the
legislation Within the legislation, the limit value
function is described in a formula. The limit value curve for the 130 gCO2/km target for cars is: Permitted
specific emissions of CO2 = 130 + a × (M – M0) Where: ·
M = mass in kg ·
M0 = 1372.0 ·
a = 0.0457 Parameter 'a' in the formula determines the
slope of the limit value function. Effect of the slope The slope of the utility curve affects the
distribution of effort between vehicles depending on their position on the
curve. The slope of the curve does
not change the overall outcome in terms of average gCO2/km, it only
defines the distribution of reduction effort between vehicles with different
values of utility parameter (currently mass). This is because it is rotated
around the point set by the average vehicle parameter (1372 kg in case of cars)
and the average CO2 target to be achieved by the overall fleet (130 gCO2/km
for cars). If the curve has a lower slope (below
100%), the degree of effort required is proportionately greater from vehicles
with a larger parameter (e.g. mass). If the curve is steeper (above 100%) then
the effort required is proportionately greater from vehicles that have a
smaller parameter. Because of this differential effect on different vehicles,
changing the slope alters the amount of effort required from different
manufacturers. For the current studies, the range from 60 to 140% has been
analysed. Changes since the
legislation was adopted The slope of the curve in the current car
Regulation is a 60% slope based upon the car fleet distribution in 2006. As a
result of the way manufacturers have responded to the legislation, the current
(2009) data shows a flatter line of best fit through the fleet data. So the
100% line through the 2009 data has a similar slope to the 60% line based on
the 2006 data. This change in baseline year can cause confusion. The slope of
the limit value function is ultimately selected on the basis of an appropriate
burden sharing amongst manufacturers. This choice can as easily be made on the
basis of 2006 fleet data, 2009 data or indeed an average of the two because
ultimately what counts is a mathematical slope which delivers an acceptable
burden sharing amongst manufacturers which limits the impact on
inter-manufacturer competition and which is socially equitable. In simple
terms, any desired slope of the limit value function can be expressed in terms
of the 100% slope line of the vehicle emission data plotted as a function of
mass (or footprint) of any particular year. For example, the 60% slope of the
2006 fleet data which delivers the 95 g/km target (in absolute terms 0.0333) is
the equivalent of a 67% slope relative to the 2009 fleet data.
7.12.
Explanation of the effective change of the
distance to target when applying light-weighting technologies in case of a
mass-based limit function, and its impact on costs for meeting the 2020 target.
In a CO2 regulation system
differentiating the target by manufacturer based on mass as the utility
parameter, CO2 reductions resulting from light-weighting (vehicle
weight reduction) are not fully counted towards achieving the manufacturer's
target. Since applying weight reduction to a vehicle lowers the
vehicle-specific (or equivalently the manufacturer’s specific) target (see Figure
19), the distance to target of the manufacturer is effectively reduced (s
in Figure 19) less than the reduction in CO2 emissions (r
in Figure 19). The fact that under a mass-based regulation
the target changes with reduced vehicle weight reduces the cost-effectiveness
of light-weighting as a CO2 emission reduction technology. Under a
footprint-based regulation the change in distance to target would equal the
full CO2 emission reduction resulting from light-weighting. In the
assessment that has been carried out in support of the current review, identical
cost curves were used to assess both mass and footprint based limit functions.
It is desirable to understand what the impact on the cost of meeting the target
would be if the reduced effectiveness of weight reduction under a mass-based
limit function is taken into account. Figure 19 Schematic
representation of the effective reduction of the distance to target when
applying a weight-reducing technology under a CO2 regulation using a
mass-based limit function. This is a 1st order assessment.
The fact, that the regulation allows the value of M0 to be adjusted periodically
in the limit function CO2 = overall target + a × (M – M0)
if a change in average weight is observed, provides the possibility to at least
on average reward the full impact of applied weight reduction. Nevertheless it
creates a first mover dilemma. The first manufacturers that start applying
weight reduction are confronted with a more stringent target. If all
manufacturers apply weight reduction to the same extent and M0 is
subsequently adjusted, then mass reduction would be fully rewarded. But if only
a few apply weight reductions and many manufacturers don’t, then a correction
of M0 only partially compensates the reduced effectiveness for the
first movers, while providing a more lenient target to all other manufacturers
that did not apply weight reduction. The assessment here therefore applies only
to the situation in which the utility-based limit function is not adjusted in
response to observed changes in average vehicle mass. By analogy it will also
apply to a lesser extent to the situation where unequal mass reduction takes
place. Methodology The mass reduction ∆M of a vehicle
translates into a reduction ∆CO2 of the vehicle’s CO2
emissions reduction (under the assumption that engine power is adjusted to
maintain constant vehicle performance) according to the following formula: ∆CO2
/ CO2 = 0.65 * ∆M / M (1) In order to determine the extra costs
resulting from the stricter target caused by applying mass reduction, new cost
curves are constructed that simulate the eroding of the effective reduction of
the distance to target resulting from applying mass-reducing technologies under
a mass-based limit function. In these cost curves, the CO2
reductions from light-weighting are corrected (lowered) for the stricter CO2
target they induce. This is done by replacing the actual CO2
emission reduction associated with weight reduction with the effective change
in the distance to target. In detail this is done using the following method,
analogous to Figure 19 and reported in Table 16:
The average mass M and average CO2
emissions CO2 are calculated per segment.
Application of these average values in
the 100% slope mass-based utility function results in the average distance
to target for all vehicles sold within a segment.
For each level of weight reduction,
defined in the technology tables, the ∆M in [kg] can be determined
by inserting the initial relative reduction potential of the mass reducing
technologies into equation 1 for ∆CO2 (e.g. 2% for mild
weight reduction for a small petrol vehicle). For M the average
mass of the segment is used and for CO2 the average CO2
emissions per segment.
Subtracting the initial CO2
emission reduction of the mass reducing technologies from the average CO2
emissions of every segment gives the remaining average CO2
emissions within every segment when that technology is applied.
·
The average CO2 emissions that have
to be met within every segment are determined by applying the corrected average
mass (M - ∆M) of every segment in the limit function.
The alternative distance to target,
resulting from applying a mass reducing technology, is the result of
subtracting the adjusted average CO2 emission targets that have
to be met within every segment from the remaining average CO2
emissions within every segment after application of weight-reducing
technology.
Finally, the effective relative reduction
of the distance to target is determined by dividing the difference between
the distance to target with and without the mass reducing technology
applied by the initial average CO2 emissions per segment. As
can be seen in Table 16, these ‘new’ reduction potentials
(reductions of the distance to target) are lower than the actual CO2
reduction of that technology.
Impact on the effectiveness of
light-weighting In Table 16 below the 2009 average
values per segment for mass and CO2 emissions were chosen as
baseline for calculating the adjusted potential for light-weighting under a
mass-based limit function. Formally reduction potentials of technologies are
defined relative to 2002 baseline vehicles. The reason to deviate from that
definition here lies in the fact that according to formula (1) the absolute
impact of a given mass reduction on CO2 emissions decreases with
decreasing CO2 emissions of the baseline vehicle. Using the 2002
baseline data would thus lead to a smaller erosion of the potential of
light-weighting under a mass-based limit function than when 2009 data are used. Based on the assessment made in the car
study[38], light-weighting is a relatively expensive technology which only
becomes cost effective higher up the cost curves. As cost effectiveness further
decreases when the effect of distance to target relative to a mass-based limit
function is taken into account, it is expected that light-weighting would only
be applied later towards 2020. In order not to underestimate the erosion of
light-weighting potential it was considered appropriate to base the assessment on
the 2009 baseline CO2 values. Table 16 Estimated CO2 reduction potential and costs for
light-weighting technologies relative to a 2009 baseline vehicle. Impact on cost of meeting the target Applying the adjusted reduction potentials to
the technology packages results in modified cost curves. These show that the
cost to reach a certain reduction potential is higher than the original cost
curve. This is only the case from the first point on the curve that includes a
mass reducing technology. These adjusted cost curves result from the necessity
for a manufacturer to apply extra CO2 reduction technologies to meet
their target. Application of the adjusted cost curves in
the assessment model used to determine the lowest possible costs for every
manufacturer to meet its target, leads to average additional manufacturer costs
shown in Table 17. The impact of a mass-based limit function on the
effectiveness of light-weighting is found to lead to an increase in the average
additional manufacturer costs for meeting the target from € 2188 to € 2249 per
sold vehicle for the highest cost scenario compared to the 2009 situation. Table 17 Comparison between the average additional manufacturer costs based
on the original cost curves and those based on cost curves that are corrected
for the effectively reduced impact of mass reducing technologies under a
mass-based limit function. Average additional manufacturer costs relative to 2009 || Cost [€] Original cost curve || 2188 Adjusted cost curve corrected for the effective reduction in distance to target for light-weighting options under a mass-based limit function || 2249 Conclusions In the assessment of mass as utility
parameter presented in the car study this was considered not to affect the
cost-effectiveness of light-weighting technologies used by manufacturers to
reach their targets under the CO2 regulation. However, use of
light-weighting technologies under a mass-based limit function not only reduces
a vehicle's CO2 emissions but also its target. As a result
light-weighting is a less attractive option when a mass-based limit function is
used. The reduced effectiveness of light-weighting would lead to increased
costs of meeting the target, relative to use of a footprint-based limit
function under which the effects of light-weighting are fully rewarded. For the
95 gCO2/km 2020 target, the impact on the additional costs per
vehicle is of the order of €60 per car on a total additional manufacturer cost
compared to 2009 of around €2200 per vehicle, ie about 3%. The impact is limited due to the relatively
high costs assumed for the light-weighting technologies. If light-weighting
would be cheaper, this option would appear lower on the cost curve and the
change in effectiveness due to a mass-based limit function would be greater.
Now the impact only occurs higher up the cost curves, with the additional costs
amounting some €1000 at the end of the cost curves. Therefore, the impact of a mass-based limit
function on the cost of meeting the target could be higher than assessed here
if light-weighting technologies are cheaper than currently estimated. Studies
underlying the US car CO2 regulation indicate that this might be the
case.
7.13.
Cost scenarios in the car analysis
The cost curves
are constructed on the basis of information regarding the CO2-reducing
technologies and their application in different types of vehicles, their CO2
reduction potential and the associated cost.[39] Cost
scenario 1 (referred to on Figure 20 and Figure
21 as the 2020 cost curve) is the basic scenario and concerns cost curves
constructed on the basis of information obtained from the main stakeholders
concerned, including the automotive manufacturers (incl. ACEA) and component
suppliers, information from the literature review and expert judgement within
the consortium led by TNO. Further to the
critical evaluation of the cost curves under cost scenario 1, three more
alternative cost scenarios were developed: Cost
scenario 2 (referred to in Figure 20 and Figure
21 as scenario a) is based on scenario 1 but takes into account the observed
significant progress in CO2 reduction in the European new passenger
car fleet in the 2002-2009 period. Since this progress had not been accompanied
by the vehicle price increase, and does not appear to be explained through
deployment of new technologies, it could be interpreted as an indication that part
of the observed reductions in type approval CO2 emissions in that
period may need to be attributed to other causes than application of
technologies included in the cost curves in cost scenario 1. Due to the strong
non-linearity of the cost curves the possibility that other causes may be
responsible for part of the observed reductions between 2002 and 2009 could
have a significant impact on the assessment of cost for moving from the 2009
values to the 2020 target values. This results in cost curve in scenario 2
which is lower than scenario 1 for a given level of reduction. Cost scenario 3 (referred to in Figure 20 and Figure 21 as
scenario b) takes into account the technical input to the US Environment Protection
Agency's (EPA) studies in support of the US legislation on CO2
emissions from light duty vehicles which seem to suggest that the costs of
reducing CO2 emissions in passenger cars could be lower than
estimated in cost scenario 1. To
test the possible impact of the most striking differences between US data and
cost and reduction figures used in scenario 1, a selection of data on cost and reduction
potential derived from the EPA studies, specifically for full hybrids and the
various levels of weight reduction, has been used by
the contractors to construct a
modified technology table. Using the same methodology as in the
basic scenario alternative cost
curves have been constructed on the basis of the table based on the EPA
data. This
variant was created to allow for an indicative
assessment of the possible implications that information from the EPA studies
underlying the US CO2 legislation for cars might have for assessment
of the costs of meeting the European target for 2020.
This approach results in a cost curve lower than scenario 2. Cost scenario 4 (referred to on Figure 20 and Figure 21 as scenario c)
is a combination of cost scenario 2 and 3 using the alternative cost
assumptions based on the EPA study and taking into account the progress in CO2
reduction in the European new passenger car fleet in the 2002 - 2009 period
that is not attributed to application of technologies included in the cost
curves in scenario 1. This approach results in the lowest cost curve as
compared to scenarios 1-3. The following figures depict these
differences for different car segments. Figure 20 Comparison of cost scenarios 1 - 4 for petrol cars Figure 21 Comparison of cost scenarios 1 - 4 for diesel cars There are a number of reasons for believing that the
lower rather than the higher cost scenarios are more credible. Information is available that certain important
technologies are available at lower cost than assumed in the underlying
analysis. For example stop-start systems are assumed to have a 2020 cost of
€200 yet these are reportedly supplied for around €40. Hybrid systems are one
of the more expensive technologies and a system offering 15% CO2
reduction is assumed to cost around €1500. However it is reported that Valeo
has developed such a system which will cost around €800[40] to
manufacturers. The US based cost analysis was much more extensive than
that which has been performed for the Commission. A major aspect of the work
was a tear-down analysis of lower CO2 emitting vehicles to assess
the additional manufacturing costs. The ICCT has undertaken a study to convert
these US assessments to EU conditions and to supplement it with additional data
on technologies more specific to the EU market. This analysis results in a cost
curve that is lower than that in scenario 4 of the Commission analysis. The cost curves relate to the cost of reducing CO2
emissions from a vehicle on a standard test cycle under test procedures.
However, there is considerable evidence that some part of the reductions that
have been reported may arise from the flexibility inherent in the test
procedures rather than deployment of technology. This is discussed in more
detail in Annex 7.7. In view of these various factors suggesting that lower
cost curves may be more appropriate, and in recognition of the uncertainties
that exist, it seems most sensible to use the central cost curves, i.e.
scenario 2 and 3 as providing the most probable scenario within this impact
assessment.
7.14.
Discarded options
Phase-in The options considered for this modality are: (1) No phase-in of the 2020 target (2) Inclusion of phase-in of the 2020 target over the period 2017 - 2020 or 2020 - 2023 Option 2 would involve a phasing-in of the 2020
target. This might be carried out over a period of 3 years as with the previous
targets. Two variants are considered: a) the phase-in occurs over the period
2017-2020; b) the phase-in occurs over the period 2020-23. Cars The assessment[41] of
variant a) of option 2 is based on step-wise declining targets leading to 95 gCO2/km
in 2020, which is similar although not identical to a percentage of the fleet
complying in earlier years with 95 gCO2/km. This reduces total CO2
emissions compared to a "worst case". However, in view of the current
trajectory of new car emissions (shown in Figure 1), it might have no
practical impact. In contrast, it would make the obligation on manufacturers
more onerous since they would have to comply in multiple years with a target,
not just in 2020, reducing their flexibility. By contrast variant b) of option 2 would
lead to increased CO2 emissions compared to compliance in 2020. This
undermining of the level of ambition in the Regulation would run contrary to
the intention of the Council and Parliament and to the desire for regulatory
certainty for the automotive sector which is keen to recoup investments in CO2
reducing technology. A weakening is not warranted since manufacturers will have
had 11 years to prepare their plans for compliance and as shown[42], this is more than adequate. Any combined variant (phase-in
starting before 2020 and ending after) would suffer the negative aspects of both
variants (more CO2 and less flexibility). Vans The 2020 target for vans requires less reduction
from the first target (i.e. 16% for vans vs. 27% for cars), although this is
distributed over 3 years, compared to 5 for cars. However, 2010 van baseline
emissions at around 181 gCO2/km are much closer to the 2020 target
than the equivalent 2010 car emissions. Given the current trajectory, the first
target for vans can be expected to be met before 2017 increasing the time to
reach the second target. Similar to cars, in view of the reduction trajectory
variant a) of option 2 might have no practical impact. Manufacturers are
expected to reduce their average emissions smoothly rather than in abrupt
steps.[43] As with cars, this variant would be more onerous for manufacturers.
However, the short time between the two targets would even more significantly
reduce flexibility. Variant b) of option 2 has the same
weaknesses as for cars. Manufacturers will have had 9 years to prepare for
compliance and as shown[44], the 2020 compliance cost is expected to be lower than estimated in
2009[45]. In view of these assessments option 2 is
discarded for both cars and vans. Super-credits The options considered for this modality are: (1) No prolongation of super-credits (2) Prolongation of super-credits (3) Modification of super-credits The Regulations
are based upon CO2 emissions from the vehicle and ignore those from
other parts of the energy supply chain. Therefore certain types of vehicles,
essentially using substantial proportion of hydrogen or electricity for their
propulsion during the test procedure will be measured as having very low
emissions[46]. The Regulations incorporate provisions that count vehicles with
emissions below 50 gCO2/km a multiple number of times for the period
up to 2016 for cars and 2018 for vans. It was argued that this multiplier would
provide a strong incentive for vehicles meeting this criterion to be marketed.
Option 2 would introduce multipliers for low emission vehicles up to 2020 for
cars and vans. The effect of introducing such a multiplier
depends on the proportion of vehicles complying with it and is assessed for
various scenarios[47]. Depending on the scenario, total CO2 emissions will
increase by between 3% and 15% using a multiplier of 3.5. This is because
conventional vehicles are allowed to emit more CO2 if low-emitting
vehicles count as more than one. Option 3 would also result in increased CO2
emissions although the impact would be somewhat smaller if a lower multiplier
was used. The CO2 increase shows that
super-credits weaken the stringency of the Regulation. This runs counter to the
need to provide certainty for the industry that there is a market and need for
CO2 reducing technology. This increase has longer term implications
since the higher emissions continue during the period when those vehicles are
used i.e. till around 2030. The effect of introducing a multiplier is identical
for vans apart from the fact that the negative impacts are somehow mitigated by
the limited number of vehicles that can benefit from it[48]. These negative impacts can be limited by
introducing low multipliers and a threshold on the number of vehicles which can
benefit from super-credits, e.g. by capping it at a low share of the
manufacturer's registrations. The Vans Regulation already includes such
provision for the short-term target by capping the cumulative number of
vehicles which can use super-credits over 4 years at 25,000 vehicles per
manufacturer. Finally, in view of lower 2020 targets (95 and 147 gCO2/km)
and to reflect expected technical progress in the
development of advanced hybrid and electric vehicles by 2020, the threshold of
50 gCO2/km would be too high as it would cover too large a share of the
overall fleet. While promoting extremely low CO2
emission vehicles may be a desired policy goal, it should not be pursued
through a measure that undermines the overall CO2 savings of the
policy and reduces its overall cost-effectiveness. This approach runs counter
to the aim of ensuring technology neutrality since it advantages manufacturers
deploying very low tailpipe technologies for a small part of their fleet and
fewer reductions for the rest compared to another who achieves reductions
across the whole of their fleet. Because options 2 and 3 increase CO2
emissions, reduce the stringency of the target below that politically agreed,
reduce the cost-effectiveness of the Regulations and do not respect the
principle of technological neutrality these options are discarded for both cars
and vans. Banking
and borrowing Banking and borrowing is familiar from
different regulatory environments. The rationale is that a desired level
outcome should be achieved by a certain time, but the optimal route to that
point may differ between economic actors. In view of this, allowing those
actors to bank over-compliance in some years and borrow by under-complying in
others, while still achieving the end goal increases flexibility and therefore
should lower the cost of achieving the goal. To enable banking and borrowing it
is necessary to define an expected trajectory of compliance and then assess
borrowing or banking against that baseline. This option is mutually exclusive
with phase-in and excess emissions premia. The most appropriate baseline against which
banking and borrowing could be compared is a straight line trajectory towards
the objective. However the starting point of the trajectory has a substantial
impact on the outcome. Car CO2 monitoring shows that manufacturers
are likely to exceed their target in 2015. This implies that if the starting
point for the baseline is taken as 130 gCO2/km in 2015,
manufacturers can be expected to be in over-compliance and therefore able to
bank surplus savings. In follows that their overall fleet would not need to
meet the 95 gCO2/km target in 2020 but only later - if borrowing
were permitted beyond 2020. Similarly simply assuming that the 2015 target is
the baseline to 2019 would create a large surplus of borrowing which would effectively
halve the 2020 ambition. A more appropriate baseline for comparison is between
the current emissions from monitoring and the 2020 objective. The time period for which banking and
borrowing would be permitted is an important parameter. The longer, the more
the flexibility undermines the CO2 reduction goal. The car study
makes clear that this should be limited to 5 to 10 years. If borrowing were
permitted beyond 2020, it would be necessary to know what trajectory would be
followed and this cannot be done in the absence of a post 2020 target. Cars The banking and borrowing option assessed
will finish with a neutral balance in 2020, i.e. manufacturers must still comply
with their 2020 emission target. The trajectory to be assessed follows a
straight line between monitored emissions in 2010 and the 95 gCO2/km
target in 2020. The assessment[49] shows
that banking and borrowing slightly reduces manufacturer compliance costs. This
is because more, cheaper technology can be implemented early in the reduction
trajectory, and then less effort made towards the end of the period when costs
would be higher. The illustrations show a cost saving of some 1% per car. Against this potential benefit are a number
of risks. Manufacturers that over-comply early in the period may be less able
to introduce the innovations needed for 2020 models to meet their target. There
will be less competitiveness benefit and reduced certainty for suppliers of
advanced technology. There is a risk that some manufacturers might under-comply
early in the period but then not manage to over-comply sufficiently to return
to a neutral situation in 2020. Banking and borrowing would prevent the
application of excess emissions premia in the period to 2020 which removes a
strong incentive for manufacturers to ensure they are on a good path to meeting
their 2020 target. Complications also arise in how banking and borrowing would
apply to pooling. Finally banking and borrowing would introduce additional
bureaucratic and administrative procedures. Vans Banking and borrowing has not been analysed
in detail for vans. It has also been discarded as an option because of the
3-year gap between the two targets which is fairly short, and expectation of
greater stability in the market distribution of sales between van classes. In
view of the lower stringency of the 2020 van target compared to that for cars,
the scheme would bring little benefit in terms of flexibility and carry administrative
burden. As for cars, banking and borrowing prevents use of excess emissions
premia up to 2020 removing a strong incentive for manufacturers' compliance and
creates problems in relation to pooling. In view of the above considerations, the
option is discarded for both cars and vans. Combining
car and van targets Until now CO2 legislation has
been implemented separately for cars and vans. A reason for that is that these
vehicle categories represent different markets with to a large extent unrelated
vehicle models. Given the different characteristics and applications of cars
and vans, the two categories may have different CO2 emission
reduction potentials from a technical and economic perspective. On the other
hand there is some overlap between the categories. A large share of class I and
II vans are car derived. Even dedicated van platforms often share engine and
other powertrain components with cars. Some vehicles
could in theory be covered by either the van or car Regulation depending on how
they are registered. However, at present, the limit value curve slopes of the
two Regulations differ. This means it is attractive for manufacturers to
register small vans below 1157,5 kg as cars, since they will benefit from a
less stringent target, and to register cars above this threshold as vans.
However, there are legal limitations to how far this can be done[50]. There are several possibilities to combine
the targets for these two categories which are assessed[51]: ·
Allow pooling between cars and vans. ·
Combine the van and car Regulation with a single
limit value curve ·
Bring car derived vans under the car Regulation.
Pooling between the two categories could in
principle ensure a cost-effective means of meeting a target for light-duty
vehicles. However, there is no such overall target. Also in view of the
differences in stringency of the 2020 targets for cars and vans and thus
significant differences in marginal costs, manufacturers would be likely to
over-comply with the van target rather than try to fully meet the car target.
This flexibility would benefit those manufacturers producing both categories of
vehicles and thus not be competitively neutral. Setting a combined linear limit value curve
for both categories of vehicles would result in either unattainable van targets
(in case of mass-based function) or unachievable car targets (in case of
footprint-based function). Such combined functions would be detrimental to
manufacturers of only one category of vehicles. The main drawback to the option addressing
the technical overlap between cars and car-derived vans is the need for a precise legal definition of which vans would
qualify for inclusion in the (possibly adapted) car target. This would be very
difficult to establish and would require subjective judgment as to the status
of a vehicle. This could give rise to arbitrariness and provide perverse
incentives. Also, this option reduces the room for manufacturers' internal
averaging to meet the target for the remaining vans. In view of these conclusions this option is
discarded. Mileage
weighting The legislation is based upon average new
vehicle CO2 emissions per km. In reality different classes of
vehicles are driven different distances annually and over their lifetime, which
means that overall CO2 reductions can differ depending on the
distribution of CO2/km reductions across the vehicle fleet. The
ultimate goal of lowering total vehicle CO2 emissions might be more
cost effectively achieved from a larger reduction in vehicles that travel
further and a corresponding reduction in effort for vehicles that travel less. In
view of this, the option considered is to introduce a mileage weighting factor
to the CO2 emission values based on an estimate of the relative
distances travelled by different vehicle classes and fuels. Cars Broadly speaking the assessment[52] shows that larger cars drive further than smaller cars and diesel
further than petrol. Mileage weighting based upon the estimated values could
lead to slightly lower overall costs of compliance. Total overall cost savings
amount to around 2%. However, there are significant
distributional impacts. Diesel cars, because they must make substantially more
reduction effort, have costs between €300 and €1100 higher per car. In contrast
petrol cars have compliance costs between €400 and €650 lower per car. The approach could be open to challenge due
to the lack of sufficiently strong evidence on the mileage of different vehicle
classes. Implementation of the measure could be complex. Since the mileage
distribution between small and large cars is similar for petrol and diesel, a
comparable effect for size could be achieved by lowering the slope of the limit
value curve. In view of these factors it is thought unwise to proceed with the
option. In addition, as summarised in section 5 of annex 7.4, the stakeholders
were not in favour of this modality. It is therefore concluded that this
approach should be discarded. Vans Over 90% of vans are diesel, therefore
mileage weighting is unnecessary to take account of mileage differences between
different fuel types. There is also insufficient evidence on the mileage of
different van classes making the suitability of this measure highly uncertain.
Furthermore, its implementation could be complex due to data requirements.
There is a risk of a differential impact on manufacturers so in view of these
factors this option is also discarded for vans. Vehicle
based limits This provision would mean setting a limit
curve exceedance of whose values by any vehicle placed on the market would
require payment of a penalty. This was assessed for application in addition to
the fleet wide average target[53]. Cars Four variants of the vehicle based limit
curve were explored – flat, linearly sloped, truncated linear and curved. Of
these the linear has the lowest compliance costs and buy-out premia while the
flat has the highest. Whichever approach is adopted, some manufacturers would
have high buy-out costs. This would result in a large cost burden on these
manufacturers without necessarily leading them to develop further technology
since at present the study has not identified technologies adequate to enable
their compliance. Vans While for cars it can be argued that there
is no additional transport utility for higher emissions, this logic does not
apply to vans. Larger vans offer more transport utility by offering more
payload or loading space and thus may reduce the number of vehicles needed to
transport a given amount of goods. Applying vehicle based limits to vans could
therefore perversely lead to lower transport efficiency. It is concluded that this approach should
be discarded for both cars and vans.
7.15.
Description of non-linear limit value curve for
LCVs
The relationship between the measured CO2
emissions and footprint is of quite a different format for vans and
cars. In case of vans whose footprint is above around 8 m2 the
relationship levels off giving similar CO2 emissions, even when
their footprint is 13 m2. The reasons for this are not
fully understood, but are thought to arise, at least in part, from the
characteristics of the test procedure, e.g. the equivalent inertia dynamometer
load setting does not increase beyond 2,270 kg for any vehicle weighing above
2,210 kg. Therefore, the supporting study on LCVs concludes that a non-linear function
better describes the relationship between footprint and CO2 for the
van fleet. Figure 22 shows
the non-linear equivalent of the 100% footprint-based limit function and a
number of non-linear alternatives with different slopes. The value of the
footprint where the gradient changes from being relatively steep to very
shallow, is 7.6 m2, and is described as the interception point. The
other notable point in the graph occurs at 6.5 m2, the value where
all the lines go through the same pivot point. Figure 22 The
non-linear equivalent of the 100% footprint-based limit function and a number
of alternatives between 60% and 140% slopes. The interception point is 7.6m2
and the pivot point is 6.5m2.
7.16.
List of possible environmental impacts
Environmental Impacts || Key Questions || Answer The climate || · Does the policy affect the emission of greenhouse gases (e.g. carbon dioxide, methane etc.) into the atmosphere? · Does the policy affect the emission of ozone-depleting substances (CFCs, HCFCs)? · Does the policy affect our ability to adapt to climate change? || Yes No No Transport and the use of energy || · Will the policy increase/decrease energy and fuel needs/consumption? · Does the policy affect the energy intensity of the economy? · Does the policy affect the fuel mix (between coal, gas, nuclear, renewables etc.) used in energy production? · Will it increase or decrease the demand for transport (passenger or freight), or influence its modal split? · Does it increase or decrease vehicle emissions? || Yes Yes No Yes Yes Air quality || · Does the policy have an effect on emissions of acidifying, eutrophying, photochemical or harmful air pollutants that might affect human health, damage crops or buildings or lead to deterioration in the environment (soil or rivers etc.)? || Yes ( secondary effect) Biodiversity, flora, fauna and landscapes || · Does the policy reduce the number of species/varieties/races in any area (i.e. reduce biological diversity) or increase the range of species (e.g. by promoting conservation)? · Does it affect protected or endangered species or their habitats or ecologically sensitive areas? · Does it split the landscape into smaller areas or in other ways affect migration routes, ecological corridors or buffer zones? · Does it affect the scenic value of protected landscape? || No No No No Water quality and resources || · Does the policy decrease or increase the quality or quantity of freshwater and groundwater? · Does it raise or lower the quality of waters in coastal and marine areas (e.g. through discharges of sewage, nutrients, oil, heavy metals, and other pollutants)? · Does it affect drinking water resources? || No No No Soil quality or resources || · Does the policy affect the acidification, contamination or salinity of soil, and soil erosion rates? · Does it lead to loss of available soil (e.g. through building or construction works) or increase the amount of usable soil (e.g. through land decontamination)? || No No Land use || · Does the policy have the effect of bringing new areas of land (‘greenfields’) into use for the first time? · Does it affect land designated as sensitive for ecological reasons? Does it lead to a change in land use (for example, the divide between rural and urban, or change in type of agriculture || No No Renewable or non-renewable resources || · Does the policy affect the use of renewable resources (fish etc.) and lead to their use being faster than they can regenerate? · Does it reduce or increase use of non-renewable resources (groundwater, minerals etc.)? || No No The environmental consequences of firms and consumers || · Does the policy lead to more sustainable production and consumption? · Does it change the relative prices of environmental friendly and unfriendly products? · Does it promote or restrict environmentally un/friendly goods and services through changes in the rules on capital investments, loans, insurance services etc.? · Will it lead to businesses becoming more or less polluting through changes in the way in which they operate? || No No No No Waste production / generation / recycling || · Does the policy affect waste production (solid, urban, agricultural, industrial, mining, radioactive or toxic waste) or how waste is treated, disposed of or recycled? || No The likelihood or scale of environmental risks || · Does the policy affect the likelihood or prevention of fire, explosions, breakdowns, accidents and accidental emissions? · Does it affect the risk of unauthorised or unintentional dissemination of environmentally alien or genetically modified organisms? || No No
7.17.
Effect on emissions of slope and autonomous mass
increase
As concluded in section 5.3 changes to the
slope do not directly cause any change in overall new car or van fleet CO2
emissions per km. This annex explains a secondary effect on CO2
emissions linked to a potential autonomous mass increase (AMI) in passenger
cars. AMI is an increase in mass linked to other factors than CO2
standards, such as demand for larger vehicles, additional safety requirements
etc. This is illustrated by comparing the impact
of two slopes of the curve (60% based on 2006 data (a=0.0333) and 100% based on
2009 data (a=0.0494)) which would lead to a change in target CO2 as
a function of mass in running order as illustrated in Figure 23. This would not
lead directly to an aggregate change in CO2 emissions provided the
average mass of vehicles remained unchanged, although it would present
different challenges to different manufacturers dependent on the average mass
in running order of their vehicles. However, this situation would be different
if the autonomous mass increase (AMI) was observed and the average mass
increased. If the AMI would amount to 0.82% per year, by 2030 the average mass
in running order for passenger cars would have increased from 1,372 kg (as in the
car Regulation) to 1,608 kg. This would lead to an increase in average mass in
running order of the new car fleet of 236 kg. Even though the Regulation allows
for the overall average mass to be adjusted every 3 years starting from 2016, a
small secondary effect would occur for the two years between these adjustments.
From Figure 23 it is seen that the target
for a heavier average fleet is greater for the slope with a=0.0494 than for a=0.0333.
The effect of two years’ worth of autonomous mass increase (22.5 kg) would be
to increase the average CO2 emissions (gCO2/km) by 1.25 gCO2/km
for the slope with a=0.0494, and by 0.75 gCO2/km for a slope with
a=0.0333. Consequently the use of a=0.0494would for this year allow a 0.5 gCO2/km
larger increase in emissions. The corresponding figures for the previous and
subsequent years would be: 0.25 gCO2/km additional emissions and no
additional emissions because of the adjustment of mass in the third year. On
average, this secondary effect would result in around 0.25 gCO2/km
additional emissions when averaged over the 3 year mass adjustment cycle.
Relative to an average emissions value of around 100 gCO2/km, this
secondary effect is a +0.25%, a very small change relative to the -26.9% change
caused by the implementation of the 95 gCO2/km 2020 target. Figure 23 The 2020 target CO2
as a function of mass in running order for slopes of 60% and 100% [1] Consortium composed of TNO, Ricardo, IHS Global
Insight, CE Delft, Okopol, AEA Technology, Transport and Mobility Leuven;
analysis carried out under Framework Contract on Vehicle Emissions - No
ENV.C.3./FRA/2009/0043 [2] "Effect of regulations and standards on
vehicle prices" available for download at: http://ec.europa.eu/clima/policies/transport/vehicles/cars/docs/report_effect_2011_en.pdf [3] UNFCCC, 2010, Decision
2/CP.15, Copenhagen Accord [4] COM/2011/0112 final [5] Excluding international maritime emissions [6] EU transport in figures 2011, European
Commission [7] Progress report on
implementation of the Community’s integrated approach to reduce CO2
emissions from light-duty vehicles COM/2010/0656 final [8] IEA, Transport White Paper [9] http://www.theicct.org/sites/default/files/publications/ICCT_EU_fuelconsumption2_workingpaper_2012.pdf
[10] http://www.tno.nl/downloads/co2_uitstoot_personenwagens_norm_praktijk_mon_rpt_2010_00114.pdf [11] See for instance: 'Parameterisation of fuel
consumption and CO2 emissions of passenger cars and light commercial vehicles
for modelling purposes'; JRC; 2011 [12] http://www.theicct.org/sites/default/files/publications/WLTP3_2011.pdf
[13] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2011:0288:FIN:EN:PDF
[14] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2011:0358:FIN:EN:PDF
[15] http://ec.europa.eu/energy/energy2020/roadmap/doc/sec_2011_1565_part1.pdf
[16] http://ec.europa.eu/energy/observatory/trends_2030/index_en.htm
[17] Short-term projections for oil, gas and coal prices
were slightly revised according to the latest developments in the Reference
scenario as compared to the version used in A Roadmap for moving to a
competitive low carbon economy in 2050. [18] European Commission, DG Economic and Financial Affairs:
2009 Ageing Report: Economic and budgetary projections for the EU-27 Member
States (2008-2060). EUROPEAN ECONOMY 2|2009, http://ec.europa.eu/economy_finance/publications/publication14992_en.pdf
. The “baseline” scenario of this report has been established by the DG
Economic and Financial Affairs, the Economic Policy Committee, with the support
of Member States experts, and has been endorsed by the ECOFIN Council. [19] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:2020:FIN:EN:PDF
[20] The US Energy Information Administration and the
International Energy Agency. [21] Projections for oil, gas and coal prices as used in the
“Reference scenario” in the Energy Roadmap 2050. [22] http://www.e3mlab.ntua.gr/e3mlab/PROMETHEUS%20Manual/prometheus_documentation.pdf
[23] In PRIMES and PRIMES-TREMOVE models all monetary values
are expressed in constant terms (without inflation). The economic modelling is
based on Euro (€), for which the exchange rate is assumed to depreciate from
the higher levels of around 1.4 $/€. Thus there will be a somewhat faster
increase in energy prices expressed in Euro if compared to prices expressed in U.S.
Dollar. [24] Regulation (EU) No 510/2011 of the European Parliament
and of the Council of 11 May 2011, setting emission performance standards for new
light commercial vehicles as part of the Union's integrated approach to reduce
CO2 emissions from light-duty vehicles [25] International Energy Agency (2009), Transport, Energy
and CO2: Moving Towards Sustainability. [26] http://publications.jrc.ec.europa.eu/repository/bitstream/111111111/22474/1/co2_report_jrc_format_final2.pdf
[27] http://www.tno.nl/downloads/co2_uitstoot_personenwagens_norm_praktijk_mon_rpt_2010_00114.pdf
[28] Unless otherwise highlighted, figures
in the following sections are taken from the DG Enterprise and Industry 2009
study on competitiveness of main industrial sectors entitled: European
Industry in a Changing World Updated Sectoral Overview 2009 [29] According to CECRA (customer services, repair and servicing,
spare parts, accessories and tuning) statistics [30] EUROSTAT statistics. [31] Source of figures on the retail sale of fuel - EUROSTAT [32] Support for the revision of Regulation (EC) No 443/2009
on CO2 emissions from cars, Service Request #1, carried out by TNO,
AEA, CE Delft, IHS Global Insight, Ökopol, Ricardo and TML under Framework
Contract No. ENV.C.3./FRA/2009/0043. Final Report, November 2011.
See: http://ec.europa.eu/clima/policies/transport/vehicles/cars/docs/study_car_2011_en.pdf [33] The oil price assumed is $
120/barrel with an annual mileage for petrol vehicles of 14,000 km and 16,000
km for diesels. A factor of 1.195 is used to convert TA emissions into ‘real
world’ emissions and the mark-up multiplication factor used to determine the
vehicle price increase from the additional manufacturer costs is 1.235. [34] The oil price assumed is $ 120/barrel with an annual
mileage of 23,500 km. A factor of 1.195 is used to convert TA emissions into
‘real world’ emissions and the mark-up multiplication factor used to determine
the vehicle price increase from the additional manufacturer costs is 1.11. [35] See e.g. the projects Super
Light car (http://www.superlightcar.com)
and FutureSteelVehicle (http://www.worldautosteel.org)
[36] Based on information from
companies' websites [37] For
example: 'More jobs per gallon: how strong fuel economy/GHG standards will fuel
american jobs'; CERES, 2011; 'Potential long term impacts of changes in US
vehicle fuel efficiency standards'; Bezdek, R.H., Wendling, R.M., 2005; 'Energy
efficiency and job creation: the employment and income benefits of investing in
energy conservation technologies. Report no ED922, American Council for an
Energy-Efficient Economy'; Geller, H., DeCicco, J., Laitner, S., 1992;
'Employment impacts of achieving automobile efficiency standards in the United
States'; Dacy, D.C., Kuenne, R.E., McCoy, P., 1980 [38] Tables 8 and 9 in the car study [39] For details of this methodology see section 2 of the
car study. [40] http://www.decisionatelier.com/Valeo-l-hybridation-a-moins-de-800.html
[41] Section 15 of the car study [42] Section 5 of the car study [43] If the OEMs were to reduce the average emissions from
2010 to comply with the 2017 and 2020 targets exactly when these become fully
mandatory, it would mean on average less than 1 gCO2/km yearly
reduction until 2017 and more than 9 gCO2/km from 2017 to 2020. This
is rather unlikely and a smoother reduction path over the period 2010-2020 is
more probable leading to certain overachievement of the 2017 target. [44] Section 3 of the van study [45] The
impact assessment accompanying the Commission's proposal for a regulation
setting emission performance standards for light commercial vehicles SEC(2009)
1454 [46] For example the Opel Ampera has combined test cycle
emissions of 27 gCO2/km. [47] Section 13.3 of the car study and section 6.2.3 of the
van study [48] According to the Vans Regulation a maximum of 25,000
vans per manufacturer registered over 4 years can benefit from a super-credit. [49] Section 15.3 of the car study [50] According to Commission Regulation (EU) No 678/2011
amending Directive 2007/46/EC a vehicle can be categorised as N1 if, inter
alia, the seating compartment is separated from the loading area and vehicle's
bodywork meets certain criteria regarding the loading and cargo areas. [51] Section 12 of the car study [52] Section 16 of the car study [53] Section 11 of the car study