An element of the supercredit system has been retained although neither the green lobby nor the German OEMs is particularly happy with the proposed legislation, which probably means the correct balance has been struck.
IHS Automotive perspective
The EU has agreed a deal on implementing legislation that will introduce a target of 95g/km CO2 for passenger car emissions by 2020.
Last-minute lobbying efforts by the German government on behalf of the country's OEMs appear to have had some impact, with the multiplier concept being adopted. This allows the German OEMs to retain some supercredits for manufacturing higher-emission cars.
Judging by the comments of the green politicians and the head of the German automotive manufacturers committee, neither party are particularly happy with the compromise agreement brokered by Ireland, which currently holds the rotating EU presidency. However, the proposals do look a sensible compromise between the goals of both lobbies.
The European Parliament, Council and European Commission has reached an agreement which is aimed at reducing the reduce average CO2 passenger car emissions to 95g/km by 2020, according to a European Commission press release.
According to the release, the key details of the agreement are as follows:
- Emissions target: The agreement will reduce average CO2 emissions from new cars to 95 g/km from 2020, as proposed by the Commission. This is a 40% reduction from the mandatory 2015 target of 130 g/km. The target is an average for each manufacturer's new car fleet; it allows OEMs to build some vehicles that emit less than the average and some that emit more.
- 2025 target: The Commission is required to propose a further emissions reduction target by end-2015 to take effect in 2025. This target will be in line with the EU's long-term climate goals.
- Supercredits for low-emission vehicles: The Regulation will give manufacturers additional incentives to produce cars with CO2 emissions of 50 g/km or less (which will be electric or plug-in hybrid cars). Each of these vehicles will be counted as two vehicles in 2020, 1.67 in 2021, 1.33 in 2022 and then as one vehicle from 2023 onwards. These supercredits will help manufacturers further reduce the average emissions of their new car fleet. However, to prevent the scheme from undermining the environmental integrity of the legislation, there will be a 2.5 g/km cap per manufacturer on the contribution that supercredits can make to their target in any year.
- Exemption for small producers: To minimise the administrative burden, manufacturers of less than 1,000 cars per year registered in the EU will not have to meet any emissions target.
- Test procedure: The European Council and Parliament agreed that more realistic test procedures need to be introduced to measure fuel consumption and CO2 emissions from cars and vans to present a more accurate measure of real-world emissions and fuel consumption.
Commenting on the agreement Connie Hedegaard, EU Commissioner for Climate Action, said, "The European Parliament and the EU governments reach a deal on the European Commission's car emissions proposal: the 95g CO2/km 2020 target is secured and there is a limited use of supercredits. Also, the European Commission is asked to propose a 2025 target by end-2015." It appears that the last-minute lobbying efforts by German politicians appear to have won some concessions, with the multiplier idea being adopted. The original plan to carry over supercredits earned prior to the introduction of the new legislation was rejected. However, the German government then came up with another formulation known as a multiplier, which refers to the mechanism by which any low-emission or zero-emission vehicles count as two vehicles on the introduction of the legislation in 2020. However, neither the Green lobby or the German manufacturers appear particularly content with the proposals. The spokesperson for campaign group Transport & Environment, Greg Archer, said, "The effect of the supercredits is to raise the 2020 target from 95g/km to 97.5g/km, ultimately costing the average driver money in extra fuel purchased. It could have been even better for drivers, jobs and the EU economy if decision-makers had focused on the significant long-term benefits of more fuel efficient cars instead of the narrow, short-term interests of some carmakers." However, Matthias Wissmann, the president of the VDA Germany Automotive Industry Association, criticised downgrading the impact of supercredits. He said, "The European Union is failing to provide a powerful impulse for technological development and a market ramp-up of alternative drives despite an economic crisis."
Outlook and implications
With the previous legislation governing passenger emissions which is running between 2012 and 2015 being criticised for being watered down and overly compromised by green lobby groups and the green faction within the European parliament, it appears the new legislation has been formulated to be more aggressive, despite the concessions won by Germany over retaining an element of the supercredits system. The current legislation began last year and demanded average of 65% of each manufacturer's newly registered cars must comply by 2012, rising to 75% in 2013, 80% in 2014, and 100% from 2015 onwards. However, with the average CO2 of vehicles being sold in Europe at 132.2g/km in 2012, according to the European Environment Agency, it appears the OEMs are meeting the current targets with relative ease. It should be remembered that despite the protestations of the VDA and its members, the current and proposed legislation by the EU limiting passenger car emissions are the most far-reaching and progressive yet proposed by any government or legislative bloc in the world. Therefore they will help keep European OEMs and those OEMs with a significant interest in the European market at the forefront of low- and zero-emission vehicle research and development (R&D), as well as the development of low-emission conventional powertrain technology. This will give European OEMs a competitive advantage when countries like China almost inevitably adopt legislation with similar goals at a later date. Other interesting aspects to the proposed framework is the EU's agreement to adopt more accurate testing measures for vehicle emissions, which will make it much harder for OEMs to get round current testing criteria. This indicates a strong willingness to adopt test cycles like the forthcoming updated WLTP, which are aimed at providing a more accurate representation of real-world powertrain emissions and fuel consumption than existing test criteria (see World: 31 December 2012: The movement towards a global emissions testing procedure). This will also mean that OEMs will have to find more genuine reductions in emission output and improvements in fuel consumption. The agreement must still be confirmed by the European Parliament, the Council and the Commission, after which the Regulation will be formally adopted.