Environment and Climate

CO₂ regulation of passenger cars and light commercial vehicles in Europe

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

Pillar 1: CO₂ reduction potentials within the automotive industry

The determination of CO2 reduction potentials within the automotive industry highlights the following questions:

  • How can a target value be set today, which takes account of the uncertainties in switching from the testing cycle NEDC to WLTP, plus the great uncertainty associated with the ramp-up of alternative powertrains?
  • What other useful reduction potentials for CO2 reduction exist that can be shown to contribute to CO2 reduction, even if they cannot be measured in the testing cycle?

Technical reduction rate for new cars

Why a technical reduction rate instead of a limit value?
The current Regulation sets a CO2 target value and verifies the fleet CO2 values for all new registrations, in relation to weight and for each manufacturer, at the end of the year. At present all new vehicles are still measured using the New European Driving Cycle (NEDC). From 2017 onward, this testing cycle will be replaced with the Worldwide harmonized Light vehicles Test Procedure (WLTP), which is also intended to form the basis for defining a new target value.

The European Commission is applying the principle of comparable stringency to the switch from NEDC to WLTP. This means that a vehicle fleet that is legal today, under today’s NEDC boundary conditions for testing, must also be legal under WLTP boundary conditions for testing.

The NEDC and WLTP values cannot be converted by a simple calculation because individual technologies, such as a start-stop system, have differing effects in the two test cycles and consequently there would be no “comparable stringency.” For this reason, the European Commission is leaving verification of the 95 g CO2/km fleet target as correlated NEDC values until 2020, using the CO2MPAS tool to do so.

Although WLTP measuring will be introduced in 2017, a complete WLTP data set for an entire new car fleet will be available from 2020 at the earliest. Therefore, at this time a new CO2 fleet limit value for the period after 2020 cannot be set based on WLTP data. Instead, it is planned that a snapshot of the European passenger car market after 2020 will supply the new CO2 database from which, similar to today’s procedure, a new CO2 slope will be derived for 2030. The new weight-based and manufacturer-related WLTP limit values for 2030 will then be based on this new slope.

Conclusion
In order to propose a post-2020 reduction path in 2017 in the sense of an interim regulatory step, only a percentage overall reduction rate can be set for the period from 2020 to 2030. It is not possible to give an absolute WLTP limit value because a WLTP starting point cannot be determined until 2020.

How ambitious can the post-2020 technical reduction rate be?
It will not be possible to maintain the speed of CO2 reduction achieved in the past by further optimizing the internal combustion engine. Instead, additional reductions to below 95 g CO2/km depend very largely on the market success of alternative powertrains.

The market ramp-up of alternative powertrains is in its turn dependent on many exogenous factors that are not within the responsibility of the automotive industry and which it can influence only to a limited extent. They include the battery costs, charging infrastructure, fuel prices and public procurement. Therefore more ambitious targets after 2020 can be attained only if joint action by the automotive industry, Member States, infrastructure providers and regional and municipal political decision-makers can be relied on to create the right regulatory framework. The politicians, the industry and, not least, the motorists, must all contribute in order to ensure further reduction rates.

Therefore, reductions cannot simply be calculated in a linear manner as in the past. Instead, the future CO2 regulatory logic must take into account the uncertainties of this new technology and infrastructure development.

In principle, the possible CO2 reductions for new vehicles after 2020 result from two main points of leverage:

  • further optimization of conventional powertrain concepts, and
  • market success of the alternative powertrains will both determine the CO2-reduction rate.

Depending on the development of the charging infrastructure, battery costs, fuel prices and other exogenous factors, the overall CO2 reduction will be either higher or lower depending on the growth in electric mobility.

Since the market success of alternative powertrains cannot be forecast at present, in 2017 only a conditional overall reduction rate can be formulated for 2030 as an if-then statement: if the exogenous factors develop in a certain way, then an overall reduction of x percent is possible in 2030. This situation is illustrated by the figure below and the following table showing different e-mobility scenarios.

The great uncertainty over whether market ramp-up can be achieved by 2030 will remain even after 2017. For this reason, at the latest in 2025 the reduction steps achieved should be subject to a transparent check in a mid-term review. Then, if the regulatory conditions for the alternative powertrains develop different from those predicted, the agreed reduction rates can be adjusted either upward or downward. A mid-term review could be drawn up – for example – in the following way:

Qualitative mid-term review by an independent body of experts
Policy-makers and the industry agree in 2017 on an independent body of experts that will assess in 2025 all the major parameters influencing the ramp-up of alternative powertrains, by considering the following indicators:

  • Range of vehicles on offer (battery electric vehicles [BEV], plug-in hybrid electric vehicles [PHEV], fuel-cell electric vehicles [FCEV], etc.)
  • Expansion of the charging infrastructure
  • Oil and fuel prices
  • Levels of subsidies and non-monetary incentives
  • Level of public procurement, etc.

In principle this type of tracking of the trends in relevant parameters and indicators is already known in the EU legislation. For example, in the current CO2 Regulation the average weight in the EU fleets, and the 7 g threshold for eco-innovations are already subject to regular verification.

Quantitative mid-term review
Alternatively the mid-term review could be simplified by basing it solely on individual, easily measurable indicators that are highly relevant for ramping-up alternative powertrains. Obviously the decisive factor for the reduction potential is the actual market share of alternative powertrains resulting from many indicators. However, many surveys indicate that total coverage with a rapid charging system is a relevant indicator for the purchase of electric vehicles. The European Commission also underscores the need for an infrastructure in its “Directive on Deployment of Alternative Fuels Infrastructure” (DAFI). The Commission’s proposal for the DAFI calls for a ratio of 1 to 5 between charging points and the number of electric vehicles. Verifying this ratio in the mid-term review in 2025 should include the feasibility of the reduction rate defined for 2030. Consequently, in the review year the expansion of the infrastructure would be measured and assessed in proportion to the achieved market share. From the measured and evaluated status a correction factor can be derived for the ramp-up of alternative powertrains and used to determine the final additional reduction rate.

Conclusion
As the market success of alternative powertrains is extremely uncertain and is the responsibility of more players than the automotive industry alone, the stringency of the future Regulation should react flexibly to actual market development and to the expansion of the infrastructure, and be examined in a mid-term review.

Promotional strategy for alternative powertrains (eco-incentives)
In October 2014 the European Council requested in its conclusions the Commission “… to further examine instruments and measures for a comprehensive and technology neutral approach for the promotion of emissions reduction and energy efficiency in transport, for electric transportation and for renewable energy sources in transport also after 2020”. So a regulatory, non-monetary incentive system is to be created for the major investments in alternative powertrains. Manufacturers could be given an incentive in the form of a smaller reduction obligation if they invest especially heavily in alternative powertrains and their models achieve the corresponding market success. Targets will not be relaxed for manufacturers that do not sell any models with alternative propulsion. By the same token, the super credits for alternative propulsion systems in the resultant carbon impact could also be an effective incentive instrument.

Conclusion
The legislators should encourage market penetration of vehicles with alternative powertrains. On the one hand, this has a positive impact on CO2 emissions from road traffic, and on the other may generate faster economies of scale, which then makes vehicles with alternative powertrains competitive even sooner.

Summary
Future technical reduction rates within the framework of conditional fleet regulation will result from conventional reduction rates and variable alternative reduction rates in line with the market success of alternative powertrains and the expansion of the charging infrastructure (conditional). The ramp-up of alternative powertrains should be promoted by an eco-incentive.

This type of approach can bring about a significant reduction in CO2 emissions from 2021 to 2030. If the market for alternative powertrains and the expansion of the necessary infrastructure develop better than predicted, even greater reduction rates can be achieved. Any adjustment of the reduction rates should follow in the context of a mid-term review in 2025.

Crediting additional reductions

Alongside the CO2 reduction potentials that can be directly measured in the test cycle, there are many more measures for effective emissions reduction. Since these emission reductions do not have a direct impact on the official CO2 value certified in the cycle, the manufacturers should be awarded credits if measures they have selected are shown to reduce CO2 emissions and this is not reflected in the test results. Expedient measures here include additional credits on the manufacturer’s official fleet value. Any credits and their amounts are to be expressed in a manner that is binding and as specific as possible in a post-2020 regulation regime in order to facilitate planning and thus to incentivize the necessary, and in some cases long-term, investment.

Expansion of eco-innovations (off-cycle technologies)
Eco-innovations are measures that reduce a vehicle’s CO2 emissions, but are not taken into account in the official type testing procedure. At present the EU is already using ecoinnovations as a fixed part of CO2 regulation and allows the incorporation of eco-innovations making savings of up to 7 g CO2/km. The current recognition procedure for ecoinnovations is however beset with regulatory and bureaucratic hurdles.

In the next stage of regulation post 2020, eco-innovations should be designed such that the market penetration of innovative technologies in the volume segment is actually promoted, and thus makes a major contribution to the overarching climate protection targets. The automotive industry appeals for a pragmatic approach in which a list of predefined technologies and their CO2-reduction potentials is incorporated into the Regulation. The CO2-reduction potential can be recorded either as a formula dependent on a technical value to be measured, or as a fixed value.

For the higher number of all-electric vehicles in the future, fuel-saving air-conditioning and comfort technologies will have a considerable effect on the range of electric vehicles in daily operations. Therefore these technologies should be included in the definition of eco-innovations. Furthermore, for the increased networking of vehicles with their environment, technologies whose CO2-savings potential depend on the way the vehicle is used (e.g. Adaptive Cruise Control, Adaptive Haptic Pedal, On Board Trip Computer and Eco-Mode programs), may be expected to become more common and should be accordingly promoted as eco-innovations.

ITS and safety packages
Similar to the “additional measures” from the existing target value regulation (Regulation (EC) No 443/2009), technology packages can be defined, for which every manufacturer that installs these unequivocally CO2-reducing technologies receives a standard credit for them. In the target value regulation of 2015, a “lump sum” credit of 10 g was already applied for the series installation of tire pressure control systems, low-resistance tires, efficient air-conditioning systems, gear-shift indicators and the adaptation to biofuels. In the post-2020 Regulation the following points – for example – could be offset:

  • ITS (Intelligent Transport Systems) packages: equipping for digital connectivity and thus for smoothing out the traffic flow and for improving mobility (e.g. car-to-car communication, traffic light recognition, congestion avoidance/networked systems).
  • Safety packages: avoiding congestion owing to fewer accidents (e.g. lane departure warning, line keeping, adaptive lighting).

Eco-driving
In addition, technologies depending on driver behavior, such as eco-mode and “soft measures” for CO2 reduction should be recognized as emission-reducing measures. For instance, if a manufacturer were willing to declare that it would offer every purchaser of a new car a free training in efficient driving, the manufacturer should be awarded credits for this. This would require an independent institution to determine statistically what average long-term CO2 savings could be achieved through driver training.

Credits to the fleet emission value for equipping vehicles to use
low-CO2 and/or climate-neutral energy carriers

The use of a significant share of renewable fuel of biogenic origin in vehicles requires the vehicles to be specially equipped. Therefore, the technological capabilities of vehicles for using second and third-generation biofuels must be promoted. Vehicles that have been homologated for running on biofuels could for instance be given a CO2-approval value that at least partially corresponds to the CO2-reduction due to the fuel. This kind of standardized option was already included in the existing Regulation. This article could simply be re-inserted in a subsequent post-2020 regulation.

Crediting CO2-neutral fuels on the fleet emission value
Electric vehicles (BEV, FCEV) and highly efficient internal combustion engines in combination with gaseous or liquid renewable fuels are perfectly complementary. Combustion engines are also needed in the long term for certain purposes (for commercial vehicles, hybrid passenger cars on long journeys, and air travel). If fuels for internal combustion engines are produced on the basis of renewable electricity, they are largely climate-neutral.

The Post-2020 fleet passenger car regulation for CO2 offers the unique opportunity of sustainably stimulating both ramp-up and market penetration of renewable fuels. A suitable incentive will encourage the use and the spread of renewable fuels, increase their absolute quantities, and ensure faster establishment of the necessary infrastructure. Accordingly it is important to promote the use of CO2-neutral substitute fuels by crediting their reductions of greenhouse gas (GHG) emissions to the fleet average for the new cars.

When fuels are used whose quantities and sustainable GHG-reductions are demonstrated without doubt, the manufacturer should be given a CO2 credit for the vehicle fleet supplied with these fuels. The proven reduced emission values should be credited directly to the fleet emission value of the new vehicles of that particular manufacturer. This would require that these fuels are not used to satisfy the GHG reduction quota of the petroleum producers.

Driving new mobility concepts forward
New mobility concepts also play an important role in reducing CO2 emissions. Consequently, manufacturers should receive an incentive in the form of credits for their commitment to driving forward corresponding offers.

Car sharing is one way of reducing the number of vehicles on the roads, because vehicles can be used more efficiently within a single multimodal transport offering. In comparison with the existing fleet, car sharing reduces fuel consumption and CO2 emissions because new, lower-emission vehicles replace end-of-life vehicles. Various studies have shown that on average one car-sharing vehicle replaces eight to ten old vehicles. Furthermore, in free-floating car sharing the number of kilometers driven can also be reduced because drivers make one-way trips instead of return trips. If electrified vehicles are used, this also enhances the environmental benefits and the general interest in electric mobility.

Car sharing has the potential for substantial CO2 reduction. A study conducted in London indicates a potential reduction of 49 percent in the carbon footprint. Supplementary studies are required to give a better estimate of the actual CO2 effect, but the potential justifies including the contribution from car sharing in the CO2 Regulation.

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