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Brussels, 7 February 2007

Questions and answers on the EU strategy to reduce CO2 emissions from cars

What is the problem?

After power generation, road transport is the second biggest source of greenhouse gas emissions in the EU. It contributes about one-fifth of the EU's total emissions of carbon dioxide (CO2), the main greenhouse gas. Road transport is one of the few sectors where emissions are still rising rapidly, so at present it is undermining rather than helping the EU's efforts to tackle climate change. Passenger cars alone are responsible for around 12% of EU CO2 emissions. Although there have been significant improvements over recent years in vehicle technology - particularly in fuel efficiency, which translates into lower CO2 emissions – these have not been enough to neutralise the effect of increases in traffic and car size. CO2 emissions from road transport rose by 26% between 1990 and 2004. This increase acted as a brake on the EU's progress in cutting overall emissions of greenhouse gases, which fell by just under 5% in the EU-25.

What is the EU's objective?

To help reduce greenhouse gas emissions and meet its Kyoto Protocol targets, the EU has agreed that average CO2 emissions from new passenger cars should not exceed 120g CO2 per km by 2012[1]. This target was reconfirmed most recently at last June's meeting of the European Council, when EU leaders revised the EU Sustainable Development Strategy. The target compares with an average emissions level of 186g CO2 per km in 1995. Achievement of this target will help Member States in the delivery of the reductions needed to respect of the Kyoto protocol.

What does the existing strategy consist of?

As proposed by the Commission in 1995, and supported by the Council and European Parliament, the existing strategy has three pillars.

The first consists of voluntary commitments by the European, Japanese and Korean car industries to reduce CO2 emissions from their new cars sold in the EU to an average of 140g/km by 2008 (for European manufacturers) or 2009 (for Japanese and Korean manufacturers).

The second pillar involves raising awareness among consumers. An EU directive[2] requires the display on each new car of a label showing its fuel consumption and CO2 emissions, as well as publication of fuel efficiency information in other formats, including in printed advertisements.

The third pillar aims to promote fuel-efficient cars through fiscal measures. Several Member States have done this, and the Commission has proposed EU legislation[3] aimed at including a CO2 element in national car taxes.

How much progress has the strategy achieved?

The strategy has brought only limited progress towards achieving the target of 120g CO2/km by 2012. Between 1995 and 2004 average emissions from new cars sold in the EU-15 fell by 12.4%, from 186g CO2/km to 163g CO2/km. Over the same period new cars sold in the EU became significantly bigger and more powerful.

Why is the Commission proposing a revised strategy?

As part of the European Climate Change Programme, the Commission last year carried out a review of the strategy in close consultation with key stakeholders. The conclusion of the review is that the voluntary approach has delivered a solid CO2 reduction but has not been as successful as hoped. Given the slower than expected progress to date, the 120g CO2/km target will not be met by 2012 without additional measures. To give industry maximum predictability and lead-time for developing new technology, the Commission wants to set out its intentions clearly now.

What measures does the new strategy envisage?

The revised strategy is based on a comprehensive set of measures to influence both the supply and demand sides of the EU market for cars and vans. The overall effect of these is to promote affordable fuel efficiency improvements and reductions in CO2 emissions, as well as substantial fuel savings for car and van drivers. Together with the recent proposal to update the fuel quality directive, which will reduce greenhouse gas emissions from transport fuels by 10% between 2010 and 2020,, the strategy represents the first concrete implementation of the Commission's recent Energy Efficiency Action Plan and of the 10 January Energy and Climate Change package.

The main measures of the revised strategy are as follows:

  • EU legislation to reduce CO2 emissions from new cars and vans will be proposed by the Commission by the end of this year or at the latest by mid 2008.
  • Average emissions from new cars sold in the EU-27 would have to reach the 120g CO2/km target by 2012. Improvements in motor technology would have to reduce average emissions to no more than 130g/km, while complementary measures would contribute a further emissions cut of up to 10g/km, thus reducing overall emissions to 120g/km. These complementary measures include efficiency improvements for car components with the highest impact on fuel consumption, such as tyres and air conditioning systems, and a gradual reduction in the carbon content of road fuels, notably through greater use of biofuels. Efficiency requirements will be introduced for these car components.
  • For vans, the fleet average objectives would be 175g by 2012 and 160g by 2015, compared with 201g in 2002.
  • Support for research efforts aimed at further reducing emissions from new cars to an average of 95g CO2/km by 2020.
  • Measures to promote the purchase of fuel efficient vehicles, notably through an amendment to the car labelling directive to make it more effective and by encouraging Member States that levy road tax to base it on cars' CO2 emissions. The Council will be encouraged to adopt the Commission's proposal on road taxes without further delay.
  • An EU code of good practice on car marketing and advertising to promote more sustainable consumption patterns. The Commission is inviting car manufacturers to develop this and sign up to it by mid-2007.

How will it work in practice? Will 120g/km be measured by manufacturer?

The 120 g CO2/km objective is defined as the average of the new cars sold in a given year. How exactly this will be translated at the level of manufacturers and vehicles, and how the emissions saving of up to 10g CO2/km to be contributed by complementary measures will be divided amongst the various measures identified, have yet to be decided. The precise definition of the regulatory approach will be established after wide consultation and on the basis of a thorough impact assessment. By way of example, in the US an average fuel efficiency level per car manufacturer is applied, while Japan uses a fuel efficiency objective as a function of the car weight. The Commission will consider the respective pros and cons of the different approaches and propose the best solution for the EU from a climate change and competitiveness point of view.

Will this limit be harmful for the competitiveness of the European car industry? Will the proposal cover American and Japanese manufacturers?

The objective is to address all manufacturers that sell new cars in Europe, so American, Japanese and Korean manufacturers will be concerned as much as European ones. The European car industry includes American manufacturers since they sell their cars through European subsidiaries or parent companies, e.g. Ford of Europe, Opel (GM), DaimlerChrysler (Chrysler).

How much will the measures cost? Will car prices increase?

Our investigations show that cars will rise in price by a certain amount - but this will be compensated by fuel savings. The impact assessment of this measure is not yet out, in it we will supply all the details.

It should be underlined that average CO2 emissions from new cars have been reduced by 12% since 1995 but over the same period the price of new cars has increased significantly less than inflation. This shows that CO2 can be reduced in an affordable way. There are already several cars on the market that have low CO2 emissions[4], and no major price differentials have been observed.

What impact will the strategy have on the car industry? Would jobs be lost or moved outside the EU?

All manufacturers, wherever they come from, will be subject to the CO2 requirements when selling cars in the EU. The need to meet the mandatory target by 2012 will stimulate research and development, most of which would be done in the EU as far as EU carmakers are concerned. It is worth noting that the most competitive auto industries are located in the regions where the most ambitious fuel efficiency standards are applied, namely Europe and Japan. The Commission's action will strengthen the competitiveness of Europe's car industry since there is growing evidence, including from key players in the financial markets, that fuel efficiency will become an increasingly important competitive factor for car manufacturers as global constraints on carbon emissions tighten.

Can cars be taken off the market?

No, the emissions targets will only apply to new vehicles (cars and vans) when they are put on the market. Cars sold before the requirement takes effect will not be affected and will not have to be taken off the road.

What role is foreseen for biofuels?

The EU recognises that biofuels can help to meet its Kyoto emission targets, and an EU directive[5] aims to raise the market share of biofuels in road transport fuels to 5.75% by 2010. Biofuels and vehicle improvements are two essential elements of the EU's policy for addressing the climate change impacts of transport. In order to reduce the fossil carbon content of transport fuels, the Commission has proposed as part of the revision of the fuel quality directive[6] to progressively reduce the carbon content of transport fuels from 2011 onwards (see IP/07/120) The CO2 savings delivered by this measure up to 2012 will be counted towards the achievement of the 120g CO2/km objective.

What is the situation in other parts of the world?

Efforts to reduce the greenhouse gas emissions from road vehicles are under way in many parts of the world. The United States, Canada, Japan, Korea, China and Australia already have regulatory or voluntary approaches in place, some of which are now being reviewed with the aim of delivering further improvements in fuel efficiency and reductions in CO2 emissions.

The EU objective of 120 g CO2/km and the Japanese standards are in absolute terms the most ambitious in the world. A precise comparison is difficult because of differences in fleet and test method. Japan recently announced its intention to further improve car fuel efficiency by 20% by 2015.

In the US, President Bush announced in his January 2007 State of the Union Address that he would seek fuel efficiency improvements for cars and light-trucks, and support clean diesel – a technology in which EU manufacturers are world leaders. At the state level, California followed by 10 other states adopted a rule in 2004 that aims at a 30% reduction in greenhouse gas emissions from cars and light-trucks over the 2009-2016 period.

What is the next step? When will there be legislation?

The Communication setting out the Commission's proposal for a revised strategy is addressed to the Council of Ministers and European Parliament. The Commission will await their responses and based on these will proceed to implement the strategy. The legislative proposal is already foreseen in the Commission's 2007 Legislative and Work Programme but preparatory work may take until mid-2008.

Will there be European legislation on speed limits?

No, this is not part of the strategy. It is noteworthy however that the fuel consumption and CO2 emissions of a car driven on a motorway increase disproportionately to its speed. For example, the CO2 emissions per km of a car travelling at 200 km/h are more than two and a half times those of the same car travelling at 130 km/h.

The idea of including individual cars in the EU Emissions Trading Scheme has been suggested. Is this on the agenda?

Not for the moment, but the Commission will explore the possibility of including the road transport sector in the scheme in the medium term. Any revisions to the scheme will take effect at the start of the third trading period in 2013. The inclusion of cars in the scheme, if proposed, would be likely to raise significant administrative challenges for which several years' preparation would be needed. It would also not be appropriate to bring cars into the scheme before 2013 for reasons of market predictability and regulatory stability.

Is the Commission reducing CO2 emissions from its own car fleet?

The Commission takes account of the environmental impacts of the vehicles it uses, including fuel consumption and CO2 emissions, in its fleet management practices. It has already committed itself:

  • to gradually replace its fleet of service cars with diesel cars equipped with a particle filter (diesel cars emit less CO2 than petrol-powered cars)
  • to equip technical services, for short trips between Commission buildings, with small cars emitting less than 140 g/km for petrol cars and less than 130 g for diesel cars

Due to the specific needs of the institution, and notably security considerations (armoured vehicles are heavier and thus have higher CO2 emissions), average CO2 emissions for the whole Commission fleet were about 254 g CO2/km for the year 2006. However, significant reductions are being achieved as the fleet is renewed. For example, last year 17 large petrol-powered cars for use by Commissioners were replaced by diesel vehicles with the lowest engine capacity available for this category of car. These new cars emit 20 to 30% less CO2 than those previously used. The Commission has also recently ordered two VW Polo "Blue Motion" cars that emit 102 g CO2/km to replace older service cars.

How much will the revision of the fuel quality directive contribute to reducing CO2 emissions?

It is estimated that the 1% annual reduction in greenhouse gas emissions from transport fuels over their lifecycle required under the revised directive will bring a cumulative saving by 2020 equivalent to around 500 million tonnes of CO2. That is as if Spain and Sweden combined halted all greenhouse gas emissions for a year.

How much CO2 will be reduced under the revised strategy?

Compared to today's situation, reaching the EU target of average CO2 emissions from new cars of 120 g CO2/km by 2012 will deliver 10% of the reduction effort that is still needed to meet the EU's Kyoto Protocol commitment to reduce greenhouse gas emissions to 8% below levels in the base year (in most cases 1990) by 2012.

Taking a longer term perspective, with the gradual renewal of the EU car fleet as more fuel efficient cars penetrate the market, the Commission calculates that the cumulative CO2 savings by 2020 of reaching the 120g CO2/km target in 2012 will be over 400 million tonnes.

[1] This corresponds to fuel consumption of 4.5 litres per 100 km for diesel cars and 5 l/100 km for petrol cars.

[2] Directive 1999/94/EC

[3] COM(2005)261 final

[4] Examples: VW Polo (102 g), Peugeot 206 (113 g), Ford Fiesta (116 g), Renault Megane (120 g)

[5] Directive 2003/30/EC

[6] Directive 98/70/EC

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