Official and effective 2025 target, with flexibilities
Mass adjustment of the CO₂ target: Carmakers selling heavier-than-average vehicles benefit from a relaxed CO₂ target, which weakens the EU-wide CO2 savings. The mass of cars sold is expected to continue to increase in the coming years because of increasing SUV and EV sales (EVs are heavier than conventional cars due to the battery). Therefore, the average weight of cars sold in a given year is above the reference mass, which is based on cars sold two to four years earlier. T&E estimates that cars in 2025-2029 will be 67 kg heavier on average than the reference mass, which would translate into an average increase of the CO₂ target of 2 gCO₂/km.
Eco-innovation credits: Carmakers can earn eco-innovation CO₂ credits by fitting technologies such as LED lights or efficient alternators on the vehicles which will reduce carmakers CO₂ emissions on paper. In 2019, fitting two eco-innovations saved on average 2.5 gCO₂/km [1]. Carmakers are expected to fit more of such technologies onto vehicles as they become cheaper and as the CO2 targets become stricter. All major carmakers have already joined forces to have the four main eco-innovation technologies [2] approved under the new test to be able to use in the future [3]. T&E estimates that eco-innovation credits will represent 3 gCO₂/km weakening per conventional car on average from 2025.
WLTP test optimisation: Until recently, carmakers achieved more CO₂ cuts by manipulating the NEDC test cycle to reduce on-paper emissions rather than reducing emissions in the real world. Between 2010 and 2019, real-world emissions have decreased by only 1% while average NEDC test emissions have dropped by 13%. Similar manipulation of the WLTP test cycle could be expected, in particular by artificially inflating the WLTP test CO2 in 2020 [4] to then reduce it back to normal after 2021. T&E estimates that carmakers are able to artificially reduce WLTP emissions by 5%, just by test manipulation. This is supported by the fact that JRC independent estimates suggested that WLTP values should be 5% lower than what they are today [5].
ZLEV bonus: In order to incentivise the supply of zero- and low-emission vehicles, the CO₂ target is relaxed by up to 5% for all manufacturers selling more than the plug-in threshold of 15% from 2025 onwards. With plug-in sales at 14% at the time of writing, all major carmakers in Europe are expected to sell more than enough plug-ins to benefit from the full bonus [6]. As a result, their fleet-wide CO₂ emission target will be weakened by 5%.
— Combined: only 2% effective reduction in CO₂ emissions in until 2029 —
Under the current regulation the effective CO₂ emissions reduction in 2025-2029 would be a mere 2% compared to 2021 levels, far less than the 15% put forward by the legislation. With cars being one of the single largest sources of carbon, this will seriously undermine both Europe’s climate ambition in 2030 and the industrial transformation currently underway.
Keeping the electric car sales close to today, carmakers can still comply with the targets up to 2029 with only a 6% effective CO2 reduction thanks to flexibilities. This can be achieved thanks to mild efficiency improvements on their diesels and petrols. The minimum share of EV sales needed to comply with the regulation can even decrease from 8% battery electric and 8% PHEV in 2025 to as low as 5% BEV and 5% PHEV in 2029 in case of further efficiency improvements (e.g. hybridisation). For comparison EV sales in the first quarter of 2021 were 6% BEV and 8% PHEV.
The current e-mobility head start in Europe is the result of the car CO2 regulation. Ironically, it is the very same regulation that can now put the EU electric car market at risk of stagnation up to 2029. Raising the 2030 target alone will only have an impact after 2030. The regulatory design means that actual targets as late as 2029 could, in the worst case, be met with the same level of plug-in sales as today. While global competitors are gearing up, the EU cannot afford not to increase the pre-2030 CO₂ ambition. The success of the e-mobility transition is at risk, including capital-intensive investments into European battery production and wider supply chain. To fully accomplish Europe’s industrial ambition – and reach the goals of the European Green Deal – the car CO₂ standards need to be upped in 2020s to continue the investments and scale up EV manufacturing.
Notes:
[1] The average contribution of eco-innovation credits for BMW is around 3gCO2/km in 2019. Transport & Environment (2020). Mission (almost) accomplished. Link
[2] LED light, efficient alternator and 12V and 48V motor generator with DC/DC converter
[3] Most were submitted in 2020 and amended in 2021, and most now apply to PHEVs as well, source: Circabc
[4] There is an incentive for OEMs to manipulate the test to inflate the WLTP-NEDC gap in 2020 as it also inflates their emission baseline in the same proportion, which makes it easier for them to “reduce” their emissions in the future. Hence, OEMs could manipulate the test so that very high WLTP values correspond to low NEDC values.
[5] According to the JRC, WLTP emissions values should have been 15% higher than NEDC values (see 2018 T&E report) whereas evidence from 2020 shows that the gap has been 21% on average (see T&E 2020 car CO2 report). The difference between the two is a 5% gap.
[6] Based on production forecasts from IHS Markit and recent voluntary commitments to electrification by car manufacturers. Except for Toyota, all major carmakers in Europe are expected to supply more than 20% ZLEV in 2025, thus qualifying for the full bonus. On average they are expected to sell 27% ZLEVs in 2025.
