On 25 March 2020, all of the lobby groups of the European car industry - including manufacturers, suppliers, tyre-makers and dealers - wrote to European Commission President Ursula von der Leyen pleading for a relaxation of cars CO2 targets.
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While the lobby associations rightly point to the significant challenges posed by an unprecedented global health crisis, they explicitly call for a postponement of CO2 and safety laws: “We believe therefore that some adjustment would need to be made to the timing of these laws,” the letter states.
A closer look at the facts around the climate (and green tech) targets shows that such a plea is currently unfounded and potentially damaging for the long-term sustainability and competitiveness of the car industry in Europe.
What are EU car CO2 standards and what do they mean for carmakers?
The car CO2 law is the primary EU-wide policy to reduce the increasing climate impact of cars, which account for 14% of the EU’s overall greenhouse gas emissions and 70% of EU road transport emissions. The first meaningful target, after years of growing CO2 emissions and a lack of electric car models on the market, kicked in on 1 January 2020: 95% of all new passenger car sales EU-wide have to be at or below the average targets of 95g CO2 per km. The target then applies to 100% sales in 2021.
The first thing to understand is that this target, which was set in 2008 and reconfirmed in 2014, is a fleet average target. Thus, falling car sales do not automatically affect compliance. What would impact compliance is if the type of vehicles sold changes, not their actual numbers.
The second important thing is that this is a CO2 target, not an EV sales target. When it was first agreed in 2008, the compliance route was not electric cars – it was small and fuel-efficient cars. But because carmakers pushed SUV sales to increase profit margins, the emissions of their car fleets continued to grow. So, electric cars are now the preferred option for compliance for many – and the best solution for the climate. However, in times of crisis small, cheap cars can still help compliance.
What does a global crisis mean for CO2 emissions from cars and car sales?
If the previous global economic and social crisis is any guidance, the evidence shows that drivers shift to smaller, less powerful (lower emitting) cars in times of recession. In 2009, new car CO2 emissions fell by a record 5.1%. Generous and targeted scrappage schemes helped direct demand towards cleaner vehicles – the scrappage schemes accounted for 86% of all sales in 2009. There are currently at least 35 cheap small and medium-sized conventional models on sale that are below 95g/km. Almost every EU carmaker has such models – for example, the VW Polo, Ford Fiesta and Renault Megane.
What’s happening with the electric car segment?
In the first two months of 2020, EVs’ share of overall sales more than doubled in the EU, from 3.1% to more than 6% in 2020. Indeed, 2020 so far has been a record year for electric car sales: France leads among the big five markets, with 8% of new sales being EVs, against 6% in the UK, 7% in Germany, 3% in Spain, and 2% in Italy.
In order to comply with the 2020 CO2 target, T&E estimated the EV sales in Europe would need to be around 5% (3-7% range) of all new sales. So, even in the absence of new models (coming later in 2020 like VW’s heavyweight ID.3 or Fiat’s e500), the first quarter sales were already at the upper boundary of what carmakers need to achieve compliance. These zero-emission vehicle sales will contribute significantly to achieving the CO2 targets in 2020. Assuming that sales in quarters 2-4 are lower, the first quarter sales become more important
As part of the recovery package for the car industry the governments will no doubt look into measures to support the demand for cars, notably scrappage schemes (as was widely done in the aftermath of the 2008/9 financial crisis). If designed with CO2 criteria in mind, these can ensure that the market continues to move in the right direction. First, with over half of all car sales going to companies driven by tax and operational costs, scrappage schemes should target those fleets and reward the ones who buy EVs, including through support for charging infrastructure. Second, in the private sales segment – where sales will see a large hit – the purchase of smaller and lower-emitting cars should be supported.
What have individual carmakers said about this attack on EU CO2 laws?
In stark contrast to ACEA’s overt attack on car regulations, the three German carmakers, Volkswagen, Daimler and BMW have come out publicly in support of them. This begs the questions whether there is a fracture in the car industry front, and is ACEA speaking on behalf of its laggard members only?
Comment from Julia Poliscanova, clean vehicle director with sustainable transport research and campaign group, Transport & Environment:
“The priority now is to ensure the health, safety and job security of the workers affected by the current factory closures. While the overall economic recovery is crucial, we shouldn’t let some opportunistic carmakers use the crisis to shamelessly roll back the EU climate targets for cars. All three German carmakers, VW, Damiler and BMW, have rightly acknowledged this is not needed.
“It is too early to judge the impacts of the Coronavirus on the car industry but selling less cars won’t impact compliance with the law. What matters is the type of car you sell. Any incentives to boost demand once normal life resumes should be targeted at zero-emissions cars. This will help keep jobs in Europe, curb pollution and boost the competitiveness of our car industry.”
