# IMMC.EESC-2017-05269-AC.ENG.xhtml.EESC-2017-05269-00-01-AC-TRA-EN.docx

EN

European Economic and Social Committee

European Economic and Social Committee

INT/835

INT/835

CO2 emissions from passenger cars and commercial vehicles

CO2 emissions from passenger cars and commercial vehicles

OPINION

   
  European Economic and Social Committee



  Proposal for a Regulation of the European Parliament and the Council on setting emission performance standards for new passenger cars and for new light commercial vehicles as part of the Union's integrated approach to reduce CO2 emissions from light-duty vehicles and amending Regulation (EC) No 715/2007 (recast)
  [COM(2017) 676 final - 2017/0293 (COD)]

OPINION

European Economic and Social Committee

Proposal for a Regulation of the European Parliament and the Council on setting emission performance standards for new passenger cars and for new light commercial vehicles as part of the Union's integrated approach to reduce CO2 emissions from light-duty vehicles and amending Regulation (EC) No 715/2007 (recast)
  [COM(2017) 676 final - 2017/0293 (COD)]

Rapporteur: Dirk BERGRATH

Rapporteur: Dirk BERGRATH

Consultation

| Consultation | European Parliament, 05/02/2018


  Council, 09/02/2018 |
| --- | --- |
| Legal basis | Article 192(1) of the Treaty on the Functioning of the European Union |
| | |
| Section responsible | Section for the Single Market, Production and Consumption |
| Adopted in section | 24/01/2018 |
| Adopted at plenary | 14/02/2018 |
| Plenary session No | 532 |
| Outcome of vote
  (for/against/abstentions) | 124/1/3 |

Consultation

European Parliament, 05/02/2018

European Parliament, 05/02/2018

Council, 09/02/2018

Council, 09/02/2018

Legal basis

Legal basis

Article 192(1) of the Treaty on the Functioning of the European Union

Article 192(1) of the Treaty on the Functioning of the European Union

Section responsible

Section responsible

Section for the Single Market, Production and Consumption

Section for the Single Market, Production and Consumption

Adopted in section

Adopted in section

24/01/2018

24/01/2018

Adopted at plenary

Adopted at plenary

14/02/2018

14/02/2018

Plenary session No

Plenary session No

532

532

Outcome of vote
  (for/against/abstentions)

Outcome of vote
  (for/against/abstentions)

124/1/3

124/1/3

1.Conclusions and recommendations

1.

Conclusions and recommendations

1.1The EESC welcomes the Commission's proposals in principle as a balanced compromise between the objectives of climate-neutral mobility, the innovation capacity of the European automotive industry and preserving quality jobs.

1.1

The EESC welcomes the Commission's proposals in principle as a balanced compromise between the objectives of climate-neutral mobility, the innovation capacity of the European automotive industry and preserving quality jobs.

1.2In particular, the EESC considers the planned interim target for 2025 of a 15% reduction in emissions compared to 2021 to be very demanding as the required changes are to be made to combustion engines at the cutting edge of technology. The EESC expects the Commission to monitor type approvals of new vehicles on an ongoing basis, in order to prevent impermissible engine components from being installed in future. Achieving the reduction target by 2025 will be especially difficult for light commercial vehicles with longer production and development cycles. Despite this, the EESC views the market development towards zero-emission vehicles and low-emissions vehicles and hybrids as an opportunity.

1.2

In particular, the EESC considers the planned interim target for 2025 of a 15% reduction in emissions compared to 2021 to be very demanding as the required changes are to be made to combustion engines at the cutting edge of technology. The EESC expects the Commission to monitor type approvals of new vehicles on an ongoing basis, in order to prevent impermissible engine components from being installed in future. Achieving the reduction target by 2025 will be especially difficult for light commercial vehicles with longer production and development cycles. Despite this, the EESC views the market development towards zero-emission vehicles and low-emissions vehicles and hybrids as an opportunity.

1.3The EESC welcomes the improved market surveillance consisting of measuring and monitoring real fuel consumption, based on an obligation for manufacturers to fit new vehicles with standardised devices.

1.4The structural transition towards alternative powertrains will – together with digitalisation, autonomous driving and other things – be associated with dramatic changes in automotive value chains. The EESC welcomes the Commission's position on establishing the electric vehicle value chain in Europe (EU Battery Alliance), but calls for more affirmative action.

1.5The threat to jobs and employment depends on the pace of this structural transition. The EESC calls on the Commission to ensure that this structural transition is accompanied by industrial policy measures, as a thorough social and economic impact assessment is lacking. The EESC rejects mass redundancies.

1.6In the EESC's opinion, the mid-term review anticipated for 2024 should examine to what extent the climate, innovation and employment goals have been achieved. That will essentially depend on how the market for alternative powertrains has developed by 2024, the number of charging points that have been built and the extent to which electricity grids have been converted and upgraded to meet the noticeable increase in electricity demand.

1.7The EESC calls for a mid-term review to include the state of play regarding the qualification and (re)training of staff as well as an updated analysis of the areas in which (additional) action is required in order to further improve the skills and qualifications of employees in the automotive industry for the structural transition.

1.8The EESC believes that any fines, under both the existing and the new regulation, should be used to support the sector and its workers through the transition towards low-carbon products. Additional financial resources are expected to be provided in order to guarantee employees' access to the labour market.

2.Introduction

2.1In October 2014, the EU heads of state or government
  1
  set a binding goal of reducing emissions produced across the EU's entire economy by at least 40% compared with 1990 levels, and to do so by 2030. This target is based on global projections that comply with the medium-term timescale of the Paris Agreement on climate change (COP 21)
  2
  . Many countries are now introducing measures for low-emission transport, including in the form of vehicle standards, often in conjunction with measures to improve air quality.

2.2The European Strategy for Low-Emission Mobility
  3
  published in June 2016 sets the target of having at least 60% fewer greenhouse gas emissions from vehicles by 2050 compared to 1990 and of being firmly on the path towards zero. The strategy made it clear that the use of low-emission/emission-free vehicles would have to increase in order to achieve a significant market share by 2030 and set the EU on a consistent long-term path towards zero-emission mobility.

2.3As a first step, the strategy was part of a legislative package presented in May 2017
  4
  and was implemented with the communication "Europe on the move – An agenda for a socially fair transition towards clean, competitive and connected mobility for all"
  5
  , also published in May 2017.

2.3.1The purpose of this communication is to improve road safety; promote fairer tolling; reduce CO2 emissions, air pollution, traffic congestion and red tape for businesses; combat illegal employment; and ensure decent conditions and rest periods for workers.

2.3.2This communication makes it clear that the EU seeks to develop, offer and manufacture the best low-emission, connected and automated mobility solutions, equipment and vehicles, and to have the most advanced supporting infrastructure. It also emphasises that the EU needs to play a leading role globally in steering ongoing change in the automotive industry and to build on the major progress already made.

2.4The proposal for a regulation is part of a broader mobility package
  6
  that also includes demand-side measures in support of the supply-side measures contained in this proposal. Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles is intended to support the market for clean and energy-efficient road transport vehicles. The proposed amendment
  7
  ensures that the directive covers all relevant procurement practices and sends clear long-term market signals; using its provisions is also made simpler and effective. The aim is also to increase the transport sector's contribution to the reduction of CO2 emissions and air pollutant emissions and to boost the competitiveness and growth of the sector.

3.The proposal for a regulation
  8

3.1The Commission's aim with its proposal for a regulation is to achieve the targets set out in the Paris climate agreement, reduce fuel costs for consumers, boost the competitiveness of the automotive industry and create additional employment. The road towards decarbonisation, in particular using alternative powertrains, is described as irreversible.

3.2The Commission expects the proposal to provide a reduction in CO2 emissions of around 170 million tonnes in the period from 2020 to 2030, thereby improving air quality. Gross domestic product is expected to grow by up to EUR 6.8 billion by 2030 and an additional 70 000 jobs are expected to be created.

3.3For consumers buying a new car, the Commission expects average annual cost savings of EUR 600 in 2025 and EUR 1 500 in 2030 (over the life cycle of the vehicle). Annual fuel cost savings across the EU are expected to amount to EUR 18 billion, a total of 380 million tonnes of oil in the period from 2020 to 2040.

3.4The key elements of the Commission proposal on reducing CO2 emissions from passenger cars and light commercial vehicles are:

3.4.1A further 30% reduction in CO2 by 2030, based on the targets for 2021 of 95 g/km for cars and 147 g/km for light commercial vehicles by 2021 (NEDC test cycle). As an interim target, CO2 emissions are to be reduced by 15% to enable the overall target to be achieved as quickly as possible (which also means investment certainty for industry).

3.4.2From 2021 onwards, emission values will be based on the WLTP lab test (Worldwide Harmonised Light Vehicle Test Procedure), which has been applicable since 1 September 2017. As a result of the change in lab test, the targets for 2025 and 2030 are given in percentages.

3.4.3In principle, the project is open to all kinds of technology. A distinction is made between zero-emission vehicles (ZEVs) and low-emission vehicles (LEVs), which emit less than 50 g CO2/km, in particular plug-in hybrid vehicles (PHEVs – vehicles that have an electric powertrain in addition to a combustion engine). Benchmarks of 15% by 2025 and 30% by 2030 are set out for both types of vehicle. Manufacturers that exceed these benchmarks will receive a bonus on their manufacturer-specific targets of a maximum of 5 g/km. When determining this percentage, the emission performance of the vehicles concerned is taken into account, with zero-emission vehicles having a higher rating than low-emission vehicles. No penalty rule is planned.

3.5So-called eco-innovations, which are not reflected in the official lab tests, will also be taken into account (up to a cap of 7 g CO2/km). A revision of this special scheme is planned for 2025. From 2025 onwards, energy-efficient air conditioning units will be considered eco-innovations.

3.6Exceeding the manufacturer-specific (interim) targets will result in a penalty of EUR 95 per g CO2/km per vehicle. The monitoring of CO2 emissions from newly registered cars is carried out by the European Environment Agency. Manufacturers with fewer than 1 000 new vehicle registrations a year are excluded from the scope of the regulation.

3.7In addition to the draft regulation, numerous references to complementary activities, initiatives and priorities are listed. Of particular interest here is the factsheet entitled "Driving Clean Mobility: A Europe that defends its industry and workers". Here the Commission points out that between 2007 and 2015 EUR 375 million were invested in battery research. A further EUR 200 million are due to be funnelled from the Horizon 2020 programme in 2018-2020. In particular, the next generation of batteries is to be promoted and a roadmap for an EU Battery Alliance is due to be presented in early 2018. The aim is to establish the entire battery production value chain in Europe
  9
  .

4.General comments

4.1The EESC welcomes the Commission's proposals in principle as a balanced compromise between various objectives. The proposal is an important step towards climate-neutral mobility, while also promoting the innovation capacity of the European automotive industry, retaining high-quality employment and facilitating a gradual social transition to new production patterns. The goal of reducing CO2 emissions by 30% corresponds to the target for the non-ETS sector under the EU's 2030 climate and energy framework.

4.2With its proposal, the EU is opening up a new chapter on mobility, which appears to be increasingly finding favour with the population at large. This shift in public attitude is also taking place particularly in the light of the diesel crisis. It also includes changes in mobility patterns, the improvement of public transport and finally the goal of developing and implementing comprehensive and integrated transport policies.

4.3The EESC considers the interim target of a 15% reduction in emissions by 2025 compared to 2021 to be very demanding since it requires changes to combustion engines that are at the cutting edge of technology. This is especially the case for light commercial vehicles with longer production and development cycles. An assessment should therefore be carried out in 2024, on the basis of which it will be determined whether or not the targets for 2030 are to be retained or whether they can be amended. With the way market uptake of ZEVs, LEVs and PHEVs is currently evolving, the interim target looks to be a challenge, albeit an achievable one.

4.4The EESC welcomes the supplementary rule under which market surveillance is strengthened by measuring and monitoring real fuel consumption, based on an obligation for manufacturers to fit new vehicles with standardised devices. The data collected will be made available not only to manufacturers, but also to independent third parties for the purpose of carrying out evaluations. This could be a functional equivalent to measuring emissions in real driving conditions, which is not workable for reasons relating to the comparability of test results.

4.5The EESC notes that, despite all of the benefits, the tailpipe approach opted for in the draft regulation is still only of limited value. For example, CO2 emissions are generated in the production of vehicles, batteries and electricity and are also influenced by driving performance and driving behaviour. The EESC also notes that the efforts in vehicle technology could be undermined by other modes of transport, such as the projected increase in air transport.

4.6The EESC draws attention to its work on the structural transition in the automotive industry towards alternative (green) powertrains, digitalisation and networking, and autonomous driving, with the potential risk for employment, which could lead to trends for new qualifications. Among its recommendations here are that the European Commission should put together a legal and regulatory framework that allows for the rapid use of support schemes in the restructuring process
  10
  . Examples here include first and foremost the EU's structural funds, such as the Globalisation Fund and the European Social Fund (ESF). Other projects based on the Airbus model can also be envisaged.

4.7The European car industry currently employs around 2.3 million workers directly in the area of vehicle manufacturing and accounts for 8% of total value added. Ten million are indirectly employed in this highly innovative sector, accounting for 20% of industrial research funding in Europe.

4.8The EU is among the world's biggest manufacturers of motor vehicles and is the largest private investor in research and development (R&D). The industry is also a world leader in terms of product innovation, production technologies, premium design and alternative powertrains, among other things. As a result, one car in four worldwide was produced in European assembly plants in 2016 and the automotive sector accounts for 4% of European GDP
  11
  .

4.9The EESC welcomes the Commission's proposed desire to make the transformation of the automotive sector socially acceptable. The structural transition towards alternative powertrains will – together with digitalisation, autonomous driving and other things – be associated with dramatic changes in automotive value chains. One question this raises is which components are produced by manufacturers themselves and which are bought in. To date, the added value of e-components has been predominantly a supplier's business, with the area of battery cells still dominated by Asian producers. The EESC therefore welcomes the Commission's position on establishing the electric vehicle value chain in Europe (see point 3.7 on the EU Battery Alliance). It is still unclear what the next generation of battery cell will be like in technological terms and how the price-performance ratio will develop over time. Here the EESC recommends that the Commission monitor developments on an ongoing basis.

4.9.1The pursued transition from traditional to alternative powertrains entails a structural change. Traditional products must be heavily modified or replaced by new ones. In the case of purely electric vehicles this concerns the internal combustion engine, the entire gear system and tailpipe units, among other things. In addition, there are also the electric motor and the battery, including the manufacturing of battery cells. However, these components account for significantly different proportions of the automotive sector value chain and, consequently, have a varying impact on the demand for employment and skills.

4.9.2A study carried out by FEV
  12
  concluded that battery powered electric cars – conceived as mid-range cars – entailed manufacturing costs of around EUR 16 500. The main components are electric motors (EUR 800), power electronics (EUR 1 400) and the battery (EUR 6 600). For the battery alone, which represents 40% of the cost, 70% goes towards producing the cells. Electric cars are substantially less complex and producing them requires extensive changes to employees' qualifications: electrical engineering/electronics, electrochemistry, coating technology, thermal management, steering and control technology in the area of engineering, handling high voltage technology and active principles of electricity as well as the behaviour of materials and other things in the context of assembly and repairs.

4.9.3Although the Commission assumes there will be a beneficial impact on employment, there are also dangers. A current study
  13
  by Fraunhofer IAO is examining the quantitative effects on employment through a scenario based on a 25% share of EVs and a 15% share of PHEVs, which roughly reflects the Commission's proposal. Initial results show that, in the best case scenario, around 10-12% of jobs involving powertrains will be lost by 2030 as part of the technological switchover. That would amount to between 25 000 and 30 000 jobs in Germany alone. The lower the actual share of PHEVs turns out to be, the more pronounced this negative effect will be (with a 5% share of PHEVs the reduction will be 15-18%). The same would be true for an accelerated phasing out of diesel technology, which, due to the greater complexity particularly of the supplied parts, has a 30-40% greater bearing on employment than petrol engine parts. Risks to employment are also emerging in parallel due to the effects of digitalisation and the increased localisation of production in major regions of the world.

4.9.4Generally speaking, it is to be expected that these effects will be felt asymmetrically over time and geographically. Final manufacturers and large suppliers are better placed than small, highly specialised part suppliers when it comes to taking countermeasures though innovations and new business models. In addition, jobs in the area of new technologies and services will more frequently be located in urban centres and less in peripheral regions. This must be taken into consideration when designing the relevant framework programmes.

4.9.5The threat to jobs and employment depends on the pace of this structural transition. The EESC therefore welcomes the Commission's proposal, which now includes investment certainty for industry, enabling it to initiate and prepare for this structural transition right away. The EESC calls on the Commission to ensure that this structural transition is accompanied by industrial policy measures, in order to avoid upheaval among employees. Tripartite and bipartite dialogue is crucial in this connection.

4.9.6The EESC notes that the first steps have already been taken, with some individual manufacturers announcing additional electric car models by 2025 and having begun their planned share of newly registered car fleets – albeit still on a modest scale.

4.10In order to support the sustainable and regionally balanced decarbonisation of the transport sector, the Commission plans to provide EUR 800 million under the Connecting Europe Facility for the deployment of interoperable charging stations. This should trigger substantial additional public and private investment (200 000 charging points are currently operational in the EU, while 800 000 are needed). A further EUR 200 million will be made available to set up a public-private partnership for the development of next generation batteries. Finally, the Commission wishes to support the introduction of alternative powertrains through targets for public authorities to include more ZEVs/LEVs in their procurement.

4.11The EESC believes that any fines, under both the existing and the new regulation, should be used to support the sector and its workers through the transition towards low-carbon products. At present, only a minority of car manufacturers are on track to achieve the reduction targets for 2021.

4.12While the reduced dependency on oil imports is to be welcomed, new dependencies could arise, such as access to raw materials (lithium, cobalt and nickel from remote areas). The EESC also expects a sufficient electricity supply from renewable energy sources to be guaranteed.

4.13Mid-term review of the regulation

4.13.1In 2024, the Commission will carry out a mid-term review of the regulation, in order to verify whether the path followed is proving effective.

4.13.2As the structural shift from internal combustion engines to alternative powertrains is currently still uncertain in quantitative terms, it will be necessary to see how the market for alternative powertrains has developed by 2024, the number of charging points that have been built (a restricting condition) and the extent to which electricity grids have been converted and upgraded to meet the noticeable increase in electricity demand.

4.13.3The EESC expects this mid-term assessment to provide information on what has been done regarding employees' qualifications and (re)training. In what areas is (additional) action required in order to further improve the skills and qualifications of staff in the automotive industry for the structural transition? How far do the proposed measures go (see Automotive Skills Council) in ensuring the implementation of the changes to qualifications? In this connection, the EESC believes first and foremost that the sector's unions have a responsibility to further promote industrial tripartite dialogue. In addition, the necessary resources should be provided to enable employees to remain on the labour market.

Brussels, 14 February 2018

Georges Dassis
  The president of the European Economic and Social Committee

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