EN    EN EN 
 
EN    EN  EUROPEAN COMMISSION 
Brussels, 7.7.2010 
SEC(2010) 829 
  
COMMISSION STAFF WORKING DOCUMENT 
IMPACT ASSESSMENT 
  
Accompanying document to the 
  
Proposal for a 
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
amending Directive 97/68/EC as regards the pr ovisions for engines placed on the market 
under the flexibility scheme  
 
COM(2010)362 final 
SEC(2010)828 
 
 
 
EN 2   EN TABLE OF CONTENTS 
1. I NTRODUCTION AND POLICY CONTEXT ....................................................................... 5 
1.1. Basis for the introduction of the flexibility scheme..................................................... 5 
1.2. Competitiveness issues................................................................................................. 6 
2. P ROCEDURAL ISSUES AND POSITIONS FROM CONSULTATION OF INTERESTED 
PARTIES ........................................................................................................................ 7 
2.1. Consultation and expertise ........................................................................................... 7 
2.2. Impact Assessment Board (IAB) recommendations.................................................... 9 
3. P ROBLEM DEFINITION ................................................................................................. 9 
3.1. Background ................................................................................................................ .. 9 
3.2. Developing New Engine Technology ........................................................................ 10 3.3. Ability to Comply ...................................................................................................... 10 3.4. Compliance costs ....................................................................................................... 12 3.5. Regulatory issues ....................................................................................................... 12  
3.6. Influence of the Crisis ................................................................................................ 12 3.7. How will the situation develop?................................................................................. 13 3.8. Does the EU have the right to act?............................................................................. 14 
4. 
OBJECTIVES ................................................................................................................ 14 
4.1. Consistency with other horizontal ob jectives of the European Union....................... 15 
4.1.1. The European Economic Recovery Plan.................................................................... 15 
4.1.2. Environmental Policies .............................................................................................. 15 
5. P OLICY OPTIONS ....................................................................................................... 17 
5.1. Introduction.............................................................................................................. .. 17 
5.2. Options ................................................................................................................... .... 17 
5.2.1. For the sectors already covered  by the flexibility scheme........................................ 17 
5.2.2. For the railcars sector currently excluded from the use of the flexibility scheme . 18  
6. O PTION ANALYSIS – PRELIMINARY ANALYSIS – SECTORS ALREADY COVERED BY 
THE FLEXIBILITY ....................................................................................................... 19 
6.1. Analysis of Option 1A – Baseline.............................................................................. 19 
6.2. Option 2A. Provision of loans for purcha sing stocked engines manufactured under 
the so called sell-off period as in Artic le 9, section 4a of the Directive .................... 19 
 
EN 3   EN 6.3. Option 3A. Implementation of a scrapping scheme at National level. ...................... 20 
6.4. Option 4A Implementation of alternativ e types of provision s under the existing 
flexibility scheme....................................................................................................... 21 
6.4.1. Option 4.1A Implementation of scaled percenta ges of flexibility for the different types 
of machinery, depending on the problems  they encounter for the transition from 
Stage III A to Stage III B............................................................................................ 21 
6.4.2. Option 4.2A Increase of flexibility percent age to 50% for all ma chinery eligible to 
use the provisions of the scheme and pr oportionate adjustment of the fixed numbers 
of engines to the relevant table of Annex IV. ............................................................. 21 
6.4.3. Option 4.3A. Conditional use of the flexibil ity scheme, with penalty mechanism ..... 22 
6.4.4. Option 4.4A. Implementation of a trading system...................................................... 23  
6.4.5. Comparison of the Options ........................................................................................ 23 
6.5. Conclusion on preliminary Analysis.......................................................................... 25 
7. I MPACTS OF PREFERRED OPTION .............................................................................. 26 
7.1.1. Environmental impact ................................................................................................ 26 
7.1.2. Economic impact........................................................................................................ 2 9 
7.2. Description of methodology for the sectors ex cluded from the use of the flexibility 
scheme........................................................................................................................ 3 1 
7.2.1. Environmental impacts............................................................................................... 33 
7.2.2. Economic impact........................................................................................................ 3 4 
7.3. For the SMEs.............................................................................................................. 34 
8. E FFECT OF THE PROPOSED MEASURE COMPARED TO THE BASE LINE ..................... 35 
9. M ONITORING AND EVALUATION ............................................................................... 36  
ANNEX I : GLOSSARY........................................................................................................ 37 ANNEX II: REFERENCE DOCUMENTS.......................................................................... 38 ANNEX III: Summarized Stages tabl e of Directive 97/68/EC........................................... 39 
ANNEX IV: Flexibility scheme ............................................................................................. 40 ANNEX V: Positions of stakeh olders regarding the amendment of the provisions of the 
flexibility scheme ............................................................................................................. ....... 42 
ANNEX VI: Fleet and annual sales of NRMM machinery ................................................ 44 
 
EN 4   EN ANNEX VII: Emissions of NOx and PT .............................................................................. 45 
ANNEX VIII: Tables of fixed engines numbers of the flexibility scheme......................... 46  
 
EN 5   EN 1. INTRODUCTION AND POLICY CONTEXT  
The Non-Road Mobile M achinery Directive 97/68/EC1 (NRMM)2 regulates the exhaust 
emissions (carbon oxide (CO), hydrocarbons (HC) , nitrogen oxides (NOx) and particulates 
(PT)) from diesel engines installed in non-road  mobile machinery. This  includes construction, 
agricultural and forestry machinery, railcars & locomotives, inland waterway vessels, constant speed engines (mostly used in generator sets and pumps, etc) and small petrol engines used in 
different types of machinery (including ha ndheld machinery like chainsaws, etc). 
The Commission proposal accompanying this im pact assessment responds to the adverse 
market conditions fo r the non-road OEMs
3 brought about by the fina ncial and economic crisis 
and only covers the flexibility scheme. A full revi ew of the Directive is planned and a further 
Commission proposal is likely to  be presented by the end of 2010 and will be accompanied by 
an IA. 
1.1. Basis for the introduction of the flexibility scheme 
For the various types of machinery, the Directive stipulates the maximum permitted engines 
exhaust emissions as a function of the power of  the installed engine. Moreover, the Directive 
includes a series of emission limit stages of increasing stringenc y with corresponding 
compliance dates. OEMs must ensure that new e ngines used in their machines comply with 
these limits when placing them on the market.  
Directive 2004/26/EC introduced the current app licable Stage of emi ssion limits for the 
majority of diesel engines referred to as Stage III A. These limits will be replaced by the more 
stringent Stage III B limits entering into force progressively, depending on the power 
category, as of 1st January 2011 with regard to the pl acing on the market whilst from 1st 
January 2010 the type approval period for these e ngines will start. As the Stage III B limits 
are stricter, current engines will need to be mo dified, re-designed in order that the limits can 
be respected. This redesign affects OEMs who have  to adapt the design of their machines to 
accommodate the modified engines. This is a time and resources consuming procedure, 
depending heavily on the required changes in th e engines and body of the machinery to be 
installed.  
Directive 2004/26/EC4 also introduced the so-called flexibility scheme5 to facilitate the 
transition between the different emission stages . The flexibility scheme allows the OEMs to 
place on the market, during the period between two successive stages of exhaust emissions 
limit values, a limited number of non-road mobile machinery which is fitted with compression ignition engines –with power fr om 19kW to 560 kW- that still comply with the exhaust 
emission limits of the previous stage. The flexib ility scheme applies to various types of land 
based machinery including construction, agricultu ral and forestry machinery, generator sets 
and pumps using constant speed engines, but not to locomotives , railcars and inland waterway 
vessels. An OEM has the option either to place  on the market (1) for each engine power 
category a limited number of machines not exceeding 20% of the OEM's annual sales of 
                                                
 
1 OJ L 59, 27.2.1998, p.1  
2 Additional information on abbreviations used  are available in Glossary in Annex I.  
3 OEM: Original Equipment Manufacturer, also explained in Annex I  
4 OJ L 225, 25.6.2004, p.3  
5 Additional clarifications on pr ovisions of the flexibility sche me can be found in Annex IV  
 
EN 6   EN machinery (calculated as the average machinery sale s in the EU of the late st 5 years) or (2) a 
fixed maximum number of machines as stipulat ed in the Directive. This second option was 
intended to be used by smaller enterpri ses producing lower volumes of engines. 
The flexibility scheme was designed6, among other reasons, to: 
• Permit smooth integration of applicable re gulations to the NRMM machinery; since the 
majority of OEMs do not produce their own engines, but have  to purchase these from 
engine manufacturers. Engine an d after-treatment development7 is then followed by its 
integration, optimisation and machinery type ap proval. This situation is unique compared 
with other vehicle manufacturers, who can deve lop and produce both vehicle and engine at 
the same time. 
• Provide the necessary environment for the OE Ms to develop and adapt firstly machinery 
with bigger volume sales and fewer problems and then utilise the gained experience to the 
rest of the machinery, produced at smaller/niche volumes. This experience makes the adaptation of the rest of the machinery less costly.  
• Avoid excessive impacts at the transition to the next Stage of low volume products (such 
as harvesters-linen/grapes, landfill compactor s, pipe-layers, etc), since development in 
these series requires rela tively high fixed cost.  
1.2. Competitiveness issues 
World-wide, only the EU and the U.S. and to a lesser degree Japan have similar ambitions 
with regard to engine emissi on legislation for NRMM. In othe r important geographical areas 
like China, India, Russia or Latin-America thes e requirements do not exist. Thus the main 
geographical market is the transatlantic market  hosting the key manufactu rers of engines and 
machinery, but also of customers. This is why considerable efforts have been made to fully 
align emission limits and implementation dates of the key Stages on both sides of the Atlantic. Testing procedures are currently in the proce ss of being harmonised at  global level and a UN 
ECE
8 standard is to be adopted  in November 2009. Only the approval procedures remain 
different. 
Flexibility measures in this area have also been adopted in the U.S. In addition to the existing 
flexibility, the U.S. system has in 2008 introdu ced an additional 'flexibility', the so-called 
ABT9-system, which is built on the three pillars of Averaging  i.e. exchange of credits between 
engine families within a given engine manufacturer for a specific model year, Banking  i.e. the 
retention of credits by one engine manufacturer for use in  future model year averaging or 
trading and Trading  i.e. exchange of credits be tween engine manufacturers.  
                                                 
6 As stipulated in the COM (2002) 765 fi nal and COM (2000) 840, amending proposals  
7 Additional equipment installed with the engine, that chemical ly or physically reduces the e xhaust emissions emitted from the 
engine before releasing them to the atmosphere ex. Diesel Pa rticulate Filters, NOx adsorber Catalyst or Selective Catalyst 
Reduction systems  
8 See reference in Annex I  
9 The Average Banking and Trading (ABT) system  on exhaust emissions used in U.S. allows a manufacturer to produce individual 
products of 'cleaner' and 'dirtier' line s and place both types on the market, provide d that the average emissions of the 
manufacturer's fleet comply with the legislated limits. A precise  method, allocating points, is used in order to calculate the 
emissions from both engine types. In the sa me legislation an emissions cap is foreseen, as a higher limit that must be met by a ll 
individual products. Strict rules on the implementation and comp liance of the engines placed on the market by the manufacturer 
followed by strict penalties in case of no compliance are set in the regulation  
 
EN 7   EN The U.S. introduced a modification in their curr ent ABT system for Tier 4 engines and it is 
assumed that this measure provides a greater fl exibility for manufacturers compared to the 
current EU system in place.  
2. PROCEDURAL ISSUES AND POSITIONS FROM CONSULTATION OF INTERESTED 
PARTIES  
2.1. Consultation and expertise 
The current analysis of Directive 97/68/EC is  part of the Commissi on’s Legislative Work 
Programme for 2009 and introduced under the reference 2009/ENTR/028.  
Before the onset of the financial crisis, a pos sible amendment of the flexibility scheme was 
already considered in the contex t of a wider revision of the Dir ective which is foreseen in the 
Commission’s Legislative Work programme for 2 010. The current analysis  takes into account 
elements of this process incl uding the following main steps: 
• a Technical Review of the Directive10 by the Joint Research Centre (JRC) which includes, 
inter alia, an evaluati on of the need to amend the provi sions of the flexibility scheme; 
• an Impact Assessment study11 to assess the impacts of the policy options as laid down in 
the draft Technical Review of JRC. Two co mplementary studies have been launched to 
further assess, inter alia, the impacts of a po ssible inclusion of the rail sector (railcars, 
locomotives) and the impacts of the options of  the Technical Review of JRC, including the 
amendment of the flexibility scheme's percentage, to SMEs12. The final report13 and 
executive summary14 of the third study will be delivered by March 2010. 
For the intended revision of the flexibility scheme as a response to the current economic 
situation of engine manufacturers and the NR MM OEMs, the Commission’s services carried 
out between May and June 2009 an in depth cons ultation of Member States’ authorities and 
stakeholders (industry, environmental organisations, workers associations)15. Meetings were 
organised with the following main industr y federations: the Committee for European 
Construction Equipment (CECE) and European Agricultural Machinery (CEMA), the Association of the European Rail Industry (UNI FE). In a letter of 16 June 2009 Member State 
authorities and Non Governmental Organisa tions (NGOs), the European Environmental 
Bureau
16 and the European Federation for Transport & Environment17 were informed about 
the proposal to revise the flexibility scheme and invited to submit written contributions. The 
letter was uploaded on a dedica ted web-based consultation tool  so to inform stakeholders 
more widely. On 22 June 2009 a presentation on th e current and future in itiatives on revising 
the NRMM Directive was made by DG Enterprise at  the 'Clean Air seminar' organised by the 
                                                 
10 The final report of the Technical Review is availa ble on the NRMM web page at the Europa website : 
http://ec.europa.eu/enterprise/mecha n_equipment/emissions/projstudies.htm   
11 The final report of the IA study by ARCADIS N.V. is available on the NRMM web page  at the Europa website: 
http://ec.europa.eu/enterprise/mechan_equipment/e missions/impactassessment/nrmm_iastudy_fnrep.pdf   
12 The additional IA study on rail and inland waterway sector is available on the NR MM web page at the Europa web site: 
http://ec.europa.eu/enterprise/mecha n_equipment/emissions/projstudies.htm  
13 Reference at the Europa website will be included when available  
14 Reference at the Europa website will be included when available  
15 Summarised information on the contributions of the pub lic consultation on this proposal may be found in Annex V  
16 More relevant information can be found on the link: http://www.eeb.org/   
17 More relevant information can be found on the link: http://www.transportenvironment.org/  
 
EN 8   EN European Environmental Bureau at which mo st Environmental NGOs were represented. On 
17 July 2009 the proposal to ame nd the flexibility scheme was di scussed at a meeting of the 
Expert Group on Emissions from NRMM. 
The input from stakeholders has been taken into account, assessing different options to amend 
the provisions of the flexibility scheme. It has also been considered by the external contractor 
(ARCADIS), assessing environmental, social  and economic impact s, including large 
industries, SMEs and individuals as worker s, consumers and users. Information on the 
methodology used, and the interim progress was made available to the public and stakeholders through the NRMM web page
18.  
To summarize the comments received from consultation: A majority of comments were 
submitted by industry federations and individual  manufacturing or user companies. These 
underline the benefit from increasing the flexibi lity which will allow companies to distribute 
the required compliance costs more evenly during the crisis and ensure a relative income that 
would allow performing the necessary extended ch anges in various types of products (engines 
and machinery) in a longer peri od of time. Only one compa ny stated that new emission 
standards can only be achieved with low-sulp hur fuels which will not be available world-
wide, meaning that export oriented OEMs will be  compelled to produce two different sets of 
machinery, one for the countries that have emi ssion limits (EU, U.S., Japan) and another for 
the rest of the world. Comments from the rail sector highlighted that the main problem to 
meet the new emission requirements remains the complete reengineering of the rail vehicle 
linked to the modification of the exhaust and c ooling system which are closely related with 
the safety and operability requirements.  
The international organisation of catalyst and fi lter based technology drew the attention to the 
need to align the production of engines to em ission standards in the U.S. and in Japan and 
concludes that any delay in th e introduction of EU emission st andards jeopardis e the benefits 
for the whole NRMM manufacturing industry, in particular with regard to the 'first mover' 
benefits. It also highlighted that the increased flexibility would delay the recoupment of 
development costs. 
One environmental NGO submitted comments and re ferred to the recent  statement of the 
European Environmental Agency on the impact  of particle pollution, mainly emitted from 
diesel engines and expressed its concern that the increased flexibility could trigger lobbying 
for the delay of other environmental measures. 
One national employer's organisation expressed its full support to the Commission initiative 
on extending the flexibility scheme, and identi fied numerous merits of this approach. 
One Member State drew the attent ion to the need to carefully assess the po ssible impact of the 
measure on the environment and in particular in  the context of Member State obligations to 
meet the ambient air quality standards. A nother Member State welcomes the proposed 
measure, but invites the Commission to carefully assess the specific situation related to the 
railway sector. 
A short summary of the arguments of the various stakeholders can be found in Annex V.  
                                                 
18 More relevant information can be found on the link: http://ec.europa.eu/enterprise/m echan_equipment/emissions/index.htm  
 
EN 9   EN In support of this IA, an Impact Assessm ent Steering Group (IASG ) was created with 
invitations for participation sent to DG Enterp rise and Industry, DG Jo int Research Centre, 
DG Research, Secretary–Gen eral, DG Environment, DG Transport and Energy, DG 
Employment and DG Trade. Th e IASG met three times on 18th June 2009, 25th June 2009 and 
15 July 2009. The suggestions of the IASG group have been incorporated in the IA. 
2.2. Impact Assessment Board (IAB) recommendations 
The Impact Assessment was discussed at the IAB at the meeting of 9th September 2009, and 
according to its opinions of 11 September 2009 and of 26 October2009. 
In order to accommodate the recommendations of  the Board the following elements have been 
developed. 
• Problems which are caused by the current econ omic crisis and more general problems 
related to the design and introduc tion of the necessary new technology. 
• It was clarified that: 
– The proposed amendments of the flexibil ity scheme could have an impact on 
competition (between complying and non-complying manufactures). 
– The basis on which the new flexibility limits were determined has been specified. 
– The incentives of the manufacturers comply ing with the Directive in the future 
have been further evaluated the impact s of the preferred option were also 
identified. 
– The reasons that the penalty mechanism option is not feasib le were explained. 
• The IA has been made more specific about all environmental impacts of the proposed 
amendment of the flexibility scheme, especial ly on the efforts to develop a methodology to 
measure CO 2 emissions from NRMM. 
Moreover, numerous detailed modifications have been introduced in the IA, incorporating the 
comments of the IA Board. 
3. PROBLEM DEFINITION  
3.1. Background 
The technological challenge for non-road machin ery engine manufacturer s is that the next 
generation of engines must make emissions re ductions in particulat e matter (PM) and NOx 
comparable to those required a nd deployed in on-road engines a nd vehicles (trucks, lorries, 
buses etc.). This is not possible with the current technology. Fu rther research and 
technological development is required by industry in order to ensure that machinery can be 
placed on the market with compliant III B engines.  
Compliance costs include costs for the engi ne manufacturers but also on the OEMs.  
 
EN 10   EN There is a great diversity of machinery pr oduction (approximately 1500 companies) which 
has to comply with the emission limits laid out  in the Directive, while engines are produced 
by only few large companies (approximately 20 companies). Only a very few large OEMs produce their own engines. The adaptation of vehicles machinery can only be done 
subsequently by the OEMs that do not produce thei r own engines, after the finalisation of the 
configuration of the engine, si nce this redesigning procedure cannot be done in parallel.  
3.2. Developing New Engine Technology  
Engines compliant to Stage III B emission limits are progressively going to be placed on the 
market as of 2011 (see Annex III about deta ils of the timing of stages across engine 
categories).  
Substantial changes to the design of engines are necessary. Engines must be fitted with 
electronic control systems that deliver fuel at the right time and quantity for a cleaner burning 
in the combustion chamber. In addition new,  sophisticated after-treatment systems are 
necessary.  
3.3. Ability to Comply 
These engine modifications have implications on the configuration of the non-road machinery 
body and chassis in which the engines are installe d. It is therefore not possible to develop and 
design the machinery until the engine is ready.  
Since technical solutions for complying III B e ngines are not in general yet finalised, OEMs 
are not in a position to fully redesign the body of  the machinery where the engine is to be 
installed. It is important to note that the comp lexity of the redesign varies among the different 
forms of NRMM applications. 
For some of them, the Stage III B emissions  requirements will no t pose very significant 
problems for OEMs (e.g. some forestry equipm ent, some construction equipment, some 
agricultural machinery and inland water way ve ssels). In other NRMM applications, a Stage 
III B compliant engine is far fr om being finalised and thus the OEMs have not been in a 
position to redesign their machinery in order to insert the new engines. 
Individual OEMs, producing machinery with engi nes of different power categories, are at 
various degrees of readiness depending very mu ch on the range of products they manufacture. 
It is not possible to gi ve a detailed overview of the state of preparation of each company/sub-
sector as such information at that level of detail is not available.  
Based on information received from the industr y, the adaptation period of the bodies of the 
machinery ranges between 12 to 18 months in order to accommodate the new III B engine and 
the accompanying after-treatment system. Th e exact duration of the adaptation period 
depends on the number of machinery produced  with various engines and the types of 
machinery in each engine power category.  
Apart from the redesign of the body, the ad aptation of the production line of machinery 
(additional space, raw material handling and storage,  costs etc) must also be finalised in the 
same adaptation period. At the end of this period there would therefore be two production 
lines, one for Stage III A compliant machinery and one for Stage III B.  
 
EN 11   EN The situation is as follows: 
• For construction and agricultural machinery, te chnical solutions for OEMs are still to be 
found and consequently increase d R&D efforts are necessary. 
• Railcar OEMs have fewer difficulties as they  mostly use engines already developed for 
on-road uses but problems are encountered in the redesign of the vehicles to accommodate 
in a tight space the engine and the after-treatment systems. 
• Locomotive OEMs have the biggest difficultie s to comply with the new limits and will 
definitely not be ready by 1.1.2012. The adaptation of vehicles compliant to Stage III B has not yet started. A significant re search program launched under the 7
th Research 
program-CLEANER-D- has recently been initiated  and the intention is to build on this 
experience for future orientation of the full revision of the Directive in 2010.  
• Inland waterway vessels are not concerned as th e directive does not at the moment foresee 
Stage III B emission limits for engines used in this sector. 
Table 1: State of play *  (2009) 
  
Construction 
Agriculture 
Machinery  
Railcars  
Locomotives  
Inland  
Waterway  
Vessels 
 
Engines  
Ready  
by 2011  
Ready 
by 2011  
Not ready   
n.a. 
 
After-
Treatment Systems  
Ready  
Ready  
Not Ready  
n.a. 
 
Machinery 
  
Not Ready 
by 2011  
Not Ready  
Not Ready  
n.a. 
 
Conclusion  
III B not 
ready in time  
III B not 
ready in 
time   
III B not 
ready in time  
III B does 
not apply 
to sector 
 
EN 12   EN * General description of the industry (few individual exceptions may exist). 
3.4. Compliance costs 
The compliance costs for OEMs to cope with the new emission limits are significant. These 
costs include for example, research and develo pment costs, equipment redesign costs, after 
treatment devices costs, investment costs,  documentation and labelling costs, etc...  
Existing Stage III A production lines may conti nue to be used – depending on demand for 
machinery with IIIA engines from  third countries that do not ha ve the same exhaust emission 
limits as the EU or the U.S. In this case new production lines for machinery with III B engines must be set up with additional cost in e quipment, personnel (hiring, training etc).  
3.5. Regulatory issues 
The original directive was introduced in 1997 an d its decisions on deadlines and criteria were 
based on data that was av ailable at that time.  
The strict timetable of transition from Stage II I A to Stage III B with a duration of only three 
(3) years compared to the five (5) years of tran sition from Stage II to Stage III A (see Annex 
III) has been ambitious. In 2004 when the new em ission limits have been  adopted it was still 
uncertain whether the required technology could be  applied in all applic ations. In order to 
maintain the application dates for the new em ission limits it was agreed to accompany the 
measure by a flexibility scheme which should allow OEMs allocating their limited research 
and development capacity to their priority markets. 
3.6. Influence of the Crisis 
From autumn 2008 onwards most of the EU based industry producing non road mobile 
machinery has been unexpectedly and severely hit by the global financial and economic crisis, 
particularly affecting construc tion equipment and agricultural machinery. Steep falls in sales 
caused a large decrease in income and availa ble capital to finance the necessary technology 
research and development for machinery with  Stage III B compliant engines in all power 
categories and applications within the time limits in the Directive. Firms prioritise their R&D 
expenditure to cover firstly those products with high existing and potential sales volumes. 
These sales then provide the business with reve nues that can be used for R&D in order to 
develop technical solutions for smaller niche markets.  
For construction equipment
19 the market in Europe started to drop20 sharply in the 4th  
quarter of 2008 and is continuing to decline21; the sales over the year  2009 are expected to 
drop by at least 25% in units and depending on th e market segment there are decreases up to 
60%. This reduction in sales ultimately resu lts in cutting down production plans.  
                                                 
19 Construction equipment includes wheel loader s, bulldozers, crawler tractors, crawler lo aders, truck-type loaders, off- highway  
trucks, hydraulic excavators, etc.  
20 Reference: CECE letter ''Background material for the Request to Enlarge Flexibility from 20% to 50% for III BStage III B'' , 0 5-
06-2009, addressed to Commission Services  
21 Additional information on market share can be found in the study 'Competitive analysis of the EU Mechanical Engineering', p. 4 , 
available at the link: http://ec.europa.eu/enterp rise/mechan_equipment/compa nalysis-eu-mechengin.pdf  
 
EN 13   EN • Downstream demand is greatly influenc ing construction companies and rental 
companies using this type of machiner y. The construction activity dropped by 
6.5% in 2009 and is predicted to dr op by an additional 2.5% in 2010. 
EUROSTAT22 reports that many European coun tries still register a decline of 
economic activity in the construction indus try. The largest quarterly decreases for 
the 3rd quarter 2009 were reported in  LT (-18.32%), LV (111.8%) and EE(-
11.4%). Only PL, LU, FI, CZ reported a pos itive construction output compared to 
the previous quarter, but stakeholders rema in pessimistic about the stabilisation of 
the situation and a possible recovery in  the coming months.. As a result, new 
orders for construction equipment are expected to further delayed.  
• The European construction equipment industry includes around 1.200 companies 
which are operating with an estimated turnover of Eur 30 b illion. According to 
industry estimates, the sector provides for 2008 around 160,000 direct jobs and an 
additional 450,000 indirect j obs in the supply, dist ribution and maintenance 
network. For March 2009, the in direct jobs were expected  to drop by 20% and the 
direct jobs to be reduced to 90,000-95,000.  
For agricultural machinery23 the decline started in most European countr ies in early 2009. 
For the part of agricultural machinery covered by  the Directive, the total number of machinery 
registered in 2009 is estimated at 10,000 to 15,000 units.  
• According to industry 60% of all OEMs reported in May 2009 an order intake 
which was more than 10% below the prev ious year in their home markets and 
50% of all OEMs declines of above 20% in  incoming orders from other countries. 
Exports to Russia for example have dropped dramatically according to industry. 85% of all OEMs expect thei r turnover to further decrease in the coming months.  
• No separate data concerning NRMM covered machinery and agricultural 
machinery (tractors not covered) is av ailable at this time. According to 
information from the industry, the total turnover for agriculture machinery, in 
2008, should have reached almost Eur 30 billion. Directly linked jobs reach 135,000 with another 200,000 indirect jobs.  
For railcars , the impacts of the crisis according to industry, at the time do not seem as severe 
as for construction and agricultural machinery.  According to information from industry, 
passenger numbers have not started to decline but are stagnating, and business travel is 
predicted to decline by 10-20%. Railcars are mostly using engi nes deriving from the heavy 
duty vehicles that are modified to comply with  the overall design and use of the rail vehicle. 
3.7. How will the situation develop? 
If no additional measure is taken to alleviate the burdens of the crisis: 
                                                
 
22 Updated data on construc tion output is available at the link: http://e pp.eurostat.ec.europa.eu/ cache/ITY_PUBLIC/4-17062009-
BP/EN/4-17062009-BP-EN.PDF  
23 Agricultural equipment includes harvesters , self-propelled agricultural equipment for spraying, irrigating, planting, crop 
harvesting, rotary tillers (walking ploughs).  
 
EN 14   EN • OEMs would place on the market machinery under the currently allowed 20% 
until the completion of this allowance.  
• Due to the drop in sales, the funds to further develop and finalise the required 
adaptations of machinery bodies and pr oduction lines would not be covered 
(estimated and planned incoming cash flow is limited). 
• One course of action would be to reduce the number of types of machinery the 
OEM produces, so compliance costs would be  less, but at the same time the OEM 
would lose a segment of the market and previous customers, making his future 
incoming cash flows smaller.  
• In order to acquire the required funds, OEMs could turn to th e banks for loans. 
However, as a consequence of the financ ial crisis banks revised their lending 
policy and will give a higher consideration to  the risk profile of companies. As a 
result some companies may have difficulties to obtain the necessary financial means to carry out the necessary R&D. 
• The OEMs, after having exha usted the flexibility allowa nce and since they would 
not be in a position to produce next Stage compliant machinery, would not have a 
product to place on the market.  
• This could negatively affect OEMs suppliers.  
3.8. Does the EU have the right to act? 
Since the Directive already harmonises the laws  of the Member States relating to emission 
limits and type approval procedure for engines to  be installed in Non-Road mobile machinery 
it is an area of EU concern.  
The legal basis of this initiativ e is the same as for the NRMM Directive, namely Art. 114 of 
the Treaty of the functioning of the European Union. The subsidiary pr inciple is respected by 
the proposal, since amending the NRMM Directive is only possible at EU level. Member 
States cannot take act ion individually on emission limits for NRMM. 
4. 
OBJECTIVES  
The general objective  of the proposal is to safeguard economic development of the NRMM 
industry and maintain a high leve l of environmental protection.  
Specific objectives: 
• To maintain the competitiveness of EU NRMM industry and alleviate the 
immediate pressures brought about by the economic crisis. 
• To enable industry to continue fina ncing R&D so that technology becomes 
available for all product types in Stage III B.  
• To limit the emissions of NRMM by enab ling the replacing of older, more 
polluting and fuel consuming engines by cleaner ones.  
 
EN 15   EN  
Operational Objectives: 
• To introduce a cost effective and timely  measure that allows EU engine and 
machinery producers to maintain their co mpetitiveness and to continue selling 
products throughout Stage III B and theref ore alleviate the immediate pressures 
brought about by the economic crisis. 
• To maintain the incentive to invest in R&D and develop cleaner engines that are 
compliant with future emission limit Stages. 
• To allow industry to finance expenditure on R&D in the short term to develop 
Stage III B compliant machinery by allowi ng them to conti nue to generate 
revenues from sales. 
4.1. Consistency with other horizontal objectives of th e European Union 
4.1.1.  The European Economic Recovery Plan 
The November 2008 European Economic Recovery Plan (EERP)24 addresses the difficulties 
of the wider economy due to the global financial crisis. The Plan outlines a series of measures 
to cope with the squeeze on credit,  declining sales and revenues. It refers inter alia to the need 
for a swift stimulation of demand and consumer confidence as well as m easures to lessen the 
human cost of the economic dow nturn and its impact on jobs. Th e EERP highlights the need 
to ensure full coherence between immediate ac tions and the EU’s medium and longer term 
objectives. In its Communication for the Spring European Council25 the Commission 
reconfirmed the unprecedented pressure in Europe  from a global economic crisis and the need 
to pursue the efforts launched  under the European Economic R ecovery Plan (EERP). A joint 
effort of over €400 billion of immediate fisc al measures is expected to generate new 
investment, boost demand and rate employment . The impact from th is EERP will however 
not be immediate and needs therefore to be  complemented by action to improve business 
conditions.  
Such complementary action needs to focus on ma intaining the competitive industrial base and 
focus on knowledge based and lo w carbon economy as set in the Lisbon Strategy. The current 
proposal will respect the objectives of the Lisbon Strategy and complement the EERP.  
4.1.2.  Environmental Policies 
Under the Sixth European Environment Acti on Programme which highlights the need to 
reduce pollution to levels which minimise harmful effects on human health, the Commission 
presented in 2002 the Clean Air For Europe (CAF E) initiative which provides an integrated 
and long term strategy for reducing the adverse impact of air pollution on human health and 
environment. These objectives are implement ed through Directive 2008/50/EC on ambient air 
quality and cleaner air for Europe which establ ishes a system for the assessment of ambient 
air quality and provides thresholds for each po llutant. Member States have to assess and 
                                                 
24 COM (2008) 800  
25 COM (2009) 114  
 
EN 16   EN manage the ambient air quality. Besides this instrument it remains important to combat 
emissions of pollutants at source and to im plement the most effective emission reduction 
measures. Also the national ceilings Directive 2001/81/EC26 establishes legally binding limits 
to be attained by 2010 for the total permssable emissions from a Member State for several 
pollutants including nitrogen oxides (NOx). Curr ent forecasts suggest 11 Member States will 
not comply with their ceilings for NOx. 
The NRMM Directive provides an important c ontribution with a progr essive reduction of 
targeted emissions.  
The key air polluters from the NRMM sector  to overall air pollution are PM and NOx 
emissions27. According to the RAINS model28 the estimated PM1029 emissions from the 
NRMM sector for EU27 are 7% compared to 13%  for road transport. In terms of NOx 
emissions, the NRMM is responsible for 16% of  all NOx emissions in the EU27 while the 
road sector contributes to 42%  of all NOx emissions. This contribution from NRMM to the 
overall air pollution in the EU provides the ra tional for increasing the efforts to reduce the 
emissions in the coming years. Care will be take n not to endanger the overall objective of the 
NRMM Directive to progressively reduce emissions. 
Although the NRMM Directive covers exhaust emi ssions from internal combustion engines, it 
does not address CO 2. As a result no inventory or data is available on CO 2 emissions of 
engines in the various ty pes of NRMM machinery.  
Nevertheless CO 2 emissions from combustion engines in the NRMM sector need to be 
addressed in the future in line with the r ecent development in the road sector, either by 
voluntary or regulatory measures.  
Specific consideration must be given to the f act that NRMM applications are different than 
those of other sectors like heavy and light duty  vehicles or cars. Consequently specific 
methodology, limits and implementation dates for CO 2 emissions need to be identified. Based 
on the existing knowledge and practices of other se ctors, substantial prep aratory work is still 
necessary especially for the large variety of NRMM applications which are characterised by 
variations in uses and po wer of the used engines. 
This requires however substantial preparatory work because of the la rge variety of NRMM 
applications which results in significant vari ations of emissions and fuel consumption for 
identical engines.  
These future strategies are currently discussed in the context of the overall revision of the 
Directive into 2010.  
                                                 
26 OJ L 309, 27,11,2001, p.22. 
27 Definitions of the gaseous and particulate pollutants, as stated  in Directive 97/68/EC Annex I, as amended, include: '2.2. gas eous 
pollutants shall mean carbon monoxide, hydrocarbons (assuming a ra tio of C1: H1.85 and oxides of nitrogen, the last named 
being expressed in nitrogen dioxide (NO2  equivalent; 2.3. particulate pollutants shall mean any material  collected on a  specified 
filter medium after diluting C.I. engine exhaust gas with clean filtered air so th at the temperature does not exceed 325 K (52 oC);'  
28 Regional Air Pollution Information a nd Simulation model and database  
29 Particulate matter below 10 µm  
 
EN 17   EN 5. POLICY OPTIONS  
5.1. Introduction 
The issues highlighted in the problem definitio n and the subsequent objectives warrant an 
interim measure to mitigate the impact of the economic downturn.  
The approach to be taken in identifying options is  to firstly identify options to provide relief 
for those sectors already covered by the existing fl exibility (options 1A to  4.4 A) , and then to 
consider sectors that do not currently have acce ss to the flexibility scheme (railcars, options 
1B to 4.5 B). 
5.2. Options 
5.2.1.  For the sectors already covered by the flexibility scheme  
• Option 1A - No action = Base line option 
The provisions of the current flexibility scheme remain unchanged. 
• Option 2A Provision of loans for purchasing  stocked engines manufactured under the so 
called sell-off period. 
In Article 9, section 4a of the Directive, it is stated that 'For each category, the above 
requirements (reference to implementation dates of Stages) shall be postponed by two years in respect 
of engines with a production date prior to the said date '.  
While Stage III A is in force, industry may pr oduce engines and machinery and stock them in 
the EU territory. These Stage III A engine s and machinery are manufactured, to keep 
industries running and to cover the needs of othe r countries that do not have strict exhaust 
emissions limitations as EU. After the beginni ng of implementation of Stage III B, these 
stocked engines and machinery may be placed on the market for a period of two years. This option suggests the use of government backed lo ans to be granted to OEMs to purchase Stage 
III A engines on stock.  
• Option 3A Implementation of a scra pping scheme at national level. 
The use of a scrapping scheme would be a subsi dy, given as an incentive, to the user to buy 
new machinery, with a Stage III B engine.  
Under this option, the owner of  older, more polluting machinery will deliver the machinery 
for scrapping (destruction-recycle etc). A Natio nal Public authority wo uld grant a lump sum 
to the owner of the scrapped machinery. The ow ner will receive the mone y via banking or the 
tax system when the purchase of new machinery is proven.  
• Option 4A - Implementation of alternative type s of provisions under th e existing flexibility 
scheme 
Under this option additional flexibility will be  granted for the transition from Stage III A to 
Stage III B. No additional measures for future stages are envisaged at this stage.  
 
EN 18   EN • Option 4.1A  Implementation of a scaled percentage of the flexibility scheme for the 
various types of machinery, according to th e amount of encountered problems for the 
transition from Stage III A to Stage III B.  
The option suggests the implementation of a different  percentage of flexibility to each of the 
various types of machinery, according to the particular transitiona l problems encountered 
from Stage III A to Stage III B plus a similar approach with regard to the fixed numbers of engines in Table 2. 
• Option 4.2A Increase of flexibility  percentage to 50% for all m achinery eligible to use the 
provisions of the scheme and proportionate adju stment of the fixed numbers of engines to 
the relevant table of Annex IV.  
This option suggests increasing flexibility fr om 20% to 50% for all machinery currently 
covered by the scheme and also adjusting the table of fixed engines numbers accordingly.  
• Option 4.3A Conditional use of the flexibi lity scheme, with penalty mechanism.  
In order to maintain the incentives to develo p III B machines, a system could be introduced 
where additional flexibility used in the transition from Stage III A to Stage III B will trigger 
payment of a penalty after several years.  
This would maintain the incentive for the OEMs to develop machinery with III B engines and 
use only the minimum additional flexibility they  need in order to temporarily overcome the 
burdens of the economic crisis. It requires a penalty to be set at the right level. 
• Option 4.4A Implementation of a trading system  
A system similar to that of the EU Emissions  Trading Scheme could be developed for the 
flexibility measure. A system could be esta blished whereby firms th at would not use the 
entire flexibility could sell their flexibility right s to firms that need additional flexibility. This 
scheme would require a mechanism to sell flex ibility (permits) and a system in place to 
monitor the scheme. The price of each permit of flexibility would be determined by the 
market.  
5.2.2.  For the railcars sector currently excluded from the use of the flexibility scheme 
The railcars sector currently does not have the flexibility scheme. The same descriptions of 
the options as provided above apply. 
• Option 1B - No action – There is no flexibility 
• Option 2B - Provision of loans for purchasi ng stocked engines manufactured under the so 
called sell-off period. 
• Option 3B Implementation of a scrapping scheme 
• Option 4B – Introduction of a fl exibility scheme for railcars 
• Option 4.1B - Introduce a flexibility of 20% 
 
EN 19   EN • Option 4.2B - Implementation of a scaled per centage of the flexibility scheme for the 
various types of machinery, acco rding to the various power engines used and the amount 
of encountered problems for the transition from Stage III A to Stage III B, with a 
proportionate adjustment of the fi xed numbers of engines table.  
• Option 4.3B – Introduce a flexibility pe rcentage to 50% for railcars.  
• Option 4.4B – Introduction and conditional expans ion of the flexibility scheme, with a 
penalty mechanism 
• Option 4.5B - Implementation of trading system  
6. OPTION ANALYSIS – PRELIMINARY ANALYSIS – SECTORS ALREADY COVERED BY 
THE FLEXIBILITY  
This IA will assess the options in a quali tative way with respect to the economic, 
environmental and social aspects; then subse quently, compare them against the criteria of 
efficiency, effectiveness and coherence in order to establish a preferred option. This preferred 
option will then be analysed in greater deta il with respect to the economic, social and 
environmental impacts.  
6.1. Analysis of Option 1A – Baseline 
This policy option of doing nothi ng would not be effective in reaching the objectives for the 
reasons described in section 3.7. To recall,  by doing nothing industry would continue to 
struggle in the current economic climate and w ould not have machinery ready by Stage III B. 
Industry would then not be able to place products  on the market beyond what is offered in the 
20% flexibility scheme. 
The baseline scenario would s uggest that industry will in ge neral be unable to commit to 
research and development of Stage III B deve lopment. According to data provided by 
industry, the sector of constr uction and agriculture equipment spends around 3%  of its annual 
turnover of around 60 billion € to finance R&D efforts. Most companies face serious difficulties to finance the investment necessary to ensure compliance of equipment with III B 
emission limits.  
Clients of OEMs are currently much more prude nt towards buying new machinery as a result 
of the economic climate. Companies cut capita l costs by extending the use of old machinery 
and not purchasing newer, less fuel consum ing machinery, even though this decision has 
higher operating costs an d a larger negative environmental im pact in the short term. However, 
for the products that can  be produced in time and compliant with Stage III B, these would be 
less harmful than Stage III A for the environment due to  the stricter criteria. 
6.2. Option 2A. Provision of loans for purcha sing stocked engines manufactured under 
the so called sell-off period as in Artic le 9, section 4a of the Directive  
Another possibility to continue its operation is  that an OEM could buy stocked engines from 
an engine manufacturer so he could con tinue to sell IIIA compliant machinery.  
 
EN 20   EN These engines must be pre-ordered well in advance by the OEM from the engine 
manufacturer to allow sufficien t time for manufacturing. The e ngine manufacturer is usually 
paid in advance or at a premium pre-ag reed price at fixed delivery dates.  
Additionally, in order to be used  after a stocking period of more than three months, engines 
require a special treatment30 that is time consuming and costly and could reach up to 5% of 
the sale price of the engine. 
Due to the economic crisis, cash flow is limited. Private banking institutions are not providing 
credit to industry because of the turbulent economic times and the subsequent uncertainty. A 
government backed loan (provided by national ad ministrations or the European Investment 
Bank) could enable OEMs to purchase these en gines and continue to sell machinery using 
these engines after the entry into force of the next stage. This would enable OEMs to develop 
Stage III B machinery whilst continuing to sell  Stage III A products to finance the R&D.  
However, the incentive to produce more Stage III  A engines would result in a huge number of 
Stage III A engines, instead of development of  the cleaner III B engines; it would act as a 
counter incentive to innovate in mo re environmental friendly machines.  
Thus, a loan to purchase stocked Stage III A engines would reduce the incentive to design 
compliant Stage III B machinery which is le ss environmentally damaging. However it cannot 
be excluded that extra demand fo r a fixed number of stocked Stage III A engines might lead 
to higher prices for those engine s in the short term. This might require increasi ng the level of 
loans requested by OEMs.  
6.3. Option 3A. Implementation of a scrapping scheme at National level. 
The use of a scrapping subsidy will provide an  incentive to the user to buy new machinery 
with a cleaner Stage III B engi ne, under the condition that he o fficially destroys his older, 
more polluting machinery.  
This will encourage the purchase of Stage III B machinery and have positive environmental 
impacts; however, it will not assist OEMs in financing the R&D to make Stage III B 
machinery available. Whether the prospect of  a scrapping scheme would be sufficient to 
induce banks to hand out additional loans to OEMs for R&D remains doubtful. In addition if 
Member States implemented the scrapping scheme  in different ways. This could lead to a 
fragmentation of the internal market  and to distortion of competition.  
                                                 
30 When the engine is manufactured to be stoc ked, it is filled with special oil. When it is placed on the machinery, this oil must  be 
changed to a specific one and then with a specific fuel the engine  is kept running for a few hours. After that period the oil m ust be 
changed again to normal and with a normal fuel it must run for some  time and then it is ready and safe to be sold. The required  
time and cost of the procedure depend on the size of the engine and its power.  
 
EN 21   EN 6.4. Option 4A Implementation of alternativ e types of provisions under the existing 
flexibility scheme. 
6.4.1.  Option 4.1A Implementation of scaled percenta ges of flexibility for the different types 
of machinery, depending on the problems they encounter for the transition from 
Stage III A to Stage III B.  
Industry's priority is to develop initially mach inery that faces fewer problems and bigger sale 
volumes and progressively address smaller niche market machinery with weight and 
dimension constraints. Therefor e, an alternative allowance unde r the flexibility scheme for 
each one of these categories of mach inery would be a logical solution. 
There is no specific inventory of the machiner y in each machinery type when placed on the 
market nor a relevant system to survey the number of sales. The current system, surveying the implementation of the machinery sold using fl exibility does not require such detailed 
information.  
Gathering information on the amount of problems for each specific type of machinery is also 
very difficult. It is a common approach to engine and mach inery development to use the 
experience and progress gained from one type to  another. The implementation of this option 
would require the delivery of sensitive info rmation to the Commissi on, to be used as a 
background for determining figures  of alternative flexibility. 
This measure would optimise the trade off between environmental costs and economic 
benefits within the flexibility scheme provide d there was perfect information on the basis of 
which a decision on how to allocate flexibility could be taken. However, this information is 
not available and this makes this option unfeas ible. It will therefore not be analysed any 
further. 
6.4.2.  Option 4.2A Increase of flexibility percenta ge to 50% for all machinery eligible to 
use the provisions of the scheme and pr oportionate adjustment of the fixed numbers 
of engines to the relevant table of Annex IV.  
In the Technical review study referred to in  point 2.1., an increase from 20% to 40% 
flexibility was proposed. This figure was discus sed with Member States, industry and other 
stakeholders. The figure was considered as sufficient to generate revenues for the OEMs in order to fund the R&D and compliance costs. Th e study however concludes that an increase 
to 50% should be considered by Commission because  it provides better alignment of the EU 
provisions of the flexibility scheme to the ABT system used in the USA.  
Accordingly, the table of maximu m should be amended as follows
31: 
                                                 
31 Analysis of the calculation of the new number of engines for the amended flexib ility scheme is available in Annex VIII.  
 
EN 22   EN  
Table 2: Maximum number of engines to be sold under the current and the revised flexibility schemes 
Engine Category 
(kW) Number of engines 
(existing scheme up to 
Stage III A) Number of engines 
(revised scheme for 
transition from IIIA to III B) 
19-37 200 - 
37-56 200 
56-75 150 
175 
75-130 100 250 
130-560 50 125 
This new percentage or the amended fixed num ber of engines may be distributed, according 
to the OEM's production plan, ove r the duration of Stage III B.  
For those engines in power categories for whic h no Stage III B and IV a time limit should be 
included so as to restrict the placing on the ma rket of machinery under the revised flexibility 
scheme after 31 December 2013. This date is selected in order co mply with the main 
objective of the proposal, to alleviate burdens of  the current economic crisis and to provide a 
'similar' three years time of implementation of  the flexibility scheme to all engine power 
categories since starting tim e of Stage III B differs. 
Allowing an extended flexibility in all categori es will ensure that firms have the required 
flexibility to cover each se ctor and those products within  each sector. The additional 
flexibility does not require any up front payments from industry. 
6.4.3.  Option 4.3A. Conditional use of the flexibi lity scheme, with penalty mechanism 
The users of the additional flexibility for transi tion from Stage III A to III B would, at a later 
stage for instance for the transition from Stage III B to IV, have to pay a penalty. 
This approach would limit concerns that comp etitive distortions may occur from enlarged 
flexibility. For instance, those firms that have already invested in getting Stage III B 
compliant machinery ready could be at a comp etitive disadvantage compared to those that 
have not invested yet; as the ones who are ready are going to have to pr ice their products to 
recoup their investments. This sy stem reduces the adverse incen tives that could be introduced 
in Option 4.2.  
However, the use of a penalty mechanism will be difficult to justify for the following reasons: 
− First of all, the necessary information pro cedures for managing such a system would place 
additional burden on competent national authori ties. Those would have to monitor the data 
exchanged and establish a system to allow them to impose a penalty. As OEMs can choose 
the approval authority among 27 Member States, criteria for the establishment of penalties 
(amount etc) would have to be established at EU level to ensure a non-discriminatory 
treatment and to avoid an unbalanced  application of the Directive. 
 
EN 23   EN Taking into consideration the rather limited life -time of the modified flexibility scheme, the 
introduction of a new penalty system does not s eem to be proportionate, especially against the 
background that recently a simplification of the management procedures on flexibility has 
been introduced into the Directive with  the adoption of Directive 2010/26/EU.  
− Secondly, the implementation of such a penalty mechanism would also entail 
disproportionate efforts on the market surve illance which would be continued well beyond the 
limited duration of the increased flexibility. 
6.4.4.  Option 4.4A. Implementation of a trading system  
A trading system by which firms could buy additi onal flexibility from those firms that do not 
need it would provide a strong incentive to comply  as soon as possible with the new emission 
limits. Firms that had completed all of the ta sks in order to reach Stage III B would be 
rewarded whilst those that hadn't would be penalised.  
The price of the additional flex ibility would be fixe d by the market. It would be necessary to 
establish the framework for this market.  
The placing of such a complex system in a s hort time scale would be disproportionate to the 
expected achievements. The time taken to deve lop this trading system  would be too long for 
meeting the immediate effects expected. Additio nal EU / national resources would be required 
to set up and regulate this system. This scheme  would not help the fi rms who are experiencing 
problems in cash flow for R&D to reach Stage III B. Those firms not ready for Stage III B 
would either have to pay for fl exibility or for additional R&D.  
6.4.5.  Comparison of the Options 
The options will now be assessed with respect to the efficiency, effectiveness and coherence 
with the corresponding analysis pr esented in the table below. 
• Option 1A - No action = Base line option 
Is not effective in reaching th e objectives and industry would c ontinue to struggle and would 
not have compliant machinery ready for Stage III B. 
• Option 2A - Provision of loans fo r purchasing stocked engines  
This would provide OEMs access to finance to purchase Stage III A engines and would allow 
them to continue to generate revenue so th at they could develop Stage III B compliant 
machinery. However, the control of stocked engines and surveillan ce by type approval 
authorities of Member States is  close to impossible, since such  a surveillance system currently 
does not exist and it would require time and fina ncial resources to be established, certified and 
operated in practice. This scheme is similar in its effect to extending flexibility by allowing OEMs to put Stage III A compliant  engines on the market in Stag e III B, but will front load 
engine sales which could introduce capacity c onstraints for the production of Stage III A 
engines. It is more expensive for OEMs due to  the stocking (additional fees and transportation 
costs) involved and is much more difficult  to monitor by authorities and includes the 
associated administrative costs of providing loans. Therefore this option is not efficient 
compared to options 4.A.  
• Option 3A - Implementation of a scrapping scheme 
 
EN 24   EN This scheme will stimulate demand for Stage III B compliant machinery but will not assist in 
helping OEMs develop compliant machinery. Subs tantial funds will be required to provide 
subsidies under a scrapping sche me and distortions of the inte rnal market could occur from 
diverging national schemes. It s compliance with state aid rules is also questionable.  
• Option 4.1A- Implementation of a scaled pe rcentage of the flexibility scheme  
This system would be very effective in mee ting the objectives and pr oviding targeted support 
where additional flexibility was required. Howe ver, there is no specifi c inventory on which 
these assessments could be made, theref ore, this system is not feasible. 
• Option 4.2 A Increase of flexibility percentage to 50% 
A uniform increase to 50% would avoid the info rmation issue that is apparent in Option 4.1 
and would provide assistance to i ndustry in the short term. This additional flexibility could be 
introduced without setting up any new system s and therefore could provide an immediate 
response to the crisis.  
However, to put this extension into context, th e additional flexibility to 50% is the equivalent 
of a 16 week delay in the introduction of Stage III B32.If an industry will not be in a position 
to produce Stage III B engi nes, after the use of its allowance of 50% of engines of Stage III A, 
then it will disappear of the market.  
There is a trade off between the economic ince ntives and the environmental pressures. In 
order that industry can ensure production of Stage III B mach inery, and thus be able to 
continue selling in the future, there is a negative impact on the environment as the introduction of stricter Stage III B compliant machinery is being delayed. 
 
According to information from industry, Stage IV engines are strongly considered as a 
continuation of Stage III B engines. Depending on the type of technology used, and in order 
to comply with the stricter NOx emissions limits  in Stage IV engines, compared to those of 
Stage III B, 'minor' adaptations are expected by installing a more efficient anti-NOx after 
treatment system. Therefore it would be logical to assume that, in order to diminish R&D and compliance costs, the preferred option would be to perform the redesign of the engines as 
soon as possible and only once (from Stage III A to Stage III B covering as much as possible the needs for Stage IV) instead of having to  do similar adaptation twice (once for the 
transition from Stage III A to Stage III B and then from Stage III B to Stage IV). If this logical assumption is followed the 50% flexibil ity would be a strong incentive to a timely 
adaptation of engines since indirectly would co ver the majority of the compliance costs also 
for Stage IV and would provide industry additional time to amortise the additional 
investments.  
• Option 4.3A - Conditional use of the flexib ility scheme, with penalty mechanism 
This option introduces the idea of  a penalty for those industries that did not  reach Stage III B 
compliance in time, by penalising them in the future. However, such a system would be 
difficult to implement and enforce. 
                                                
 
32 If all of the flexibility was used straig ht away in the current 20% flexibility sche me then the manufacturer could delay using  Stage 
III B by 10 weeks, instead, under the proposed  50% flexibility the manufacturer can de lay by 26 weeks. Th erefore, assuming 
constant sales, this is an extension of 16 weeks.  
 
EN 25   EN • Option 4.4A - Implementation of trading system  
Here the market would decide whether or not firms would purchase additional flexibility or 
spend the money on R&D to reach Stage III B, therefore, optimising the trade-off between 
economic development and environmental objectiv es. The system would be very complex to 
put into place in such a short time scale. The time taken to develop a working system would not be effective in meeting the im mediate requirements of industry. 
Coherence also included whether the options could be  possible to be implemented in short 
time and also be enforceable. 
Table 3: Comparison of the listed options:  
 Effectiveness Efficiency Coherence 
Option 1A – Baseline 0 0 0 
Option 2A - Government loan + - - 
Option 3A - Scrapping scheme + + - 
Option 4,1A – Scaled Flex +++ +++ -- 
Option 4,2A - Flex to 50% ++ + + 
Option 4,3A – Penalty  + ++ -- 
Option 4,4A - Trading scheme ++ +++ -- 
6.5. Conclusion on preliminary Analysis  
As a result of the above analys is, it is concluded that extendi ng the flexibility to 50% is the 
most appropriate measure to ensure that the ob jectives of the policy are met in the sectors 
where the flexibility is already available. Th e impacts of this will be measured against the 
baseline in a quantitative way in section 7.1.  
OPTION ANALYSIS – PRELIMINARY ANA LYSIS – SECTORS NOT COVERED 
BY THE FLEXIBILITY - RAILCARS 
Due to the receding analysis, it is clear that some of the options, are not efficient in reaching 
the objectives, and are therefore unfeasible. It does not add value to repeat the analysis for 
those options where that is the case. The anal ysis of the options therefore will focus on the 
baseline, introducing flexibility of 20% and intr oducing flexibility to 50%. To avoid repeating 
the arguments made above that apply equally to this sector, these two opt ions will be analysed 
in section 7.2 in detail against the baseline 
 
EN 26   EN 7. IMPACTS OF PREFERRED OPTION  
The environmental, social and economic impact  of preferred policy option of the identified 
policy options will be analysed in the following section. Description of methodology for the sectors eligible to use the flexibility scheme 
The analysis of the impact is based on data coming from  industry, EUROSTAT and the 
European Handbook on External Costs
33 (CE Delft, 2008), with a qua ntitative estimate of the 
gains that the amended flexibility would provide, followed by a multi-criteria analysis. 
Some of the requested economic data provided by industry, including commercially sensitive 
data, was submitted to the external consultant. 
All contributions provided duri ng stakeholders meetings and especially during the public 
consultation for this proposal have been taken into account.  
Compliance costs were determined initially fo r a typical single machine or engine. These 
costs were then extrapolated to the whole EU. The major cost categories that were taken into 
account include: research and development costs,  variable production engine costs, machinery 
redesign costs, after treatment de vices costs and fuel costs.  
Environmental impacts have been determined ba sed on external costs of calculated emissions. 
Emissions have been calculated taking into acco unt machinery/engine stocks, average use and 
lifetime of machinery. 
Socio-economic impacts have been derived from  the compliance costs and the specific market 
situations. 
7.1.1.  Environmental impact  
The overall impact from this additional amount of emissions is not expected to significantly 
affect the Member States obligations under the CAFE program. This legislation requires MS 
to meet certain ceilings for ambient air quality in defined geographical areas34.  
The effect on the environment will be even sm aller than that estimated in the Technical 
Review due to the impact of th e crisis as there will be reduced numbers of new engines placed 
on the market than what was the basis of the cal culation. An average drop of sales of at least 
up to 25% and for some sectors up to 60% is expected. 
As a large part of the NRMM are not used in  problematic and highly populated areas which 
face the highest local concentrat ions of pollutants, the overall impact from this limited 
additional amount of emissions is not expected to  be significant. Furthe rmore some cities and 
regions in the EU are reinforcing their public procurement rules in a way that only machines 
will be allowed to operate in urban areas which meet the most stringent emission standards.  
Emission limits as provided for by the Direc tive are for NOx around 30% lower and for PM 
around 90% lower35 in Stage III B than in the previous Stage III A. The environmental impact 
                                                 
33 The European Handbook on External Costs can be found at the link: 
http://ec.europa.eu/transport/sustain able/2008_external_costs_en.htm  
34 Directive 2008/50/EC L 152 11.6.2008 p1, Annex III  
 
EN 27   EN of a modified flexibility scheme is estimated  under the assumption that all OEMs will use the 
full percentage of the flexibili ty scheme in the first year after the introduction of the new 
limits of Stage III B. In the case of 50% flexibility, from all NRMM (100%) placed on the market, only 50% of the machinery would comply  with Stage III B emissions limits, while the 
remaining 50% would comply with the emission limits of Stage III A. 
Based on 2005 figures
36, the average share of emissions resulting from new engines put on the 
market during one year are around 5% of the to tal emissions of non-road mobile machines. 
The remaining 95% of emissions are allocate d to engines already operating on the market. 
The amendment of flexibility from 20% to 50% would increase the emissions of newly 
produced machinery within the first year by abou t 9% compared to the current scheme, used 
as a base line. However, the overall NRMM  compression ignition (diesel) engine emissions  
would increase  for the first year under the 50% flexibility by around 0,3%  compared to the 
current 20% scheme. In absolute numbers th e amounts of emissions can be quantified to 
about 0,66 kt for PM and 9,8 kt for NOx per year.  
Comparative graphs presenting NOx and PM em issions for the current 20% and the proposed 
50% flexibility scheme can be found in Figure 1. and Figure 2.  
Figure 1: Total NOx emissions for all CI engi nes in case of 20% flexibility and of 50% 
flexibility 
All CI engines
0200400600800100012001400
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050NOx emissions [kt]Flex20
Flex50
Flex50-Flex20
 
Environmental costs were calculated based on the emission model for CI engines, including 
assumptions and information provided by indus try and the JRC emi ssions inventory, as 
described in detail in Annex 7.8 of the IA study by ARCADIS. 
                                                                                                                                                         
35 More information on the reduction % of pollutants of the different stages of the Directive can be found in table 3. of Annex I II.  
36 Summarised sales table of new machinery to be placed on the ma rket and table of existing machinery, covered by the NRMM 
Directive, are available at Annex V  
 
EN 28   EN Figure 2 : Total PM emissions for all CI engi nes in case of 20% flexibility and of 50% 
flexibility 
All CI engines
01020304050607080
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050PM emissions [kt]Flex20
Flex50
Flex50-Flex20
 
The environmental costs represent the cost ge nerated from the additional emissions of the 
engines under the amended 50% flexibility sche me compared to the current 20% flexibility 
scheme. The conclusion of the study, according to the methodology followed based on the Net Present Value (NPV), estimates, per type of  pollutant, the environmental costs resulting 
from a 50% flexibility compared to the current 20% flexibility, in the magnitude of: 
Table 4: Environmental costs occurred during 2008 – 2030 
Pollutant 50% flexibility ( Million Euros)  
PM - 200 
NOx - 350 
Total - 550 
The estimated impact of an enla rged flexibility scheme is 0.3 %37 of the overall emissions 
(both of PM and NOx) 
This figure represents the total cost over the period of 2008-2030, wh ile for the present 
Impact Assessment the benefit has been calculate d for the period of three years as covered by 
the accompanying proposal. 
These conclusions on the technical review of the Directive are based on figures dating back to 
before the economic crisis. Reports from indus try on the drop of sales and diminished fuel 
consumption, in the NRMM sector, indicate that a small decrease in th e emissions is most 
probable. An assessment of the impact of plac ing on the market a smaller number of engines 
as a result of the economic crisis is not yet available. 
Available information to Commission Services  via the notification requirements of the 
Directive on the use of the flexibility scheme, for the transition from Stage II to Stage III A, 
                                                 
37 Draft Impact Assessment p 15  
 
EN 29   EN clearly indicate that the total allowance of OE Ms to place on the market 'flexed' engines is not 
depleted in most of the power categories(more than 50% is stil l available). On the very small 
power category however, the total allo wance is covered almost by 100%.  
As reported, the additional flexibility has the impact of increasing the availability of Stage III 
A rather than Stage III B by just 16 weeks.  
As CO 2 is the natural product of burning fossil fuel , its emissions will bring changes to the 
environment. Although it may seem obvious that the gained experience from other sectors' 
approach on the efforts to reduce CO 2 could be easily adapted a nd introduced for the NRMM, 
the differentiation of Directive 97/69/EC (deali ng with engines not machinery) requires a 
different approach that only re cently has been initiated.  
CO2 emissions from engines are currently not reported and as no classi fication of machinery 
according to type of use is available (not ma ndated by the Directive), no estimate can be given 
on the impacts of increased flexibility or  any other tentative measure reducing CO 2 emissions.  
7.1.2.  Economic impact  
The underlying assumptions applied for the economi c impact analyses are described hereafter. 
The main economic impact of the proposed meas ure are related to compliance costs which, as 
described under 3.1, include mainly research a nd development costs as well as investment 
costs.  
The assessment is based on the data availabl e from different sources. Industry reported 
relative increases in R&D costs around the date  of introduction of the new stages. Additional 
information on the R&D budget for the sector was obtained from EUROSTAT. Some of the 
factors, not possible to be qua ntified due to lack of detaile d information from the industry, 
and therefore not taken into account include:  
• increased learning & training 
• increased unavailability of manpower 
• increased stock piling 
• increased unavailability of low volume products 
• standstill state of the art 
• increased peak load certification bodies 
• increased warranty cost due to rush released 
A simplified approach was used to quantify the impact of the flexibility scheme enabling the 
reduction of peak efforts of R&D costs and th e possibility to amortise these costs over an 
extended time period according to industry pla nning. The assumptions a nd clarifications of 
this approach include: 
• Estimates for the potential relative gains in R&D budget, provided by industry, due to the 
increase in flexibility for the typical period around the introduction of new emission 
standards, are indicated in the second and the fourth column in Table 6. The larger the 
 
EN 30   EN flexibility percentage is, the lower the peak costs of R&D are expected in the same period 
of time. This difference in peak costs for the two different options of percentage of 
flexibility, are also presented in Figure 3. 
 
Figure 3. Illustration of how flexib ility reduces peak R&D efforts 
• Use of 2005 EUROSTAT figures on R&D. The concerned sectors considered are: DK29 
Manufacture of machinery and equipment, DK2911 Manufacture of engines and turbines, 
excluding aircraft, vehicle a nd cycle engines. Parts of DK293_TO_DK296 were included 
on Manufacture of agricultural and forestry machinery; Manufacture of machine-tools; 
manufacture of other special purpose machinery.  
• Only half (48%) of the R&D budget is consider ed, as only half of the machinery sales is 
concerned with compliance to the future emission limits for NRMM machinery with CI 
engines. No discrimination is taken into ac count on the aspect that bigger engines (with 
smaller series and sale figures) need probably more efforts to comply with the threshold s. 
• For the calculation, the intr oduction of Stage III B in 2012 and Stage IV in 2015 were 
assumed as an average, to compensate for th e different implementation dates in both stages 
for the various power categories of engines. The initial year is set to 0 for the year 2013. 
For this year, the theoretical gain has not been taken into account.  
• For each year, the relative gain in R&D is multiplied with the total R&D budget and 
discount of the amount to 2008 (date of the begi nning of the study) at a 4% discount rate. 
The Net Present Value of saved compliance cost s of the use of the amended flexibility are 
presented in more detail in Table 5 for the period of 2010 to 2013 which has been chosen for 
the revised flexibility scheme. The calculation is however based on a lo nger period ending in 
2016.  
 
EN 31   EN  
Table 5: Economic Gains of 50% flexibility  compared to 20% flexibility (million EUR)  
  Stage X   
Year % gain in R&D Moneti zed gain discounted gain 
2010 0.1 496 458 
2011 0.2 991 881 
2012 0.3 1 487 1 271 
2013 0.2 991 No gain due to overlap with next stage 
Total discounted period gain  2 610 
Total saved compliance cost 2 124 
The NPV of saved compliance costs of the intr oduction of 50% flexibility compared to the 
20% flexibility for the period under consid eration is around Eur 2.1 billion for EU 1538. This 
is the amount of money that is saved, if the flexibility used for placing on the market 
machinery with engines of Stage III A is  50% compared to the current 20%. 
7.2. Description of methodology for the sectors ex cluded from the use of the flexibility 
scheme  
In this chapter the environmental and complia nce costs are calculated for railcars which are 
currently not covered by the flexibility scheme. The assumpti ons made in the analysis of the 
sectors eligible to use the flexibility scheme ar e maintained. The unit values for external costs 
for EU were taken from the European Handbook on external costs (CE Delft, 2008).  
The methodology used included: 
• Calculation of the difference in annual NOx a nd PM emission between an average IIIA and 
an average III B engine, using the same t echnical assumptions already mentioned in 
section 6.1.1 and 6.1.2. of this IA, 
• Combination of the previously mentioned data  with the unit external costs to obtain the 
annual difference in external co sts between an averag e IIIA and an averag e III B engine for 
each power category. 
• Combination of the assumed engine lifetime e xpressed in hours with the average hours of 
use per year, to obtain the expected engine lifetime in years. 
• Estimate of an external consultant of the average number of engines put yearly on the 
market in the 5 years precedi ng the beginning of Stage III B. 
• Combination of the previous estimate with th e allowed flexibility to  obtain the number of 
IIIA engines that can be put on the market in the first three years of Stage III B;  
                                                 
38 The calculations are based on the EU15 market due to the fact the base year has been calcul ated for 2005 and no data were 
available for EU12  
 
EN 32   EN The number of railcars with new engines to be placed on the market under proposed options 
of the flexibility scheme is summarized in the following Table 6. 
Table 6: Railcar flexibility for 20% and 50% flexibility 
Years for placing 
on the market Annual number of 
engines under 20% flexibility Annual number of 
engines under 50% flexibility Year of 
withdrawal from the market 
2012 - 2014 52 129 2018-2020 
• Calculation of compliance costs is made as th e additional cost of a III B engine compared 
to a IIIA engine. Saved expenses are thus main ly concentrated at the beginning of Stage III 
B. 
• Since for all applications more than one t echnical solution for compliance to III B is 
possible, it is assumed that the OEM will al ways choose the solution with the lowest net 
compliance costs, and the same solution will be  chosen for each application, independently 
of the option and the flexibility  scheme under consideration. 
• As the previous point suggests and with th e comparative figures presented by industry on 
Stage III B compliance costs for railcars, the analysis of impacts on granting the use of flexibility to railcars, includes only the less costly technical solution
39. These costs are 
presented in the following Table 7. 
                                                 
39 Diesel Particulate Filter and Exhaust Gas Recirculation  
 
EN 33   EN Table 7. Compliance costs for railcars per unit and per technology in Euros  
 Diesel Particulate Filter and Exhaust Gas 
Recirculation  1 Selective Catalytic Reactor  
Investment cost 15 000 15 000 
Operating cost 4 000 5 000 
NPV (EUR) 38 000 50 000 
• For the calculation of compliance costs, the made assumption including engine life time of 
25 000 hours with a load factor fraction of 0.3 and 3 500 hours of use per year, an average 
life time of approximately 7 years is calculated. 
• Since additional external costs are directly pr oportional to the number of IIIA engines that 
are in operation, they thus first increase un til all IIIA engines a llowed under flexibility 
have been put on the market, and remain constant until the first batch of IIIA engines are reaching the end of their economic life. Afte r that the total additional external costs 
decline. 
• The calculation of the net present value (NPV ) of additional costs and benefits was done 
under the same discount rate of 4%. 
7.2.1.  Environmental impacts 
The environmental impacts from the application of the flexibility scheme to railcars are 
quantified and presented in Euros, according to the used technology and under the assumption 
that all engines under the 20% or 50% flexibility will be placed on the market in a three year 
period after the implementation of Stage III B, fo r the fleet of railcars which are equipped of 
engines having a power range situated between 130 and 560 kW.  
Based on the emission factors, the load factor  fraction of 0.3, and the yearly operational hours 
(3 500 hrs), as provided by an external cons ultant, the difference in annual NOx and PM 
emissions (in quantities as expre ssed in Table 8) between a typi cal III A and III B railcar can 
be estimated. The cost figures are presented in the following Table 9. 
Table 8. Difference of emissions between Stag e III A and Stage III B for railcars per year
40 
POLLUTANT TONNES (per unit) 
NO X 0.672 
PM 0.0315 
                                                 
40 Page 16 of Final Report of the IA for the sector  not covered – ARCADIS – May 2009, as in Annex II  
 
EN 34   EN Table 9. Environmental costs related to flex ibility % for railcars for both NOx and PM 
(NPV)41. 
Percentage of flexibility (%) Environmental costs (Euros) 
20%  3 400 000  
50% 8 500 000 
7.2.2.  Economic impact 
Calculations related to the compliance costs of engines placed on the market under the 
proposed % of the flexibility scheme, using D PF+EGR, resulted in the figures presented in 
the following Table 10. 
Table 10. Saved compliance costs related to fl exibility % for railcar s (NPV for 3 years)  
Percentage of flexibility (%) NPV of saved compliance costs (Euros) 
20%  4 900 000  
50% 12 500 000 
7.3. For the SMEs  
The existing flexibility scheme already considers the need to protect small volume OEMs 
which have lower resources for developing new technology as the current system allows firms 
to either place a fixed number of machinery or a percentage of th e previous Stage on the 
market. The proposal, by scaling the fixed num ber by the same proportion as the percentage 
increase (2.5 times), maintains the logic of a system already preferred by SMEs.  
The possible impacts on SMEs which the polic y options for revising the directive as 
suggested by JRC, were assessed in the imp act assessment study carried  out by Arcadis. After 
the adoption of the Commission's Impact A ssessment guidelines in January 2009 it was 
agreed to commission an additional SME focussed complement which Arcadis will finalise in 
September 2009. This complementary study cove rs the relevant target group including 
manufacturers of both machiner y and engines, as well as pr ofessional customers of the 
machinery. Information collected so far suggests that compliance costs, mainly R&D and conformity assessment costs will weigh rela tively more upon SMEs. Raising the necessary 
capital may be more difficult for SMEs which also have a lesser potential for cost pass-through compared to large enterprises. The contra ctor also indicated that only very few OEMs 
are also engine manufacturers of NRMM and that the professional customers are mainly very small entities. 
No SMEs are identified operating in the railcar s sector according to the ARCADIS Impact 
Assessment study. 
                                                
 
41 Page 18 of Final Report of the IA for the sector  not covered – ARCADIS – May 2009, as in Annex II  
 
EN 35   EN 8. EFFECT OF THE PROPOSED MEASURE COMPARED TO THE BASE LINE  
The use of the flexibility sc heme generates a negative envi ronmental impact, a benefit in 
compliance cost including a decrease in peak R&D investments costs, since these costs are 
spread over a longer period.  
In order to allow the proposed measure that is  limited in its duration, to  produce its effect on 
the industry sectors covered it will be necessary th at it enters into force as early as possible 
and is preferably applied immediately after the ordinary legislative procedure is finalised as the amended flexibility scheme will expire by 31 December 2013. For any delay in the implementation of this measure the estimated monetised gains as provided in table 5 need to be decreased accordingly.  
In the present IA an analysis of the impact of an amended flexibility scheme had to be 
performed for the sectors already having the po ssibility to use a basic 20% with a proposed 
increase to 50% and for the sectors not eligible to use the scheme until now. 
As expected and seen in the analysis, the proposed measure covers a large variety of 
machinery, characterised by heterogeneous user ma rkets, a wide range of feasible technical 
solutions, different investment costs and retail  prices, which are not easily comparable. The 
comparisons of the financial figures which are based on the figures re ported during the short 
period of consultation, are pres ented in the following Tables: 
Table 11. Comparison of options for increased flexibility for sectors already covered by the 
flexibility scheme (NPVs, all costs in Euros)  
 FLEXIBILITY PERCENTAGE 
 20% 50% 
Environmental cost  550 000 000 
Saved Compliance costs  2 124 000 000 
The adoption of the increased flexibility is estimated to have monetised impacts in the order 
of EUR 550 million. This compares with a sa ved compliance cost of EUR 2.1 billion, thus 
implying that the environmental costs are outweighed by the benefits. 
Table 12. Comparison of options for railcars for the period applicable for the proposed 
measure (constant prices in Euros)  
 FLEXIBILITY PERCENTAGE 
 N.A. 20% 50% 
Environmental cost  3 400 000 8 500 000 
Saved Compliance costs  4 900 000 12 500 000 
Although it is apparent that the use of 50% fl exibility for railcars results in a bigger total 
saved cost figure than the 20%, the preferred policy option propos ed in this measure is the 
20% for this sector. The reas ons for this proposal include: 
 
EN 36   EN • Producers of railcars are for the first time proposed to become el igible to use the provisions 
of the flexibility scheme, so it is more logical to be granted a smaller % in order to 
safeguard the easier transition, as a first step, to Stage III B. 
• Railcars are mostly ‘borrowing’ engines from th e heavy duty vehicles (trucks, busses e.t.c.) 
and according to the industry, it is required only to adapt at some or more extend the 
engine to fit to the body of the railcar. Theref ore the need to use Stage III A engines is not 
that imperative since compliant to Stage II I B technology already exists and should be 
encouraged. 
• Due to the type of the machinery (bulky a nd quite compact) the time required for this 
adaptation can be substantial and resource s demanding. This proposed measure will 
provide some additional time so investments ma y be amortized in a longer period of time 
and the saved costs can be allocated to the better development of Stage III B engines for 
dedicated railcar usage. 
• The incentive of the Directive and will of the legislator for cleaner engines, for technical 
progress and placement on the market of railcar s using Stage III B compliant engines must 
not in any way be compromised by the granti ng the possibility to continue using more 
Stage III B engines than required to overcome the impacts of the economic crisis and stay in business seeking a competitive advantage. 
• The 20% of proposed flexibility scheme is expected to act as an upper limit to the 
placement of Stage III A engines to the market wh ere a lot of railcar operators exist, but at 
the same time provide them the opportunity to  stay in business so they can finance the 
completion of development of Stage III B engines. 
9. M
ONITORING AND EVALUATION  
An assessment of the impacts of the enlarged pr ovisions of the flexibility scheme after its 
implementation and completion will be based on information provided by the industry and by 
Member States. 
Key indicators to assess the effectiveness of this  initiative could be the use of the flexibility 
scheme until end of 2013, the development of the number of firms going out of business, and 
the development of NOx and PM emissions attributed to NRMM. 
Article 4 of the Directive requires the type ap proval authorities of each Member State to 
notify to the Commission the rele vant data on the type approve d engines. Furthermore the 
flexibility scheme as provided in Annex XIII of  the Directive obliges the OEM to notify all 
relevant data concerning the ap plication of the scheme including inter alia the cumulative data 
on the number of engines placed on the market under the flexibility scheme. 
It is the Commission’s intention, independently  from the current proposal, to invite the 
Member States to communicate precise informati on about the use of the flexibility scheme on 
the basis of the provisions specified in Annex XI II of the Directive 97/67/EC. It also intends 
to evaluate the impact of the revised flexibility  measure at the end of the period defined in the 
accompanying proposal, i.e. in 2013 and to draw the necessary conclusions from the results obtained. If appropriate, monitori ng and evaluation arrangements for this initiative could be 
 
EN 37   EN integrated into the monitoring of  the broader revision of the Dir ective foreseen for the end of 
2010. This will be discussed in the corresponding impact assessment. 
ANNEX I : GLOSSARY  
 
Adsorption: the accumulation of atoms or molecu les on the surface of a material.  
Engine family:  a manufacturer's (engines) grouping of engines which, through their design, 
are expected to have similar exhaust emission characteristics and which comply with the requirements of this Directive 
CECE: Committee for European Construction Equipment 
CEMA:  European Agricultural Machinery 
C.I.:  An engine that works under the compressi on-ignition principle, e.g. diesel engine 
CO: Carbon monoxide  
DPF:  Diesel Particulate Filter 
EGR:  Exhaust Gas Recirculation 
Engine manufacturer:  means the person or body who is  responsible to the approval 
authority for all aspects of the type-approval pr ocess and for ensuring conformity of 
production of the engines.  
HC: Hydrocarbons 
Non-Road Mobile Machinery (NRMM):  means any mobile machinery, transportable 
industrial equipment or vehicle with or w ithout body work, not inte nded for the use of 
passenger- or goods-transport on the road, in which an internal combustion engine is installed. 
NOx:  Nitrogen oxide 
Original equipment manufacturer (OEM ): means a manufacturer of a type of non-road 
mobile machinery (final product). 
PT: Particulates 
UN ECE: United Nations Economic Commission for Europe (Geneva)  
 
EN 38   EN ANNEX II: REFERENCE DOCUMENTS  
  
Final Report Technical Review - DG JRC- 28-11-2008 
Administrative arrangement for a Technical Re view of Directive 97/68/ EC, carried out by DG 
JRC, on behalf of DG ENTR, September 2006 - September 2008. 
Final Report of the IA study - ARCADIS -January 2009 
External specific contract, under LOT5 framew ork contract, for an Impact Assessment study 
of options presented in the Technical Revi ew of Directive 97/ 68/EC, carried out be 
ARCADIS N.V., April 2008 - January 2009. 
Final Report of the IA for the se ctor not covered – ARCADIS – May 2009 
Final report of an IA study, under LOT5 fram ework contract, of the impacts on possible 
inclusion of the possible inclusion to the flexib ility scheme for sectors currently not covered 
by Directive 97/68/EC (rail sector, inland waterway ve ssels) – carried out by ARCADIS 
N.V. – May 2009. 
All reference documents are published on http://ec.europa.eu/ enterprise/index_en.htm  
 
EN 39   EN ANNEX III: Summarized Stages table of Directive 97/68/EC  
 
 
EN 40   EN ANNEX IV: Flexibility scheme  
As provided in Article IV and in Annex X III of Directive 97/68/ EC on NRMM emissions, 
any OEM that wishes to make use of the flexib ility scheme shall request permission from an 
approval authority to purchase from his engine suppliers, in the period between two emissions 
stages, the quantities of engines that do not co mply with the current emission limit values, but 
are approved to the nearest prev ious Stage of emission limits. 
The flexibility scheme applies for machinery with compression igniti on engines (eg diesel) 
with a power from 19kW to 560 kW.  
The number of machinery placed on the market  under a flexibility scheme shall, in each 
engine category, not exceed 20%  of the OEM's annual sales of m achinery with engines in that 
engine category (calculated as the average of the latest 5 y ears sales on the EU market). 
Where an OEM has marketed machinery in the EU for a period of le ss than 5 years, the 
average will be calculated based on the period for which the OEM has marketed machinery in 
the EU. 
As an alternative the OEM may seek permissi on for his engine suppliers to place on the 
market a fixed number of machinery under the flexibility scheme. The number of machinery 
in each engine category shall not exceed the following values: 
Engine Category (kW) Number of engines 
37-56 200 
56-75 150 
75-130 100 
130-560 50 
The fixed number of engines scheme is in tended for very small producers that would 
otherwise not be able to effectively use the scheme. 
Any OEM may apply to the type approval authority of a Member state to be allowed to use 
the provisions of the flexibility  scheme for each engine power category. The placing on the 
market of machinery (with new engines) under th e scheme can be spread over the duration of 
the next 'cleaner' stage, in different ways, pr ovided the total allowance of 20% of sales per 
power category is not exceeded. (ex. for the dura tion of Stage III A - 5 years for the power 
category of 130-560 kW - the 20% can be all used in the 1st year, or 10% in the first year 10% 
in the second, 0% in the 3rd, 4th and 5th, or 10% in the first, 5% in 2nd and 5% in 3rd, 0% in 4th 
and 5th , e.t.c.), according to the needs and business plan of the OEM. 
The OEM may also choose for machinery with en gines of one engine power category to apply 
the percentage of sales of the previous year and for another engine pow er category to use the 
fixed engines number as mentione d in the relevant table; he cannot use both options in the 
same power category.  
The number of machinery allowed to be pl aced on the market under the maximum 20% per 
power category, is calculated as the average of  sales of the machinery placed on the market in 
 
EN 41   EN EU for the previous 5 years, counting back fr om the day of the application to the type 
approval authority of a Member State for usin g the flexibility scheme. If the OEM has not 
been in business for 5 years, then the average is calculated for the period that the OEM is in business.  
As a result, after the approval of using the flexibility scheme, the number of machinery to be 
placed on the market under the flexibility scheme  remains the same and is not recalculated as 
years pass by in the 'cleaner' stage.  
The main advantage of the scheme is that the sooner the application fo r using the flexibility 
scheme is granted, the bigger numbers of mach inery may be placed on the market, especially 
in times where technical changes must be im plemented or like the present situation when 
under the pressure of the economic crisis, sales are dropping. 
The OEM cannot transfer part or the total of hi s flexibility allowance to  another OEM or from 
one power category to the other. 
The provisions of the flexibility scheme are allo cated to power categories of the used engines, 
regardless of the number of engine families
42 type approved in that category.  
It must be noted that as a result of the way that the flexibility scheme is implemented, all 
environmental impacts remain the same in total, regardless of the time of the placing of 
engines on the market, since the total allowa nce of 20% per power category is respected. 
The application for the use of the flexibility scheme may be delivered to only one type 
approval authority of any Member  State in the EU. The provisions of the scheme make it very 
clear that the type approval au thorities of one Member State disseminate to other Member 
states information on granting approvals for ma chinery being placed on the market under the 
flexibility scheme. As a result, the OEM cannot a pply for the use of the flexibility scheme to 
more than one Member States. 
Examples of machinery, eligible to use the flexibility scheme, include: 
– for construction machinery - wheel loaders, bu lldozers, crawler tractors, crawler loaders, 
truck-type loaders, off-highway tr ucks, hydraulic excavators etc. ,  
– for forestry machinery - tree cutters, tree loaders etc.,  
– for road maintenance machinery - motor grader s, road rollers, asphalt finishers etc,  
– mobile cranes, fork-lift trucks , material handling equipment, 
– self-propelled agricultural vehicl es - planting, spraying, irrigati ng machinery e.t.c. (tractors 
are excluded and covered by a specific directive),  
– smaller agricultural machinery - types of mach inery were the user is following on foot,  
– harvesters - cotton, wheat, corn etc,  
– for generator sets, pumps – us ing constant speed engines 
                                                 
42 Engine family: a manufacturer's grouping of engines which, through their design, are expected to have 
similar exhaust emission characteristics and which comply with the requirements of the Directive, as in 
Annex I 
 
EN 42   EN ANNEX V: Positions of stakeholders  regarding the amendment of the 
provisions of the flexibility scheme  
01-06-2007 EUnited 
Municipal Equipment - 
CECE Industry Associations Proposing: an enlargement of flexibility to 
better align with the US 
04-2009 UNIFE The European Rail 
Industry Strongly welcomes the proposed inclusion of 
railcars to the measure enlarging flexibility, 
asks for a provision of 50% and introduction 
of derogation for locomotives. 
16-06-2009 WIRTGEN 
GROUP Road and mineral 
Technologies Supports an increase of flexibility up to 50% 
and a relevant increase of the fixed numbers 
table, proposes the extension of implementation date of Stage III B be 2 years 
and Stage IV by 3 years and emphasises on 
the need to adopt a positive statement on these issues by October 2009. 
29-06-2009 German Federal 
Ministry of 
Environment  Expresses doubts on the extend of the 
economic crisis of the NRMM sectors and 
inclusion of railcars in the flexibility scheme, 
concerns on the analysis of the presented environmental impacts, concerns over the rise 
of the PM concentration.  Proposes to address 
an enlargement of flexibility, linked to limit values, in the full revision of the Directive.  
30-06-2009 ATOC Association of Train 
Operating Companies Welcomes the proposal by Commission and 
proposes a 50% increase compared to the 20% for railcars proposed by Commission, 
inclusion of locomotives under the flexibility 
scheme and refers to additional issues that require attention, like replacement engines.  
30-06-2009 SNCF French Railways Support the proposal, proposes an increase of 
50% for railcars, a postponement of the implementation date of Stage III B for rail 
engines and refers to additional issues that 
require attention like replacement engines. 
30-6-2009 CER Community of 
European Railways 
and Infrastructure 
Companies 
 Fully support the proposal to enlarge 
flexibility and extend it to railcars, proposes 
increase up to 50% for railcars and inclusion 
also of locomotives in the flexibility scheme, 
proposes address the issue on replacement engines.  
30-6-2009 UIC International Union 
of Railways Fully support the proposal, asks for 50% 
flexibility for railcars and inclusion of 
locomotives to the scheme with 50%,  
30-6-2009 Department of 
Transport, UK  Welcomes the proposal to amend flexibility, 
asks for 50% for railcars and inclusion of 
locomotives with 50%, asks for additional measures to accommodate the specific 
 
EN 43   EN railway problems of the UK.  
30-06-2009 FEM Federation of 
European Materials Handling Really appreciates the amendment of 
flexibility. 
01-07-2009 EUROMOT The European 
Association of Internal Combustion 
Engine 
Manufacturers Fully support the flexibility amendment 
02-07-2009 EEB European 
Environmental 
Bureau Express concerns on the flexibility 
amendment, on the ability of MS to comply 
with National emission ceilings, on possible delay of placing on the market of Stage III B 
compliant engines, on competitiveness issues 
within industry and on the reliability of the EU policies as a total.  
03-02009 CEA Construction 
Equipment Association (UK) Strongly endorses the proposal 
09-07-2009 JCB Construction 
Equipment 
Manufacturer Strongly endorses the proposal. 
10-07-2009 SMMT The Society of Motor 
Manufacturers and 
Traders (UK) off 
Highway Engine & Equipment Group  Strongly endorses the proposal  
13-07-2009 AGORIA Belgium Employers 
Organisation Fully support the proposal, ask for a similar 
measure to be proposed for tractors. 
14-07-2009 AECC Association for 
Emissions Control by 
Catalyst Supports additional measures acting as 
incentives for Stage III B engines to be 
placed on the market but not the proposed measure. Justifications include impacts on 
environment, EU competiveness in the global 
market. 
14-07-2009 BOMAG Compaction 
equipment (used in 
construction sites) Appreciates very mu ch the proposal,  
15-07-2009 WKO Austrian Vehicle 
Industry Association Supports the proposal  
15-07-2009 US-EPA United States 
Environmental 
Protection Agency Highlights the benefits of alignment 
including the flexibility aspects  
16-07-2009 CLAAS Agricultural 
Equipment 
Manufacturer Appreciates the proposal to amend flexibility 
and proposes the implementation of a similar 
measure for tractors. 
 
EN 44   EN ANNEX VI: Fleet and annual sales of NRMM machinery  
Table 1: Annual sales estimates per machin ery category and power class (year 2005, EU15) 
 
Table 2: Total number of machinery on the mark et per machinery category and power class 
(overall: 6.7 million, 2005, EU15) 
 
 
EN 45   EN ANNEX VII: Emissions of NOx and PT  
Table 1: NOx and PM emissions per machinery category and power class  
 
 
EN 46   EN ANNEX VIII: Tables of fixed engine s numbers of the flexibility scheme  
Table 1. Fixed number of engines under the curr ent flexibility scheme up to Stage III A 
ENGINE CATEGORY 
(kW) NUMBER OF ENGINES 
(flexibility at 20%)  
19-37 200 
37-75 150 
75-130 100 
130-560 50 
The classification of engines differs in Stage III  B, compared to the classification of engines 
up to Stage III A. Power category of 19-37 kW is  not included any more in the flexibility 
scheme, and power category 37-75 kW is split in two separate categories of 37-56 kW and 
56-75 kW. The total of engines in these two cate gories (80+70) as in Table 2, equal the total 
of the 37-75 kW. 
Table 2. Calculation of fixed number of e ngines under the proposed amended flexibility 
(1) (2) (3) 
ENGINE CATEGORY (kW) Number of engines under 
flexibility  scheme of 20% Final number of engines  
(Figures in (2) multiplied by 
2.5 times) 
37-56 80 200 
56-75 70 175 
75-130 100 250 
130-560 50 125 
Table 3. Fixed number of engines of the flexibility scheme after expiration of the period of 
amended flexibility. 
ENGINE CATEGORY 
(kW) Number of engines  
(for the period af ter end of 2013) 
37-56 80 
56-75 70 
75-130 100 
130-560 50 
 
EN 47   EN