EUROPEAN COMMISSION Brussels,8.11.2017 SWD(2017) 366 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for A Directive of the European Parliament and of the Council amending Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles {COM(2017) 653 final}



{SWD(2017) 367 final}



This initiative forms part of the overall effort to create an Energy Union that tackles long-term energy and climate objectives and delivers on the Paris Climate Agreement, among other. It is part of a package of mobility initiatives adopted as part of the Mobility Package approach of the Commission in 2017. It is particularly complementary to the legislative proposal for setting new CO2 emission performance regulations for cars and vans post 2020 – together, both policy initiatives create a coherent market push-and-pull approach. 1.2.Legal context Currently, purchases of services, works and supplies by public authorities in the EU account for approximately 14% of GDP. To create a level playing field for all businesses and to increase transparency, EU law sets out minimum harmonised public procurement rules through Directives 2014/24/EU and 2014/25/EU. These horizontal public procurement rules organise the way public authorities and certain public utility operators purchase goods, works and services. Directive 2009/33/EC on the promotion of clean, energy-efficient road vehicles (known as the Clean Vehicles Directive, in the rest of this Impact Assessment report abbreviated as: the Directive) complements this horizontal public procurement legislation. By making a mandatory requirement to account for operational life-time energy and environmental impacts in procurement of road vehicles, it seeks to promote and stimulate the market for clean, energy-efficient vehicles. The Directive introduced the principle of sustainability into the public procurement law of the Union. An increased uptake of clean, energy-efficient passenger cars, buses, coaches and trucks shall improve transport's contribution to reducing emissions of CO2 and certain pollutant emissions (particulate matter (PM) (PM), nitrogen oxides (NOx) and non-methane hydrocarbons (NMHC), to increasing energy efficiency and to promoting competitiveness of the industry. The Directive is an important complement to other policy instruments that address European policy objectives on climate change, energy and environment in the vehicles sector. They include: ·Performance standards for CO2 emissions of passenger cars (Regulation 2009/443/EC) and light commercial vehicles (Regulation 2011/510/EC), seeking to reduce the average CO2 emissions from vehicle fleets of manufacturers; ·Common technical requirements for the type-approval of motor vehicles, engines and replacement parts with respects to emissions from heavy-duty vehicles (Regulation 595/2009/EC), setting requirements concerning emissions from motor vehicles, among other; ·Limits on tailpipe pollutant emissions (Regulation 2007/715/EC) and real-world emissions performance (Regulation 2017/1154) to contribute to reduction of pollution emissions of light-duty passenger and commercial vehicles; ·Fuel quality requirements (Directive 2009/30/EC) and targets on the share of renewable energy sources (Directive 2009/28/EC) to improve the sustainability of transport fuels; ·Minimum requirements for infrastructure deployment for alternative fuels (Directive 2014/94/EU) that require Member States to establish national policy frameworks for the establishment of a minimum of recharging and refuelling infrastructure; ·Consumer information on fuel economy and C02 emissions in respect of the marketing of new passenger cars (Directive 1999/94/EC) to increase transparency and improve awareness. The Directive delivers additional value to these policy instruments: it provides a demand-side market stimulus. It is the only instrument that addresses the demand-side at a European level. The other instruments mainly focus on vehicles or fuel requirements or seek to inform consumers. The CO2-emission performance standards for cars and vans provide the main regulatory framework for car manufacturers to reduce CO2 emissions from vehicle fleets. The Directive is supposed to function in a market push-and-pull approach with the CO2 emission performance standards. Public procurement, particularly in the context of larger fleets, can provide relevant additional market demand; particularly in markets with very low market take up of low- and zero-emission and other alternative fuels vehicles. It can provide vehicles and infrastructure to start the market, increases their public visibility and improve their public readiness perception. The Directive particularly provides incentives for the clean vehicles development in the heavy-duty transport market: Currently, no regulatory requirement for CO2 emissions from heavy-duty transport vehicles exist at European level. The Directive requires contracting authorities, entities and certain operators for the discharge of public transport passenger services to take into account operational life-time energy and environmental impacts when purchasing road transport vehicles. Contracting authorities, entities and operators may also consider other environmental impacts in their procurement decisions. The Directive applies to purchases of vehicles above the thresholds for procurement volumes set by Directives 2014/24/EU and 2014/25/EU; it does not cover all contracts by public bodies for road transport vehicles. Contracting authorities, entities and affected operators have different options for complying with the requirement to consider life-time energy and environmental impacts (Art. 5 of Directive 2009/33/EC). They can set technical specifications for energy and environmental performance in the documentation for the purchase of the road vehicles. Or they can include energy and environmental impacts in the actual purchasing decision, using these impacts as award criteria in cases where a procurement procedure is applied. In case where impacts are monetised, the Directive prescribes a methodology for the calculation of operational lifetime costs (Art. 6 of Directive 2009/33/EC). The Directive also provides the data to be used for energy content of motor fuels, cost of emissions and life time mileage of road transport vehicles (Annex to Directive 2009/33/EC). It does not specify a reporting obligation for contracting authorities, entities and affected operators. The Directive provides mandatory minimum requirements for public procurers in the field of road transport vehicles. In addition, the Commission has set up a voluntary initiative with the Green Public Procurement Criteria (GPP). In the field of transport, the GPP criteria stipulate a set of more demand criteria for clean vehicle procurement. They are meant to help those public authorities that wish to go beyond the minimum requirements of the Directive. 1.3.Evaluation of the implementation A REFIT ex-post evaluation was carried out in 2015. It also investigated the possibility of repealing the Directive. The evaluation used a combination of desk analysis and consultation activities, including targeted interviews and a survey among contracting authorities, entities and operators. The evaluation concluded that the Directive had a very limited impact on its main policy objective, namely no really impact on the market uptake of clean vehicles (low- or zero-emission vehicles and other alternatively fuelled vehicles). Many public procurement decisions continue to be driven by a focus on lowest price of purchase tendering, the evaluation found. A better alignment of public procurement criteria at European level has not been achieved, which was another objective of the Directive. Action under the Directive has also marginally contributed to the reduction of CO2 and air pollutant emissions, another objective of the Directive (box 1). Box 1: Key outcomes of the 2015 ex-post evaluation under REFIT

- Effectiveness The evaluation estimated a low impact of up to 5.5% CO2 emissions reduction for passenger cars procured and 2.3% for vans procured compared to the baseline. This estimate does not fully account for the impact of other policies. It concluded no real impact on NMHC, NOx and PM emissions for passenger cars; and only a marginal impact (0.01%) for vans, trucks and buses. - Efficiency The evaluation pointed to a low overall benefit-to-cost ratio. Due to data gaps, cost and benefits estimates have a wide range. Benefits were estimated to range in between EUR 42.6 to EUR 521.1 million compared to total cost (purchase and operational cost) of around EUR 34.6 to EUR 341 million. The evaluation estimated rather low administrative cost of ~EUR 2.3 million per year. It suggested that this was mainly due to the limited use of the monetisation methodology and the limited impact of the Directive on changing actual procurement decisions. - Value added Given the limited market impacts, a similar outcome might have been achieved by market actors in the absence of the Clean Vehicles Directive, the evaluation concluded. - Coherence The evaluation noted that transposition options undermined coherence in implementation of the Directive. The monetisation methodology puts a greater emphasis on energy efficiency compared to environmental impacts, which benefits diesel passenger cars, and hence can undermine European air quality policy objectives. - Relevance The evaluation conservatively estimated that volume of contracts under the reach of the Clean Vehicles is up to EUR 13 billion p.a. Public procurement can provide a meaningful trigger for market development, particularly in the market segment of urban buses. It needs to be understood as a demand-side stimulus that complements and reinforces other policy levers, such as the CO2 emission performance standards for passenger cars and vans. The ex-post evaluation identified shortcomings in the overall scope of the Directive and a lack of clear provisions for vehicle purchase as key problem drivers. In addition, it noted the complexity of the monetisation methodology, which has limited its use by public bodies. Section 2 of this Impact Assessment builds on these initial findings. The evaluation concluded that a repeal of the Directive was unlikely to have a significant negative impact on the overall market for passenger cars and vans because shares of publicly procured vehicles in overall market transactions are low. Contrary, a repeal of the Directive was likely to have a larger negative impact on the market segment of urban buses, where public demand is the main market driver. Moreover, repealing the Directive would send a wrong policy signal to public bodies and their contractors. The purpose of using public procurement to stimulate market uptake of clean vehicles and to contribute to reducing transport emissions was still relevant, the evaluation concluded. The evaluation recommended to retain the Directive, but to revise it. It made a number of specific recommendations on how to improve clarity and ambition of the Directive. Table 1.1 lists these recommendations and notes how the Impact Assessment reflects them. Table 1.1: Links between specific recommendations of the ex-post evaluation and the Impact Assessment Specific policy recommendations (SPR) from the evaluation Impact Assessment SPR1: There needs to be more clarity as to what can be considered a clean vehicle Section 2.2.2 recognises this problem; section 5.1.2 pre-screens measures for the design of a definition; section 5.3 and 5.4 present different conceptual approaches under policy options 3 and 4. SPR2: Encourage higher levels of ambition with regards to clean vehicles purchased required by the Directive Section 2.1 and 3.3 pick up on this problem and its implications. section 5.1.2-5.1.4 pre-screen different policy measures; which are reflected in policy options 2,3,4 and 5 in section 5. SPR3: Facilitate the use of the monetisation methodology (if retained) Section 2.2.3 recognises this problem. Section 5.1.3 screens possible measures to facilitate the use, including a mandatory use requirement, which is reflected in policy option 5 (section 5.3.5) SPR4: Future consideration of well-to-wheels emissions should be assessed Section 5.2.2 assesses the feasibility of this recommendation. SPR5: Extend the scope of the Directive The Impact Assessment explores the relevance of this problem in section 2.2.1; it screens different policy measures in section 5.1.1 All policy options (section 5) include variants of policy measures to extend the scope SPR6: Resolve the challenges posed by the lack of, or inaccurate data The evaluation referred to needs for improving provisions for vehicle emission and energy consumption data. This topic is outside the realm of the "Clean Vehicles" Directive. SPR7: Introduce a voluntary framework to facilitate Member State reporting Section 2.1.1 and policy options 2,3, 4 and 5 tackle the issue of reporting (section 5). SPR8: Explore potential for a Commission initiative on cross-border procurement The Commission is facilitating action on joined up or joint public procurement, for example through a European Clean Bus Deployment Initiative. It is also encouraging its use through funding instruments like the Connecting Europe Facility. It was not considered part of this Impact Assessment, as it is not the objective of the Clean Vehicles Directive to facilitate financing of vehicles. 2.What is the problem and why is it a problem? As noted, the transition to a modern and low-carbon economy has become an everyday reality since the Paris Climate agreement. The 2017 State of the Union address succinctly notes: the EU has to become a world leader in decarbonisation. With dynamically accelerating global markets for low-emission mobility and transport solution it is clear that the European mobility sector must remain among the best of the world. The transition to low- and zero-emission mobility needs to considerably accelerate in order to meet long-term climate and energy objectives of the Union. As described in greater detail in section 2.1.2, the share of clean, low- and zero-emission and other alternative fuels vehicles in the Union is still considerably low. Competitiveness of the European transport sector in these sectors is challenged by global market developments. For example, China has overtaken the EU as a lead market for zero-emission bus technologies. Public procurement can play a role as a market lever. However, at current, public bodies are not using public procurement in an effective manner in order to help accelerate the market uptake of low- and zero-emission or other alternatively fuelled vehicles. The volume of those vehicles that are publicly procured remains small in the whole of the Union. In recital 15, the Directive notes that "procurement of vehicles for public transport services can make a significant impact on the market, if harmonised criteria are applied at Community level". This has not been achieved yet. Annex 8 to this Impact Assessment notes several national policy initiatives to strengthen the use of public procurement for market uptake of clean vehicles, going beyond the requirements of the Directive. Figure 2.1: Problem tree

2.1.What is the nature and size of the problem? What are its implications? 2.1.1.The Directive does not stimulate the public procurement of clean vehicles Public bodies have purchased rather small volumes of low-and zero-emission and other alternatively fuelled vehicles under the scope of the "Clean Vehicles" Directive. For the time period of 2009-2015, an approximate average of 4.7% (or ~2,7k vehicles) of all new public passenger vehicles purchases, of 0.4% (or 0,02k vehicles) of all new vans purchases, of 0.07% (or 0,006k vehicles) of all rigid trucks purchases and of 1.7% percent (or 0,13k vehicles) of all new buses represented battery-electric, fuel-cell electric, plug-in hybrid or natural gas vehicles (see table 2.1). Results from the 2015 ex-post evaluation further corroborate these findings. In a survey among 156 contracting authorities, 87% of the respondents noted to have procured conventionally fuelled vehicles through contracts falling under the "Clean Vehicles" Directive. Only 4% noted to have bought battery-electric, hybrid or natural gas vehicles. Table 2.1: Vehicles purchased by public bodies under the scope of the "Clean Vehicles" Directive Vehicle type Powertrain/fuel Average purchases by public bodies (2009-2015) Absolute % Passenger cars Petrol/Diesel 56.7k 95.3 Alternative fuels

(battery-electric, fuel-cell electric, PHEV, LPG, CNG, E85)

2.7k

4.7 Vans Petrol/Diesel 7.4k 99.6 Clean (low- and zero-emission)

(battery-electric, fuel-cell electric, PHEV, LPG, CNG, E85)

29

0.4 Rigid trucks Diesel/Diesel Hybrid 9k 99.9 Clean (low- and zero-emission)

(battery-electric, fuel-cell electric, LPG, CNG)

6

0.07 Buses Diesel/Diesel Hybrid 7.8k 98.3 Clean (low- and zero-emission)

(battery-electric, fuel-cell electric, PHEV, LPG, CNG)

133

1.7 Source: Ricardo (2017) Support Study for the Impact Assessment of the revision of the Clean Vehicles Directive. This is a conservative estimate. The Impact Assessment support study has estimated the number of publicly procured vehicles based on information from the European Tender Electronic Database (TED). The level of publication of public tenders at EU level is still low. It is possible that both the number of contracts and the market shares of clean vehicles are underestimated. In the absence of a reporting obligation under the Directive, new registrations or vehicle stock for public sector vehicles are not commonly registered across the EU. In addition, there is little data available on the types of vehicles procured, or their lifetime use. Further information has been gathered from Member States. The Impact Assessment Support Study provides further detail on the approach. 2.1.2.Implication: Limited impact on general market uptake In many instances, public procurement has not effectively helped the general market uptake of those vehicles. As figure 2.2 shows, market shares of these vehicles, and particularly the market shares of zero-emission vehicles (battery-electric, fuel cell electric), are still low. For example, the EU market share of battery-electric and plug-in hybrid electric passenger vehicles in new registrations was 1.15% in April 2017. Deployment of these vehicles is also unevenly spread across Members States. In some Member States, a real market hardly exists (see fig. 2.2). A detailed example concerns the impact on the urban bus market segment. Here, Member States show an uneven record. Data from case studies carried out for this Impact Assessment show a higher share of alternatively fuelled buses in the total bus fleet of the Czech Republic (13.3% CNG buses, and 19.7% electric trolley buses), but a rather low share in the bus fleet of Germany (2.4% of the total bus fleet). In Sweden, approximately 5.6% of new bus registrations concerned CNG or battery-electric buses. A public transport survey among operators in 2013 found a market share of 1.2% for battery electric buses and of 7% for CNG-buses. Figure 2.2: Number of newly registered alternatively fuelled vehicles and public/semi-public charging points in European Member States, 2017 Source: European Alternative Fuels Observatory (access 15 July 2017), www.eafo.eu Figure 2.2 shows that registration numbers of alternatively-fuelled vehicles are generally low; and very low in quite a few Member States. The finding is corroborated when looking into the data on new car registrations by fuel type over the past years. Table 2.2 presents data for EU-15. The EU-15 include all advanced clean vehicle markets in the EU. In the wake of the discussion about real-world car emissions and policy intentions to restrict access of diesel cars in a number of cities, consumers are buying more petrol cars. Even in this sample of Member States with more advanced markets, the share of alternative fuelled cars has been stagnating over the past years: a slight rise in plug-in hybrids and battery-electric vehicles has been met by a decrease of other alternative fuels (natural gas) vehicles. Public procurement is hence still relevant as a demand-side stimulus, particularly in Member States with low overall market shares of clean, low- and zero-emission and other alternative fuels vehicles. Even when the number of publicly purchased clean vehicles is small in total, it can help sustain a market that is obviously still in its beginning in all Member States. Table 2.2: Registration of new cars in the EU15 according to fuel type Diesel Petrol Alternative Fuels Hybrid-electric Electric chargeable Other alternative fuels Total alternative fuels 2014 53.6% 42.3% 1.5% 0.6% 2.0% 4.2% 2015 52.1% 43.5% 1.7% 1.2% 1.6% 4.5% 2016 49.9% 45.8% 1.9% 1.1% 1.2% 4.2% EU 15: AT, BE, DE, DK, ES, FI, FR, GR, IE, IT, LU, NL, PT, SE, UK.

Source: ACEA (2017) alternative fuels vehicle registration in the EU, www.acea.eu

Achievement of the average CO2-emission performance targets for fleets of passenger cars and vans in the EU would be helped by additional public demand for low- and zero-emission or other alternative fuels vehicles. The uncertainty about vehicle demand is visible in Member States planning for alternative fuels infrastructure: the analysis of the national policy frameworks under Directive 2014/94/EU shows strong variances in levels of ambition and clarity. Additional public demand for clean vehicles will contribute to security of investment into recharging and refuelling infrastructure. In many cases, public bodies still decide on the basis of the upfront purchase price. Purchase prices of clean vehicles are still considerably higher compared to conventionally fuelled vehicles. For example, the average purchase price of a battery-electric bus is roughly double the price of a conventionally fuelled diesel bus. A business model based on total cost of ownership can reduce the cost gap, as successful examples of larger bus fleet deployment show (box 3). Public procurement provides a framework in which to validate new operating and business models. Box 3: Examples of public procurement of clean (low- and zero-emission and other alternative fuels) buses The majority of procurements of battery-electric buses still include contracts for fewer vehicles, mostly in view of equipping a particular bus line. In a few cases, public authorities have started procure a larger number of battery-electric of fuel-cell electric buses. For example, Eindhoven and the Region of Helmond have started in 11 December 2016 a new fleet of 43 articulated electric buses (18 meter), covering 9000 km every weekday. It surpassed 1 million electric kilometres in April 2017. The city of London is operating a fleet of 73 standard electric buses (12 meter). Through joining up procurement efforts with the help of the European Fuel Cells and Hydrogen Joint Undertaking, 142 fuel-cell electric buses will be deployed across 9 locations, supporting their further commercialisation. Several cities and regions, including London, Ile-de-France Region, Berlin, Copenhagen, or Hamburg have announced to stop purchasing conventionally fuelled buses in the near-term. 2.1.3.Implication: no real impact on reducing GHG and air pollutant emissions from transport and increasing energy efficiency ·Impact on CO2-emissions: A maximum 5.5% improvement in tank-to-wheel emissions for publicly procured passenger cars and 2.3% for vans compared to the baseline was estimated. No change in performance compared to the baseline was detected for heavy-duty vehicles. ·Impact on air pollutants: No effects on NMHC, NOx and PM emissions for passenger cars and only a marginal impact (0.01%) for vans, trucks and buses were estimated. The transport sector is the biggest contributor to NOx emissions (46% of overall EU emissions in 2014). ·Impact on energy efficiency: The "Clean Vehicles" Directive had affected up to 1.8 percent of the overall fuel-efficient vehicles sales in the EU. Depending on the type of vehicle, trade-offs between energy-efficiency increase and air pollution impacts have to be considered. 2.1.4.Implication: No real support to EU industry competitiveness and growth The ex-post evaluation indicated that the volume of procurements targeted by the Directive amounted up to EUR 13.7 billion annually. Compared to other policy levers, public procurement exercises a limited impact on innovation in light-duty vehicle technologies. It impacts more strongly the heavy duty transport market, particularly buses, but also special service trucks (e.g. waste collection). Lack of public demand can have an impact on competitiveness of this industry. In the ex-post evaluation, a survey was carried out with 36 contractors that supply vehicles to public authorities (table 2.3). Only a few mentioned that the Directive has had a considerable impact (and here in the area of trucks). A majority in the survey noted that the Directive either had no impact at all or only little impact; most often, respondents answered with "do not know", which indicates a low level of awareness about the Directive itself. Table 2.3: Impact of Clean Vehicles Directive on the sales and deliveries of clean vehicles to public bodies by vehicle suppliers (n=36) Types of vehicles Not at all A little A moderate amount A great deal Do not know Passenger cars 6 3 2 0 12 Buses or coaches 5 3 2 0 15 Light (<3.5 t) commercial vehicles 6 5 3 1 9 Heavy good vehicles (trucks other than waste) 4 5 1 2 13 Special service vehicles – waste collection and trucks 11 4 6 3 10 Special emergency vehicles 5 4 2 0 12 Source: ex-post evaluation of the Clean Vehicles Directive, Brannigan et al, 2015, a.a.o.



European manufacturers have not switched to larger manufacturing capacity for alternatively felled vehicles, and particularly battery-electric vehicles yet. While the EU could catch up to other regions with respect to producing vehicles, this is not true for all parts of the value chain, including particularly decisive parts such as batteries. Taking the example of battery-electric vehicles, global market developments are driven by markets in China, the United States and a few European markets (see figure 2.3). Over the past years, competitiveness of international competitors in all segments of the market has grown. In 2016, China surpassed the United States in total electric care stock, with a rapidly growing market for battery-electric vehicles that supports domestic manufacturers. China and the US together account for approximately 60% of the global market and the EU for approximately 28%. According to the International Energy Agency, around 70.500 vehicles were registered in the nine leading markets in the EU, compared to 71.000 vehicles in the United States and 146.720 vehicles in China in 2015. Fig. 2.3 Evolution of the global electric car stock, 2010-2016

Source: International Energy Agency (2017): Global EV outlook 2017: two million and counting, IEA: Paris Global dynamics in the segment of battery-electric buses are particularly relevant, as these are heavily influenced by public procurement. Chinese bus manufacturers, for example, are now also operating in the European market. According to data from the European Alternative Fuels Observatory, Chinese manufacturers hold a market share of 11.2% in battery-electric bus registrations in 2016. Public procurement in China has helped to establish a strong global lead market. While the EU is one of the leading regions for R&I on bus developments, the Asia-Pacific Regions is now hosting the largest producers of buses and batteries (box 4).





Box 4: Promotion of battery-electric bus deployment in China China has witnessed a rapid increase on sales of battery-electric buses over the past three years. According to the International Energy Agency, China is leading the global deployment of electric bus fleets. The global electric bus stock is estimated to count 173 000 buses (2015 figures), out of which ~150 000 are battery-electric. 98% of the global stock is situated in China.The stock grew nearly six-fold in between 2014 and 2015, noting the relevant impact of public support from the Chinese government. In November 2015 the Chinese Ministry of Transport, the Ministry of Finance and the Ministry of Industry and Information Technology jointly released a new regulation, which obligates local governments and relevant stakeholders to promote the integration of electric buses in public transport fleets. In this context, the share of new energy buses in public transport is targeted to rise to 30%, 60% and 80% until 2019 regarding specific provinces or cities. In Beijing, for instance, a share of 80% in 2019 is anticipated. 2.2.What are the main drivers of the problem? Three main drivers underpin the main problem (see figure 2.1). 2.2.1.Driver 1: Limited range of contracts covered by the Directive Due to the provisions of Art.3, the Directive does not cover all public procurement contracts, which limits its possibilities to trigger a larger market uptake. Analysis carried out for this Impact Assessment estimates that the Directive covered 14% of all publicly purchased passenger cars, 18.5% of all publicly procured vans, 74.7% of all publicly procured rigid trucks and 43.3% of all publicly procured buses in the period 2009-2015 (see table 2.4). Art.3 of the Directive stipulates: ·The Directive applies to contracts above the threshold of horizontal European procurement law. Service contracts below the €135,000 threshold for central public sector authorities and below the €209,000 threshold for sub-central contracting authorities are not covered by the Directive. Table 2.2 illustrates that this requirement substantially reduces the number of publicly procured vehicles affected by the Directive. ·Moreover, the Directive does not cover all contracts that are above the procurement thresholds. It only applies to purchase of vehicles. It does not cover other forms, e.g. such as the lease, rent or hire-purchase of vehicles. It is estimated that this affects at least 23% of all contracts above the threshold (see Table 2.5). ·Finally, the Directive covers purchases by contracting authorities and operators “for the discharge of public service obligations under a public service contract … on public passenger transport services by rail and by road”. This definition does not cover operators for other public services for transport of persons or goods (e.g. waste collection, special transport services for the elderly people or people with a disability). Table 2.4: Comparison of total annual new vehicle registrations, estimates of the total number of publicly procured vehicles from the Clean Vehicles Directive ex-post evaluation and estimates of public vehicle purchases and clean vehicle purchases falling under the Clean Vehicles Directive Vehicle / service EU total new registrations (annual average 2009-2015) Proportion of which is purchased

by the public sector – CVD Ex-post evaluation (annual average 2012-2014) Total vehicles procured (purchases/leases/services) reported in TED (annual average for 2009-2015) CVD scope Vehicles purchased

by the public sector (average 2009-2015) Proportion of vehicles purchased by the public sector which are clean vehicles (average 2009-2015) Passenger cars 13.7 million 405k vehicles 3.4% of EU new car registrations 68.5k vehicles 0.5% of EU new car registrations 56.7K vehicles 14% of public purchases 0.4% of EU new car registrations 2.7k vehicles 4.7% of public purchases 0.02% of total registrations Light commercial vehicles 1.5 million 40k vehicles 2.8% of EU new van registrations 9.4k vehicles 0.61% of EU new van registrations 7.4k vehicles 18.5% of public purchases 0.5% of EU new van registrations 29 vehicles 0.4% of public purchases 0.002% of total registrations Rigid trucks 120k 12k vehicles 6.4% of EU new rigid truck registrations 13.5k vehicles 11.25% of EU new rigid truck registrations 9k vehicles 74.7% of public purchases 7.5% of new EU new rigid truck registrations 6 vehicles 0.07% of rigid trucks purchased 0.005% of total registrations Buses 29k 18k vehicles 75% of EU new bus registrations 12.7k vehicles 43.11% of EU new bus registrations 7.8k vehicles 43.3% of public purchases 26.5% of EU new bus registrations 133 vehicles 1.7% of buses purchased 0.45% of total registrations Source: based on Ricardo (2017): Support Study to the Impact Assessment of the Clean Vehicles Directive Type of vehicle Type of contract Number of vehicles procured (Average 2009-2015) % share Passenger Car Lease 11,019 16% Purchase 56,750 83% Services 745 1% Total 68,514 100% Van Lease 914 10% Purchase 7,388 79% Services 1,088 12% Total 9,389 100% Truck Lease 4,191 31% Purchase 8,968 67% Services 298 2% Total 13,457 100% Bus Lease 1,293 10% Purchase 7,799 61% Services 3,604 28% Total 12,696 100% Total Lease 17,417 17% Purchase 80,905 78% Services 5,735 6% Total 104,057 100% Sources: Ricardo (2017) Support Study to the Impact Assessment of the Clean Vehicles Directive In the Open Public Consultation for this Impact Assessment, 67% (87 out of 130 contributions) strongly or somewhat agreed that it was a relevant problem driver. In the targeted consultation activities, experts from public authorities, transport operators and manufacturers agreed that the scope of the Directive limits its market impact.

2.2.2.Driver 2: Lack of clear, impactful vehicle purchase provisions Art. 5 (3) of the Directive does not include clear vehicle-related purchase provisions. It notes the principal need to address energy and environmental concerns in technical specifications, but does not specify further vehicle requirements. Similarly, it notes the possibility to use environmental impacts as awards criteria, but does not set further specifications for their weighting. In the end, the success of the Directive depends on the willingness of public bodies to act, but it does not stimulate the decision for a clean vehicle purchase as such. The implementation has not sent clear, long-term signals to the market. In the survey among contracting authorities in the ex-post evaluation, a total of 63 (out of 156) respondents (or 40%) noted that they used the option to set technical specifications. Close to all of these respondents demanded vehicles that complied with existing Euro VI standards. A total of 68 (out of 156) respondents (or 44%) respondents noted that they use environmental and energy impacts as award criteria. Of those respondents, 75% noted that environment criteria made up less than 20% in the weighting of impacts in the purchase decision. A large majority of respondents (84%, 109 out of 130 contributions) to the Open Public Consultation strongly or somewhat agreed that the lack of a clear definition undermines the practical relevance and market signals of the Directive. In this context, 73% (95 out of 130) also strongly or somewhat agreed that the absence of clear minimum procurement targets is a key problem driver. The lack of clear vehicle-specific criteria is combined with the lack of alignment of procurement criteria at EU level that could trigger better market impact. The Directive provides different options to include operational life-time environmental and energy impacts in purchase decisions. Nearly all Member States have transposed all options into national law. Following the lack of specific provisions such as a definition of a clean vehicle or weighting of impacts, the implementation of the Directive has not led to a greater use of harmonised criteria for public procurement and additionally not to greater harmonisation in determining life-time operational environment and energy cost. 58% (75 out of 130) respondents to the Open Public Consultation strongly or somewhat agreed that the opportunity to choose between transposition options has furthered the variety of public procurement approaches. It has undermined the Directive's objective as cited in Recital 11: the application of harmonised criteria at EU level should lead to a significant market impact. 2.2.3.Driver 3: Complex provisions for the use of the monetisation methodology At the time of the adoption of the Directive in 2009, mandatory inclusion of operational life time cost into purchase decisions was regarded to be the best way to influence the market (see recital 16 of Directive 2009/33/EC). Monetisation of external effects appeared promising. In the contracting authorities' survey during the ex-post evaluation, 13% (from 156 respondents) noted that they had monetised impacts. Of those 13%, only 29% (6 out of 21) noted that they had used the methodology as defined by the Directive, which is a mere minority. The rare use of the monetisation methodology has been confirmed in the consultation activities for this Impact Assessment. Interviewees noted that the methodology is complex to apply. Relevant expertise is often missing. Moreover, in the absence of any harmonised EU standard for measuring fuel consumption or CO2 emissions from heavy duty vehicles, use of the methodology is restricted. During the Open Public Consultation for this Impact Assessment, 46% (59 out of 130) of respondents strongly agreed and 22% (28 out of 130) somehow agreed that the rare use of the methodology is due to the perceived complexity of the provisions of the Directive. In addition to the concerns about the complexity, there are concerns about the suitability of the methodology, which might also explain the limited use. In the ex-post evaluation survey with 156 authorities, 34% of respondents objected to the appropriateness of the methodology and its parameters for a good evaluation of environmental and energy impacts. Only 18% agreed; and 46% did not express an opinion. The methodology gives greater emphasis to energy efficiency compared to pollutant and CO2 emissions. The methodology confers higher scores to conventionally-powered fuel efficient vehicles, including diesel vehicles, which creates a bias towards diesel vehicles. As part of the Open Public Consultation, 59% (77 out of 130) of respondents strongly or somewhat agreed that the methodology is too complex and can benefit diesel vehicles. A substantial increase of its use in an unchanged manner can actually lead to an increase of the problem at hand. 2.3.Who is affected by the problem? Citizens are affected by the lack of contribution from publicly procured vehicles to the reduction in CO2 and air pollutant emissions. More than 85% of the urban population is exposed to fine particulate matter (PM2.5) at levels deemed harmful to health by the WHO. In 2013, PM 2.5 was responsible for more than 400000 premature deaths per year in the Union, in spite of emission reductions in previous years. NO2 exposure resulted in up to 70000 premature deaths per year in the Union. Climate change impacts are also found to have direct human health impacts, including illness or premature death from flooding, rainfalls, storms or heat. Public reactions to high levels of air pollution are recorded in form of lawsuits. Corresponding, several courts have ruled against public authorities, noting failure to comply with legal air quality requirements. Public authorities are starting to react, adapting, among others, measures such as urban access restriction schemes. A limited availability of clean vehicles sold at comparatively high prices affects public bodies' ability to accelerate fleet transitions towards low-emission mobility solutions. Manufactures of low- and zero-emission and other alternatively fuelled vehicles and recharging infrastructure technologies face investment risks, particularly in the heavy-duty sector. In the absence of policy certainty and secure larger-scale tenders on a regular basis, it can be difficult to plan for larger production capacity. Similarly, investment decisions by energy providers and grid operators are affected: deployment of a larger number of battery-electric buses, for example, can have huge repercussions for local energy grids, but investments into a stable and smart grid are affected by the uncertainty about vehicle demand. A long-term policy framework would help investment planning. In general, all relevant public and private actors need to change behaviour. Public bodies can have a stronger impact through purchasing clean vehicles large enough to matter for industry production and investment at scale. Captive fleet solutions (vehicles and infrastructures) can be advanced. Manufacturers need to extend the number of available vehicles, improve their reliability and bring purchase prices down. Manufacturers and standardisation organisations need to continue working on common standards. Public authorities, manufacturers and suppliers can impact the problem by developing suitable business models for the whole chain of purchase, operation and maintenance. 2.4.How would the problem evolve, all things being equal? The Directive will continue to exercise a very limited impact on the market uptake of clean (low- and zero-emission vehicles). The multiple alternative implementation options, including a lack of detail of provisions for the actual public procurement of clean vehicles, will continue to sustain the current diversity of public procurement policy practices at Member State level. As noted in Annex 6 (box 1) of this Impact Assessment Report, some Member States or single regions or cities have already put ambitious public procurement frameworks into place that set minimum procurement requirements for clean, i.e. low- and zero-emission or other alternative fuels vehicles. In the baseline scenario, some Member States and contracting authorities, entities and operators therein will continue to use vehicle procurement to drive forward the markets. However, they will continue to set punctual incentives and market stimulus for single markets within the Union. They cannot substitute the lack of a EU-wide coherent minimum level of common policy ambition for the procurement of vehicles that translates a market impetus beyond the frontrunners of this policy development. On their own, the relevant share in overall vehicle markets transactions of public procurement in single Member States remains too small. In a larger set of Member States, the main effort will be on substituting older conventional vehicles with modern conventional vehicles. In the baseline scenario, around 2.1 million vehicles are projected to be publicly procured between 2020 and 2035 under purchase, lease or services contracts (Table 2.6). Battery- and fuel-cell electric, plug-in hybrid and, natural gas vehicles would represent around 7% of publicly procured vehicles in 2020, going up to 16% by 2035. Over the 2020-2035 period, clean vehicles would thus represent around 12% of the total vehicles procured, which represents an improvement, but still under-utilises the potential of public procurement to contribute to a low-emission mobility transition. Without further action, their increasing share would be mostly driven by cost reductions of technologies. A description of the Baseline scenario assumptions is provided in Annex 4 "Analytical models used in preparing the impact assessment" and further in the Impact Assessment Support Study.

A sensitivity analysis has been performed for buses, using information on market prospects provided by key vehicle manufacturers and transport operators for the bus market, which differ from the reference scenario. The upper bound of the number of clean vehicles procured in Table 2.6 (in brackets) corresponds to more optimistic assumptions on the uptake of clean buses. The structure of the vehicles procured (i.e. the share of clean vehicles) would not be significantly different from that of the vehicles registrations in the Baseline scenario, however. Therefore, without further action, the Directive will result in limited impact on the market uptake of clean (low- and zero-emission vehicles). Table 2.6: Baseline development of clean vehicle procurement under purchase, lease and services contracts for buses 2020 2025 2030 2035 2020-2035 (cumulative) Vehicles procured per year 119,550 131,960 139,040 142,020 2,139,680 Number of clean vehicles procured per year 8,140 (10,170) 14,040 (17,570 ) 19,860 (24,960) 22,440 (27,530) 261,260 (325,730) % of clean vehicles of total vehicles procured per year 7% (9%) 11% (13%) 14% (18%) 16% (19%) 12% (15%) Source: Ricardo (2017) Support Study to the Impact Assessment of the Clean Vehicles Directive



From an industry perspective, uncertainty over demand will continue to persist, particularly in the area of heavy-duty transport. In an increasing number of cases, public tenders with a focus on clean, alternatively fuelled transport solutions could be awarded to foreign competitors. Given the long lead times for fleet renewal, the contribution to low-emission mobility will remain limited. CO2 and air pollutant emissions from publicly procured vehicle will not be significantly reduced. The revision of the Directive forms part of a comprehensive set of measures, including supply and demand side measures and enabling conditions. The effect of demand-side measures is dependent on supply-side measures, and vice versa. More stringent vehicle CO2 standards could reduce the direct impact of the Directive on emissions but would also make it easier to achieve its objectives and reduce its compliance costs. While CO2 emission standards are better placed for delivering significant CO2 emissions reductions in the road transport sector, the revision of the Directive could provide a useful complementary contribution by incentivising the renewal of vehicle fleets. The baseline scenario assumes the implementation of the CO2 standards for cars and vans in line with current legislation, as required by Better Regulation principles. No policy action to strengthen the stringency of the target is assumed after 2020/2021 in the baseline. More stringent CO2 standards for cars and vans post-2020 would result in a higher share of clean vehicles in the new vehicle fleet and thus in the total vehicles procured in the baseline. Consequently, the impact of policy options in terms of uptake of clean vehicles and environmental impacts may be more limited when compared to such alternative baseline. This is due to the overlapping effects between policies. In other words the combined effect of more stringent CO2 standards for cars and vans and revised procurement rules under the Directive would be lower than the sum of their individual effects.



3.Why should the EU act? 3.1.The EU's right to act Directive 2009/33/EC is based on Art 192 of the Treaty establishing the European Union. The European co-legislator principally underlined the role and relevance of public procurement to contribute to the achievement of long-term EU environmental, climate and energy as well as growth and competitiveness objectives with the adoption of the Clean Vehicles Directive. It is also confirmed by Directive 2014/24/EU on public procurement and Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors. 3.2.Subsidiarity check Transport, environment and procurement law remain shared competences. But the sectorial harmonization of procurement rules is an EU competence. Problems linked to the current text of the Directive could not be achieved by measures on other levels since Member State jurisdiction ends at the national borders. There is a clear need for EU action. EU intervention is limited to provide for a minimum level direction to public demand to stimulate a (cost) effective contribution to the widely agreed market uptake of clean vehicles. It helps ensuring a simpler, better coordinated approach. All measures are considered to be principally proportionate in terms of their impacts. They do not principally intervene into Member State competence to organise the provision of (public) transport; and they also do not principally constrain the ability to choose the most relevant technology. As noted in section 3.4 the principal ability of contracting authorities, entities and affected operators to choose technologies according to needs is not affected, as this initiative only targets a minimum share of procurement within a Member State through a technological-neutral low-emission mobility approach and leaves full choice of conventional and innovative technologies for the remaining rest. This initiative also does not tend to intervene directly into the decision-making procedures at local and regional level, but addresses the national level, where Member States are granted the flexibility to adapt the implementation according to domestic conditions and comparative capabilities. Reduction of CO2 include a clear and widely accepted cross-border dimension. Member States have the means to promote more fuel-efficient vehicles, e.g. through public procurement. In the lack of clear policy provisions and their consistent applications, effectiveness will be subject to the willingness of other countries applying similar measures. Air pollution is mostly a local externality and must be addressed primarily at local level. But the large scale of the air pollution problem and its move across Member States and cities (see section 2.3) as well as the large scale of potential impacts of climate change justifies actions at all levels of governance to address the problems. This perception also underpins key parts of the European acquis. Public demand is a relevant market driver in the heavy-goods sector and particularly for urban buses. A minimum level direction is required to create certainty of demand which helps investment planning and scaling of production capacity. Without such action, future global competitiveness of the European transport sector could be undermined in this market segment. 3.3.EU added value Action at EU level helps ensuring greater clarity and long-term policy signal for market actors. It ensures a simpler and more effective policy framework to guide public procurement of clean vehicles, thus contributing to key EU policy objectives on growth, jobs and competitiveness as well as on completing the Energy Union. As persistent challenges such as climate change and air pollution remain on the policy agenda, actions to tackle them should make best use of possible synergies. Without specific new provisions in the Directive, a bottom-up approach through different national policies will not provide the clear and stable long-term policy framework that can effectively help leverage relevant market investments in the whole of the Union. Setting up a clear definition of clean vehicles will effectively inform other procurement policies at national, regional and local levels, and thus create better policy coherence and greater market certainty. This initiative also has important synergy effects with the proposal for new CO2 emission performance standards for cars and vans post-2020, ensuring additional demand for low- and zero-emission vehicles.

An effective, long-term common policy framework enables joining up procurement and reaching market impact much more effectively. The revised Directive can contribute to competitiveness and long-term growth of the transport sector; particularly in the heavy goods sector, where it is the key market demand driver for alternatively fuelled urban buses. Better coordinated action will support the functioning of the internal market. Such an approach is best placed to accelerate the needed cost reductions and enable economies of scale. The revised Directive can help guide future EU funding and financing in the area of transport and mobility: a definition of clean vehicles can underpin priority setting for EU funds. Better coordinated public procurement can add to the needed demand for the recharging and refuelling infrastructure that is being implemented under Directive 2014/94/EU on alternative fuels infrastructure. Actions under the policy options of this initiative could contribute to simplifying the implementation of the Directive by replacing the current vague provisions with clear requirements and removing the broader choice of implementation mechanisms. This policy initiative is also well-timed, as a number of public bodies in Member States have started to procure innovative clean vehicles technologies at larger scale. The measures considered under the different policy packages of this initiative can take this momentum and extend it beyond the current group of front-runner cities and regions. Coupled with targeted support opportunities at EU level through both funding and intelligent financing, it seems possible to address the gap and trigger market growth in all Member States. 3.4.Why act now? Markets for low- and zero-emission and other alternative fuels vehicles need to accelerate to greater mass market use, the Low-Emission Mobility Strategy of the Commission notes. All available policy levers are needed in an intelligent policy mix in order to incentivise purchase of vehicles and leverage investment into infrastructures. As table 2.2 shows, consumers are still cautious with embracing low- and zero-emission and other alternatively fuelled vehicles. Key concerns relate to reliability and accessibility of recharging, choice of models and their purchase prices. While some markets in Member States have seen increased growth (though at a low overall level), other markets in Member States are not picking up (figure 2.2). Policy certainty is needed at a time when cities and regions are implementing new approaches to clean, sustainable mobility and when manufacturers are planning large-scale investments into new powertrain technologies and their infrastructures (see box 4). Demand is still considerably low in many domestic markets of the Union. These vehicles are needed for an effective contribution from transport to reaching long-term climate, energy and environmental policy objectives of the Union. Increasingly, low- and zero-emission vehicle technologies also shape the future market and competitiveness of the transport sector. Box 4: List of OEM announcements on battery-electric car ambition (by April 2017) ·BMW has announced a target of 0.1 million electric car sales in 2017, and of 15-25% of the BMW group's sales by 2025. ·Chevrolet (GM) has announced a target of 30thousand annual electric car sales by 2017. ·Daimler has announced a target of 0.1 million annual electric car sales by 2020 ·Ford has announced the ambition to introduce 13 new electric car models by 2020 ·Honda has announced to have two thirds of group sales in 2030 consist of electrified vehicles (battery-electric and plug-in hybrid) ·Renault-Nissan aspires to have cumulative sales of electric cars by 2020 of 1.5 million ·Tesla has announced to target sales of 1 million electric cars by 2020 ·Volkswagen has announced a target of 25% of group sales by 2025 to be electric vehicles ·Volvo just announced that every car from 2019 onwards will have an electric motor, and launching 5 fully electric cars in between 2019 and 2021. Source: International Energy Agency (2017): Global EV outlook 2017: two million and counting, IEA: Paris This outlook changes the prospects for contracting authorities, entities and specific operators: in the future, they will have a much better ability to choose from an increasingly larger palette of vehicles. Cost reduction is expected to happen in quickly accelerating markets. The benefits and cost-efficiency of such clean vehicles are clearly demonstrable over time, contributing to attractive, quiet multi-modal solutions in public transport and to overall improvements in air quality and noise reduction, among other (see section 6). Public fleet procurement of clean vehicles can influence private purchases of clean vehicles. Under conditions of perceived risk and uncertainty, consumers tend to favour known, familiar solutions. Increased visibility of clean vehicles and their infrastructures in day-to-day transport increases public confidence that the technologies are mature and trustworthy. This concerns particularly Member States, where the market take up is still very low (see section 2.1.2) and where suitable infrastructure does not exist everywhere. Moreover, private consumers are generally found to slowly pick up innovative products unless all elements of the requisite infrastructure are available. If public recharging and refuelling infrastructure (e.g. for buses, trolleybuses or trams) is available for private users (pedelecs, cars, taxis, vans, delivery trucks) it can incentivise the purchase of those vehicles. This is relevant particularly for people who do not have a private garage. A substantial share of passenger cars (~50%) is not privately owned but belongs to a corporate fleet or to a public fleet. Large-scale public fleet operators can find it easier to adopt low- and zero-emission and other alternative fuels vehicles due to different conditions of scale. Employees can benefit from the possibility to familiarise themselves with the new technology in an environment that is free of individual purchase risks. This can also facilitate information and education of further potential users. Documented are cases, where fleet solutions have knocked on private vehicle purchases. It is, however, difficult to directly quantitatively account how public procurement will impact on private purchases, as the individual decision to purchase a vehicle is influenced by different factors. This policy initiative is part of a package of policy initiatives to support the transition to a low-emission mobility in the EU. The need to accelerate efforts is a widely noted European policy ambition. The 2017 State of the Union address notes that the EU needs to become a world leader on decarbonisation. The 2017 Mobility Package Chapeau Communication underlines that Europe must lead the transition to a low-emission mobility. Global competition dynamics require sufficient action now if the European transport sector is to maintain and expand its competitiveness in these future growth markets. As part of the package, new CO2 emission performance standards for passenger cars and vans post 2020 are being proposed. Further actions on heavy-duty vehicles' CO2 emissions have been announced. In a policy package approach that includes contributions from public and private market actors the revision of the Clean Vehicles Directive ensures that all available policy levers – on the supply and the demand side - are utilised. In tandem with the CO2 emission performance standards for cars and vans the revision of this Directive ensures that incentives are set up for the same type of vehicles through both a market push-and-pull logic, whereby the public procurements provides a particular stimulus for domestic markets with very low market shares and for the heavy-duty vehicle market, mainly on urban buses. Moreover, the EU is also publishing an EU actin plan for alternative fuels infrastructure to support the further implementation of Directive 2014/94/EU on alternative fuels infrastructure, where a EU backbone infrastructure for recharging should be completed on the TEN-T core network corridors by 2025, including full equipment of urban nodes. Investment into infrastructure is increasingly sought be taken in form of captive fleet models, where vehicles and infrastructures are realised together. Public procurement is of importance in this context. Securing additional demand is important, also in view of global market dynamics and potential shifts in global competitiveness (see figure 2.3). Chinese OEMs have announced sales targets of 4.5 million battery-electric vehicles by 2020. The Chinese government has announced a forthcoming requirement for every car manufacturer that sells more than 30.000 vehicles in China to comply with a sales quota of 10 percent of battery-electric vehicles. This policy is expected to have a strong impact on the market for zero-emission vehicles. Moreover, the current approach of the Directive that sought to put the emphasis on the internalisation of external energy and environmental impacts has not yielded any significant market impact. Provided that there is flexibility in implementation, changing the governance approach of the Directive towards a greater directional market uptake of low- and zero-emission and other alternative fuels vehicles is coherent with both policy principles of low-emission mobility and technological neutrality. Action does not prescribe choice of a specific technological but remains neutral in view of the broader choice of low- and zero-emission and other alternative fuels technologies. A minimum share target would leave technology choice of all clean conventionally and alternatively fuelled vehicles for the major part of the procurement, while a flexible approach to implementation within the Member State ensures that capacities can be best used and tailored to specific regional and local circumstances.



4.What should be achieved? 4.1.General and specific objectives The general objective of this initiative is to accelerate the public procurement of clean, i.e. low- and zero-emission or other alternatively fuelled vehicles in the Union. This should help stimulate the needed market uptake of these vehicles. It should further improve the contribution from the transport sector to the reduction of C02 and air pollutant emissions and contribute to competitiveness and growth, particularly in the heavy-duty transport sector. In addition, this initiative supports more effective public procurement policies at domestic level, which are better aligned in terms of strategic direction and market impact. It should reduce information cost for public and private actors and simplify the implementation process.

The specific objectives (SO) for the revision of Directive 2009/33/EC are as follows: SO1: Ensure that the Directive covers all relevant procurement practices SO2: Ensure that the Directive supports clear, long-term market signals SO3: Ensure that the Directive provisions are simplified and effective to use 4.2.Links to the problem, synergies and trade-offs The objectives are directly linked to the problems identified in section 2 (figure 2.1). There are synergies among the objectives. Addressing the limited scope of the Directive will help with improving clear market signals, while providing clear provisions for vehicle purchase will address the current lack of long-term market signals and address fragmentation of policies. There are trade-offs for CO2 and air pollutants emissions when using the monetisation methodology: the methodology requires the purchase of the vehicle that is the most cost-effective in view of all its internal and external cost. This could lead to situations where public bodies either continue to purchase conventionally fuelled vehicles, because their overall cost are still lower due to the initial purchase cost. In this case, impacts on emission reductions are limited. Or, in view of updated external cost figures, it can lead to situations where public bodies should only buy low- and zero-emission vehicles, because they are most cost-effective. In this case, public bodies are confronted with high upfront costs. Simplification of EU law could be achieved, if a clear definition and related minimum procurement targets were to be established. These can provide clear, long-term policy orientation, while avoiding calculation methodologies that are complex to use. There could be a trade-off between a continued choice of implementation mechanism (clean vehicle definition and target versus monetisation methodology) and the objective of creating stronger market signals and more effective procurement procedures within and in between Member States. The necessity for continuing this approach of dual implementation mechanisms under the current Clean Vehicles Directive needs to be analysed. Trade-offs exist between costs and benefits for public bodies, industries and citizens. The latter two benefit from the action taken by public bodies to procure clean, low- and zero-emission and other alternative fuels vehicles in form of positive impacts on quality of life and market demand for new vehicles. Public bodies have to weigh increased cost with increased benefits over time and impacts on public service obligations. If there is a too strong requirement for upfront investment into innovative clean technologies, it could impact on the ability of providing relevant public transport services (including reduction of serviced bus lines, for example), which would conversely undermine key policy priorities for supporting multi-modality in European cities and regions. On the other hand, clean vehicle procurement provides numerous opportunities to make public transport more attractive, by enabling smoother, quiet travel and by providing new opportunities for route design (including for new services such as in-door bus stops, enabling new possibilities for better customer service (e.g. in shopping malls). From a European industry point of view, a key question concerns competitiveness vis-à-vis foreign competitors and their ability to service mobility needs of public bodies. 4.3.Consistency with other EU policies and Charter of Fundamental Rights The main objective of this initiative is fully in line with the main objectives of other legislative and non-legislative initiatives to support the deployment of clean, low- and zero-emission vehicles at European level. It is consistent with long-term EU policy objectives on climate, energy and environment policies. It supports the proposal for the post-2020 CO2 emission performance standards for light duty vehicles, where it reinforces the policy orientation, builds on the same thresholds for low- and zero-emission vehicles and adds further demand for low- and zero-emission vehicles. Automakers in their contribution to the public consultation for the revision of this Directive have noted the consistency and relevance of a strong public procurement mandate under an amended Directive. This initiative also supports the action plan on alternative fuels infrastructure that reinforces the implementation of Directive 2014/94/EU on alternative fuels infrastructure, which has been published as part of the Mobility Package II. The action plan seeks to stimulate better exchange of Member States on alternative fuels infrastructure deployment and investment by both public and private actors, to further orient market actors to greater aligned action and to test innovative financing models for interoperable infrastructure. In all occasions, public procurement is a key supporting lever. The objectives of this initiative are mutually supportive to the objectives of revising the voluntary Green Public Procurement Criteria of the European Commission in the field of transport. The objectives for this initiative are furthermore coherent with the Charter of Fundamental Rights, in particularly by applying a non-discriminatory approach to single contracting authorities, entities and relevant operators.



5.What are the various options to achieve the objective? 5.1.Preliminary screening of potential measures to achieve the stated objectives A pre-screening of main policy measures was done to identify the most acceptable and feasible measures to address the identified problems. An initial long list was created on the basis of the outcomes of the ex-post evaluation. In the Open Public Consultation and through targeted consultation activities during this Impact Assessment, the Commission asked key stakeholders for their opinion on the relevance and feasibility of policy measures on this long list of policy measures relative to achieving the policy objectives presented in section 4.

The most important of those measures are screened in terms of their relevance, feasibility or proportionality as well as key outcomes from the public consultation. Based on this screening, some of the measures have been recommended for a more detailed analysis and subsequent use in the policy packages as presented in section 6. The other remaining measures were then discarded. 5.1.1.Potential measures to ensure that the Directive covers all relevant procurement practices Four different measures were proposed and discussed. 1. Extend the scope by removal of the procurement thresholds Under this measure, the thresholds for contract volumes (see section 2.2) as required by the horizontal public procurement law of the EU would be removed. Two alternative variants of this measure were discussed: A complete removal, according to which the Directive would apply to all contracts, and an alternative variant of replacing the current threshold with a new threshold. Comment: Views in the Open Public Consultation (130 responses in total) were mixed. A large majority of respondents from companies (76% (28 out of 37) and particularly from NGOs (84% (24 out of 29) supported this measures as a very relevant, relevant or somewhat relevant measure. No majority of public authorities (48%, (11 out of 23) noted it to be relevant, but 60% of contracting authorities (6 out of 10) considered this measure very relevant, relevant or somewhat relevant. In total, 72% of respondents (or 94 out of 130) agreed it was relevant or somewhat relevant. However, in targeted consultations, representatives of public and contracting authorities noted that the measure, while being highly relevant, would have a strong impact on administrative burden of public and contracting authorities. It would particularly affect smaller public authorities. All experts from public authorities advised against this measure. Indeed, removal of the procurement threshold could extend the range of application of the Directive considerably (as noted in Table 2.1). Considerations of proportionality and acceptability speak against this measure, however. The current procurement thresholds of horizontal public procurement law (Directives 2014/24/EU and 2014/25/EU) are aligned with the thresholds set out in the WTO’s Agreement on Government Procurement (GPA). They are set to avoid the unnecessary development of a multitude of different thresholds that would apply otherwise. A policy approach based on no thresholds or also lowered thresholds would disproportionately increase the administrative burden of the Directive and would go against coherence with horizontal public procurement rules. Preliminary conclusion: Discard, because the measure affects policy coherence, is not in line with subsidiarity, strongly increases administrative burden, and despite of its relevance, is not likely to get the necessary political support. 2. Extend the scope by including vehicles rented, leased or hire-purchased Public authorities can rent, lease or hire-purchase vehicles instead of purchasing them. The relevance of the practice of renting, leasing and hire-purchasing differs per Member State. On average it is found to affect 23% of all contracts currently noted in the EU's Tender Electronic Database. It represents a relevant contract volume (Table 2.2). Under this measure, the scope of the Directive would be extended to cover vehicles that are leased and hire-purchased. The public procurement thresholds under the Directive would apply as would the minimum procurement requirements for purchase of vehicles, if these were to be adopted. The Directive would also be extended to cover vehicles that are rented by public authorities. In this case, rental fleets would need to be compatible with public authorities' requirements for the environmental performance of the vehicles they rent. Comment: This measure received consistent strong support from all target groups in the Open Public Consultation. Also 75% of public authorities (16 out of 21) and 90% of contracting authorities (9 out of 10) regarded this measure as either very relevant, relevant or somewhat relevant. During targeted consultations, experts from public authorities noted the relevance of this measure. Yet they noted the need for a flexible approach: to make sure it does not substantially increase administrative burden and takes into account the wider diversity of contractual arrangements in this area. One representative noted challenges for rental companies as these currently have low shares of clean vehicles. However, it should be possible to adapt with appropriate lead time for introduction of such a requirement. Preliminary conclusion: retain for further analysis, because of its relevance and as a large part of the key stakeholders support this measure. 3. Extend the scope by including additional transport services procured by public authorities Public authorities regularly contract operators to provide services. These operators use their own vehicles. Under this measure, contracts for transport services other than public passenger transport would be added to the scope of the Directive, following the thresholds of the horizontal public procurement law. Operators in charge of these contracts would need to be compatible with public authorities' requirements for the environmental performance of the vehicles they rent. Comment: Different services, including bus services, postal and courier services or waste collection services, could be included under this measure. The principle approach of such a scope extension received general support from a majority of respondents to the Open Public Consultation. The level of support differed among key target groups though. 55% of public authorities (12 out of 21) noted it to be very relevant, relevant or somewhat relevant as well as 90% of contracting authorities (9 out of 10). Contributions of companies (90%) and NGOs (79% (23 out of 29) also regarded this measure to be very relevant, relevant or somewhat relevant. In the targeted consultation, a few representatives of public authorities highlighted that contractual arrangements between public authorities and private operators are quite diverse and could be difficult to set up and monitor. They required a flexible approach that would be simple to implement. Indeed, a challenge that could arise is that in many cases the suppliers of services provide the same services using the same vehicles to multiple purchasers, including businesses. Some services are often provided by SMEs, e.g. school transport services. Based on feedback during the consultation, it was concluded to keep the potential inclusion of bus, waste collection and postal/courier services for further analysis. Rather than setting an additional, separate, minimum requirement for transport services, the fleets of the relevant operators running services for public authorities should be included as part of overall minimum procurement requirement, if it was to be set up. Preliminary conclusion: Retain for analysis, because of its impact and broader support from key target groups. However, the measure should be confined to bus services, waste collection services and postal and courier services, as defined by their respective Common Procurement Vocabulary codes. These reflect the more significant services that involve transport that are procured by public authorities. 4. Extend the scope to all contracts that have a major transport element This policy measure would cover contracts with a ‘major transport element’, for example vehicles used as part of infrastructure contracts. Contractor fleets then would need to demonstrate that they are compatible with the overall minimum requirements as set up by the Clean Vehicles Directive.

Comment: This measure did not get a majority support from public authorities (47% (10 out of 21) in the Open Public Consultation. In the targeted consultations, experts from public authorities referred to the needs of clearly defining the elements of the contracts that will fall under the responsibility of this measure. There was stronger support from contracting authorities and NGOs where 70% (7 out of 10) and 72% (21 out of 29) noted this measure to be very relevant, relevant, somewhat relevant respectively. Respondents from companies also strongly supported this measure (67% or 25 out of 37 noted it as very relevant, relevant, somewhat relevant). However, close to every fifth respondent to the OPC noted "I do not know", underlining uncertainties about this measure. This measure presents a number of challenges, not least in identifying how it might be applied in practice. One possibility is to set a definition of a major transport element, e.g. in proportion of contract value. It will need to differ by type of contract and conditions for transport components of a wide range of specific contracts will need to be set. The other possibility is to define the types of contracts with thresholds (such as for example construction, transport infrastructure, maintenance contracts, catering services). This would again require considering separate types of contracts. However, the main purpose of these contracts is not the purchase of road transport vehicles. Preliminary conclusion: Discard, because the measure is increasing administrative burden and despite of its relevance, is not likely to get the necessary political support. 5.1.2.Potential measures to ensure clear, impactful vehicle purchase provisions With regard to the vehicle purchase provisions of Art. 5 of the Clean Directive, two main measures were proposed, with sub-options for their alternative design: a) setting up a definition of a clean vehicle b) establishing related minimum action requirements. Those measures would require discarding the current vehicle purchase provisions of the Directive (Art 5 (3) (a) of Directive 2009/33/EC). The current provisions of Art. 5 (3) (b) would either be removed or kept, if a decision was taken to maintain the approach of using the monetisation methodology as a parallel choice option. In addition, measures were proposed to make the monetisation methodology more effective to use. Finally, a measure was proposed to focus the amended Directive only on heavy-duty vehicles and leave the market segment of light-duty vehicles to voluntary policy action. 5.1.2.1.Definition of a clean vehicle Defining a clean vehicle consists of two elements: the criteria to be used and the threshold to be applied. Six different approaches were discussed. 1. Defining a clean vehicle on the basis of its CO2 tailpipe emissions Under this approach, vehicles below a threshold of CO2 tailpipe ("tank-to-wheel") emissions would be classified as clean. Varying the threshold from high to lower or zero emission can define the level of ambition. Comment: this approach can be used without any problem for light duty vehicles. The level of ambition for publicly procured clean vehicles could be defined on the basis of the CO2 emission performance standards post-2020 for cars and vans. However, a mechanism to measure such emissions and related CO2 emission performance standards are still under development for heavy duty vehicles (HDVs) and buses. Standards for buses and for certain categories of trucks could be applicable from the early 2020s. In view of preparing a legislative proposal for the revision of the Directive, a specific CO2 emission threshold for HDVs could not be set, but would need to be delayed to a later stage, when the respective emission profiles and related overall emission performance standards have been set. It could then be adopted through a delegated procedure. There were concerns in the Open Public Consultation that this approach will not adequately cover the totality of emissions that occur during the production of the energy or fuel that is used to power the vehicle. Around 50% of respondents (n=129) noted this approach to be not or somewhat adequate. However, the Clean Vehicles Directive concerns the purchase of road vehicles. Requiring public authorities to take into account both the vehicle and the fuel or electricity/source concerned could add to administrative burden, while adding problems of monitoring actual implementation. Preliminary conclusion: retained for further analysis, because of feasibility for cars and vans and coherence with other policy initiatives. The combination of CO2 emissions with air pollutant emissions should be analysed. 2. Defining a clean vehicle on the basis of its CO2 life-cycle emissions Under this approach, vehicles below a threshold of life-cycle ("well-to-wheel", in the following: WTT) CO2 emissions would be classified as clean. Varying the threshold from high to low or zero emission can define the level of ambition. Comment: The feasibility of setting emission thresholds for LDVs and HDVs is the same as it is for the tailpipe emissions approach. However, there are several additional complications to the setting of WTT-based thresholds in the context of the Directive. Factors for each vehicle and fuel type would need to be set. Potential factors already exist in the amendments to the Fuel Quality Directive (2009/30/EC) and the Renewable Energy Directive (2009/28/EC) for biofuels and biogases and their fossil fuel alternatives. But factors to be used for electricity or hydrogen would require considerable discussion in the absence of a methodology fully consolidated with all stakeholders. Problems could arise whether upstream emissions have to be counted as emissions of the energy or of the transport sector and how they would be counted under the different policy requirements for the sectors. A WTT-approach is also not the basis for the approach to setting CO2 emission performance standards for cars and vehicles. Its adoption as part of the Directive would increase policy fragmentation; and its legislative adoption could risk presenting values that are already challenged by the time of transposition.

Considerations about the complexity of the approach and its applicability in the legislative context speak against its use. The prospects of broad-scale political support appear non-certain. A majority of respondents to the Public Consultation for this Impact Assessment regarded this measure as adequate (61% (n=122), but only a slight majority of respondents from the public authorities (52% (11 out of 21). Of the contracting authorities, a majority rejected the adequacy of the approach (6 out of 10). Preliminary conclusions: Discarded for further analysis, because of consideration of feasibility and anticipated difficulties with political support. 3. Defining a clean vehicle on the basis of its air pollutant emissions Under this approach, clean vehicles could be defined as vehicles below a specific threshold of air pollutants, in relation to RDE values included in the certificates of conformity of vehicles. Comment: this approach can be used without any problem for cars and vans. By 2021, all new cars and LCVs will have to meet the RDE Euro standards (all new cars to be no more than 50% above Euro 6 standards). The actual values of certain air pollutants will be included on the certificates of conformity of vehicles. These could be used to further define a clean vehicle – but only for cars and LCVs – in the context of the revised Directive. Any threshold would need to go beyond RDE to generate additional impact and could require real-world compliance with Euro 6, or beyond. Going beyond the legislative requirements could yield questions as to the proportionality of the measure. For buses and trucks, the Euro VI emission standards already deliver emissions reductions in the real world. Such requirement would not yield improvements; any threshold would need to exceed Euro VI, where the future development is not clear. This measure got broad support during the Open Public Consultation (75% agreed (n=122), with broad support among from all target groups. Preliminary conclusion: retain for analysis, in spite of the shortcoming for heavy-duty vehicles. The combination of air pollutants with CO2 emissions for cars and vans should be analysed. 4. Defining a clean vehicle on the basis of a wider set of environmental criteria Under this approach, clean vehicles would be defined with regard to a broader set of environmental criteria following the Green Public Procurement core criteria for transport of the European Commission. These would add vehicle noise and potentially other pollutant emissions. Comment: In principle, this approach would broaden the scope of current environmental and energy impacts under the Directive, as the core set of Green Public Procurement (GPP) transport criteria focus also on all exhaust emissions, eco-driving and award additional points to the use of alternative fuels and noise reduction. Particularly adding the element of noise puts up a challenge: the reduction potential in marginal noise damage costs is difficult to assess as it is context-dependent on the number and level of noise emissions of the other surrounding vehicles. There is currently no widely agreed set of vehicle-noise related damage cost data available, making a legislative approach on a European level difficult. The voluntary GPP criteria are also designed to provide a more ambitious approach, supporting those authorities that want to go beyond the mandatory minimum requirements of the Directive. The interplay of a mandatory minimum level for all public bodies and of a voluntary policy framework to orient further-going ambition should be kept in place. Preliminary conclusion: discarded, because of problems with availability of information and particularly the challenge of noise. 5. Defining a clean vehicle on the basis of its use of an alternative fuel Under this approach, a clean vehicle would be defined as a vehicle using an alternative fuel. Comment: this approach is applicable to all market segments of passenger cars, vans, trucks and buses. An applicable legal definition exists with Art. 2 of Directive 2014/94/EU on alternative fuels infrastructure. Member States are implementing the Directive, and hence there is clarity about the type of vehicles that fall under the remit of the Directive. There is no need for defining an entry threshold. As part of the Open Public Consultation, a slight majority (52%, (n=122) considered this measure adequate, including also a slight majority of public authorities (52% (11 out of 21). Preliminary conclusion: Retain for analysis, in view of its practical relevance for all market impacts, and principal support from the public consultation. 6. Defining a clean vehicle as a vehicle with zero-tailpipe emissions. Under this approach, clean vehicles would be defined as vehicles that have no tailpipe emissions. Comment: this approach can be used without any problems for cars, vans, trucks and buses; the technologies that fit this approach are mainly battery-electric and fuel-cell electric vehicles. Concerns raised in the public consultation and in expert interviews about a definition based solely on tailpipe zero-emissions concerns limits to the choice of technologies and higher cost to authorities, though more in the short-term. Only 33% (7 out of 21) of public authorities considered it adequate. 66% of contracting authorities (4 out of 6) considered it not adequate. At least in the short-term and potentially longer, HDV applications will need a wider range of alternative fuels. Zero-emission technologies particularly for trucks are not mass-market ready. Preliminary conclusion: retain for analysis, because of the political priority to accelerate zero-emission vehicles. It is necessary to analyse options for integrating a specific target for zero emission vehicles in the broader overall target and related requirements to count them preferentially towards the fulfillment of a possible target. There was a strong support for combining a specific emission threshold for CO2 emissions and an emission threshold for air pollutant emissions, in the case an emission threshold-based approach would be used to define a clean vehicle. All key target groups to the consultation supported majorly the combination of thresholds under such an approach. 5.1.2.2.Setting a minimum requirement for action

A clean vehicle definition needs to be applied in practice to establish a clear, long-term policy orientation. It links to a discussion about how to set a minimum action requirement. Under a definition of a clean vehicle based on its emissions, the threshold for the emissions and the target for the share of the procurement would interact. Under the definition of a clean vehicle based on its fuel, only the target for the share of the procurement would be taken into account. Six different measures have been proposed and discussed. These measures do not all represent different approaches. Measures 3 to 6 present gradual refinements of the main measure of fixing a minimum share requirement over time compared to full or proportional share requirement per contract, particularly in view of feedback from targeted interviews during the stakeholder consultation. 1. Define an emission threshold and require its application in all procurement contracts Under this approach, a clean vehicle definition would be based on a common threshold (e.g. CO2 emissions of vehicles). The definition would then apply to the purchase of all vehicles above the procurement threshold of EU procurement law, including the lease, rental and hire-purchase of all vehicles and to a certain percentage of the fleets of operators providing specified transport services. Comment: no minimum requirement would need to be set. The definition will affect the totality of all authorities' procurements. This approach is not feasible for any definition based on alternative fuels. It would impose comparatively high costs for public bodies. In terms of tailpipe emissions, a threshold could be set at the level of the next CO2 emission performance standard for cars and vans. However, this approach would lack a clear impulse for a larger market uptake of zero-emission vehicles, which is a political priority. Gradually tightening the threshold over time can address this challenge. A slight majority of respondents to the Open Public Consultation agreed to this approach (53%, (n=122). However, it is largely driven by agreement by NGOs, whereas public authorities (47% (10 out of 21) disagreed, but only 29% (6 out of 21) agreed), contracting authorities (40% (4 out of 10) agreed) and companies (46% (17 out of 37 agreed) were more reserved about the measure. Preliminary conclusion: Discard for future analysis, because the approach could either financially and technologically constrain public authorities, if the ambition level is too high, or lack market impact, if the ambition level is set too low. 2. Define a more ambitions emissions threshold and require a proportion of the vehicles to be procured under each contract Under this approach, every purchase contract should have to comply with a requirement of a minimum share of vehicles following a definition of clean vehicles with a more ambitious emission threshold. This would also apply to vehicles procured in each lease, rental or hire-purchase contract and in each operator’s fleet that are providing specified transport services under contract to public bodies. Comment: The Open Public Consultation did not produce a clear picture. A slight majority of respondents agreed to this measure (54% (n=108), but only 38% (8 out of 21) of public authority respondents and 50% (5 out of 10) of contracting authorities respondents agreed to it. In the targeted interviews, representatives of public transport operators, and also of contractors, raised concerns about the practicability of imposing a minimum requirement on every contract: Oftentimes, clean and other vehicles were not procured through the same contract. The need to combine different types of vehicles may not allow the public authority to procure the best vehicle of either type. Moreover, variety of types of contract would increase the administrative burden of monitoring the implementation of the minimum requirement. Preliminary conclusion: discard for further analysis, because it would considerably increase the administrative burden of the Directive. 3. Define a higher threshold and require a proportion of the vehicles to be procured over a fixed period of time Under this approach, public bodies and operators would have to purchase a certain proportion of their procurement over a fixed period of time as clean vehicles, following the definition of a clean vehicle. This would also apply to vehicles procured in each lease, rental or hire-purchase contract and in each operator’s fleet that are providing specified transport services under contract to public bodies. Comment: This approach is better suited than the approach based on each contract. It also met the broadest average support in the Open Public Consultation (58% agreed (n=128), but public authorities remained more reserved (43% (9 out of 21) strongly or somewhat agreed). However, the approach is also meeting challenges. One challenge is to define an adequate period of time and a relevant monitoring (each type of vehicle would need to be monitored) that does not add substantially to administrative burden. Smaller public authorities do not procure vehicles as frequently as larger authorities. Self-reporting through a central procurement portal could be used to address this challenge; and a specific code in the Common Procurement Vocabulary of the EU will help. Being imposed to each public body and operator, it is likely to non-proportionally increase the administrative burden. Preliminary conclusion: Discard for future analysis, because of impacts on administrative burden. 4. Define a higher threshold and set a target for a future year on vehicle procurement This approach modifies the previous approach: all public bodies and operators would need to comply with a minimum requirement of clean vehicles as noted for the previous approach. However, the requirement would only apply to a specific future year in order to minimise impact on reporting. Comment: For procurement, leasing, rental and hire-purchase, this approach has similar challenges to those already discussed for a time-based approach. However, it has a lower impact on administrative burden, as the requirements only apply to the final year. A fleet-based approach could set a target that, for example, all public authority bus fleets should contain a certain proportion of clean buses by 2030. Even if it would be potentially challenging to monitor, it would at least set a direction for the market, which would be clear both for manufacturers and for public authorities. If such a target was applied to the public authority procurement of transport services, e.g. bus services, the same target could be applied to these fleets, i.e. those of contractors providing services to public authorities. Preliminary conclusion: Discard, because of impacts on administrative burden. 5. Define a higher threshold and set a target for vehicle procurement for a future year, but leave it to each Member State on how to achieve it

This approach further modifies the previous approach. The same requirements apply, but compliance with the minimum requirement would need to be demonstrated at the level of the Member State, not at the level of individual authorities or operators. Comment: This approach would add considerable flexibility. Member States would have the possibility to adjust the implementation to their domestic circumstances. They could, for example, differentiate between more and less advanced cities. In this way, national financial support could focus on the cities that are most in need or most capable of developing the infrastructure for and utilising clean vehicles. With such an approach, there would still be a clear direction in terms of the development of the market, but action could become domestically better targeted. In the targeted consultations, representatives of public authorities and particularly of public transport operators supported such a measure, as it would leave greater flexibility to the implementation process. Preliminary conclusion: retain for future analysis, because it enables a more flexible implementation of a possible definition and related target. 6. Define a higher threshold and leave it to Member States how to act on it Under this approach, the Directive would require Member States to transpose the definition of clean vehicles, but it would not specify any further condition for the use of the direction but the request for a national policy framework according to the competencies in the Member State. Comment: This approach would provide the greatest flexibility to Member States. It would give a common reference framework in the form of a clean vehicles definition that can help policy development in Member States. Compared to the other approaches, it contains a higher risk of non-appropriate action and hence lack of market impact, particularly in less advanced Member States. This approach would not establish a common and stable European market signal. Financial support could be used to incentivise higher ambition. However, financial support cannot be scheduled through the Directive itself, but would be dependent on other policy instruments. Preliminary conclusion: retain for future analysis, because it allows the further analysis of a fully flexible, non-directional approach. 5.1.2.3.Differentiation of a minimum procurement requirement In addition, there is further need for a differentiation of a possible minimum procurement target by Member State. All expert interviews pointed to the need for a differentiation: setting the same requirement for all Member States would risk setting a minimum requirement that could be meaningless for some Member States, but too challenging for others. Five different measures were proposed and discussed for the differentiation of a target. Table 5.1 lists the different measures and the assessment of their suitability. Table 5.1 Approach to differentiating a minimum procurement requirement by Member State Measure Strengths Weaknesses 1. Reflecting a Member State’s GDP ·Reflects differences in wealth between Member States, and so potentially the ability to finance the procurement of clean vehicles ·GDP can vary a lot between cities ·Does not (necessarily) link to environmental needs ·No direct link with a procurement target 2. Based on a city’s GDP ·Reflects differences in wealth between cities, and so potentially the ability to finance the procurement of clean vehicles ·Does not (necessarily) link to environmental needs ·No direct link with a procurement target ·Complex to calculate, as there are hundreds of cities ·Problems with application to public authorities that are not city authorities 3. share of population living in urban areas ·Reflects differences in size of population ·Does not (necessarily) link to environmental needs ·No direct link with a procurement target ·Is complex, as there are hundreds of cities ·Problems with application to public authorities that are not city authorities 4. Based on differentiation of Member States under the proposed ESR ·Directly related to environmental need ·Differentiation reflects economic capacity (related to GDP) ·Does not take into account the GDP of different cities ·ESR does not relate to specific sectors 5. Based on the extent of a city’s lack of compliance with EU air quality limits ·Directly related to a relevant environmental need in a city ·Can help target needs ·Does not take account of a city’s (financial) ability to procure CVs ·Enforcement and moni