EUROPEAN COMMISSION Brussels, 20.7.2016 COM(2016) 501 final COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A European Strategy for Low-Emission Mobility {SWD(2016) 244 final}



1.Introduction Low-emission mobility is an essential component of the broader shift to the low-carbon, circular economy needed for Europe to stay competitive and be able to cater to the mobility needs of people and goods. Transport represents almost a quarter of Europe's greenhouse gas emissions and is the main cause of air pollution in cities. Europe's answer to these challenges is an irreversible shift to low-emission mobility in terms of carbon and air pollutants. The ambition is clear: by mid-century, greenhouse gas emissions from transport will need to be at least 60% lower than in 1990 and be firmly on the path towards zero. Emissions of air pollutants from transport that harm our health need to be drastically reduced without delay. Transport has much greater potential than in the past to contribute towards reducing the EU's emissions, as we have committed to do under the Paris Agreement on climate change and in line with the 2030 Agenda on Sustainable Development. The shift towards low-emission mobility has already started globally and its pace is accelerating. It offers major opportunities. It is an opportunity for European car manufacturers to modernise, embrace new technologies more strongly and regain the trust of consumers. It is also an opportunity for other industries and manufacturers to drive global standards and export their products. It is also an opportunity for innovative energy companies and service providers, as well as for investors to contribute to sustainable growth and provide new jobs. This shift has already started, building on existing EU policies. Now, its pace should be accelerated through this Strategy for low-emission mobility, while ensuring the mobility needs of an efficient internal market and of global connectivity. This will require a wide range of actions. The Action Plan lists those actions this Commission plans to take subject to better regulation principles and processes so as to ensure any measures proposed will be evidence-based, effective, efficient, proportionate and in full respect of subsidiarity. These actions address key levers to tilt the transport sector in the right direction in respect of technology neutrality and contributing to jobs, growth and investment: (1) higher efficiency of the transport system, (2) low-emission alternative energy for transport, and (3) low- and zero emission vehicles. In addition, horizontal enablers such as the Energy Union strategy, research and innovation, industrial and investment policy, the Digital Single Market Strategies and the skills agenda will support this transformation. Since road transport is responsible for over 70% of transport greenhouse gas emissions and much of the air pollution, action will focus on this area, while all sectors of transport can and must contribute. Through its initiatives, the EU will create enabling conditions and provide strong incentives for low-emission mobility. The actions announced in this communication are part of a holistic approach requiring the long-term engagement of all stakeholders, including Member States, which will have to do their part according to their responsibilities. Europe's researchers and manufacturing and service industries should continue to innovate and make business choices with a mid-century goal in mind. They will need the right kind of incentives and investments at the right time in order to bring their innovations to the market in Europe and globally. Regions and cities too will be major actors in delivering low-emission mobility solutions, close to where the problems are felt most, and ultimately, behavioural choices made by mobility users will determine how successful we will be. It is only through sustained action by all actors that Europe can successfully transform its transport system, which is critical to its prosperity and the well-being of its citizens. 2.Regulatory Framework for low-emission mobility To facilitate the transition to low-emission mobility and provide certainty for investors, the EU regulatory framework needs to change. Many advances in the past have been offset by growing transport demand, so a transport system that is more efficient needs to be the starting point. Low-emission alternative energy for transport represents an opportunity for innovation and job creation and allows reducing Europe's dependency on imported oil. 2.1optimising the Transport System and Improving its Efficiency The way mobility is organised is changing thanks to new technologies, business models and mobility patterns, as is, for instance, shown by the rapid expansion of the collaborative economy in the mobility sector. Mobility is increasingly driven by demand, leading to a more optimal use of transport resources. Data, clearer price signals and a multimodal transport system support this change and therefore have a key role in the EU's approach to low-emission mobility. Digital mobility solutions Digital technologies can make transport safer, more efficient and inclusive. They enable seamless door-to-door mobility, integrated logistics and value added services. To make best use of this potential, these technologies need to be well integrated in sustainable mobility concepts. For this reason, the deployment of Intelligent Transport Systems for all transport modes has become an integral part of the development of the multimodal Trans-European Transport Network. In road transport considerable efforts are now being made to stimulate the development and deployment of Co-operative Intelligent Transport Systems. To this end, the Commission is working on a framework for the swift and coordinated deployment of such systems across the EU. Fair and efficient pricing in transport

Providing the correct price signals and taking account of externalities is one of the most economically rational ways of incentivising more energy efficient transport operations, low-emission energy and a faster renewal of the fleet. While charging is already used at EU level for lorries and rail, there is scope for action at Member States and municipal level to address passenger transport. Such charges should be complementary to the existing taxation of motor fuels. Across the EU, charging should move towards distance-based road charging systems based on actual kilometres driven, to reflect better the polluter-pays and user-pays principles. To that end, the Commission is developing standards for inter-operable electronic tolling systems in the EU, to facilitate access to markets for new tolling service providers and to reduce overall system costs. Moreover, the Commission will revise the Directive on the charging for lorries to enable charging also on the basis of carbon dioxide differentiation, and extend some of its principles to buses and coaches as well as passenger cars and vans. Promoting multi-modality Measures to support multimodal integration have an important role in achieving low emissions mobility by incentivising a shift towards lower emission transport modes such as inland waterways, short-sea shipping and rail. The revised regulatory framework for the railway sector for instance is designed to make rail more competitive and attractive for both passengers and freight. To further promote inter-modality, the Commission will modernise incentives for combined transport and is preparing measures to enhance capacity and efficiency of use of corridors for rail freight. The Commission is supporting the roll-out of the multimodal core network corridors by preparing the second generation of work plans and facilitating measures for the implementation of the Trans-European Transport network. To further strengthen public transport and contribute to the reduction of carbon dioxide emissions from road transport, the Commission is preparing action to allow for a further development of domestic bus and coach services. 2.2Scaling Up the Use of Low-Emission Alternative Energy for transport Transport in the EU still depends on oil for about 94% of its energy needs, which is much higher than in any other sector and makes transport heavily dependent on imports. While the transition to low-emission alternative energy in transport has already begun, it will need to accelerate in the next decade. It is an opportunity for Europe to develop leadership in new products, such as advanced biofuels. Relevant infrastructure needs to be rolled-out. Effective framework for low emission alternative energy As part of the revision of the current legislation related to fuels and renewable energy, the Commission is examining how to provide a strong incentive to innovate in energies needed for the long-term decarbonisation. This could be done for example as an obligation for fuel suppliers to provide a certain share of renewable alternative energy, i.a. advanced biofuels and synthetic fuels, for example through a blending mandate or an obligation to reduce the greenhouse gas impact of the energy supplied. The Commission already indicated that food-based biofuels have a limited role in decarbonising the transport sector and should not receive public support after 2020. In the context of the ongoing analytical work to support the revision of the current legislation on fuels and renewable energy, the Commission is focusing on their gradual phase out and replacement by more advanced biofuels. The impacts will be assessed carefully including the investment needs for advanced biofuels and the fact that without support, at this stage, they will not be able to compete with fossil fuels or food-based biofuels. The prospects for low-emissions alternative energy differ among transport modes. The widest range of options is currently available for passenger cars and buses, and solutions are rather straightforward for rail through electrification. In the medium-term, advanced biofuels will be particularly important for aviation, as well as for lorries and coaches. Natural Gas is expected to be increasingly used as an alternative for marine fuels in shipping and for diesel in lorries and coaches. Its potential can be increased significantly with the use of bio-methane and synthetic methane (power-to-gas technologies).

Roll-out of infrastructure for alternative fuels Large part of alternative fuels (including electricity) requires specific infrastructures outside the current refuelling system. The Alternative Fuels Infrastructure Directive addresses the provision of common standards on the internal market, the appropriate availability of infrastructure and consumer information on the compatibility of fuels and vehicles. A methodology for fuel price comparison is being prepared. Based on this Directive, by November 2016, Member States will design policy frameworks for rolling-out publicly available electric recharging points and natural gas filling stations, and optionally hydrogen filling stations. In order to achieve mass acceptance and deployment of electric vehicles, charging and maintenance infrastructure needs to become widely available throughout Europe. The ultimate objective is to allow a car journey across Europe, making electric vehicle charging as easy as filling the tank. The EU is supporting this deployment financially and through its stakeholder platforms. Ongoing projects develop the business case and test feasibility through real-life trials, bringing together more than EUR 1 billion of private and public investment and almost EUR 600 million of EU financial support for nearly 100 projects. In this context also financing opportunities provided by the European Fund for Strategic Investments should be further exploited. Commission will assess the need to adjust the existing financing instruments with a view to facilitate the realisation of cross-border investment projects to charging and alternative fuel infrastructure. In the context of its work on energy efficiency, the Commission is examining options to promote the installation of electric vehicle re-charging points in buildings. Interoperability and standardisation for electro-mobility Standardisation and interoperability are crucial to make the most of the scale of the internal market, especially for electro-mobility and barriers to charging of electric vehicles across the EU need to be eliminated. Further effort should be made to foster the creation of an EU-wide electro-mobility services market, such as the cross-border interoperability of payments and the provision of real-time information on charging points. EU-wide standards are being developed in co-operation with EU Member States, the industry and the European Standardisation Organisations. A common plug standard already exists for cars and standards for induction charging, batteries, and charging plugs for electric buses and motorbikes are next. The Commission has also inaugurated a dedicated laboratory to ensure that the next generation of electric cars and smart grids are fully interoperable, based on harmonised standards, technology validation and testing methods. The EU also participates in international efforts in this area, including with the United States and the United Nation's Economic Commission for Europe. 2.3Moving towards Zero-Emission Vehicles Improved efficiency of the transport system and shift to low-emission alternative energy need to be complemented by policies to support efficiency and innovation in vehicles and demand for such products. In road transport, further improvements in the combustion engine will continue to be needed. However, the transformational change towards low- and zero-emission vehicles will need to be supported by a wide range of measures at all levels of policy-making to engage both manufacturers and users. Compared to the past, policies will need to pay more attention also to lorries, buses and coaches. Improvements in vehicle testing to regain trust of consumers Over the last year, the Commission has made fundamental changes to how vehicle emissions are measured and verified. New 'real driving' emissions tests will now be implemented swiftly so that limit values for air pollutant emissions have a stronger impact on the ground and consumers can trust them again. A new type-approval framework will strengthen independent testing, market surveillance and enforcement in Europe. In this context, transparency and reliability of environmental performance of vehicles will ensure that consumer trust is regained and will provide additional tools to address severe air quality problems across the EU. A new global test procedure, the World Harmonised Light Vehicle Test Procedure, will be implemented to deliver more realistic and accurate carbon dioxide and fuel consumption values. The setting of post-2020 standards for cars and vans will be based on this new test procedure and in defining the new standards the higher stringency of the new test will need to be taken into account.

The Commission is also exploring the feasibility of measuring real-world fuel consumption and carbon dioxide emissions, and the possible use of such data to inform consumers and to control the accuracy of test procedures. Post-2020 strategy for cars and vans EU fuel efficiency standards for new cars and vans have proven to be a strong driver for innovation and efficiency in automotive technology. Thanks to the secondary vehicle market, their benefits spread gradually across the entire vehicle fleet. Emissions from conventional combustion engines will need to further reduce after 2020. Zero- and low-emission vehicles will need to be deployed and gain significant market share by 2030. To support the transition, incentives on both the supply- and demand-side will be needed through measures at EU level, as well as at Member State, regional or local level. The Commission is working on post-2020 carbon dioxide standards for cars and vans, assessing their costs and benefits, competitiveness impacts and industrial policy developments across the EU and globally. It will also analyse the impact of different ways to incentivise low- and zero-emission vehicles in a technology neutral way, such as setting specific targets for them. Such vehicles will need to be properly defined, including possibly distinguishing between low-emission and zero-emission vehicles. The overall timetable for the post-2020 framework, in particular the setting of an intermediate target before 2030 will also be assessed. The fleet renewal times would call for action earlier rather than later. The Commission is launching a public consultation on these options together with this Strategy. These measures will need to be supported by development of domestic production base of new generation of electric battery cells. As regards consumer up-take, more needs to be done to create markets for low- and zero-emission vehicles. That is why the Commission is working on improving consumer information through car labelling and on support through public procurement rules. Member States, local and municipal authorities as well as producers themselves can provide much needed incentives. Customer awareness is a particular problem for electric and fuel cell vehicles. Thanks to improvements in battery technology, range is increasing, purchase costs decreasing and refuelling and maintenance costs are significantly lower compared to conventional fuels. Potential users need to be made more aware of these benefits. A more holistic approach to indicate emissions including also those from the fuel or energy used could further drive consumers' choice and enhance the role of alternative fuels and contribute to achieving higher carbon dioxide reductions. Tax instruments are very effective to incentivise consumer behaviour. Member States still apply a wide range of contradictory tax incentives that discourage low-emission mobility. These include fossil fuel subsidies for example through low rates on some fuels and tax schemes for company cars. These schemes, in the hands of the Member States, need to be reviewed so as to ensure positive incentives for low-emission vehicles and energy for transport. For company cars, a well-designed framework could make a big difference for the introduction of low- and zero-emissions vehicles, as these are fast renewing and sizeable fleets. Post-2020 strategy for lorries, buses and coaches Emissions from lorries, buses and coaches currently represent around a quarter of road transport carbon dioxide emissions and are set to increase by up to 10% around between 2010 and 2030. While lorries, buses and coaches have been subject to similar air pollution standards as cars and vans, and are now required to meet them under real driving conditions, the EU has neither fuel efficiency standards for them, nor a carbon dioxide monitoring scheme as in the case of cars and vans. As a first step, the Commission is working on two proposals: one on the certification of carbon dioxide emissions and fuel consumption of these vehicles and one on the monitoring and reporting of such certified data. These measures will increase transparency and will also facilitate differentiation in road user charging.

The EU will also need to introduce measures to actively curb carbon dioxide emissions from lorries, buses and coaches. Other parts of the world, such as the United States, China, Japan and Canada, have already introduced standards, and some European manufacturers participate in these schemes. Europe cannot lag behind. Lower running costs for transport of goods, more fuel efficient vehicles will benefit the entire economy and ultimately, the consumers and passengers. The secondary market will spread the benefits to small and medium-sized hauliers. This Commission will, therefore, speed up analytical work on design options for carbon dioxide emission standards for such vehicles and will launch a public consultation to prepare the ground for a proposal during this mandate. Given the average lifetime of a lorry of about 10 years, vehicles sold in 2020 will still be on European roads in 2030. In order to be able to make swift progress different options for standards will be considered, including for engines only or for the whole vehicles, with the objective of curbing emissions well before 2030. In its analysis, the Commission will make full use of all available data, including the simulation tool developed in close collaboration with stakeholders. The potential to introduce low or zero emission technologies differs among categories of such vehicles. For some categories – such as city buses – early adoption of zero emission technologies seems in reach and a separate zero-emission target should be explored. Public procurement is a powerful instrument to create markets for innovative products and it should be used to support take up of such vehicles. Since a significant part of public procurement is undertaken by municipal and local authorities, there is particular potential for public transport vehicles, such as buses, using low-emission alternative energies. To make such public procurement even more effective, the Commission is currently working on the revision of the Clean Vehicles Directive, which introduced sustainability obligations into public procurement in the EU. The options that are currently being assessed include broadening of the scope, more robust compliance requirements and procurement targets. 3.Enabling Environment for Low-Emission Mobility A number of horizontal initiatives and actions at all levels will support the transition to low-emission mobility. Energy Union: linking the transport and energy systems Low-emission mobility could affect energy supply, by creating additional demand for some energy sources and reducing demand for others. Suppliers of fossil fuels will need to embrace new opportunities related to low-emission alternative energy for transport. Low emission mobility could create more demand for electricity and additional pressure on the power sector to decarbonise under the EU Emission Trading System. While the existing electricity infrastructure generally has the capacity to accommodate widespread use of electricity in transport, challenges may occur at the distribution level at peak times. To address this, under Energy Union Strategy the Commission is working on the Electricity Market Design proposal, aiming to facilitate the integration of electro-mobility, by encouraging charging at times of cheap electricity when demand is low or supply high. The proposal could also reduce barriers to the self-generation, storage and consumption of renewable electricity. This would, for example, facilitate consumers' ability to use electricity generated from their own solar panels for charging vehicles. In the long-run vehicle batteries could also become an integral part of the electricity system and provide energy to the grid when needed. Similarly, hydrogen, bio-methane and synthetic fuels could be produced from electricity at times of low prices, providing a form of energy storage. Research, innovation and competitiveness Research and innovation efforts to support the long-term transition towards zero-emission mobility need to intensify. Later this year, the Commission intends to present an Integrated Research, Innovation and Competitiveness Strategy for the Energy Union, which will bring together three interconnected strands: energy technologies, transport and industry. The aim is to ensure coherence with on-going horizontal discussions on the broader research, innovation and competitiveness policy. From now on resources should focus on innovative zero- and low-emissions options and their deployment. It is important to set clear priorities and maximize synergies, e.g. between the transport and energy systems, for example by developing energy storage solutions, including next generation batteries, that meet transport demands and enable Europe to develop a manufacturing base for the mass production of such solutions. As far as energy for transport is concerned, traditional markets for fossil based energy will shrink and new opportunities to supply low-emission alternatives will open up. Research activities should therefore also focus on advanced bio- and synthetic fuels, relevant for the decarbonisation of the existing road transport fleet and for sectors that could remain at least partially dependent on liquid fuels, such as aviation.

The industry is investing in Research and Innovation activities and Europe has traditionally enjoyed a strong position in transport-related manufacturing. This position must be maintained. While in the field of road transport, Europe still leads on patents for the improvement of internal combustion engines, the rest of the world benefits from a higher number of patents on alternative energy and markets for low-emission vehicles are growing faster outside the EU. The EU simply cannot afford innovation and the development of new technologies to take place – along with the jobs created – predominantly outside of the Union. Europe has to continue leading global standard-setting. Low-emission mobility and innovation will need to be an integral part of industrial policies of all Member States. The question of competitiveness does not only concern major vehicle producers, be it of cars, heavy duty vehicles, planes, trains or vessels. Component manufacturers, often small and medium-sized enterprises, are a vital part of European manufacturing. Digital technologies Digital technologies offer enormous potential for optimising the transport system and open up new opportunities for manufacturing and services. Digital technologies also support the integration of transport with other systems, such as the energy system, and make the mobility sector more efficient. But to reap the full benefits of digitisation in the field of transport, it is necessary to create the regulatory frameworks to incentivise the development and market uptake of such technologies, and set standards to ensure interoperability, including across borders, and enable data exchange while at the same time addressing data protection and cyber-security issues. Under the Digital Single Market Strategy the Commission is preparing a free flow of data initiative aiming to prevent unjustified restrictions on data location and addressing issues of data access and use including for transport and traffic information. In its Digitising European Industry Communication, the Commission has already presented measures in support of the new business models, including for the collaborative economy. Skills It is estimated that transport industry at large employs more than 15 million people, accounting for 7% of total employment in the EU. New skills will be required to accompany the technological transition towards low-emission mobility. The Commission's New Skills Agenda for Europe aims at addressing this challenge. The automotive and maritime technology sectors will be two of the first areas for the initiative "Blueprint for Sectoral Cooperation on Skills". Investment This Strategy for low-emission mobility also aims at providing the necessary certainty to investors. EU investment instruments will be geared towards supporting higher efficiency of the transport system in a technology neutral way, low-emission alternative energy for transport and low- and zero-emissions vehicles. The Investment Plan for Europe is pivotal to support these policy objectives. Significant progress has been made in implementing the transport pipeline of the European Fund for Strategic Investment. The focus has been on mobilising the necessary private and public investment, increasing the risk absorption capacity and the certainty of delivery when providing support to projects that face difficulties in accessing long-term finance. This support can also include setting-up platforms and other related activities to help cities pool and leverage finance, as well as the provision of technical assistance through the European Investment Advisory Hub. In addition, a number of specific EU funds are available. The transport-related envelope under the European Structural and Investment Funds totals EUR 70 billion, which includes EUR 39 billion for supporting the move towards low-emission mobility. This in turn includes EUR 12 billion for developing low-carbon, multi-modal sustainable urban mobility. The Connecting Europe Facility offers EUR 24 billion. A significant portion of Horizon 2020's transport research and innovation programme amounting to EUR 6.4 billion is focused on low-carbon mobility.