EN    EN EN 
 
EN 1   EN  EUROPEAN COMMISSION 
Brussels, 27.10.2010 
SEC(2010) 1252 final 
  
COMMISSION STAFF WORKING DOCUMENT 
Accompanying document to the 
Proposal for a 
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
amending Directive 2000/25/EC as regards the implementation provisions for tractors 
placed on the market under the “flexible scheme” 
 
 
 
Executive summary of the Impact Assessment 
{COM (2010) 607} 
{SEC (2010) 1251} 
This report commits only the Commission's servic es involved in its preparation and does not 
prejudge the final form of any deci sion to be taken by the Commission 
 
EN 2   EN 1. C ONTEXT AND PROBLEM DEFINITION  
The tractors emissions  Directive 2000/25/EC1 regulates the exhaust emissions (carbon monoxide 
(CO), hydrocarbons (HC), nitrogen oxides (NOx) and particulate matter (PM) from diesel engines 
installed in agricultural and forestry tractors (hereafte r: tractors). It is fully  in line with Directive 
97/68/EC on emissions of non-road mobile mach inery (NRMM), for which recently a similar 
proposal and IA Report were produced.  
For the various types of tractors, Directive 2000 /25/EC stipulates the maximum permitted engine 
exhaust emissions as a function of the power of  the installed engine. Moreover, the Directive 
includes a series of emission limit stages of in creasing stringency with corresponding compliance 
dates. Tractor manufacturers must ensure that ne w engines used in their machines comply with 
these limits when placing them on the market.  
Directive 2005/13/EC2 amended the original tractors Dire ctive and introduced the currently 
applicable stage of emission limits for the majority of diesel engines (refe rred to as Stage IIIA). 
These limits will be replaced by the more stri ngent Stage IIIB limits entering into force 
progressively, depending on the power category, aff ecting vehicles placed on the market from 1st 
January 2011 onwards. From 1st January 2010 the type approva l period for these engines has 
started. As the Stage IIIB limits are stricter, current engines will  n e e d  t o  b e  m o d i f i e d  a n d  r e -
designed in order to respect the ne w limits. This redesign affects tractor manufacturers who have to 
adapt the design of their vehicles to accommodate the modified engines. This is a time and resources consuming procedure; the efforts needed depend heavily on the required changes to the 
engines and to the body of th e tractor in which the engi ne is to be installed. 
Directive 2005/13/EC introduced a so-called "flexibi lity scheme" to facilitate the transition from 
one emission stage to the next. The flexibility scheme allows the tractor manufacturers to place on the market, during one stage of exhaust emissions limit values, a limited number of tractors fitted 
with compression ignition (CI, diesel) engines that still comply with the exhaust emission limits of 
the previous stage. A tractor manufacturer has the option to place on the mark et either (1) for each 
engine power category a limited number of tractors not exceeding 20% of the tractor 
manufacturer's annual sales (calculated as the average sales in the EU of the la test 5 years) or (2) a 
fixed maximum number of tractors as stipulated in the Directive. This second option was intended 
to be used by smaller enterprises producing lower volumes of tractors. 
The flexibility scheme was designed to: 
• permit smooth integration of new engine requirements applicable to  the tractors. The majority of 
tractor manufacturers do not produce their own engines, but have to  purchase these from engine 
manufacturers. Once the engine manufacturer is  satisfied that engine  and after-treatment 
development
3 is satisfactory and ready for production, then the trac tor manufacturer can follow-
up with its integration and optimisation in the vehicle and arrange for type-approval. This 
situation is unique compared with other (mostl y road) vehicle manufacturers, who can develop 
and produce both vehicle and engine at the same time. 
                                                 
1 OJ L173, 12.7.2000, p.1  
2 OJ L 55, 1.3.2005, p. 35  
3 Additional equipment installed with the engine, that chemically  or physically reduces the exha ust emissions emitted from the en gine 
before releasing them to the atmosphere e.g. Diesel Particulat e Filters, NOx adsorber Catalyst or Selective Catalyst Reduction systems.  
 
EN 3   EN • provide the necessary environment for the tractor manufacturers to develop and adapt, initially, 
tractors with bigger volume sales and fewer problems and then ut ilise the experience gained to 
adapt the rest of the tractors, produced at smal ler volumes for niche markets. This experience 
makes the adaptation of the rest less costly. 
• avoid excessive impacts during the transition to the next St age on low volume products, since 
development in these series requ ires relatively high fixed costs. 
The tractors emissions directive  2000/25/EC  was set up fully in line with the NRMM directive and 
implemented the requirements specifically for tractors under the framework Directive 2003/37/EC, 
including the Stages IIIA, IIIB and IV, the time frame and the flexibility scheme. Because the 
provisions for tractors are aligned with those for NRMM, the text of this impact assessment draws 
on the impact assessment for flexibility for NR MM. A general difficulty was encountered in 
obtaining specific information for tractors. Sources  like EUROSTAT treat tractors as part of 
'agricultural machinery' and don't show them se parately. Because of th e similarities between 
NRMM and tractors with regard to engines, some of the data  on NRMM can still be used. 
What is the problem? 
In analogy with the situation for NRMM manufactur ers, the technological challenge for tractor 
manufacturers is that the next generation of engines must achieve emission reductions in PM and 
NO x comparable to those required and deployed in  on-road engines and ve hicles (trucks, buses 
etc.). This is not possible with the current technology. Furt her research and technological 
development by industry is required in order to en sure that tractors can be placed on the market 
with Stage IIIB compliant engines. 
There are approximately 40 tractor manufacturers (most are part of 6 ma jor groups) in the EU 
producing a wide variety of tractor s that have to comply with th e emission limits laid down in the 
Directive, while the engines are produced by only a few large companies (approximately 10 
manufacturers in the EU and 20 companies worldwid e). Only very few large tractor manufacturers 
produce their own engines. The adaptation of th e vehicles can only be  done by the tractor 
manufacturers after the finalisati on of the configuration of the engine, since this redesigning 
procedure cannot be done in parallel (except for tractor manufacturers producing their own 
engines). According to information from the indu stry, the total turnover fo r tractor manufacturing 
in 2008 should have reached some € 8 billion. Directly linked jobs reach 24 000 for tractors 
production and another 10 000 j obs are indirectly related. 
Influence of the Crisis 
From early 2009 onwards most of the EU based industry producing tractors  has been unexpectedly 
and severely hit by the global fina ncial and economic crisis. Steep falls in sales caused a large 
decrease in income and available capital to finance the necessary technology research and 
development for tractors to be equipped  with Stage IIIB compliant engines in all power categories 
and applications within the time lim its in the Directive. Firms prioritise their R&D expenditure to 
cover firstly those products with high existing and potential sales volumes. These sales then 
provide the business with revenues that can be  used for R&D in order to develop technical 
solutions for smaller niche markets.  
 
EN 4   EN For tractors  the market in Europe started to drop sharply in the 1st  quarter of 20094; the sales over 
the year 2009 have dropped by 20 % in units (180 000 in EU15 fo r 2008. No figures are available 
for EU12; for all equipment this may probably be  15% of the total). According to the industry 
association (CEMA) the turnove r in 2009 decreased by 20-25% compared to 2008. This is the 
consequence of the decrease in downstream de mand. For 2010 tractor manufacturers are expecting 
a further 5-10% decrease. Figures for the 1st quarter 2010 show - 22% compared to 2009.5 
Industry has not been able to do all necessary R& D yet, which is now aggravated by the influence 
of the crisis. There is a risk th at no tractors (or not e nough) complying with IIIB  will be available 
in 2011. At the same time not enough IIIA compliant tr actors can be put on the market. This would 
mean that older tractors have to run longer, which entails an increase in pollution and require more 
expensive maintenance work, manufacturers might go bankrupt and/or have to  lay-off staff, etc 
2. D OES THE EU HAVE THE RIGHT TO ACT ?  
The legal basis of this initiative is the same as for the tractors emissions Directive 2000/25/EC, 
namely Art. 114 of the TFEU. The subsidiarity principle is respected by the proposal, since 
amending the Directive is only possi ble at EU level. Member States  cannot take acti on individually 
on emission limits and related deadlines. Therefor e EU action is necessary and provides value 
added in maintaining the internal market for tractors. 
3. OBJECTIVES  
The general objective  of the proposal is to safeguard economic development of the 
tractors industry and maintain a hi gh level of environmental protection.  
The table below describes the genera l, specific and operational objectives. 
GENERAL SPECIFIC OPERATIONAL 
1. Maintain the 
functioning of the internal market for tractors 
 1. Maintain a level playing field for 
tractor producers by upholding a harmonised regulatory framework across all Member States (and thus eliminating the risk of national deviations). 
2. Prevent the foreseeable aggravation 
of an already difficult economic situation for the tractor industry that has been caused by the economic crisis. 
3. Ensure that demand for new tractors 1. Introduce a cost-effective and 
timely measure that will allow EU producers to keep selling tractors under the same rules across the EU and will allow users to replace end of life tractors.  
2. Allow tractor manufacturers to 
generate revenues that can be used to invest in the necessary R&D to comply with foreseen emission limits.  
                                                 
4 Reference: CEMA letter and attached ''Background material for the Request to Enlarge Flexibility fr om 20% to 50% for Stage IIIB '' , 14-
07-2009, addressed to Comm ission VP G. Verheugen. Additional information on ma rket share can be found in the study 'Competitive  
analysis of the EU Mechanical Engineering', p. 4, available at the link: http://ec.europa.eu/ enterprise/mecha n_equipment/compan alysis-
eu-mechengin.pdf  
5 Source: CEMA, June 2010.  
 
EN 5   EN can be satisfied by industry. 
2. Protect the 
environment  
 1. Reduce the risk that older, more 
polluting (pre-Stage IIIA) tractors cannot be replaced by newer cleaner tractors, i.e. make sure that the potential for emission reductions from replacing end of life tractors is not jeopardised. 
2. Maintain the incentive for the 
industry to invest in R&D necessary to develop cleaner tractors compliant with the foreseen future emission limit stages.  1. Enable the replacing of older, 
more polluting and fuel consuming engines and tractors by cleaner ones by adjusting the emission requirements in such a way that demand for new tractors can be met by the cleanest available models.  
2. Send a clear signal to industry 
that further emission reductions are required and that the current path of reducing emissions is maintained. 
  
4. P OLICY OPTIONS  
The following options to tackle the iden tified problem have been identified:  
Option 1 - No action = Baseline scenario 
The provisions of the current flex ibility scheme remain unchanged, i.e. 20% (or absolute numbers 
of engines) continue to apply. 
Option 2 - Provision of government  backed loans for purchasing stocked engines manufactured 
under the so called sell-off period 
Article 4 of Directive 2000/25/EC  states that requirements sha ll be postponed by two years in 
respect of engines with a production date prior to  the said date, the 'sai d date' being one of the 
deadlines specified in point 2 of that article, after which non-compliant engines and tractors shall 
not enter into service anymore. 
While Stage IIIA is in force, industry may produce engines and tractors and stock them in the EU 
territory. These Stage IIIA engine s and tractors are manufactured to  keep industrie s running and to 
cover the needs of other countries that do not have exhaust emissions  limitations as strict as EU. 
After the beginning of implementation of Stage IIIB (between 1-1-2010 and 1-1-2013 depending 
on power category), these stocked en gines and tractors may be placed on the market for a period of 
two years. This option suggests the use of govern ment backed loans to be granted to tractor 
manufacturers to purchase St age IIIA engines on stock.  
Option 3 - Implementation of a scrapping scheme.  The use of a scrapping scheme would be a subsidy, given as an incentive, to the user to buy new 
tractor with a St age IIIB engine. 
 
EN 6   EN Under this option, the ow ner of an older, more polluting tr actor will delive r the tractor for 
scrapping (destruction-recycle etc) . A national public authority would grant a lump sum to the 
owner of the scrapped tractor. Th e owner will receive the money via banking or the tax system 
when the purchase of new the tractor is proven. 
Option 4 – Implementation of alternative type s of provisions under th e flexibility scheme 
Under this option additional flexibility will be gr anted for the transition from Stage IIIA to Stage 
IIIB. No additional measures for future stages are envisaged. 
• Option 4.1  - Implementation of a scaled percenta ge of the flexibility scheme  
The option suggests a different percentage for the various categories of tr actors, depending on the 
particular transitional problems from  Stage IIIA to Stage IIIB plus a similar approach with regard 
to the fixed numbers of engines. 
• Option 4.2 - Increase of flex ibility percentage to 50% 
This option suggests increasing flex ibility from 20% to 50% for al l tractor categories. The fixed 
maximum number of engines would be amended accordingly. 
• Option 4.3 - Increase of flex ibility percentage to 80% 
This option suggests increasing flex ibility from 20% to 80% for al l tractor categories. The fixed 
maximum number of engines would be amended accordingly. 
• Option 4.4 - Conditional expansion of the flex ibility scheme, with penalty mechanism 
In order to maintain the incentives to develop St age IIIB engines, a system could be introduced 
where additional flexibility used in the transition  from stage IIIA to Stag e IIIB will trigger payment 
of a penalty after several years. This would maintain the incentive for the tractor manufacturers to 
develop tractors with IIIB engines and use only the minimum additional flexibility they need. It 
requires a penalty to be set at the right level. 
• Option 4.5 -  Implementation of a trading system 
A system similar to that of the EU Emissions Trading Scheme could be developed for the 
flexibility measure. A system could be establis hed whereby firms that would not us e the entire 
flexibility could sell their flexibil ity rights to firms that need additional flexibility. This scheme 
would require a mechanism to sell flexibility (permits) and a system in place to monitor the 
scheme. The price of each permit of flexibili ty would be determined by the market.  
Option 4.6 -  Replace the flexibility scheme by a comb ination of flexibility for tractors 
manufacturers and ABT, as applied in the USA. 
An ABT scheme similar to the one used in the US A could be developed for engine manufacturers, 
together with a flexibility scheme  for the tractor manufacturers. 
 
EN 7   EN 5. A SSESSMENT OF IMPACTS OF THE OPTIONS  
The policy option of doing nothing  would not be effective in reaching the objectives. Industry 
would continue to struggle in the current economi c climate and would not have tractors ready for 
Stage IIIB. Industry would then not be able to place products on the market  beyond what is offered 
in the 20% flexibility scheme and some firms w ould subsequently go out of business which would 
lead to job losses. 
Clients of tractor manufacturer s are currently much more pr udent towards buying new tractors  as a 
result of the economic climate. Users cut capital costs by extending the use of old tractors  and not 
purchasing newer, cleaner tractors , thus causing a larger negative en vironmental impact in the short 
term. Also they would have to pay more for ma intenance in order to k eep their old tractors 
operational. 
The system for loans  would be very complex to put into plac e in a short time which is required due 
to the fact that Stage IIIB limits apply as of  2011 onwards. The time taken to develop a working 
system would not be effective in meeting the im mediate requirements of the industry. Additional 
EU / national resources would be required to set up and regulate this system. This scheme would 
not help the firms who are experiencing problems with financing R&D to reach Stage IIIB. Those 
firms not ready for Stage IIIB would have to pay for additional R&D.   
Another possibility to conti nue its operation is that a tractor manufacturer could buy stocked  
engines from an engine manufacturer to be able  to continue selling IIIA compliant tractors . In order 
to be used after a stocking period of more than  three months, engines re quire a special treatment6 
that is time consuming and costly and could re ach up to 5% of the sale price of the engine.  
It could also be argued that the incentive to produce more Stage II IA engines would result in a high 
number of Stage IIIA engines, inst ead of development of the cleaner  Stage IIIB engines; it would 
act as a counter incentive to innovate and devel op more environmental friendly tractors. Thus, a 
loan to purchase stocked Stage IIIA engines would reduce the incentive to design compliant Stage IIIB tractors  which is less environmentally damaging. In  addition, this op tion raises issues 
regarding compatibility with the EU state aid provisions. 
The use of a scrapping  subsidy will provide an incentiv e to the users to buy new tractors  with a 
cleaner Stage IIIB engine, under the condition that they destroy their older, more polluting tractor . 
This will encourage the purchase of Stage IIIB tractors  and have positive environmental impacts. 
However, it will not assist tractor manufacturers in  financing the R&D to make Stage IIIB tractors 
available. Whether the prospect of a scrapping sche me would be sufficient to induce banks to hand 
out additional loans to tractor manufacturers for R&D remains doubtful. In addition, if Member 
States implemented the scrapping scheme in different  ways, this could lead to a fragmentation of 
the internal market and to distortion of competi tion. In any event, no plans from any MS to 
introduce a scrapping scheme for this s ector are known to  the Commission.  
Implementation of scaled percentages  of flexibility for the different types of tractors, depending 
on the problems they encounter for the transition from  Stage IIIA to Stage IIIB is not feasible since 
                                                
 
6 When the engine is manufactured to be stoc ked, it is filled with a special oil. When it is placed on the tractor , this oil mus t be changed to 
a specific one and then with a specific fuel the engine is kept  running for a few hours. After that period the oil must be chan ged again to 
normal and with a normal fuel it must run for some time and then it is ready and safe to be sold. The required time and cost of  the 
procedure depend on the size of the engine and its power.  
 
EN 8   EN there is no specific inventory of the tractors in the various categories, nor a relevant system to 
survey the number of sales. 
Increase of flexibility percentage to 50%  for all tractors and propor tionate adjustment of the 
fixed numbers has to take account of environmenta l, social and economic impacts. Environmental 
impacts have been determined for all NRMM in  the impact assessment for NRMM flexibility 
based on external costs of calculated emissions. As there is a complete lack of specific information for tractors in EUROSTAT and envi ronmental databases, it is not po ssible to provide more specific 
information for tractors only. However, the nature of  the impacts is similar for tractors as for all 
non-road mobile machinery. 
The environmental costs represent the cost genera ted from the additional emissions of the engines 
under the amended 50% flexibility scheme compar ed to the current 20% flexibility scheme. 
According to the methodology followed based on th e Net Present Value (NPV), per type of 
pollutant the environmental costs resulting from a 50% flexibility compared to the current 20% 
flexibility are in the magnitude of: 
Pollutant  50% flexibility for all NRMM 50% flexibility for tractors  
PM 200 80 – 90  
NO x 350 130 – 150  
Total  550 210 - 240  
 
These figures  (million Euros) represent the total co st over the period of 2008-2030, while for the 
present Impact Assessment the bene fit has been calculated for the pe riod of three years as covered 
by the accompanying proposal. The figures for tract ors are based on the assumption that tractors 
will still have the same relative share in pollution.  
The estimated impact of an enlarged flexibility scheme is 0,3% of the ove rall emissions (both of 
PM and NO x) of all NRMM in use, in the first year. 
On the other hand, enlarged flexibility would allow manufacturers to continue  selling tractors and 
thereby generating revenue to finance R&D costs for stage IIIB tractors. Similarly to the NRMM impact assessment, it is expected that the econom ic benefits outweigh th e environmental harm.  
As alternative to 50% flexibility , a possibility to postpone the in troduction of Stage IIIB might be 
considered until the introduction of Stage IV. The consequence of this  would be that the effect of 
the 90% reduction in PM limits would be delayed for three years. The Comm ission is also of the 
opinion that a similar rise in flexibility for the introduction of Stage IV should not be considered; 
as stated before, the R&D work done for Stage IIIB should guarantee th at this would not be 
justified. The Commission will inform the stakeholders about this. 
Increase of flexibility percentage to 80%  for all tractors and propor tionate adjustment of the 
fixed numbers, similar to option 4.2, with the following differences: 80% would not be coherent 
with the NRMM proposal (50%); flexibility would now be clos er to the US system while 
maintaining the EU fundamental system; it would l ead to more environmental harm, while industry 
stated that this high figure is not  necessary for them to be able to comply with the Directive. 
The use of the flexibility scheme with penalty mechanism  would limit concerns that competitive 
distortions may occur from enlarged flexibility. Howe ver, there is a lack of available information 
 
EN 9   EN concerning compliance of tractors which would place a significant burden on competent National 
authorities that render this option practically unfeasible and the preparation and implementation of such a mechanism would entail disproportionate cost s (notification and survei llance) with regard to 
the benefits triggered by its application. 
A flexibility trading system  by which firms could buy additional flexibility from those firms that 
do not need it, would provide a strong incentive to comply as soon as possible with the new 
emission limits. However, setting up such a complex system in a short time scale would be disproportionate to the e xpected achievements.  
Similarly an ABT  is not considered to be a feasible option as described before; it was already 
turned down by Council and Parliament.  
Comparison of the listed options:  
 Effectiveness Efficien cy Coherence Feasibility 
Option 1 –  
Baseline  Not effective Not efficient Partly coherent Feasible  
Option 2 -  
Provision of government 
backed loans to finance 
stocking of IIIA engines  Partly Effective Not efficient Not coherent Feasible, if MS 
would be willing 
Option 3 -  
National scrapping 
schemes  Partly effective Not efficient Partly coherent Unfeasible  
Option 4.1 –  
Scaled Flexibility  Effective Efficient Coherent Unfeasible 
Option 4.2 –  
50% Flexibility  Effective Efficient Coherent Feasible 
Option 4.3 –  
80% Flexibility  Effective only 
with respect to 
objective 1 Not efficient 
due to 
environmental 
trade-off Coherent with 
environmental 
policy Feasible 
Option 4.4 –  
Penalty mechanism  Effective Not Efficient Coherent Unfeasible  
Option 4.5 -  
Trading scheme  Effective  Partly efficient Coherent Unfeasible  
Option 4.6 -  
ABT  Effective  Partly efficient Coherent Unfeasible  
 
 
EN 10   EN 5.1. Conclusion  
As a result of the above analysis, it is concluded that extending the flexibility to 50% is the most 
appropriate measure to ensure that th e objectives of the policy are met.  
6. MONITORING AND EVALUATION  
An assessment of the impacts of the enlarged provisions of the flexibility scheme after its 
implementation and completion will be based on information provided by the industry and by 
Member States, as already required in Direc tive 2000/25/EC. Thus, no increase in costs for 
manufacturers or national authorities is expected. 
Key indicators to assess the effect iveness of this initiative could be the use of the flexibility scheme 
until end of 2013, the development of the number  of firms going out of business, and the 
development of NO x and PM emissions attributed to tractors. 
It is the Commission’s intention to evaluate the imp act of the revised flexibility measure at the end 
of the period defined in the accompanying pr oposal, i.e. in 2014 and to draw the necessary 
conclusions from the results obtained.