Commission staff working document - Accompanying document to the Communication from the Commission to the Council and the European Parliament - Results of the review of the Community Strategy to reduce CO2 emissions from passenger cars and light-commercial vehicles - Impact Assessment {COM(2007) 19 final} {SEC(2007) 61}
Date: 2007-02-07
Institutions: European Commission
Subjects: EU environmental policy, environmental standard, motor vehicle pollution, reduction of gas emissions, road transport

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.2.2007 
SEC(2007) 60 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying document to the 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

Results of the review of the Community Strategy to reduce CO2 emissions from 
passenger cars and light-commercial vehicles 

Impact Assessment 

{COM(2007) 19 final} 
{SEC(2007) 61} 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

Problem definition........................................................................................................ 4 

Nature of the issue or problem that requires action ..................................................... 4 

Underlying drivers of the problem ............................................................................... 5 

1.2.1. 

Increase in demand for transport.................................................................................. 5 

1.2.2.  Evolution of car markets .............................................................................................. 5 

1.3. 

1.4. 

1.5. 

2. 

2.1. 

2.2. 

Stakeholders affected ................................................................................................... 6 

Consequences of no change in policy .......................................................................... 7 

Subsidiarity principle ................................................................................................... 8 

Objectives..................................................................................................................... 8 

Policy objectives .......................................................................................................... 8 

Consistency with horizontal objectives of the European Union .................................. 9 

2.2.1.  Lisbon strategy ............................................................................................................. 9 

2.2.2.  Sustainable Development strategy ............................................................................... 9 

3. 

3.1. 

3.2. 

Policy options............................................................................................................. 10 

Options Identified....................................................................................................... 10 

Options discarded at an early stage ............................................................................ 11 

3.2.1.  EU Emissions trading scheme.................................................................................... 11 

3.2.2.  Other options .............................................................................................................. 12 

3.3. 

Detailed presentation of the reduction measures included in the options 
identified..................................................................................................................... 13 

3.3.1.  Technical options to reduce fuel consumption from passenger cars.......................... 13 

3.3.2.  Application of fuel efficient mobile air conditioning systems ................................... 15 

3.3.3.  Options to reduce vehicle and engine resistance factors............................................ 15 

3.3.4.  Options to promote application of biofuels................................................................ 16 

3.3.5.  Technical options to reduce fuel consumption from light-commercial vehicles ....... 16 

3.3.6.  Fuel efficient driving.................................................................................................. 16 

3.3.7.  CO2 based taxation schemes for passenger cars......................................................... 17 

3.3.8.  Options for improved consumer information (including CO2 labelling) ................... 18 

3.3.9.  Other measures........................................................................................................... 18 

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4. 

Analysis of Impacts.................................................................................................... 19 

4.1. 

Description of the methodology................................................................................. 19 

4.1.1. 

1st step: baseline ......................................................................................................... 19 

4.1.2. 

2nd step: Building of the cost curve for passenger cars (M1) ..................................... 20 

4.1.3. 

3rd step: Assessing the costs and reduction potential of other measures .................... 21 

4.2. 

Detailed analysis of the individual reduction measures ............................................. 21 

4.2.1.  Options to reduce fuel consumption in passenger cars (M1) ..................................... 21 

4.2.2.  Application of fuel efficient mobile air conditioning systems (MACs)..................... 23 

4.2.3.  Options to reduce vehicle and engine resistance factors............................................ 23 

4.2.4. 

Increased application of biofuels................................................................................ 25 

4.2.5.  Options to reduce fuel consumption in light-commercial vehicles (N1) ................... 26 

4.2.6.  Fuel efficient driving.................................................................................................. 27 

4.2.7.  CO2 based taxation schemes for passenger cars......................................................... 27 

4.2.8.  Options for improved energy or CO2 labelling .......................................................... 28 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

5. 

Building the Policy Options ....................................................................................... 29 

Environmental impacts............................................................................................... 31 

Economic impacts ...................................................................................................... 32 

Social impacts ............................................................................................................ 34 

Comparing the options ............................................................................................... 35 

Monitoring and evaluation ......................................................................................... 37 

ANNEX 1: PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED 

PARTIES.................................................................................................................... 38 

ANNEX 2: REFERENCE DOCUMENTS AND ADDITIONAL CONSIDERATIONS 

ON THE MODELLING FRAMEWORK.................................................................. 40 

ANNEX 3: RESULTS OF THE PUBLIC CONSULTATION................................................ 45 

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1. 

PROBLEM DEFINITION 

1.1. 

Nature of the issue or problem that requires action 

The  European  Parliament  and  European  Council  in  spring  2005  reaffirmed  the  EU 
objective  that  global  surface  temperatures  should  not  rise  by  more  than  2°C  compared 
with  pre-industrial  levels  in  order  to  prevent  dangerous  and  irreversible  anthropogenic 
climate change. The European Council also stated that reduction pathways of emissions 
of  greenhouse  gases  for  the  group  of  developed  countries  in  the  order  of  15-30 % 
compared to the baseline envisaged in the Kyoto Protocol should be envisaged. 

However,  while  the  EU  as  a  whole  has  reduced  emissions  of  greenhouse  gases  by  just 
under 5% over the 1990-2004 period, CO2 emissions from road transport have increased 
by  26%.  Road  transport  is  the  biggest  transport  emission  source  (94%  of  domestic 
emissions) with approximately 1/3 from freight, 2/3 from passengers. Furthermore, road 
transport relies quasi exclusively on fossil fuels, consuming 60 % of all the oil consumed 
in the EU. 

Figure  1  -  Change  in  EU-15  GHG  emissions  by  sector  base  year  to  2004,  sector 
projections  "with  existing"  and  "with  additional  measures"  base  year  to  2010 
(source EEA) 

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-16%

-10%

-2%

-3,6%

Energy excl. transport

-2,4%

Transport

4
0
0
2

Industrial processes

Agriculture

Waste

-33%

Energy excl. transport

Transport

Industrial processes

Agriculture

-15,6%

Waste

-44,9%

Energy excl. transport

Transport

Industrial processes

Agriculture

Waste

-47,0%

-7,1%

-10,4%

-16,4%

26,0%

34,5%

27,2%

-60%

-40%

-20%

0%

20%

40%

In  addition,  the  transport  sector  is  one  of  the  only  sectors  whose  emissions  keep 
increasing (see Figure 1), making it harder for the EU to meet its Kyoto commitments by 
jeopardising  the  progress  made  by  other  sectors.  This  situation  has  competitiveness 

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repercussions, since some of those sectors (e.g. energy intensive industries) are subject to 
international competition while transport, and even more so road transport, is by nature a 
domestic  activity.  If  domestic  transport  greenhouse  gas  emissions  continue  to  increase 
with  economic  growth  they  would  increase  for  the  EU-15  by  almost  31%  by  2010 
(compared to 1990) and up to 50% by 2020. 

1.2. 

Underlying drivers of the problem 

A wide range of factors influence the observed and predicted growth in CO2 emissions 
from passenger road transport, such as supply and demand for cars, individual mobility 
needs,  the  availability  of  alternative  public  transports  services  and  the  costs  of  car 
ownership.  

1.2.1. 

Increase in demand for transport 

While vehicle efficiency  has  been  increasing, this has been  offset  by increased  journey 
lengths and other trends leading to higher greenhouse gas intensity. The overall share of 
cars  in  passenger  traffic  has  remained  fairly  constant  (74.4 %  in  2003).  However, 
transport demand has grown significantly and the number of passenger-kilometres driven 
increased  by  16.4 %  over  the  1995-2003  period.  The  level  of  car  ownership  also 
increased substantially as shown below: 

Table  1  -  Evolution  in  car  ownership  and  vehicle  stock  in  the  EU25  and  EU15 
between 1990 and 2003 (source EU energy and transport in figures, 2005) 

EU 25 

EU 15 

1990

2003 Change 1990  2003  Change

Number of cars per 1000 inhabitants 

355 

465 

+ 31% 

394 

495 

+ 26% 

Vehicle stock (Million) 

156 

212 

+ 36% 

144 

179 

+ 24% 

This increase in demand for transport took place despite significant fuel price increases: 
over  the  1995-2005  period  in  the  EU  15,  automotive  petrol  and  diesel  increased 
respectively by 74% and 54% (all taxes included). 

1.2.2.  Evolution of car markets 

As regards the evolution of the physical characteristics of passenger cars, Figure 2 shows 
that  important  increases  in  mass  (+15%)  and  even  more  so  in  power  (+28%)  have 
taken place in parallel to reductions in specific CO2 emissions. 

This trend towards bigger and more powerful cars, also shown by the increasing market 
share of off-road vehicles (see Figure 3), is explained by the evolution of manufacturers' 
offer  and  consumer  demand,  and  by  the  measures  adopted  to  influence  these  two 
parameters. Recent surveys1 of car advertising in the United-Kingdom  and  in  Germany 

1 

See 2005 review of car adverts in United-Kingdom national newspapers by Friends of the Earth at 
http://www.foe.co.uk/resource/press_releases/government_and_industry_mu_09112005.html  and 

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have revealed that cars advertised emitted on average much higher levels of CO2 than the 
cars actually bought by consumers. Furthermore, purchasers of passenger cars now enjoy 
a  number  of  comfort  features  that  have  become  a  quasi  standard  feature.  Mobile  air 
conditioning in particular has a significant impact on the fuel consumption, which is not 
reflected under the test-cycle of the EU type approval system.  

Figure 2 - Physical evolution of ACEA's 
car  fleet  compared  to  base-year  1995
(source SEC(2006)1078) 

Figure 3 - Evolution of the market share of 
off-road  (4x4)  vehicles  in  EU  15  new 
passenger car registrations (source ACEA) 

Mass

Pow er

Capacity

CO2

)
0
0
1
=
5
9
9
1
(

140

130

120

110

100

90

80

8

7

6

5

4

3

2

1

0

)

%

(
e
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a
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s

t
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k
r
a
m

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

At the same time, consumer price for cars have increased significantly less than headline 
inflation  over  the  last  years,  de  facto  making  better  equipped  and  more  powerful  cars 
cheaper than in the past. It seems that in the majority of the new Member States, vehicle 
manufacturers  have  adjusted  prices  for  cars  downwards,  especially  for  smaller  cars, 
which suggest not only that car prices across the EU have not tended to converge towards 
levels in high price countries, but also that carmakers have tried to reduce prices in the 
new Members States, especially for small-medium cars, so as to attract consumers with 
lower budget2. 

1.3. 

Stakeholders affected 

A wide range of stakeholders are affected by the problem: 

•  The  population  of  the  European  Union  is  increasingly  affected  by  climate  change 
through  the  increased  climate variability  and  more  frequent  extreme  weather  events, 
and  their  related  impacts.  Higher  maximum  temperatures,  more  hot  days  and  heat 
waves  lead  to  increased  incidence  of  death  and  serious  illness  in  older  or  more 
sensitive groups of the population; more intense precipitation events lead to increased 
floods, landslide, avalanche, mudslides, soil erosion and related increased pressure on 
Government and flood insurance systems and disaster relief; increased summer drying 

2 

study  by  Bund  für  Umwelt  und  Naturschutz  Deutschland  (BUND)  ''Die  Werbung  deutscher 
Automobilhersteller Werbebotschaften · Spritverbrauch CO2-Emissionen", March 2006. 
See  European  Commission  DG  MARKT  2006  report  on  "Car  price  differentials  within  the 
European Union", http://ec.europa.eu/comm/competition/car_sector/price_diffs/ 

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over  mid  altitude  continental  zones  and  associated  risk  of  drought  lead  to  decreased 
crop yields, water resource quantity and quality as well as increased risk of forest fire 
and damage to building foundations caused by ground shrinkage. 

•  The consumers of motor vehicles are affected by possible increases in the price of new 
vehicles  and  reductions  in  their  running  costs,  due  to  stricter  requirements  on  CO2 
emissions  and  related  improvements  in  fuel  consumption.  Conversely,  poor  fuel 
efficiency  contributes  to  an  enhanced  dependency  on  foreign  oil  imports  and  to  a 
related exposure to possible price surges due to supply shortages. Consumers of motor 
vehicles  are  also  affected  by  possible  changes  in  the  level  of  performance  (power, 
comfort) of new vehicles. 

•  The EU being the first car market in the world, stricter fuel efficiency requirements in 
Europe  will  affect  vehicle  manufacturers  all  over 
the  world  by  requiring 
improvements  to  new  vehicles  through  the  development  and  introduction  of  better 
technologies.  Similarly,  stricter  rolling  resistance  requirements  affect  all  tyre 
manufacturers  present  on  the  EU  market.  Component  suppliers  will  also  be  affected 
by  increasing  demand  for  advanced  technologies.  The  extent  to  which  industrial 
players  will  be  affected  in  their  production  costs  will  depend  on  their  efforts  to 
develop new technologies, promote fuel efficient cars, and also on the measures put in 
place  by  competent  authorities,  and  notably  Member  States,  to  influence  consumer 
demand towards sustainable cars. 

1.4. 

Consequences of no change in policy 

As proposed by the Commission in 19953 and subsequently supported by the European 
Parliament and Council, the current Community strategy is based on three pillars, namely 
the voluntary commitments of the car industry on fuel economy improvements, the fuel-
economy  labelling  of  cars  and  the  promotion  of  fuel  efficient  cars  through  fiscal 
measures4. Compared to an EU 15 average of 186 g CO2/km  in  1995,  average  new  car 
emissions were the following in 2004: 

Table 2 - Average sales weighted new car fleet CO2 emissions in 2004 

EU 25 

EU 15 

EU 105 

2004 

162 g CO2/km 

163 g CO2/km 

156 g CO2/km 

A  number  of  issues  can  be  highlighted  based  on  the  experience  gained  in  the 
implementation of the current strategy6. 

•  Emissions  from  the  average  new  car  sold  reached  163  g  CO2/km  in  2004,  12.4% 
below the 1995 starting point of 186 g CO2/km7. Over the same period, new cars sold 

3 
4 

5 
6 
7 

COM(95) 689 and Council conclusions of 25.6.1996. 
The  Commission  has  submitted  to  the  European  Parliament  and  Council  annual  reports  on  the 
effectiveness of the strategy – see: http://ec.europa.eu/environment/co2/co2_monitoring.htm 
Slovakia and Malta did not deliver data in 2004. 
Preliminary data for 2005 point to limited further progress. 
EU-15. 

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in  the  EU  have  become  significantly  bigger  and  more  powerful,  while  prices 
increased less than inflation. 

•  While  the  combined  effect  of  supply  and  demand  measures  was  meant  to  deliver 
120 g CO2/km,  only  the  supply  measure  (voluntary  commitments)  was  attributed  a 
quantified  objective  (140  g  CO2/km).  Since  both  types  of  measures  were  to  be 
implemented  simultaneously,  it  is  not  possible  to  quantify  separately  their 
respective contributions to reaching the overall objective. 

•  Investigations on the impact of the limited measures adopted so far by Member States 
on the demand side have shown that improvements in vehicle technology delivered 
the bulk of the reductions. 

•  The  progress  achieved  so  far  goes  some  way  towards  the  140 g  CO2/km  target  by 
2008/9,  but  in  the  absence  of  additional  measures,  the  EU  objective  of  120  g 
CO2/km will not be met at a 2012 horizon. 

1.5. 

Subsidiarity principle 

The subsidiarity principle is respected, since the policy objectives cannot be sufficiently 
achieved  by  actions  of  the  Member  States,  and  can  be  better  achieved  at  Community 
level. European Union action is necessary because of the need to avoid the emergence of 
barriers to the single market notably in the field of the automotive industry, and because 
of  the  transnational  nature  of  climate  change.  Member  States  can  facilitate  the 
implementation of the strategy via action at the national level, notably to raise awareness 
about climate change and drive consumer demand towards more fuel efficient vehicles. 

2. 

OBJECTIVES 

2.1. 

Policy objectives 

The proposal pursues the following general policy objectives: 

•  Providing for a high level of environmental protection in the European Union, 

•  Improving the EU energy security of supply. 

The specific objectives cover: 

•  Reducing the climate change impacts and improving the fuel efficiency of light-duty 
road  vehicles  (passenger  cars  and  light  commercial  vehicles),  by  reaching  the 
Community objective of an average emission value of 120 g CO2/km for newly sold 
cars by 2012. 

The operational objectives include: 

•  On the supply side, defining a 2012/2015 framework for fuel efficiency in light duty 
vehicles  and  their  components  (tyres,  mobile  air  conditioning  etc)  that  address  CO2 
emissions and fuel consumption under both test-cycle and real-world conditions, 

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•  On the demand side, identify the measures that should be taken at the EU and national 
level as well as by industrial stakeholders to drive demand towards more fuel efficient 
cars. 

2.2. 

Consistency with horizontal objectives of the European Union 

2.2.1.  Lisbon strategy 

The  policy  objectives  of  the  revised  strategy  are  in  line  with  the  three  pillars  of  the 
European  Union’s  Lisbon  strategy,  namely  "making  Europe  a  more  attractive  place  to 
invest and work", "knowledge and innovation for growth" and "creating more and better 
jobs". 

Tighter requirements on CO2 emissions and fuel efficiency for passenger cars and light-
commercial  vehicles  will  encourage 
the  development  and  application  of  new 
environmental  technologies.  The  policy  objectives  therefore  promote  innovation  and 
technological development, enabling the EU car industry to achieve global leadership in 
the field of clean and lean technologies. Europe already has world leading diesel engine 
technology, and will be able to further develop this technology while making advances in 
petrol technology fuel efficiency and hybrid powertrains. 

Leadership  in  fuel  efficiency  should  in  the  short  term  pave  the  way  to  exports  of 
technologies  and  vehicles  to  emerging  markets  where  oil  is  scarce  and  that  have  set 
ambitious  fuel  efficiency  targets.  In  the  longer  term,  it  is  expected  to  provide  a  long-
standing  competitive  edge  and  the  advanced  technologies  required  to  move  towards  a 
truly low-carbon road transport system. 

By  promoting  further  advances  in  technologies,  the  strategy  will  promote  highly 
qualified jobs in Europe. Although the industry has pointed to the risk of the production 
capacity  being  relocated  outside  the  EU  to  reduce  labour  costs  while  meeting  fuel 
efficiency standards,  it should  be noted that  non-EU  manufacturers  (from  Japan,  Korea 
and  the  United-States)  will  be  subject  to  the  same  standards  as  regards  their  exports  to 
Europe,  and  that  stringent  fuel  efficiency  policies  are  already  implemented  in  their 
domestic market and, in some cases, currently subject to a revision. 

2.2.2. 

Sustainable Development strategy 

The overall objective of the Renewed Sustainable Development Strategy (RSDS) of the 
European  Union8,  as  regards  sustainable  transport  is  "to  ensure  that  our  transport 
systems meet society’s economic, social and environmental needs whilst minimising their 
undesirable  impacts  on  the  economy,  society  and  the  environment".  The  related 
operational objective and targets is to ensure that "in line with the EU strategy on CO2 
emissions  from  light  duty  vehicles,  the  average  new  car  fleet  should  achieve  CO2 
emissions of 140g/km (2008/09) and 120g/km (2012)". 

The policy objectives of the revised CO2 and cars strategy are in line with the RSDS by 
contributing to a more sustainable mobility. Leaner vehicles will bring economic, social 
and  environmental  benefits  by  reducing  the  energy  consumption  induced  by  their  use. 

8 

European Council, June 2006. 

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The  implementation  of  the  RSDS  also  means  that  challenges  must  be  addressed  in 
parallel  in  the  face  of  sometimes  conflicting  objectives.  Such  situations  include  for 
example air quality and climate change (e.g. reducing nitrogen oxides vs. reducing CO2) 
or environment and safety (e.g. impacts on average car weight), and all aspects must be 
addressed in a compatible way. 

3. 

POLICY OPTIONS 

3.1. 

Options Identified 

Three  policy  options  have  been  considered  as  possible  means  to  meet  the  policy 
objectives identified in section 2: 

(1) 

(2) 

(3) 

‘No  policy  change’  approach:  the  current  Community  strategy  to  reduce  CO2 
emissions  from  cars  and  improve  fuel  efficiency  remains  unchanged,  meaning 
that  the  Community  objective  of  120  g  CO2/km  is  to  be  achieved  through  the 
combined  implementation  of  the  existing  three  pillars  of  the  strategy,  namely 
voluntary agreements by car manufacturers' associations to reach 140 g CO2/km 
by  2008/9,  consumer  information  via  labelling  and  fiscal  measures  to  promote 
fuel efficiency. 

"Vehicle  technology  only"  approach:  the  Community  objective  of  an  average 
new  car  fleet  CO2  emission  of  120  g  CO2/km  by  2012  is  achieved  solely  by 
improvements in passenger cars (M1). 

"Integrated"  approach:  the  Community  objective  of  an  average  new  car  fleet 
CO2  emission  of  120  g  CO2/km  is  achieved  through  an  integrated  approach 
involving  car  manufacturers  but  also  other  stakeholders  such  as 
tyre 
manufacturers, competent authorities in Member States etc. The measures under 
consideration encompass supply and demand measures: 

•  Technical measures addressing new vehicles (supply) 

–  Technical options to reduce fuel consumption in passenger cars (M1) 

–  Application of fuel efficient air conditioning systems  

–  Tyre pressure monitoring systems 

–  Technical  options  to  reduce  fuel  consumption  in  light-commercial  vehicles 

(N1) 

•  Technical measures addressing the existing vehicle fleet (supply) 

–  Options to reduce vehicle and engine resistance factors (tyres and lubricants) 

–  Increased application of biofuels 

•  Demand/behaviour oriented measures 

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–  CO2 based taxation schemes for passenger cars  

–  Options for improved consumer information (including CO2 labelling) 

–  Public procurement proposals 

–  Fuel efficient driving, including gear shift indicators 

3.2. 

Options discarded at an early stage 

The following options have been discarded at an early stage: 

3.2.1.  EU Emissions trading scheme 

Consideration  has  been  given  to  the  inclusion  of  road  transport  into  the  EU  emissions 
trading scheme (ETS) established by Directive 2003/87/EC. The review of the CO2 and 
cars  strategy  is  aimed  at  reaching  the  EU  objective  of  120  g  CO2/km  by  2012.  In  the 
recent  Communication  on  the  review  of  the  ETS9,  the  Commission  has  taken  "the firm 
view  that  for  reasons  of  regulatory  stability  and  predictability,  any  changes  to  the 
Directive other than the previously decided inclusion of aviation in the ETS should take 
effect  at  the  start  of  the  third  trading  period  in  2013".  It  was  thus  considered  that 
inclusion of road transport into the EU ETS was not a viable option in the perspective of 
an  achievement  of  the  120  g  objective  by  2012.  For  the  third  period  of  allocation,  a 
number of aspects should be considered in relation to the inclusion of road transport into 
the ETS, taking into account the specificities of the scheme: 

•  The fundamental approach of the EU ETS is to place the compliance obligation with 
the  entity  responsible  for  the  emissions  released  into  the  atmosphere  i.e.  the  "direct 
emissions" approach. This is frequently the principle upheld by trading schemes, since 
the  legal  entity  emitting  greenhouse  gases  is  best  able  to  monitor  and  reduce  those 
emissions. However, a direct emissions approach for road transport would imply that 
each  individual  owner  of  a  light  or  heavy  duty  vehicle  would  have  a  compliance 
obligation  and  would  therefore  have  to  surrender  allowances  based  on  the  actual 
yearly fuel they have consumed. This would lead to prohibitively high administrative 
running  costs  (regarding  transacting  in  the  market  and  monitoring  and  verifying 
emissions), at odds with the principles of simplification and better regulation, not to 
mention the practical impossibility of defining an allocation method and emission cap 
for  individual  vehicle  owners.  It  should  be  noted  that  in  the  case  of  aviation,  the 
"direct emissions" approach is feasible and is being respected10. Departing from this 
approach, two options could be considered for an "indirect emissions": 

•  Fuel suppliers could become the accountable entity, based on yearly fuel 
sales and carbon content: this would limit the number of players covered by 
the scheme but as a result would place the compliance obligation on a legal 
entity  that  would  only  be  able  to  control  its  financial  liability  under  the 
scheme through the way it priced its fuels. In consequence, the incentive for 

9 
10 

COM(2006) 676 of 13.11.2006. 
Other  relevant  aspect  concerning  the  inclusion  of  aviation  into  the  ETS  is  that  kerosene  is  not 
taxed. 

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11 

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vehicle drivers to change their behaviour would be no different to that from 
the existing fuel excise duty regime. In addition, such a proposal would open 
a  debate  regarding  the  level  of  fuel  excise  duties  and  the  linked  impact  on 
Member States' budgets. Therefore, attention should be paid to the outcome 
of this option in relation to what is already achieved with fuel excise duties. 

•  Car  manufacturers  could  become  the  accountable  entity:  for  any  given 
car  sold  in  any  given  year,  the  gap  between  the  car's  average  specific 
emission  and  the  reduction  objective  would  need  to  be  converted  into 
projected  overall  lifetime  emissions,  and  the  corresponding  amount  of 
allowances  would  need  to  be  surrendered  by  the  carmaker  concerned.  This 
approach  would  necessitate  detailed  investigations  to  maintain  the  existing 
accurate  emissions  monitoring  and  reporting  system  (contrary  to  the  "fuel 
supplier" option which could be based on more accurate yearly fuel sales), as 
car manufacturers have no control on the actual use of the cars they sell, nor 
access to information about actual emissions. 

•  Finally  the  objectives  of  the  review  are  to  provide  a  high  level  of  environmental 
protection  by  reducing  the  climate  change  impacts  of  road  transport,  and  to 
improve the EU's security of energy supply, by improving fuel efficiency. Attention 
should be paid to these two aspects for the inclusion of road transport into the ETS. 

3.2.2.  Other options 

•  Concerns about its effectiveness and political acceptability have led to excluding the 
option of relying exclusively on excise duties on transport fuels as a policy option. 
The  equity  considerations  raised  by  the  tax  rates  that  would  be  needed  to  have  a 
significant  impact  on  vehicle  fuel  efficiency  limit  the  political  acceptability  of  this 
option, especially in a context where oil prices have significantly increased in the past 
years.  

•  Mobility/traffic and infrastructure management present an interesting potential for 
CO2 reductions, with measures such as synchronisation of traffic lights, enforcement 
of speed limits and measures to curb congestion by means of traffic flow management. 
These  measures  have  a  strong  subsidiarity  dimension,  and  are  currently  being 
investigated  in  the  context  of  solving  local  air  quality  problems  and  as  part  of  the 
European  Common transport policy. A new generation  of  emission  factor  models  to 
assess  the  impacts  of  changing  traffic  dynamics  on  emissions  is  only  now  being 
developed,  and  are  thus  not  yet  available  to  deliver  a  quantitative  analysis  of  the 
potential contribution of these measures to CO2 reductions. Furthermore, a number of 
transport policy initiatives have already been screened as part of the recent review of 
the  Transport  White  Paper11  (e.g.  development  of  an  EU  methodology  for 
infrastructure charging by 2008), and will not be included in the present review of the 
CO2 and cars strategy. 

11 

COM(2006) 314. 

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3.3. 

Detailed  presentation  of  the  reduction  measures  included  in  the  options 
identified 

3.3.1.  Technical options to reduce fuel consumption from passenger cars 

Based  on  a  review  of  literature  data  and  input  from  stakeholders,  a  review  has  been 
carried out of the costs and CO2-reduction potential of a wide range of technical options 
that can be applied to passenger cars. 

Based on this [Task A]12 review, an assessment has been made of the costs for reaching 
various  possible  targets  for  the  average  new  car  fleet  CO2-emissions  in  2012,  ranging 
from maintaining the 140 g CO2/km foreseen in the voluntary agreements to reaching the 
Community objective of 120 g CO2/km by 2012. 

While the review carried out provides for overall cost estimates, at the scale of the whole 
fleet, for the achievement of given CO2 reduction targets (including sensitivity analyses 
performed  with  respect  to  the  influence  of  demand  measures  and  cost  curve 
establishment – see Boxes 1 and 2), it does not provide information on the impacts of the 
said  target  at  the  vehicle  or  segment  level.  Indeed  the  present  exercise  focuses  on 
assessing the costs of the various measures examined  under  options  (2) and  (3), with  a 
view to setting the reduction levels required from these measures. Detailed analyses will 
be  performed  subsequently  as  part  of  the  respective  impact  assessments  underlying  the 
actions required to meet the said reduction levels as part of an integrated approach. 

Box  1  -  Sensitivity  analysis  with  respect  to  the  influence  of  measures  influencing 
demand (assumptions on relative up/down-sizing) 

The combined evolution of manufacturers' offer and of consumer demand of safer, more 
powerful, bigger and more comfortable cars has resulted in a substantial increase of the 
average new car weight. Additional vehicle weight results in additional fuel consumption 
and associated CO2-emissions which need to be compensated by additional CO2-reducing 
measures  to  meet  the  CO2-emission  targets  for  2008/9  and  2012.  Two  alternative 
scenarios have been considered as regards the future evolution of the weight of cars sold 
in the EU: 

•  On  the  basis  of  historic  trends,  it  could  be  assumed  that  the  average  weight  of 
passenger  cars  will  carry  on  increasing  on  average  by  1.5%  p.a.  between  2002  and 
2012. The 1.5% p.a. value results from the data used to monitor the achievements of 
the  car  industry  in  relation  to  their  voluntary  commitment  for  reaching  the  target  of 
140  g  CO2/km  by  2008/9.  It  is  applied  uniformly  to  all  vehicle  segments,  in  the 
absence of data showing a clear shift towards larger car segments. The 1.5% p.a. value 
is  assumed  to  include  effects  of  measures  to  improve  safety  and  reduce  exhaust 
emissions  in  response  to  voluntary  approaches  such  as  the  EuroNCAP  rating, 
consumer  demand  for  additional  safety  features  or  European  legislation,  as  well  as 
market  trends  towards  bigger,  more  powerful  and  better  equipped  cars  including 

12 

Review and analysis of the reduction potential and costs of technological and other measures to 
reduce CO2 emissions from passenger cars, prepared by TNO Science and Industry , Institute for 
European  Environmental  Policy  and  the  Laboratory  of  Applied  Thermodynamics.(N.B.:  All 
[references] are listed in "Annex II – Reference documents"). 

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increased market penetration of auxiliaries such as power steering, electric windows, 
air-conditioning etc. 

•  Alternatively,  it  may  be  argued  that  the  historic  trend  will  not  continue  at  the  same 
pace in the future thanks on the one hand to policy measures (taxation in particular) 
that  influence  consumer  demand,  and  on  the  other  hand  because  the  most  important 
safety  measures  (restraint  systems,  airbags)  are  one-offs  that  have  by  now  been 
introduced  on  most  new  cars,  new  exhaust  emission  regulations  will  be  largely  met 
with system optimisations rather than new, additional systems and new auxiliaries will 
be largely in the realm of electronic equipment with limited weight implications which 
furthermore  tend  to  become  lighter  over  time.  It  would  then  be  assumed  that  the 
historic  value  is  valid  until  2004  and  that  this  value  gradually  decreases  to  0.5%  in 
2012 in response to a natural slowing down and to measures aimed at driving demand 
towards fuel efficiency (e.g. taxation). 

Using the lower relative upsizing scenario, the costs for reaching the 2012 target of 120 g 
CO2/km  are  found  to  be  19%  lower  than  for  the  calculations  based  on  the  1.5%  p.a. 
value. 

Box 2 - Cost curve methodologies 

In the supporting study [Task A], cost curves are created based upon the clouds of data 
points that result from assessing the overall costs and CO2-reduction of a large number of 
feasible packages of technical measures. In the questionnaire and meetings as part of the 
stakeholder consultation process, stakeholders have been requested to submit information 
on  their  assessments  of  overall  costs  and  CO2-reduction  potential  of  feasible  packages 
but  such  data  have  not  been  provided  –  the  data  provided  only  referred  to  individual 
technical measures. While more detailed assessments will be carried out as a follow up to 
the measures to be included in the present strategy review, preliminary cost curves have 
been drawn up by [Task A] and follow the curvature of the outer envelope of the “cloud” 
of  data  points  at  a  certain  distance  that  serves  as  a  "safety  margin".  Two  options  are 
envisaged: 

•  In the first option, the cost curves is positioned in such a way that roughly 2/3 of the 
data points is on the left side of the curve and 1/3 on the right side. This is based on 
the conservative assumption that the overall CO2 reduction factor achieved by a given 
package  of  technical  options  would  be  lower  than  the  product  of  the  individual 
potential CO2 reduction factors, while the cost of the said package would strictly be 
the sum of the costs of the various options in the package. 

•  As a second option, it could be argued that the safety margin should be smaller. One 
can argue that the overall cost of a package of technological options is lower than the 
sum  of  the  costs  of  the  individual  options  due  to  synergies  in  the  integration  of 
systems. Indeed, most of the options considered are not simple “add-on” options but 
advanced technical developments that need to be highly integrated in the design of a 
new engine, powertrain or vehicle platform. Furthermore there is also a case for taking 
a smaller "safety margin" to account for technologies not yet available, but that will 
likely  appear  between  2006  and  2012  thanks  to  innovation  by  the  industry.  Finally 
cost estimates provided in task A are established for large scale production at a 2012 
horizon,  but  do  not  account  for  learning  curves  and  economies  of  scale  beyond  that 

EN 

14 

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date as technologies penetrate the market on a wider scale. One can also argue that a 
safety  margin  could  work  both  ways.  On  the  one  hand,  the  blind  combination  of 
individual  technical  measures  may  give  rise  to  technology  packages  that  are  less 
efficient than a straightforward combination, as argued in the previous bullet point. On 
the other hand, the same methodology of blind combination cannot take into account 
potential synergies and system optimisations that would only be visible in a detailed 
study  of  each  technology  package.  Furthermore,  studies13  have  shown  that  ex-ante 
estimates of compliance costs in the automotive sector are often overstated, and that 
ex-post  costs  can  be  much  lower  (e.g.  by  a  factor  of  2).  Overall,  these  alternative 
assumptions would result in lower cost estimates by shifting the cost curves towards 
the right. 

3.3.2.  Application of fuel efficient mobile air conditioning systems 

The vehicle’s additional energy consumption and CO2 emissions resulting from the use 
of mobile air conditioning (MAC) systems are currently not included in the type approval 
test  results.  As  more  and  more  vehicles  are  standard  equipped  with  air  conditioning 
systems,  their  impact  on  the  real-world  energy  use  of  road  traffic  is  increasing. 
According to [TNO MAC], the use of air conditioning leads on an average European car 
to an increase in CO2 emissions of 7 g CO2/km. 

Furthermore,  the  release  in  the  environment  of  refrigerants  used  in  MACs  has  an 
important impact on climate change, and the EU has recently adopted a Directive14 aimed 
at prohibiting air conditioning systems designed to contain fluorinated greenhouse gases 
with a global warming potential higher than 150. 

Taking into account the implications of this legislation for manufacturers, an assessment 
of the costs and CO2 reduction potential of measures to promote the use of fuel efficient 
MACs  has  been  carried  out  notably  based  on  assumptions  concerning  the  accelerated 
market penetration of advanced systems that meet the above mentioned Directive and at 
the same time deliver energy savings. 

3.3.3.  Options to reduce vehicle and engine resistance factors 

The costs and potential for CO2 reductions of low rolling resistance tyres (LRRT), tyre 
pressure  monitoring  systems  (TPMS)  and  low  viscosity  lubricants  (LVL)  have  been 
analysed based on data retrieved from literature and provided by the industry. 

•  LRRT  and  TPMS  have  an  important  CO2  reduction  potential  estimated  at  3%  and 
2.5%  respectively.  However  at  present  there  is  no  standardised  method  to  measure 
tyres' rolling resistance and on which legislation or incentives could be based. The use 
of LRRT is reflected under the test-cycle measurements, and there is a need to ensure 
that  the  tyres  actually  fitted  on  the  cars  sold  present  the  same  rolling  resistance 
performance  as  the  ones  used  during  type  approval.  On  the  one  hand,  the  effect  of 
TPMS  relates  to  real-world  driving  condition  and  action  by  drivers,  which  raises 

13 
14 

http://ec.europa.eu/environment/enveco/studies2.htm#ex_post 
Directive 2006/40/EC of the European Parliament and of the Council of 17 May 2006 relating to 
emissions  from  air  conditioning  systems  in  motor  vehicles  and  amending  Council  Directive 
70/156/EEC (OJ L 161, 14.6.2006). 

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15 

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monitorability  concerns;  on  the  other  hand,  TPMS  can  contribute  to  an  increased 
safety. 

•  The  CO2  reduction  potential  of  LVV  is  estimated  to  be  2.5%.  Issues  identified  in 
relation  to  LVV  are  the  same  as  for  LRRT  regarding  the  possible  discrepancies 
between  test-cycle  vehicles  and  vehicles  actually  sold,  the  need  for  a  standardised 
measurement method and issues linked to vehicle warrantee when using LVL. 

3.3.4.  Options to promote application of biofuels 

Currently the biofuels most commonly available as transport fuels are "first generation" 
biodiesel  and  bioethanol  (the  latter  being  often  converted  to  bio-ETBE  used  as  an 
additive  in  petrol).  The  main  feedstock  are  crops  grown  for  oil  (such  as  rape,  soy  and 
sunflower) for biodiesel, and crops high in sugar or starch (including sugar beet and cane, 
various grain crops, etc) for ethanol. In the future, "second generation" processes should 
deliver a range of synthetic fuels from a wider range of biomass sources, including bio-
wastes, woody crops and grasses, but these are unlikely to represent a significant market 
share at a 2012 horizon. 

The EU has adopted a directive15 to promote the use of biofuels in the transport sector, 
setting  a  2010  target  of  5.75%  market  share  of  biofuels  in  the  fuels  used  by  road 
transport. Based on the recent Commission report16 on the implementation of the biofuels 
directive, this target is unlikely to be reached. Furthermore, the Commission has recently 
proposed17 
the  gradual 
decarbonisation  of  road  fuels,  through  an  amendment  of  the  fuel  quality  directive 
98/70/EC. 

introduction  of  compulsory  requirements  aimed  at 

the 

3.3.5.  Technical options to reduce fuel consumption from light-commercial vehicles 

The  potential  and  cost-effectiveness  of  CO2-reduction  measures  concerning  light 
commercial vehicles (N1) has been assessed following the same methodology as the one 
developed  for  passenger  cars  (see  3.3.1),  taking  into  account  the  specificities  of  N1 
vehicles.  For  each  of  the  N1  categories  Class  I,  II  and  III  a  business-as-usual  package 
(BAU) has been defined of CO2-reducing options that are assumed to be applied in the 
period  2002  –  2012  even  in  the  absence  of  policy  aimed  at  the  CO2-emissions  of  N1-
vehicles, as well as four packages with increasing levels of CO2-reduction and technical 
complexity that may be applied by manufacturers in response to policy. For each of these 
packages the overall costs and CO2-emission reductions have been assessed. 

3.3.6.  Fuel efficient driving 

The assessment of the CO2-abatement potential of eco-driving is extremely sensitive to 
the methodology and to variations in the input parameters: while the initial effect of eco-
driving  is  reasonably  well  documented,  there  is  less  data  available  on  the  long  term 
effect,  which  is  expected  to  be  significantly  smaller.  Regarding  the  costs  of  promoting 

15 

16 
17 

Directive  2003/30/EC  of  the  European  Parliament  and  Council  of  of  8  May  2003  on  the 
promotion of the use of biofuels or other renewable fuels for transport (OJ L 123, 17.5.2003). 
COM(2006) 845. 
COM(2007) 18. 

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eco-driving, they vary widely depending on the efforts put in place: while an introduction 
to eco-driving as part of the driving license tuition may be cheap to implement, a large 
scale  campaign  to  raise  awareness  amongst  all  drivers,  notably  those  that  would  not 
voluntarily  participate  in  training  courses,  would  require  important  financial  efforts. 
[Task A] suggests that the long term effect of applying eco-driving is a fuel consumption 
reduction of 3%, reaching 4.5% when combined with a Gear Shift Indicator (GSI). GSI 
can  be  an  effective  tool  to  assist  drivers  in  maintaining  a  correct  and  effective  fuel 
efficient  driving  style.  In  this  way  the  use  of  GSI  in  combination  with  eco-driving  is 
expected to increase the long-term effectiveness of eco-driving. The effect of GSI in the 
absence of a specific eco-driving training is a fuel consumption reduction of circa 1.5%. 

Compared  to  other  policy  measures,  the  monitorability  and  accountability  of  a 
downstream measure such as eco-driving do not provide the same level of reliability in 
the  range  of  CO2  reductions  to  be  delivered.  This  is  why  the  modelling  of  eco-driving 
applications will be limited to the use of a Gear shift indicator. 

3.3.7.  CO2 based taxation schemes for passenger cars 

Car taxation is a powerful instrument to influence the purchase decisions of consumers. 
Taxes can be differentiated to support the market introduction of fuel efficient and low 
CO2 emitting cars. This could greatly facilitate the efforts of car manufacturers to meet 
their  obligations  by  bringing  such  vehicles  to  the  market.  Of  the  various  taxation 
instruments available to the policy maker, the present assessment focused on the use of 
taxes  to  encourage  the  purchase  and  use  of  low  emission  vehicles,  i.e.  taxes  on 
registration and annual circulation; hence, other instruments, such as fuel taxes and road 
user charges, were not considered (see 3.2). 

The Commission has made a proposal for a Council Directive on passenger car taxation18 
which is currently before the Council and Parliament. By adopting this proposal as soon 
as possible and adapting their car taxation policies so as to promote the purchase of fuel 
efficient cars throughout the EU, Member States would contribute their share to reducing 
the  CO2  emissions  of  cars  (by  making  (relatively)  less  emitting/smaller  cars  more 
attractive  to  consumers,  and  thus  easing  the  technological  burden  on  manufacturers). 
Such taxes would be differentiated over the whole range of cars on the market, rewarding 
lower emitters of CO2 while discouraging the sale of vehicles with relatively higher fuel 
consumption  and  CO2  emissions.  Evidence  provided  by  Member  States  to  [Task  A] 
indicate  that  a  realignment  of  vehicle  taxes  to  reflect  CO2  (and  other  emissions)  is 
currently being considered in a number of countries. Taxation being a policy instrument 
rather than a CO2 reduction measure in its own right, it is not modelled independently in 
the  impact  assessment.  However  alternative  cost  assumptions  are  made  concerning  the 
compliance  costs  of  given  CO2  reduction  targets  are  made  (see  section  3.3.1),  so  as  to 
illustrate the potential benefits of applying measures influencing consumer demand. 

In addition to taxation schemes, incentives for the most efficient class of cars could be a 
powerful  way  of  encouraging 
the  market.  A  Light-duty 
these  vehicles 
Environmentally Enhanced Vehicle (LEEV) should be defined as a vehicle that meets the 
next  stage  of  pollutant  emission  limit  values  as  laid  down  in  the  relevant  legislation, 

into 

18 

COM(2005) 261. 

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while  at  the  same  time  staying  below  a  certain  level  of  CO2  emissions.  In  the  current 
situation, this level should be the Community target of 120 g CO2/km. The definition of a 
LEEV  should  be  subject  to  regular  reviews  in  order  to  remain  focused  on  the  most 
advanced  end  of  the  new  car  fleet.  Taking  into  account  the  future  EURO  5  and  6 
emission  limits  for  conventional  pollutants,  the  definition  of  the  LEEV  could  be 
considered as part of the review of the labelling directive (see 3.3.8), whereby a special 
LEEV label could be defined. 

3.3.8.  Options for improved consumer information (including CO2 labelling) 

A  recent  study  on  the  effectiveness  of  the  car  labelling  Directive19  points  to  a 
disappointing  impact  of  the  label  so  far,  with  labels  of  strongly  varying  quality  in 
different  Member  States.  The  labelling  scheme  is  considered  a  useful  tool  to  raise 
awareness about the climate change impacts of passenger cars, but there is no evidence 
that labelling provided a tangible contribution to reductions in the average CO2 emissions 
of  new  cars  sold  in  the  EU.  It  would  in  any  case  be  difficult  to  attribute  a  given  CO2 
reduction to such a tool.  

There are potential synergies if the label is used as part  of  a package  of measures, e.g. 
linking  vehicle  taxation  directly  to  the  label’s  categories.  In  addition,  the  scope  of  the 
labelling  scheme  could  be  widened  to  cover  not  only  passenger  cars  but  also  light-
commercial vehicles. The design of the label could also be harmonised, accompanied by 
the introduction of energy efficiency classes. 

It  also  appears  that  manufacturers’  marketing  strategies  are  often  at  odds  with,  and 
overshadowing, the message that the label is projecting. In order to ensure a level playing 
field  in  car  advertising,  a  code  of  conduct  for  sustainable  advertising  could  be 
considered. 

3.3.9.  Other measures 

Some measures initially identified to be included into option (3) have also been excluded 
from the posterior impact analysis: 

•  The  review  of  options  for  application  of  alternative  fuels  based  on  fossil  primary 
energy  has  been  included  in  the  preparatory  works  for  the  impact  assessment  (See 
[Task A] report) and also discussed in CARS21. Stakeholders in the ECCP working 
group  supported  a  technology  neutral  approach,  thus  rejecting  the  idea  of  a  specific 
instrument  to  promote  LPG  or  CNG  cars.  In  the  light  of  this,  LPG  or  CNG 
technologies  have  not  been  considered  separately  in  option  (3)  –  which  does  not 
prevent  their  use  as  a  technical  solution  under  the  instrument  to  promote  technical 
progress in M1/N1 vehicles, nor Member States from promoting them through fiscal 
incentives for fuels. 

•  Public  procurement  provides  the  opportunity  to  stimulate  the  market  in  alternative 
cleaner or more fuel efficient vehicle technologies and fuels by creating economies of 
scale for manufacturers and thereby reducing the costs of production. However, since 

19 

"Report on the effectiveness of the car fuel efficiency labelling directive 1999/94/EC, and options 
for improvement", ADAC for the European Commission, March 2005. 

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18 

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the recent Commission proposal COM(2005)634 on the promotion of clean transport 
vehicles does not address CO2 emissions, public procurement was not included in the 
detailed analysis of option (3) considering the 2012 horizon of the review. It does not 
prevent  Member  States  from  promoting  the  purchase  of  clean  and  lean  vehicles  by 
public  procurement,  which  may  be  facilitated  if  a  definition  of  Light-duty 
Environmentally Enhanced Vehicles (see 3.3.7) is adopted at the EU level. 

4. 

ANALYSIS OF IMPACTS 

4.1. 

Description of the methodology 

The methodology followed for the analysis of the impacts of the various policy scenario 
is based on the supporting studies undertaken for the Commission in 2004-2006 ([Task 
A]  and  [Task  B],  including  [TREMOVE])  complemented  by  stakeholder  input,  a 
literature  review  and  additional  studies  (see  Annex  2:  Reference  Documents  and 
additional precisions on the modelling framework). Inline with the Community objective 
of  120  g  CO2/km  by  2012,  the  time  horizon  foreseen  for  the  entry  into  force  of  the 
measures and targets is 2012. This implies that longer term targets (e.g. a 10% biofuels 
share  by  2020  as  foreseen  in  the  Renewable  Energy  Roadmap20)  are  not  part  of  the 
measures considered. To reflect in the modelling the overall socio-economic impacts, the 
modelling time horizon is 2020. 

4.1.1. 

1st step: baseline 

As discussed in Section 1.4 the option of no policy change is not considered a viable way 
forward  to  meet  the  EU  objective  of  120  g  CO2/km  by  2012.  However  this  option 
provides  a  baseline  to  consider  against  options  (2)  and  (3):  the  reference  scenario  (see 
Figure  4)  is  based  on  140  g  CO2/km  being  achieved  by  2008/09,  inline  with  the 
industry's voluntary commitments, and maintained over the analysis period (2010-2020). 
This  means  that  in  the  baseline  the  2nd  and  3rd  pillars  (labelling  and  taxation)  of  the 
existing strategy as currently implemented (existing measures) are considered as having 
no  measurable  impacts  on  the  average  CO2  emissions  of  the  new  cars  sold  in  the  EU. 
This is inline with the findings of the Commission as reported in the annual monitoring 
Communications on the effectiveness of the strategy21. 

Figure  4:  1995-2004  monitoring  of  average  new  car  sold  CO2  emissions,  and 
TREMOVE baseline 

20 
21 

COM(2006) 848. 
See COM(2005) 269 and COM(2006) 463. 

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Baseline

Monitored Data (EU-15)

In  light  of  growing  concerns  about  the  success  of  the  voluntary  approach22,  the 
Commission underlined on several occasions in the past that it was ready to consider all 
measures,  including  legislative  ones,  to  ensure  that  the  necessary  CO2  reductions  are 
delivered. However, a "worst-case" scenario where the industry would fail to honour its 
commitments cannot be used as a baseline for the strategy review, since the objective is 
to assess the costs and benefits of moving from 140 g CO2/km down to CO2 reductions 
equivalent to reaching 120 g CO2/km. Consequently, this impact assessment uses 140 g 
CO2/km in 2008/09 as the baseline for calculations. It should, however, be noted that the 
impact  assessment  for  the  Commission’s  future  legislative  proposal  will  take  into 
consideration  the  benefits  and  costs  of  different  options  as  compared  to  the  actual 
situation of average CO2 emissions.  

4.1.2. 

2nd step: Building of the cost curve for passenger cars (M1) 

This  cost  curve  will  be  used  both  to  model  policy  option  (2)  as  well  as  to  implement 
alternative targets for M1 in policy option (3) and its variants. Four scenarios have been 
run using the cost curve assumptions from [Task A] looking at 135, 130, 125 and 120 g 
CO2/km by 2012. To reflect the potential impact of measures influencing demand on the 
compliance  costs  of  a  given  target  and  the  fact  that  costs  may  be  lower  than  ex-ante 
estimates,  alternative  scenarios  have  been  built  for  M1  vehicles:  use  of  a  different 
relative  upsizing  assumption  (cost  -19%  by  2012),  and  –  in  addition  –  alternative  cost 
curve  building  (-17%  by  2012,  or  -33%  once  combined  with  relative  upsizing 
assumption). 

The  costs  considered  for  a  measure  are  the  costs  for  society,  equivalent  to  the  sum  of 
consumer surplus, producer surplus and the marginal cost of public funding. This implies 
that the tax savings for the consumer (from fuel excise duties of the fuel saved) have to 
be compensated under a hypothesis of constant fiscal revenues for the public budget. The 
metric  used  is  the  net  present  value  by  2010  of  the  sum  of  the  cost  to  society  over  the 
period 2010-2020, with a discount rate of 4%. 

22 

See latest Commission annual monitoring Communication COM(2006) 463. 

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20 

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This  process  allows  building  a  reference  equivalent  to  g  CO2/km  for  the  renewed 
strategy. The cumulated Well-to-Wheel (WTW) CO2 equivalent emissions in the period 
2010-2020 are used to reflect the long term effects of the policy measures envisaged23. 
For GHG other than CO2, an equivalence relation will be used (CO2eq = CO2 + 23 x CH4 
+ 296 x N2O). While the reference equivalent, expressed in Mtons CO2eq saved, will be 
used  for  the  purpose  of  building  option  (3),  the  use  of  g  CO2/km  will  be  maintained 
wherever  possible  for  reasons  of  consistency,  accuracy  and  compatibility  with  the 
Community objective. 

4.1.3. 

3rd step: Assessing the costs and reduction potential of other measures 

For each measure identified in section 3.3, the scope for GHG abatement and the cost-
effectiveness  has  been  assessed  using  the  model  TREMOVE  based  on  [Task  A]  data 
complemented by stakeholder input and available literature. The detailed assessment for 
each  measure  is  provided  in  section  4.2.  Ranking  the  measure  by  decreasing  cost-
effectiveness  allows  building  a  cost  curve  segment  that  can  be  combined  with  the  M1 
cost  curve  to  determine  the  cost-optimal  contribution  of  each  individual  measure  to 
option (3). 

The objective is to ensure that CO2 reductions corresponding to reaching the Community 
objective of 120 g CO2/km by 2012 are delivered. To that end, for the establishment of 
the short list of measures to be included in Policy Option 3, focus must be given to those 
options  that  are  "clearly  measurable,  with  timetables  for  delivery,  and  identify  the 
stakeholder  responsible  for  delivering  them.  There  should  be  a  mechanism  for 
monitoring  progress  and  ensuring  accountability",  inline  with  CARS21's  final  report 
recommendation  n°724.  It  is  also  necessary  to  avoid  any  double  counting  with  existing 
measures. 

Building on this and further to the consultation of stakeholders in the European Climate 
Change  Programme  working  group,  criteria  complementary  to  cost-effectiveness  have 
been used to screen potential contributing measures to option (3), such as measurability, 
monitorability,  accountability,  as  well  as  political  feasibility,  affordability  of  cars, 
promotion of technical innovation and fairness. 

4.2. 

Detailed analysis of the individual reduction measures 

4.2.1.  Options to reduce fuel consumption in passenger cars (M1) 

The  most  promising/likely  technological  options  at  M1  vehicle  level  (from  a  large 
spectrum at the level of the engine, power train and vehicle) to be applied in the 2002-
2012  period  have  been  analysed  in  the  [Task  A]  report,  deriving  cost  curves  that  have 
been translated into input for TREMOVE. The assessment is based on six different cost 
curves  (for  small,  medium  and  large  petrol  resp.  diesel  vehicles).  Depending  on  the 
target-measure combination studied in the [Task A] report, the cost and abatement target 
per vehicle category is different. However, as already indicated in section 3.3.1, it should 

23 

24 

The measures envisaged must however be feasible and deliver reductions in a shorter time horizon 
(2012), so as to allow for the achievement of the 120 g CO2/km objective by 2012 
Available at 
http://ec.europa.eu/enterprise/automotive/pagesbackground/competitiveness/cars21finalreport.pdf 

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21 

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be noted that this assessment is aimed at providing an overall assessment for the car fleet 
as a whole, and that it cannot be used to draw conclusions at the level of individual car 
types  or  segments.  The  TREMOVE  baseline  includes  the  assumption  that  the  140  g 
CO2/km target for average new car CO2 emissions will be reached by ACEA, JAMA and 
KAMA following the least cost solution per association by 2008/9 as provided by [Task 
A]. Going beyond 140 g CO2/km towards 120 g CO2/km, the central hypothesis to assess 
the  costs  is  based  on  the  instrument  referred  to  in  [Task  A]  as  "application  of  a 
percentage reduction target at manufacturer level"25. 

As  highlighted  by  [Task  A],  the  cost  curve  for  M1-vehicles  is  very  sensitive  to  the 
assumptions made on the relative upsizing, to the method for building the cost curve as 
well  as  to  uncertainties  in  the  cost  assessment.  Three  alternative  cost  hypotheses  were 
implemented  in  TREMOVE.  The  1st  hypothesis  refers  to  the    yearly  1.5%  weight 
increase based on historic data and supported by ACEA. The 2nd cost hypothesis uses (as 
provided  in  [Task  A]  report  section  3.11.3)  -  an  alternative  percentage  of  autonomous 
weight increase, that leads to a cost for reaching 120g by 2012 19% lower than the core 
hypothesis. The 3rd cost hypothesis refers to the alternative method for building the cost 
curve (as provided in [Task A] report section 3.11.2) providing a further 17% reduction. 
This leads to the definition of cost “bands” that can be expressed in total costs or in €/ton. 
Each  additional  reduction  by  5  g  CO2/km  leads  to  a  cumulated  Well-to-Wheel  (WtW) 
CO2 equivalent reduction of circa 100 Mt over the period 2010-2020. 

Annex 2 provides more detailed explanations on the differences between the social cost-
effectiveness calculated with TREMOVE and the ex-ante calculations provided by [Task 
A]. 

Table  3  -  Societal  costs,  CO2  savings  and  cost  effectiveness  of  four  different 
reduction scenarios for passenger cars (cumulated over 2010-2020) 

Cost 
Hypothesis 

(see 
above) 

1 

2 

3 

M€ 

Mt CO2 

€/ton CO2  

M€ 

Mt CO2 

€/ton CO2  

M€ 

Mt CO2 

€/ton CO2  

135 g CO2/km 

130 g CO2/km 

125 g CO2/km 

120 g CO2/km 

-5,024.0 

-17,071.9 

-32,884.3  

-53,123.2 

-99.7 

50.38 

-320.8 

-98.1 

3.27 

3,191.4 

-96.9 

-32.92 

-200.5 

85.15 

-301.5  

109.07 

-403.5 

131.66 

-6,113.5 

-15,138.2  

-27,005.8 

-197.3 

30.99 

2,073.6 

-194.9 

-10.64 

-296.5  

51.06 

-397.1 

68.01 

-1,873.3  

-7,464.8 

-292.7  

6.40 

-392.2 

19.03 

25 

This is used as a proxy to derive the possible overall costs of a given CO2 target, but does not in 
any  way  prejudge  of  the  type  of  instrument  that  would  in  fine  be  proposed  to  establish  a  fuel 
efficiency framework for light duty vehicles. 

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4.2.2.  Application of fuel efficient mobile air conditioning systems (MACs) 

The assessment of the cost-effectiveness of this measure is based on the additional fuel 
consumption of cars as a function of MAC systems' energy consumption (reflecting the 
use of more efficient MACs), as well as the cost differences between fuel efficient and 
conventional  MACs  and  the  market  shares  of  fuel  efficient  systems.  The  scenario 
modelled corresponds to a compulsory introduction by 2012 (with 50% by 2010 and 75% 
by  2011)  of  fuel  efficient  mobile  air  conditioning  systems  (both  improved  R134a  and 
new R744 systems) in new cars. 

This would lead to an abatement of 17 Mt of WtW GHG emissions over the period 2010-
2020, and a (negative) cost per ton of WtW CO2 equivalent of -30 €, with the fuel price 
hypothesis retained for the baseline. 

However, the actual implementation of the measure depends on the establishment of an 
agreed  measurement  procedure  to  qualify  MACs'  fuel  efficiency,  which  is  until  now 
unavailable.  A  simplified  test  procedure  has  been  developed  to  this  end,  but  this 
procedure  was  found  not  to  yield  sufficiently  reproducible  and  accurate  results26  to 
become  part  of  the  EU  type  approval  system.  An  alternative  could  be  to  establish 
benchmarks  for  MACs'  fuel  efficiency,  associated  with  caps  and  monitored  at  the  EU 
level. 

4.2.3.  Options to reduce vehicle and engine resistance factors 

CO2 reductions can be achieved by reducing friction via three sub-measures: the use of 
low-resistance tyres (LRRT), tyre pressure monitoring systems (TPMS), and low-friction 
lubricants  (LVL).  These  will  induce  on  the  one  hand  extra  costs  to  manufacturers  for 
original equipment and extra annual maintenance costs to consumers, and on the other it 
will provide fuel savings. 

The assessment of the cost-effectiveness of these measures is based on an improved fuel 
consumption  combined  with  increased  cost  purchase  or  annual  maintenance  costs,  but 
would affect both new and existing cars, in the case of LVL and LRRT. 

The scenario modelled corresponds to a compulsory introduction by 2012 (with 50% by 
2010 and 75% by 2011) of the device in new cars (both new and existing cars, in the case 
of LVL and LRRT). The cost-effectiveness of the measure is minored by the fact that the 
devices  would  anyway  penetrate  the  market  in  the  absence  of  any  measure  (and  have 
already done so to some extent). Figure 5 provides an illustration of the baseline. 

26 

See docs #4 and #6 referenced in Annex 2. 

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80%

70%

60%

50%

40%

30%

20%

10%

0%

LRRT

TPMS, LVL

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

0
2
0
2

Figure 5 - Business-as-usual introduction of options to reduce vehicle and engine 
resistance factors as market share of new cars sold (source [Task A]) 

The assessment of the measure with TREMOVE gives the following results27: 

•  For  tyre  pressure  monitoring  systems  greenhouse  gas  abatement  costs  are  -64€/ton 

(negative), for a reduction potential of 42 Mt. 

•  The  CO2-abatement  costs  of  low  rolling  resistance  tyres  are  about  84  €/ton  CO2 

equivalent. The abatement potential over the period 2010-2020 is 44 Mt. 

•  LVL GHG-abatement costs are higher at 130 €/ton CO2 equivalent, with an abatement 

potential of 68 Mt. 

Lower  market  penetration  of  the  aforementioned  technologies  could  result  from 
alternative measures such as the application of labelling schemes, creation of consumer 
support  tools  such  as  product  databases  and  purchase  incentive  programs.  All  of  these 
should be combined with a necessary update of the relevant legislative framework. 

Important issues identified regarding these technologies are the absence of the necessary 
standardisation  and  legislative  framework  that  will  support  their  introduction  in  the 
market  and  possible  inconsistencies  in  relation  to  the  EU  vehicle  test  cycle:  TPMS  are 
not accounted for under the test cycle, and LRRT and LVL might be used during the test 
while different tyres/lubricants might be used in the cars actually sold. 

There  is  furthermore  a  monitorability  concern  for  TPMS,  as  it  is  difficult  to  assess  to 
what  extent  drivers  will  actually  follow  the  recommendations  provided  by  the  TPMS. 
This can be corrected by ensuring that the TPMS is fitted in such a way that it cannot be 
bypassed, and that the message given to the driver provides a strong enough incentive to 
act. Besides, the fact that TPMS may have a positive effect on safety is another incentive 
to promote such devices. Compared to gear shift indicators, it appears safe to assume that 
TPMS  would  be  more  likely  to  lead  to  a  response  by  the  driver  as  they  would  be 
activated less often and they relate to the fitness of the vehicle for driving. 

27 

See  Annex  2  for  additional  considerations  on  the  calculation  of  the  cost-effectiveness  of  LRRT 
and LVL. 

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24 

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4.2.4. 

Increased application of biofuels 

The measure corresponding to a greater biofuels penetration is modelled evaluating the 
impact  of  an  additional  1%  of  blended  fuels  and  pathways,  over  the  period  2005-2020 
(the 1% is an illustrative figure which can then be up or down scaled for a given scenario, 
the assumption being that the costs will not vary very much as a function of the volume 
of  biofuels  sold).  The  cost-effectiveness  is  calculated  based  on  hypothesis  on  the  cost 
premium for biofuels and their WtW impacts, taking into account not only CO2 but also 
CH4 and N2O. 

The  pathway  included  in  the  baseline  is  based  on  the  [JRC2006]  WtW  study,  and 
represents the likely developments of an EU-based biofuel policy (see Table 4). Imports 
of  Brazilian  ethanol,  that  presents  higher  WtW  benefits,  have  not  been  taken  into 
consideration. 

CARS21  identified  second  generation  (ligno-cellulosic)  biofuels  as  a  promising  way  to 
deliver CO2 reductions in the road transport sector. In the short term the results of [Task 
A],  based  on  the  [JRC2006]  WtW  study,  show  that  second  generation  biofuels  are 
unlikely to represent more than a very small share of the biofuels market in the 2010-12 
horizon.  There  are  also  some  uncertainties  as  regards  the  time  needed  to  overcome  the 
technical challenges to move from demonstration projects to large scale production, and 
therefore  the  time  needed  to  implement  measures  able  to  guarantee  that  second 
generation biofuels will be available in the time horizon (2012) of the strategy review. 

Table  4  -  WtW  emission  factors  and  pathways  for  TREMOVE  biofuels  baseline 
(source [JRC2006]) 

Fuel 

TtW CO2 Emission factor kg/kg 
(fossile fuels) 

WtT Emission factor kg/kg 

3,17 
3,16 

Gasoline 
Diesel 
Ethanol 
Wheat, NG GT + CHP, DDGS to animal feed 
Wheat, NG GT + CHP, DDGS to heat & power 
Biodiesel 
Rape, glycerine as chemical 
Sunflower, glycerine as chemical 

CO2 
0,54 
0,61 
1,392 
1,61 
0,89 
0,543 
0,58 
0,38 

CH4 
0,000 
0,000 
0,003 
0,004 
0,001 
0,003 
0,003 
0,002 

(1) 

N2O  CO2eq
0,000 
0,000 
0,001 
0,001 
0,002 
0,002 
0,003 
0,001 

0,54 
0,61 
1,899 
2,011 
1,638 
1,328 
1,479 
0,722 

Pathway 
baseline  
 (% fuel) 

n/a 
n/a 
100% 
70% 
30% 
100% 
80% 
20% 

Against that background, the additional replacement of a given 1% of fossil fuel use (in 
energy  terms)  by  the  use  of  biofuels  is  estimated  to  result  in  an  overall  GHG  emission 
reduction  for  EU-15  of  56,0  Mt  over  the  period  2010-2020,  resulting  of  an  increase  of 
WtT emissions by 24,2 Mt, and a decrease of TtW emissions of 80,20 Mt. 

Taking into account the crude oil price assumptions (€50/bbl), the most likely pathway 
for biofuels still triggers a cost premium. Cost/effectiveness would be situated between 
57 and 330 €/t, with a central estimate of 158 €/t. 

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Already in 2001 the promotion of biofuels in road transport was identified as part of an 
EU-level  package  of  measures28  to  help  Member  States  meet  their  Kyoto  obligations, 
going  beyond  the  policies  existing  at  the  time  which  included  the  120  g  CO2/km 
objective for new cars. This led to the adoption of the EU target of a 5.75% market share 
for biofuels by 201029, corresponding to CO2 reductions in the range of 35-40 Mt by this 
target year. These were therefore clearly intended as complementary policies, the sum of 
which would contribute towards meeting the Kyoto target. As foreseen in the EU strategy 
for  biofuels30  adopted  in  early  2006,  the  Commission  has  examined  "how  biofuel  use 
could  count  towards  CO2  emission  targets  for  car  fleets".  Biofuels  and  vehicle 
improvements are two core elements of the EU's transport and climate change policy that 
must go hand in hand, and double counting of agreed targets must be avoided because it 
would  otherwise  not  allow  the  EU  to  meet  its  8%  reduction  target  under  the  Kyoto 
Protocol31.  Going  beyond  the  5.75%  target  by  2010,  efforts  to  promote  less  carbon 
intensive fuels are being pursued. As part of its review of the fuel quality directive32, the 
Commission  has  proposed  the  introduction  of  compulsory  requirements  aimed  at  the 
gradual  decarbonisation  of  road  fuels.  Furthermore,  the  Commission  has  recently 
reported33 on its review of the biofuels directive, and it will shortly adopt a proposal to 
revise this directive aimed at setting minimum standards for the share of biofuels in 2020 
(10%) and at ensuring that the use of poor-performing biofuels is discouraged while the 
use  of  biofuels  with  good  environmental  and  security  of  supply  performance  is 
encouraged.  This  would  stimulate  further  expansion  of  biofuel  use  and  the  early 
introduction  of  second  generation  biofuels.  For  modelling  purposes,  the  level  of 
contribution from the fuel quality greenhouse gas reduction mechanism by 2012 (1% in 
2011  and  2%  in  2012)  has  been  translated  into  an  additional34  biofuel  share  of  1.65%, 
which corresponds to 92 Mt CO2 savings over the 2010-2020 period. 

4.2.5.  Options to reduce fuel consumption in light-commercial vehicles (N1) 

The methodological approach followed for light-commercial vehicles (N1) is similar as 
the  approach  followed  for  passenger  cars  (M1)  vehicles  (see  4.2.1).  Four  levels  of 
ambition  are  taken  in  consideration  and  included  in  TREMOVE  based  on  [Task  A] 
results. 

Table 5 - GHG abatement and cost effectiveness of  the  four  levels  of ambition  for 
N1 vehicles (source [TREMOVE]) 

Reduction against the 

45 to 60 g 

30 to 45 g 

15 to 30 g 

0 to 15 g 

28 
29 

30 
31 

32 

33 
34 

As foreseen in the first phase of the European Climate Change Programme - COM(2001) 580.  
Directive  2003/30/EC  of  the  European  Parliament  and  of  the  Council  of  8  May  2003  on  the 
promotion of the use of biofuels or other renewable fuels for transport (OJ L 123, 17.5.2003). 
COM(2006) 34. 
On  the  basis  of  the  first  European  Climate  Change  Programme,  meeting  the  120  g  CO2/km 
objective will deliver circa 110 Mt CO2/year by 2010 compared to 1990; this represents 20% of 
the  remaining  overall  reduction  effort  required  to  meet  Kyoto  (550Mt/year  based  on  2004 
projections). 
COM(2007)  18  –  modification  of  directive  98/70/EC  of  the  European  Parliament  and  of  the 
Council  of  13  October  1998  as  amended  relating  to  the  quality  of  petrol  and  diesel  fuels  and 
amending Council Directive 93/12/EEC (OJ L 350, 28.12.1998). 
COM(2006) 845. 
The  savings  are  accounted  for  the  period  starting  in  2011  to  avoid  double  counting  with  the 
existing 2010 biofuels target. 

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2012 baseline 

€/t CO2eq. 
Cumulated CO2eq. 
2010-2020 

CO2/km 
reduction 
364 

CO2/km 
reduction 
259 

CO2/km 
reduction 
86 

CO2/km 
reduction 
-74 

-32 

-27 

-24 

-21 

4.2.6.  Fuel efficient driving 

The  total  effect  of  mounting  GSI  systems  on  new  vehicles  is  estimated  at  38  Mt 
Cumulated  CO2eq.  over  the  period  2010-2020,  with  a  (negative)  cost  per  ton  of  WtW 
CO2  equivalent  of  -113  €,  with  the  fuel  price  hypothesis  retained  for  the  baseline.  In 
contrast to e.g. the options to reduce vehicle and engine resistance factors, no information 
was available on the likely baseline developments. There is evidence that the combined 
use of GSI and training or awareness campaigns would increase the cost-effectiveness of 
the measure. All in all, the above mentioned ratio of cost-effectiveness can therefore be 
seen as a central hypothesis. 

The  inclusion  of  eco-driving  by  training  or  awareness  campaigns  into  option  (3)  is  not 
possible  due  to  the  lack  of  monitorability  and  accountability  that  lead  to  high 
uncertainties regarding its actual CO2 savings potential. It will therefore not be included 
in  the  present  strategy  as  a  quantified  contribution  to  option  (3).  Member  States  are 
nonetheless invited to further promote eco-driving as a means to raise awareness about 
climate change impacts of car use. 

4.2.7.  CO2 based taxation schemes for passenger cars 

Although  fiscal  measures  are  an  essential  pillar  of  the  current  strategy,  there  are  few 
detailed quantitative impact assessment of existing or planned concrete proposals, neither 
at member State nor at EU level. 

Some  studies  have  focused  on  an  assessment  of  the  contribution  of  fiscal  measures  to 
CO2 abatement (see e.g. the [COWI] study where within certain boundary conditions, i.e. 
no vehicle downsizing, no change to the proportion of diesel vehicles sold, and revenue 
neutrality, the potential of restructured vehicle tax systems based on CO2 emissions was 
estimated at 5% reduction across the EU-15 in emissions from new vehicles). However, 
the interest of fiscal measures lies mainly in triggering or facilitating profound changes in 
markets,  such  as  downsizing  or  structural  changes:  taxes  differentiated  over  the  whole 
range  of  cars  on  the  market,  so  as  to  gradually  induce  a  switch  towards  relatively  less 
emitting cars, would be an efficient way to reduce compliance costs for manufacturers. 

It is moreover difficult to isolate the contribution of fiscal measures. For the UK35 it has 
been assessed that the reforms to Vehicle Excise Duty (VED) and company car tax, are 
delivering important carbon savings, in the long run between 0.5 and 1.0 Mton CO2 per 
year.  However,  it  does  not  seem  feasible  to  compare  this  fuel  efficiency  improvement, 
according to monitoring data, with  other countries that have  different taxation systems, 
that have not undertaken any fiscal reform or that have even decreased the fiscal burden 
on car drivers. Overall, it appears difficult to reach any conclusion on these grounds. 

35 

HM Revenues and Customs, Report on the Evaluation of the Company Car Tax, Reform Inland 
Revenue, 29 April 2004, http://www.hmrc.gov.uk/cars/cct_eval_rep.pdf  

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A simple simulation with TREMOVE has been performed, implementing the same fuel 
consumption  improvement  corresponding  to  120  g  CO2/km,  but  with  an  impact  on 
vehicle price proportional to the CO2 emission levels. The overall impact on CO2 from 
passenger transport is very small, as what is observed is a transfer of transport demand 
and hence fuel consumption from larger to smaller cars. To some extent, this reflects the 
limitations of the current version of TREMOVE for the modelling of taxation, since the 
scenario modelled is very basic. But this outcome also gives indications that  any fiscal 
reform should either trigger a decrease in the overall demand (this could be achieved by 
increase fuel or vehicle excise duties), or focus on providing price signals in goods with a 
strong  substitution  potential  (e.g.  relative  fuel  consumption  or  emissions,  in  the  same 
vehicle category). 

While taxation is not modelled individually as a separate measure in the present impact 
assessment,  it  is  taken  into  account  under  the  second  variant  of  option  (3),  where  an 
alternative assumption in the costs of delivering a given CO2 target is made (see Box 1). 
This  alternative  reflects  the  fact  that  the  adoption  of  ambitious  measures  to  drive 
consumer demand towards more fuel efficient cars, and notably taxation, could result in a 
reduced relative upsizing, and therefore lower compliance costs at a given CO2 reduction 
target. 

4.2.8.  Options for improved energy or CO2 labelling 

Consumer  information,  as  the  second  pillar  of  the  current  CO2  and  cars  strategy,  is 
implemented  through  the  car  labelling  Directive36  which  requires  Member  States  to 
ensure that a label with CO2 emissions and fuel consumption is affixed on all new cars 
offered for sale or lease in the EU. A review of the potential measures that could be taken 
to  improve  the  effectiveness  of  the  Directive  has  been  carried  out,  and  submitted  to 
stakeholders. The most promising measures lie with a further harmonisation of the label, 
the  introduction  of  energy  efficiency  classes,  the  widening  of  the  Directive's  scope  to 
cover  also  light-commercial  vehicles  (N1)  and  the  inclusion  of  information  on  annual 
running  costs  and  tax  levels.  Labelling  impacts  indirectly  on  CO2  emissions  via 
consumer  information,  resulting  in  potential  medium-long  term  indirect  impacts  on  car 
purchasing behaviour due to an increased awareness about the impact of car use on CO2 
emissions and climate change. 

In addition to consumer information, the way in which cars are marketed may also need 
to be adapted, so as to focus less on the dynamic performances of vehicles. To guarantee 
a  level  playing  field,  there  is  a  need  for  coordinated  action  amongst  the  industry.  Car 
manufacturers  should  consider  adoption  a  voluntary  agreement  on  an  EU  wide  code  of 
good  practice  regarding  car  marketing  and  advertising  aimed  at  the  promotion  of 
sustainable consumption patterns. 

Consumer  information  through  labelling  or  sustainable  marketing  is  an  instrument  that 
can be used as part of a package of measures, in order to facilitate their implementation 
by raising consumer awareness about e.g. fuel saving technologies, rather than a measure 
that would per se reduce CO2 emissions. It is as a result not modelled separately in the 

36 

Directive 1999/94/EC to the European Parliament and Council of 13 December 1999 relating to 
the  availability  of  consumer  information  on  fuel  economy  and  CO2  emissions  in  respect  of  the 
marketing of new passenger cars (OJ L 12, 18.1.2000). 

EN 

28 

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present impact assessment, but is indirectly reflected under the second variant of option 
(3).  

4.3. 

Building the Policy Options 

For  the  measures  considered  under  options  (2)  and  (3)  that  have  been  quantitatively 
assessed with TREMOVE, an analysis of the marginal cost and effectiveness (reduction 
potential) of the inclusion of each measure has been performed, including the lowest and 
highest bound of the M1 and biofuels cost estimates (see Table 6). 

The following overall conclusions can be drawn: 

•  The marginal abatement costs for reaching a new vehicle sales average of 120 g/km 
in  2012  range  from  118  to  198  €/  tonne.  A  lower  ambition  level  such  as  130  g/km 
would place the range between 58 and 120 €/tonne. 

•  The results for M1 vehicles are sensitive to the assumptions made on the autonomous 
weight  increase  and  to  various  assumptions  made  in  relation  to  uncertainties  in  the 
cost  assessment.  The  more  extensive  use  of  economic  and  consumer  information 
instruments, combined with regulation, would be a critical success factor for keeping 
the  abatement  costs  near  the  lower  bound,  while  a  conservative  business-as-usual 
scenario would trigger the use of the upper bound of the cost range. 

•  The number of different pathways for the production of biofuels, and the uncertainty 
on production costs, result in a wide-ranging cost-effectiveness, as indicated in section 
4.2.4, ranging between 57 and 330 €/t, with a central estimate of 158 €/t. As part of 
the  review  of  the  fuel  quality  directive,  the  Commission  has  recently  proposed  the 
establishment  of  a  greenhouse  gas  reduction  mechanism  for  transport  fuels  over  the 
2010-2020 period. In view of the 2012 time horizon of the present strategy review, the 
savings delivered under the above mentioned mechanism as in place in 2012 (1% in 
2011 and 2% in 2012, then constant until 2020) have been taken into account. Based 
on  the  impact  assessment  of  the  fuel  quality  review37,  these  savings  would  be 
equivalent to the savings delivered by an additional38 biofuel share of 1.65%, which 
corresponds to circa 92 Mt CO2 savings over the 2010-2020 period. 

•  The full application of the most cost-effective measures of option (3) other than M1 
vehicles  improvements  (GSI,  TPMS,  MAC  and  N1  up  to  15g  CO2/km),  should  be 
included  in  the  policy  option  as  they  would  deliver  a  total  of  115  Mt  with  negative 
marginal  abatement  cost.  The  building  of  a  cost-effective  package  including  these 
measures, M1 until 130 g CO2/km and LRRT, would deliver 333 Mt CO2 equivalent, 
which  is  lower  than  the  CO2  reductions  equivalent  to  the  achievement  of  the  120 
gCO2/km objective with M1 measures only (i.e. (Option (2)). Moreover, as mentioned 
above,  some  measures  considered  present  higher  uncertainties  as  to  their  actual 
delivery  of  CO2  savings,  despite  a  very  favourable  cost-effectiveness  (e.g.  GSI). 
Therefore  to  ensure  that  the  full  environmental  benefits  of  the  120  g  CO2/km  are 
delivered, Option (3) should target a higher abatement, and thus it is necessary under 

37 
38 

SEC(2007) 55. 
The  savings  are  accounted  for  the  period  starting  in  2011  to  avoid  double  counting  with  the 
existing 2010 biofuels target. 

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29 

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this  approach  to  recourse  to  decarbonised  fuels,  mainly  through  biofuels.  The 
abatement potential of Option (3) would then reach 426 Mt CO2 equivalent, which is 
higher  savings  than  the  ones  corresponding  to  the  achievement  of  the  Community 
objective of 120 g CO2/km. 

Table  6  -  Marginal  cost-effectiveness  analysis  of  the  option  (3)  measures  (source 
TREMOVE and Task A) 

Measure 

GSI 

N1-15g 

TPMS 

MAC 

CO2 eq WtW Mt 

Cost-effectiveness €/t 

-36.3 

-20.4 

-41.5 

-16.7 

-113 

-75 

-64 

-30 

M1 step 140g - 135g 

-98.1 (B) 

-99.7 (A) 

3 (B) 

50 (A) 

Biofuels 1.65%  

-92.5 

57 -158 

M1 step 135g – 130g 

-99.2 (B) 

-100.8 (A) 

58 (B) 

120 (A) 

N1-30g 

LRRT 

-24.1 

-44.2 

81 

84 

M1 step 130g – 125g 

-99.2 (B) 

-101.0 (A) 

91 (B) 

157 (A) 

M1 step 125g – 120g 

-100.6 (B) 

-102.0 (A) 

118 (B) 

198 (A) 

LVL 

N1-45 

N1-60 

-68.10 

-26.6 

-32.0 

130 

252 

356 

Other  measures  such  as  taxation  and  labelling  would  help  reducing  the  cost  for  CO2 
abatement,  through  structural  changes  in  the  demand  leading  to  the  purchase  of  more 
fuel-efficient vehicles. 

Taking into account the three policy options identified in section 3 and the results of the 
above  mentioned  detailed  analysis  of  the  measures  that  could  contribute  to  option  (3), 
two variants for option (3) have been considered: 

•  Variant  3A:  The  policy  measures  identified  through  the  cost-effectiveness  screening 
(namely  GSI,  MAC,  N1  up  to  15g  CO2/km  reduction  compared  to  the  baseline, 
TPMS, LRRT and biofuels), are added to the achievement of 130 g CO2/km  by  M1 
vehicles. 

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30 

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•  Variant  3B:  based  on  variant  3A  but  considering  in  addition  a  widespread 
implementation  of  measures  to  influence  consumer  demand  (taxation  and  consumer 
information). There is no direct estimation available of the likely impact of these non-
technical  measures  on  the  cost-effectiveness  of  the  technical  measures  included  in 
variant A, but as mentioned in Box 1, achieving a lower autonomous weight increase 
than  1.5%  p.a.  between  now  and  2012  is  related  to  the  success  of  possible 
complementary  measures  aimed  at  influencing  consumer  purchase  behaviour.  For 
modelling  purpose,  an  average  abatement  of  19%  on  the  M1  cost  curve  has  been 
implemented in this variant. 

The  modelling  of  the  policy  scenarios  with  TREMOVE39  delivers  the  bulk  of  the 
information needed for the assessment of environmental and economic impacts. This is 
complemented  by  an  analysis  of  the  macro-economic  and  sectoral  impacts  of  different 
levels of cost for the society and for car industry in particular, performed with PACE-T 
and  FORCAR  respectively.  This  analysis  of  the  policy  scenario  is  provided  in  the 
following sections. 

4.4. 

Environmental impacts 

The impact of all scenarios on transport demand would remain limited (Table 7). Option 
(2)  triggers  a  small  decrease  in  passenger transport  demand,  while  the  Options  3A  and 
3B correspond to a small increase in passenger transport, because the increase in vehicle 
purchase price and annual maintenance cost is overlapped by the fuel savings, leading to 
a decrease in passenger transport generalised cost. 

Table  7  -  Impact  of  the  Policy  options  on  transport  demand  –  EU25  (Source: 
TREMOVE) 

Vehicle.km small Passenger cars 

Vehicle.km medium/big 
Passenger Cars 

Vehicle.km Light Duty Vehicle 

% change vs Baseline 
2015 
2020 
2015 
2020 
2015 
2020 

Option 2 
-1.01% 
-1.12% 
-0.13% 
-0.27% 
-0.20% 
-0.24% 

Option 3A  Option 3B 

0.06% 
0.04% 
0.13% 
0.18% 
0.13% 
0.20% 

0.63% 
0.58% 
0.27% 
0.31% 
0.26% 
0.30% 

Policy Option 2 leads to an abatement of 403 Mt WtW CO2 equivalent over the period 
2010-2020,  corresponding  to  an  abatement  of  6%  for  road  transport  over  the  period 
compared  to  the  baseline.  Policy  options  3A  and  3B  lead  to  a  somewhat  greater 
abatement,  respectively  429  and  422  Mt,  which  is  necessary  to  ensure  the  full 
achievement  of  the  120  g  CO2/km  objective,  taking  into  account  the  uncertainties  of 
some  of  the  measures  considered  (e.g.  GSI).  For  the  cheaper  Variant  3B,  there  is  a 
smaller  abatement  due  to  a  rebound  effect  related  to  the  greater  increase  in  transport 
demand. 

39 

Policy option 2 corresponds to TREMOVE model run D23. Policy options 3A and 3B are based 
on model run D28 (also available on www.tremove.org) including 1.65% biofuels on top of the 
baseline by 2012 and – for 3B – a sensitivity analysis on M1 abatement costs. 

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Regarding  conventional  pollutant  emissions  (see  Table  8),  while  Option  2  triggers  a  – 
although  small  –  decrease  in  SO2,  PM  and  NOX  emissions,  Options  3A  and  3B  lead 
overall to a somewhat lower abatement due to increase in traffic. 

Table 8 - Impact of the Policy options on pollutant emissions – EU25 

Option 1 
(Base case) 

2015 
860.9 
142.6 
1136.5 
2150.7 
122.3 
18.1 

2020 
897.1 
151.9 
895.1 
1924.6 
113.9 
18.8 

Option 2  
(% change vs 
Base case) 
2015 
-3.88% 
-3.01% 
0.00% 
-0.06% 
-0.09% 
-1.15% 

2020 
-6.67% 
-5.05% 
-0.05% 
-0.16% 
-0.25% 
-1.96% 

Option 3A  
(% change vs 
Base case) 
2015 
-4.87% 
-1.66% 
0.00% 
-0.04% 
0.04% 
-1.00% 

2020 
-7.04% 
-3.31% 
-0.05% 
-0.11% 
-0.01% 
-1.66% 

Option 3B  
(% change vs 
Base case) 
2015 
-4.87% 
-1.66% 
0.00% 
-0.04% 
0.04% 
-1.00% 

2020 
-7.04% 
-3.31% 
-0.05% 
-0.11% 
-0.01% 
-1.66% 

CO2 exhaust (Mt) 
CO2 well_to_tank (Mt) 
NMVOC exhaust (Kt) 
NOx exhaust (Kt) 
PM exhaust (Kt) 
SO2 exhaust (Kt) 

4.5. 

Economic impacts 

The impact of the policy options on vehicle sales (see Table 9) remains also limited, with 
option 2 having a negative impact on both gasoline and diesel cars.. Options 3A and 3B 
have  a  positive  impact,  with  an  increase  in the  sales  of  gasoline  vehicles  offsetting  the 
decrease in the sales of diesel vehicles. However, this evolution is linked with the actual 
policy scenario implemented in TREMOVE, based on Task A data, where the abatement 
target  per  vehicle  category  is  calculated  exclusively  based  on  the  marginal  abatement 
curves. While this does not question the overall results of the assessment which focuses 
on  the  overall  light-duty  vehicle  market  evolution,  this  points  to  the  need  to  define  an 
instrument  taking  into  account  the  structure  of  the  car  markets,  and  specificities  of 
various segments in relation to their ability to deliver affordable CO2 reductions and fuel 
efficiency improvements. 

Table  9  -  Impact  of  the  Policy  options  on  vehicle  sales  compared  to  the  baseline  – 
EU25 (Source TREMOVE) 

% change vs Baseline 
vehicle category 
Gasoline (M1+N1) 
Diesel (M1+N1) 
Total (M1+N1) 

Option 2 

Option 3A 

Option 3B 

2012 
0.1% 
-0.3% 
-0.1% 

2020 
-0.1% 
-0.6% 
-0.3% 

2012 
0.3% 
-0.2% 
0.1% 

2020 
0.5% 
-0.4% 
0.1% 

2012 
0.5% 
-0.2% 
0.2% 

2020 
0.9% 
-0.4% 
0.3% 

The effects of the policy options on welfare indicators (see Table 10) show that there is a 
wide  scattering  between  the  scenarios  leading  from  almost  positive  (gain  to  society)  to 
negative (loss to society) values depending essentially on the fix resource costs assumed 
to  reach  the  120  g  CO2/km  equivalent  emission  target  for  new  passenger  cars.  Under 
option  2,  the  consumer  surplus  (-17  €bn)  is  worsened  by  the  marginal  cost  of  public 
funding (-36 €bn), leading to an overall welfare loss (externalities excluded) of -53 €bn. 
In Policy option 3A, the welfare loss due to fix resource cost is much lower in absolute 
value (-49 €bn compared to -98 €bn for Option 2). This compensates for the lower fuel 
savings  and  the  cost  of  biofuels,  and  triggers  a  gain  in  consumer  surplus  (+7  €bn). 
However,  the  marginal  cost  of  public  funding  still  overlaps  this  gain,  and  the  overall 
welfare  effect  is  a  loss  of  -23  €bn.  In  policy  option  3B,  the  welfare  loss  due  to  fix 
resource cost is even lower, resulting to a net welfare loss of -10 €bn. 

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32 

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Table 10 - Welfare Analysis of the Policy options – EU25 

Net  present  value  2010-2020,  M€,  difference  with 
basecase (Option 1) 
Consumer Surplus 
(including transport demand from business) 
• 
fix resource costs 
•  variable resource costs 
• 
•  other effects 
Sum of cost of public funds (general taxation) 
Sum welfare 

taxes 

Option 2 

Option 3A 

Option 3B 

-17,124 
-98,384 
39,434 
41,545 
280 
-35,999 
-53,123 

6,871 
-48,987 
16,481 
39,458 
-81 
-30,152 
-23,281 

34,356 
-37,885 
16,584 
41,188 
-142 
-29,985 
-10,239 

The  comparison  of  this  welfare  loss  with  the  overall  GHG  abatement  over  the  same 
period  gives  a  value  for  GHG  abatement  in  €/ton.  At  this  stage,  it  is  worth  taking  into 
account  the  fact  that  the  cost  estimates  selected  for  the  policy  option  modelling  were 
conservative.  As  mentioned  above  (section  3.3.1),  a  detailed  analysis  will  have  to  be 
performed regarding the future instrument to reduce CO2 emissions and its impacts, e.g. 
at the vehicle or segment level. In particular, the costs of technological options for M1 do 
not  take  into  account  neither  synergies  in  the  integration  of  systems,  nor  technologies 
likely to appear between 2006 and 2012 thanks to innovation. Moreover, cost estimates 
are  established  for  large  scale  production  at  a  2012  horizon,  but  do  not  account  for 
learning  curves  and  economies  of  scale  beyond  that  date  as  technologies  penetrate  the 
market on a wider scale, and ex-ante cost estimates have in the past proven to be much 
higher than actual compliance costs. These alternative assumptions would result in lower 
cost,  and  a  rebate  of  17%  in  fix  resource  costs  can  here  again  be  considered  as  an 
alternative estimate. 

This  leads  to  a  cost  per  ton  of  CO2  ranging  between  6  €/ton  for  Option  3B  with 
alternative cost assumptions, to 132 €/t for Option 2. 

Table 11 - Cost-Effectiveness of GHG Abatement 2010-2020 

Cost per ton of CO2 equivalent 
Cost estimates 
Alternative costs estimates 

Option 2 
132 €/ton 
84 €/ton 

Option 3A 
54 €/ton  
31 €/ton  

Option 3B 
24 €/ton  
6 €/ton  

A macroeconomic analysis has been carried with the dynamic CGE model PACE-T (see 
Annex 2), which has a special focus on the passenger transport sector. The results of this 
analysis  suggest  very  small  changes  in  all  scenarios  compared  to  the  baseline 
development. Transport demand, GDP and real consumption are slightly affected with a 
downwards  trend.  These  findings  imply  that  increased  purchase  are  more  than 
compensated by the decreases of fuel costs due to lower fuel consumption.  

Regarding the competitiveness aspects, it is interesting to consider the situation in other 
parts of the world as regards fuel efficiency requirements. The EU is not the only region 
considering  ambitious  fuel  efficiency  targets.  From  an  absolute  perspective,  the  EU 
objective  of  120  g  CO2/km  is,  with  the  Japanese  top-runner  approach  currently  being 
revised,  the  most  ambitious  in  the  world.  But  Japan  has  recently  announced  that  it 
intended  to  achieve  fuel  efficiency  improvement  of  20%  by  2015.  Besides  absolute 
values do not account e.g. for regional car fleet variations. For example, Californian cars 
are  much  bigger  and  powerful  than  European  vehicles,  and  thus  emit  higher  levels  of 
CO2. But a comparison of the regulation adopted in 2004 by the state of California (now 

EN 

33 

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followed  by  10  other  US  states)  with  the  EU  strategy  shows  similar  relative  ambition 
levels: the California rule sets a 30% reduction requirement over the 2009-2016 period (7 
years), compared to a 35% reduction over a longer (1995-2012) period (17 years). 

As  regards  specifically  the  competitiveness  implications  on  carmakers  of  carbon 
constraints, two main determinants must be taken into account: the "carbon intensity of 
profits"  (the  degree  to  which  profits  are  derived  from  relatively  high-carbon  emitting 
vehicles) and the quality of management decisions as regards lower-carbon technologies. 
Based on the results of a study on ["The impacts of climate  change on competitiveness 
and  value  creation  in  the  automotive  industry"]  show  that  amongst  the  10  leading 
automotive companies,  those that are in  the best  competitive position with regards  to a 
tightening  of  CO2  /fuel  efficiency  requirements  at  a  2015  horizon  are  the  three  most 
selling European carmakers and the three most selling Japanese carmakers, while the US 
manufacturers  are  in  a  more  difficult  situation40.  It  is  noteworthy  that  the  same 
geographical repartition applies to fuel efficiency requirements, where Japan and the EU 
objectives  are  much  more  ambitious  than  the  US  requirements.  It  thus  appears  that  the 
positive opportunities created by carbon constraints to develop fuel efficient technologies 
ahead  of  competitors  outweigh  the  risks  induced  by  higher  manufacturers  costs  and 
related loss of market share. 

A more detailed sectoral impact assessment is not provided at this stage. The impact on 
specific car segments and production location will depend on the instrument selected for 
the  implementation  of  the  revised  strategy,  which  will  be  subject  to  a  separate  impact 
assessment. In their 2004 European Competitiveness Report41, the Commission services 
paid  particular  attention  to  the  situation  of  the  automotive  industry,  and  notably 
underlined  that  based  on  the  performance  on  the  global  automotive  market  the  EU 
industry was competitive, although it had to face major challenges such as comparatively 
higher  labour  costs  and  poorer  productivity  than  its  US  and  Japanese  competitors.  The 
report  also  stressed  that  world-wide  demand  to  make  vehicles  safer  and  more 
environment-friendly  will  continue,  and  that  competitiveness  was  also  dependent  on  a 
coherent and cost-effective regulatory framework. 

Next to the calculated employment and distribution effects, stronger regulation leads to 
additional expenditures in research and development (R&D). The incentive to invest into 
research  and  development  will  be  a  medium  and  long  term  consequence  which  should 
overall  lead  to  reduced  production  costs  of  advanced  technologies,  and  research  efforts 
should be further supported through the EU research framework programmes. 

4.6. 

Social impacts 

•  Employment 

The analysis of the structure of the automotive industry shows that manufacturers already 
have  started  to  establish  production  facilities  outside  of  the  EU.  While  there  are  many 
drivers to such industrial decisions, the cost level and flexibility of labour, which may in 

40 

41 

The study also highlights that manufacturers focusing on executive/premium cars appear to be in 
an unfavourable position but because of the type of products they offer, they will be able to pass 
through the costs of fuel efficient technologies to their customers. 
SEC(2004) 1397. 

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some  cases  be  partially  offset  by  a  lower  productivity,  and  the  proximity  of  the 
production  facility  to  the  market,  are  considered  as  primary  determinants,  while  other 
aspects  such  as  the  level  of  environmental  or  safety  requirements  are  considered  less 
relevant. 

Another aspect that should be taken into account from an employment perspective is the 
fact all manufacturers, worldwide (including e.g. Japanese and Korean), will be subject 
to  the  EU  CO2  requirements  when  selling  cars  in  the  EU.  Therefore  EU  requirements 
would  not  penalise  more  directly  EU  carmakers  in  the  competitive  situation  on  other 
markets,  including  emerging  markets.  On  the  contrary,  the  introduction  of  ambitious 
legislation  would  likely  promote  research  and  development,  most  of  which  would  be 
done in the EU as far as EU carmakers are concerned. 

Against  that  background,  the  three  options  under  consideration  have  no  perceptive 
impacts on employment as a whole in the EU. 

•  Public health 

Less CO2 emissions from passenger transport by road will contribute to reducing climate 
change and its impacts on the society, such as increased incidence of death or illness due 
to higher temperature variations, pressure on Governments and insurance systems due to 
extreme  weather  events  and  impacts  on  ecosystems  and  natural  resources.  Some  of  the 
measures  foreseen  will  contribute  to  reduced  CO2  emissions  and  enhanced  road  safety 
(e.g. tyre pressure monitoring systems), and may thus contribute to reducing the number 
of injuries and fatalities linked to car accidents. 

4.7. 

Comparing the options  

Based  on  the  detailed  analysis  of  the  measures  and  policy  options  investigated  in  the 
previous  sections,  the  following  assessment  of  the  various  scenarios  analysed  for  the 
three options has been established: 

Table 12 – Overview of the options 

Option 1 
(no policy 
change) 

CO2 reductions 

- 

= 
(reference 
scenario) 

(403 Mt CO2) 

Cost-effectiveness 

n/a 

132 €/t 

Measurability 

☺ 
(based on 
directive 
80/1268/EEC) 

☺ 
(based on 
directive 
80/1268/EEC) 

Option 2 

Option 3A 

Option 3B 

++ 

+ 

(417 to 422 Mt 
CO2) 
6 to 24 €/ton 

☺ 
(idem as 
Option 2A) 

(424 to 429 
Mt CO2) 
32 to 54 €/ton 
☺ 
(need to take 
account real 
use of GSI, 
and need for 
measurement 
procedure for 

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Option 1 
(no policy 
change) 

Option 2 

Option 3A 

Option 3B 

Monitoring 

☺ 
(decision 
1753/2000/EC)

☺ 
(decision 
1753/2000/EC)

Accountability 

☺ 
(stakeholder 
responsible 
clearly 
identified: car 
manufacturers)

☺ 
(stakeholder 
responsible 
clearly 
identified: car 
manufacturers)

MAC and 
LRRT) 
☺ 
(need to adapt 
decision 
1753/2000/EC 
to cover N1, 
and set up 
monitoring for 
LRRT, MAC, 
TPMS and 
GSI) 

☺ 
(stakeholders 
responsible 
clearly 
identified: car 
manufacturers, 
fuel and tyre 
industry, 
automotive 
suppliers) 

☺ 
(idem as 
Option 2A) 

(cid:46) 

(stakeholders 
responsible 
clearly 
identified: car 
manufacturers, 
fuel and tyre 
industry, 
automotive 
suppliers but 
lack of 
certainty 
concerning the 
implementation 
taxation 
measures) 

Based on this assessment, options (3A) or (3B) seem the most promising, in view of their 
better cost-effectiveness, and higher overall CO2 reduction at a 2020 horizon, compared 
to option (2). Essentially, options 3A and 3B present the same level of ambition for the 
various  measures  under  consideration  (130  g  CO2/km  for  M1  vehicles  in  2012,  -15  g 
CO2/km  compared  to  the  baseline  for  N1  vehicles,  GSI,  TPMS,  LRRT,  MACs  and 
biofuels), but their impacts is different due to the impact of consumer demand measures 
taken  into  account  under  option  (3B).  Clearly  this  latter  option  is  the  most  cost-
effective,  at  24  €/ton,  but  is  subject  to  the  active  implementation  of  measures  to 
influence  consumer  demand,  and  in  particular  taxation.  In  view  of  the  constraints  to 
which  taxation  is  subject  at  the  EU  level,  Member  States  have  a  clear  responsibility  in 
ensuring that option (3B) is being implemented, which would be reflected by a reduction 
in  the  relative  upsizing  of  cars  compared  to  historic  trends  and  thus  lower  compliance 
costs  for  manufacturers  in  the  implementation  of  the  fuel  efficiency  framework  that 
would be proposed in 2007. Finally, the inclusion of an additional longer term objective 
of  -30 g CO2/km  for  light-commercial  vehicles  (N1)  to  be  delivered  at  a  2015  horizon 
has a limited impact on the additional costs to the society. 

EN 

36 

   EN 

 
 
5. 

MONITORING AND EVALUATION 

In 2010, a review of the status of implementation of the proposed renewed strategy and 
the  potential  of  further  measures  to  move  beyond  the  EU  objective  of  120  g  CO2/km 
should be carried out. This will notably include an assessment of the progress made by 
Member  States  in  their  national  policies  to  promote  fuel  efficient  cars  and  of  the 
development of advanced (second generation) biofuels. 

EN 

37 

   EN 

 
ANNEX 1: PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED 
PARTIES 

In  preparing  the  review  of  the  CO2  and  cars  strategy,  the  Commission  has  extensively 
consulted interested parties between September 2005 and September 2006. Consultations 
were carried out both by way of direct exchanges with stakeholders including the general 
public, and by way of external expertise. 

The consultation process comprised three consultation processes, as follows: 

(4) 

Direct consultation of interested stakeholders (external expertise) 

Two complementary studies were carried out in support of the preparation of the impact 
assessment:  [Task  A]  focused  on  the  costs  and  CO2  reduction  potential  of  various 
measures that could contribute to the renewed strategy, and task B investigated the socio-
economic  implications  of  possible  packages  of  measures.  Under  [Task  A],  detailed 
specific  stakeholder  consultations  were  carried  out,  and  input  was  received  inter  alia 
from car manufacturers associations (ACEA, JAMA and KAMA), from suppliers to the 
auto  industry  (CLEPA),  from  the  lubricant  industry  (ATIEL),  from  the  tyre  industry 
(BLIC/ERTMA),  the  oil  industry  (Europia).  In  addition  questionnaires  were  sent  to 
Member States in relation to vehicle taxation, car labelling and public procurement. The 
results  of  these  consultations  have  been  used  to  establish  the  [Task  A]  report,  and  are 
subsequently taken into account in the present impact assessment. 

(5) 

Stakeholder working group under the European Climate Change Programme 

On 24 October 2005, the Commission organised a conference to launch the second stage 
of  the  European  Climate  Change  Programme.  On  this  occasion,  a  dedicated  workshop 
was  held  in  order  to  seek  the  views  of  stakeholders  on  the  draft  of  a  mandate  for  a 
working  group  on  reducing  CO2  emissions  from  light-duty  vehicles,  and  to  call  for 
expressions of interest regarding participation in the group. The general objective of the 
Working  Group  was  to  assist  the  Commission  services  in  preparing  the  review  of  the 
Community strategy to reduce CO2 emissions from light-duty vehicles, and specifically 
provide  a  stakeholder  consultation  forum  giving  assistance  in  the  preparation  of  the 
impact  assessment  of  the  future  strategy.  Further  to  this  workshop  the  mandate  was 
finalised42,  and  the  working  group  was  established  taking  into  account  the  applications 
for membership received. 

The working group met five times between December 2005 and September 2006, and the 
outcome  of  the  meetings  and  submissions  by  working  group  members  are  publicly 
available43. Input from stakeholders was used by the contractors in the preparation of the 
[Task A] report, and by the Commission services in preparing the impact assessment of 
the renewed strategy. 

(6)  Web based public consultation 

42 
43 

See http://ec.europa.eu/environment/co2/pdf/mandate_eccp_c02_cars.pdf 
See http://forum.europa.eu.int/Public/irc/env/eccp_2/library?l=/light-
duty_vehicles&vm=detailed&sb=Title  

EN 

38 

   EN 

 
                                                 
Cars being an important part of the everyday life of European citizens, it was decided to 
carry out an online consultation of the general public, with a view to seeking the views 
and opinions of individuals on passenger road transport’s contribution to climate change 
and  possible  future  ways  to  reduce  it.  The  minimum  standards  for  consultation 
(COM(2002)704) have been respected and the questionnaire44 was made available during 
10 weeks between mid-June and mid-August 2006. A total of 1215 entries were received 
and  the  results  from  this  consultation  (see  Annex  3)  were  taken  into  account  in  the 
revision of the strategy, notably as regards the need to better inform consumers about the 
fuel efficiency of their cars (see 4.2.8). 

44 

See http://ec.europa.eu/environment/co2/co2_home.htm 

EN 

39 

   EN 

 
                                                 
ANNEX 2: REFERENCE DOCUMENTS AND ADDITIONAL 
CONSIDERATIONS ON THE MODELLING FRAMEWORK 

Reference Documents 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

[Task  A]  "Review  and  analysis  of  the  reduction  potential  and  costs  of 
technological and other measures to reduce CO2 emissions from passenger cars", 
final  report,  Contract  n°  SI2  408212  by  TNO  for  DG  Enterprise  and  Industry, 
October 
at 
http://ec.europa.eu/enterprise/automotive/projects/report_co2_reduction.pdf 

available 

2006, 

[IEEP 2004] "Service contract to carry out economic analysis and business impact 
assessment  of  CO2  emission  reduction  measures  in  the  automotive  sector"  Final 
Report http://ec.europa.eu/environment/co2/02858/sec02858_en.pdf& Annexes 

[Task  B]  "Service  Contract  in  Support  of  the  Impact  Assessment  of  Various 
Policy Scenarios to Reduce CO2 Emissions from Passenger Cars", Contract: N° 
070501/2004/392571/MAR/C1  by  Centre  for  European  Economic  Research 
(ZEW) for European Commission (DG Environment), October 2006. (available at 
http://ec.europa.eu/environment/co2/co2_studies.htm) 

model 

transport 

[TREMOVE] "Service contract for the further development and application of the 
Contract 
- 
TREMOVE 
070501/2004/387327/MAR/C1  by  KU  Leuven  and  Transport  and  Mobility 
Leuven for European Commission (DG Environment), December 2006 (available 
at  http://www.tremove.org/index.htm).  The  independent  reviews  of  the  model 
at 
3 
performed 
http://ec.europa.eu/environment/air/models/tremove.htm) 

available 

Service 

years 

over 

Lot 

last 

the 

are 

3", 

[JRC2006]  JRC/CONCAWE/EUCAR  Well-to-Wheel  study,  as  updated  in  2006 
http://ies.jrc.cec.eu.int/wtw.html 

[TNO MAC] Development of a procedure for the determination of the additional 
fuel  consumption  of  passenger  cars  (M1  vehicles)  due  to  the  use  of  mobile  air 
conditioning 
at 
http://ec.europa.eu/environment/co2/pdf/a_16174.pdf 

equipment 

available 

Review  of  the  commitment  of  car  manufacturers  to  reduce  CO2  emissions  from 
M1 vehicles available at http://ec.europa.eu/environment/co2/pdf/a_11742.pdf 

Options  to  integrate  the  use  of  mobile  air  conditioning  systems  and  auxiliary 
heaters  into  the  emission  type  approval  test  and  the  fuel  consumption  test  for 
passenger 
at 
(M1 
http://ec.europa.eu/environment/co2/pdf/tno_mac_fc_first_study.pdf 

vehicles) 

available 

cars 

(9)  Measuring and preparing reduction measures for C02 emissions from N1 vehicles 

available at http://ec.europa.eu/environment/co2/pdf/a_9482_final%20report.pdf 

EN 

40 

   EN 

 
(10)  Report  on  the  effectiveness  of  the  car  fuel  efficiency  labelling  directive 
Report 

1999/94/EC, 
http://ec.europa.eu/environment/co2/02858/sec02858_en.pdf& Annexes 

improvement: 

options 

Final 

and 

for 

(11) 

[COWI]  "Fiscal  measures  to  reduce  CO2  emissions  from  new  passenger  cars", 
see 
COWI, 
http://ec.europa.eu/environment/co2/pdf/cowi_finalreport.pdfhttp://ec.europa.eu/e
nvironment/co2/02858/sec02858_en.pdf 

January 

2002 

– 

(12)  Contribution from stakeholders (See Annex 1 and [Task A] report) 

(13) 

(14) 

["The  impacts  of  climate  change  on  competitiveness  and  value  creation  in  the 
automotive  industry"],  Sustainable  Asset  Management  and  World  Resources 
Institute, http://www.sam-group.com/changingdrivers/default.cfm 

[IEEP  2006]  "Improving  the  knowledge  base  on  car  purchasing  decision 
mechanisms and the environmental impact of company car taxation", Institute for 
European Environmental Policy (IEEP; UK/Belgium), contract for the European 
Commission’s 
on 
http://ec.europa.eu/environment/air/models/tremove.htm  

Environment, 

available 

October 

2006, 

DG 

Modelling Framework 

The  policy  scenarios  to  reduce  CO2  emissions  from  passenger  cars  are  based  on  the 
measures  analysed  by  Task  A,  complemented  when  needed  by  additional  information 
from the reference documents mentioned above. The objective of Task B was to assess 
the  economic,  environmental  and  social  aspects  of  the  scenarios,  to  support  the  Impact 
Assessment undertaken under the procedures of the Commission.  

The assessment of the several scenarios was done in comparison with a baseline scenario 
(TREMOVE  2.43b)  which  has  been  defined  by  the  European  Commission  and 
implemented into the models. 

The  effects  on  the  transport  sector  were  quantified  with  the  transport  emission  model 
TREMOVE, and the model runs have been carried out by the consultant in charge of the 
development of the TREMOVE model (K.U. Leuven / Transport and Mobility Leuven), 
and  by  the  services  of  the  Commission  (DG  Environment,  Unit  C5  Energy  and 
Environment).  

The  outcome  of  TREMOVE  is  a  calculation  of  the  cost-effectiveness  of  various  policy 
scenarios, comparing the welfare cost of the measures with the changes in emissions (no 
external  cost  valuation  is  performed  in  the  context  of  the  present  impact  assessment). 
Any comparison between the ex-ante cost-effectiveness calculation performed by Task A 
in the table presented in the executive summary of the final report and the calculations 
presented in Task B must take into account (1) the hypothesis on costs and mark-up (see 
below)  and  (2)  the  demand  effect  modelled  by  TREMOVE,  as  the  fuel  efficiency 
improvements and the related increase in car retail cost savings lead to a chain of effect 
on overall (passenger road) transport demand, variation in car sales and stock (including 
shifts between categories). 

EN 

41 

   EN 

 
On the macroeconomic level, ZEW used the dynamic general equilibrium model PACE-
T to simulate the impacts of the relevant regulation measures on the macro-economy as 
well as the individual sectors and trade flows of the European countries. 

It is worth mentioning that the macro-economic and sectoral analysis of policy scenarios 
(performed  respectively  by  PACE-T  and  FORCAR)  does  not  mirror  the  detailed  cost-
effectiveness  analysis  performed  with  TREMOVE.  Instead,  it  considers  the  range  of 
scenarios  possible  looking  at  the  two  major  changes  that  affect  transport  demand  and 
through  this  channel  the  macroeconomic  variables,  namely  a  decrease  in  fuel 
consumption  and  an  increase  in  total  costs  per  car  type  related  to  fuel  efficiency 
improvements. 

Starting  for  a  core  scenario  reaching  120g/km  by  2012  with  an  increase  in  vehicle 
purchase  costs  corresponding  to  the  highest  range  of  the  cost  sensitivity  analysis,  the 
analysis  identifies  2  alternative  scenarios:  the  1st  one  with  a  lower  decrease  in  fuel 
consumption  (corresponding  to  a  target  of  130g/km),  and  the  2nd  one  keeping  the  fuel 
efficiency  target  but  implementing  a  lower  increase  in  vehicle  purchase  cost, 
corresponding to the lowest range of the cost sensitivity analysis. 

Moreover, preliminary TREMOVE runs have been performed using the draft final report 
from  task  A  and  the  IEEP  report  “Service  contract  to  carry  out  economic  analysis  and 
business  impact  assessment  of  CO2  emissions  reduction  measures  in  the  automotive 
sector”  (IEEP/TNO/CAIR,  2004).  These  scenarios  refer  exclusively  to  measures 
targeting  passenger  cars,  but  provide  useful  insight  for  the  analysis  of  macroeconomic 
and sectoral effects. 

Comparison with Task A: mark-up and fuel prices 

Two  essential  aspects  must  been  taken  into  account  when  comparing  the  results  from 
Task A and the results from TREMOVE. 

Firstly,  the  costs  considered  as  part  of  the  Commission's  impact  assessment  are  the 
resource costs, including research and development and economies of scale but excluding 
additional manufacturer and dealer margin. This ensures that the costs taken into account 
reflect only the CO2 reduction measure under consideration, and is inline with previous 
impact  assessment  exercises  in  the  automotive  field  (e.g.  EURO  5).  This  approach 
however was not followed by the contractor in Task A. 

Secondly,  the  TREMOVE  baseline  includes  a  central  hypothesis  on  fuel  price  – 
consistent  with  the  PRIMES  scenarios  used  for  the  mid-term  review  of  Common 
Transport Policy in the ASSESS study45. Using constant Euro 2000, the forecasted fuel 
price for the period 2005-2020 experiments small variations in the band 0.4 / 0.5 €/l. To 
compare  with  the  four  cost/effectiveness  values  provided  by  Task  A,  one  should 
therefore use an intermediate value (1/4) between 50 and 74 €/bbl to be consistent with 
the TREMOVE baseline. 

45 

http://ec.europa.eu/transport/white_paper/mid_term_revision/assess_en.htm 

EN 

42 

   EN 

 
                                                 
0.6

0.5

0.4

l
/
€

0.3

0.2

0.1

0

Fuel price (at the pump, before tax, Euro 2000)

oil price
[€/bbl]

Task A Scenarios
petrol/diesel gas cost
cost [€/l]

[€/m3]

25
36
50
74

0.21
0.30
0.41
0.60

0.32
0.40
0.49
0.65

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Diesel

Petrol

Tremove baseline Diesel

Tremove baseline Petrol

An  example  can  be  provided  for  the  cost  of  reaching  120g  with  M1.  The 
cost/effectiveness  provided  by  Task  A  is  181€  at  50  €/bbl  and  132€  at  74  €/bbl.  This 
would  give  an  intermediate  value  of  170€/t.  The  removal  of  the  mark-up  (16%)  would 
translate into a circa 30% impact on cost-effectiveness (as explained page 81 of Task A 
final report). This would give 130 €, comparable to the 136 € given by the TREMOVE 
simulation (which furthermore takes into account the demand effects, contrary to the ex-
ante calculations made by Task A). 

Scenarios for Tyres and Lubricants 

Two scenarios were defined by Task A for LRRT and LVL: Scenario 1 concerned only 
new cars, while in scenario 2 the technologies were applied to the whole fleet. However, 
only scenario 1 was modelled with TREMOVE for Task B report. Later on, in order to be 
fully  consistent  with  additional  policy  considered  for 
the  future 
Communication, additional runs (D33 to D35)46 have been performed by the services of 
the Commission, including scenario 2 for LVL and LRRT. 

inclusion 

in 

Task A had concluded that the cost-effectiveness of the 2nd scenario would be higher, due 
to the fact that the percentage reduction in fuel consumption is applied on higher absolute 
fuel consumption. However, the modelling with TREMOVE has given opposite results. 
This  is  due  to  the  fact  that  the  hypothesis  provided  by  Task  A  gives  the  same  annual 
maintenance  cost  for  all  cars,  thus  disregarding  the  fact  that  older  cars  have  a  lower 
annual cost due to their lower mileage (tyres and lubricants are replaced less frequently). 

46 

The following runs have been performed: D33 = 125g M1 + GSI + TPMS + N1 15g + LRRT2; 
D35 = 125g M1 + GSI + TPMS + N1 15g + LRRT2 + MAC; D34 = 130g M1 + GSI + TPMS + 
LRRT2 + MAC + N1 15g + LVL2. Following the same methodology explained in Task B report, 
the calculation of the cost effectiveness of LRRT scenario 2 is given by the comparison between 
D33 and D26, while LRRT is given by the comparison between D35 and D34, minus the cost and 
effectiveness of the step 130g/125g given by the difference between scenarios D23 and D24. 

EN 

43 

   EN 

 
 
                                                 
In terms of effectiveness, this lower mileage of older cars is actually taken into account, 
compensating their higher average fuel consumption. All in all, very roughly, this gives 
for scenario 1 ex- tax fuel saving around 18 €/year/vehicle, compared with 16 €/year for 
scenario 1, while costs are 20 €/year/vehicle. 

The table below gives the resulting cost effectiveness: 

Task A with similar fuel 
price hypothesis 

TREMOVE Scenario 1  TREMOVE Scenario 2 

LRRT  

LVL 

59 

98 

18.9 

91.0 

83.7 

129.9 

EN 

44 

   EN 

 
 
ANNEX 3: RESULTS OF THE PUBLIC CONSULTATION 

Review of the EU strategy to reduce  
CO2 emissions and improve fuel efficiency from cars 

Report on the Public Consultation June - August 2006 

In line with the Commission's commitment to transparent and interactive policy-making, 
this  document  aims  at  providing  an  overview  and  general  impression  of  the  feedback 
provided to the Commission in the context of a public consultation. The statements and 
opinions expressed  in  the  document do therefore in no way necessarily reflect those  of 
the Commission. 

EN 

45 

   EN 

 
1. 

Summary 

1.1.  General remarks 

A  public  consultation  on  the  review  of  the  EU  strategy  to  reduce  CO2  emissions  and 
improve  fuel  efficiency  from  cars  was  held  from  12  June  to  21  August  2006  in 
preparation  for  a  Communication  from  the  Commission  to  the  Council  and  European 
Parliament.  An  online  questionnaire  available  in  English,  French  and  German  was 
designed to gather the anonymous views and opinions of the general public on passenger 
road  transport’s  contributions  to  climate  change  and  possible  future  ways  to  reduce  it. 
The  standard  Commission  internet  tool  for  Interactive  Policy  Making  was  used.  The 
objective  was  to  allow  as  many  as  possible  to  express  their  views,  but  since  the 
consultation  was  based  on  self-selection  of  those  who  wished  to  respond  to  the 
questionnaire, the views expressed by respondents cannot be regarded as representative 
of the views held by the EU population. 

1.2.  Results of the consultation 

A total of 1215 responses were received, with a 2:1 male/female respondents' ratio. The 
largest number of respondents lived in the UK, followed by France and Germany. 77% of 
respondents  owned  a  car  and  23%  did  not.  From  the  responses,  these  cars  seem  to  be 
fairly  consistent  with  the  average  EU  fleet  in  terms  of  their  size  distribution  and  fuel 
consumption. However, there are indications that the sample of respondents may be more 
informed/concerned about environmental issues than the average citizen. 

There was a large degree of agreement that road transport should make further efforts to 
mitigate  climate  change  and  to  improve  security  of  energy  supply,  but  also  that  the 
responsibility for the reduction of CO2 emissions from cars should be shared by various 
stakeholders (i.e. not only the car industry, but also the fuel industry, consumers, public 
authorities). Particularly strong support was voiced for the inclusion of light commercial 
vehicles  in  efforts  to  reduce  CO2  emissions,  as  well  as  for  efforts  to  raise  consumer 
awareness about CO2 emissions from cars. 

In terms of approaches to reduce the CO2 emissions from cars, the questionnaire asked 
for the degree of support for seven different approaches: improving car technology; fiscal 
measures  to  support  low  CO2  emissions;  better  consumer  information  on  the  fuel 
efficiency  of  cars,  and  of  certain  car  components;  promotion  of  alternative  fuels;  eco-
driving;  and  support  for  more  efficient  tyres  and  lubricants.  A  majority  of  respondents 
considered  all  of  these  approaches  as  worthwhile  by  ticking  the  option  "As  soon  as 
possible".  Within  this  option,  the  improvement  of  car  technology  comes  out  top, 
followed  by  tax  differentiation,  consumer  information  about  cars  and  the  promotion  of 
alternative fuels. Relatively lower urgency is expressed for the promotion of eco-driving 
and the promotion of efficient tyres and lubricants, with the least urgency for improving 
consumer information about the efficiency of components.  

In exchange for an annual fuel cost reduction of €150, some 70% would be willing to pay 
more  for  the  vehicle;  half  of  these  by  no  more  than  €1,000,  another  22%  by  €1,000  to 
€1,500, with almost 20% above €1,500. 

EN 

46 

   EN 

 
Somewhat less than half of all respondents also provided general comments. From these 
comments,  strong  support  emerges  for  either  binding  regulatory  measures  or  fiscal 
measures  on  CO2  from  cars,  as  well  as  for  new  technology.  Many  other  comments 
highlighted  the  importance  of  other  measures  in  transport  policy  as  well  in  order  to 
reduce CO2 from transport, chiefly public transport and non-motorised transport as well 
as biofuels, a reduction of transport demand, instruments of urban transport planning and 
policy, and fuel taxation. 

EN 

47 

   EN 

 
2. 

Introduction 

A  public  consultation  on  the  review  of  the  EU  strategy  to  reduce  CO2  emissions  and 
improve  fuel  efficiency  from  cars  was  held  from  12  June  to  21  August  200647  in 
preparation  for  a  Communication  from  the  Commission  to  the  Council  and  European 
Parliament to be adopted at the end of 2006. The consultation was carried out in line with 
the Commission’s policy of good governance, transparency and stakeholder involvement 
and using the standard Commission internet tool for Interactive Policy Making. 

An online questionnaire available in English, French and German was designed to gather 
the  anonymous  views  and  opinions  of  the  general  public  on  passenger  road  transport’s 
contributions to climate change and possible future ways to reduce it. The objective was 
to allow as many as possible to express their views, but since the consultation was based 
on  self-selection  of  those  who  wished  to  respond  to  the  questionnaire,  the  views 
expressed by respondents cannot be regarded as representative of the views held by the 
EU population. 

To facilitate the analysis, some questions were structured and allowed an answer from a 
number of presented options. The consultation was aimed at giving a voice to members 
of the public on road transport and climate change, and not at providing a representative 
survey  or  opinion  poll.  However,  it  should  be  borne  in  mind  that  self-selection  of  the 
potential respondents may have introduced a bias towards certain views and ideas and the 
results should be interpreted accordingly. 

This document does not in any way reflect the position of the European Commission. It 
merely attempts to summarise the comments received from members of the public. 

47 

To compensate for the fact that the consultation partly took place during the summer period, the 
minimum consultation time of 8 weeks was raised to 10 weeks. 

EN 

48 

   EN 

 
                                                 
3. 

Results of the consultation 

3.1.  Background information about participants 

Country of residence

542

251

174

66 51 42 16 13 9 8 7 6 6 4 4 2 2 2 2 2 2 1 1 1 1 0 0 0 0 0 0 0 0

600
500
400

300
200
100
0

Figure 9 Number of respondents per country of residence 

1215  submissions  were  received,  with  a  67%/33%  male/female  respondents  ratio.  The 
largest number of respondents lived in the UK, followed by France and Germany. This 
may  have  been  partly  due  to  the  fact  that  the  questionnaire  was  available  in  English, 
French and German but also because these are the larger Member States. The dominant 
age  group  was  30-39  (34%),  followed  by  40-49  (24%)  and  18-29  (21%),  with  the 
remaining 21% from age 50 and higher. Thus, almost 80% of all respondents were below 
50 years old. 

77% of respondents owned a car and 23% did not. For comparison, the motorisation rate 
in the EU-25 is 468 per 1000 population48. Looking at the car fleet represented by those 
who own a car (Figure 10), almost two thirds use petrol, almost one third diesel, and 5% 
other fuels such as biofuels or natural gas. Half of the cars are of medium size, over one 
quarter are small, while the remaining, larger or more luxurious categories are making up 
3-6% each (Figure 11). 

48 

For  the  year  2003.  Source:  EU  Energy  and  Transport  in  Figures  –  Statistical  pocketbook  2005. 
European Commission, Directorate-General for Energy and Transport. 

EN 

49 

   EN 

 
 
                                                 
Fuel type

Other 
5%

Diesel
31%

Vehicle type

Car derived van
3%

Mini
4%

Luxury
5%
Sport
6%

Small
28%

Figure 10 

Off-road
3%

Figure 11 

Gasoline
64%

Medium
51%

The fuel consumption as indicated by those respondents who did supply this information 
was predominantly five to seven litres per 100km (35%) and seven to nine litres (20%), 
see  Figure  12.  Using  straightforward  assumptions49,  the  average  CO2  emissions  as 
implied  by  the  respondents  would  then  be  around  177g/km.  Looking  at  the  monitoring 

49 

Fuel  consumption  as  shown  on  the  figure,  assuming  an  even  spread  of  values  within  each  fuel 
consumption category and a constant petrol to diesel split as found above. A fuel consumption of 
one l/100km corresponds to 24g/km of CO2 for petrol, and 27g/km for diesel. 

EN 

50 

   EN 

 
 
 
                                                 
data50, this value would correspond to the newly sold vehicle fleet of 1999, or – allowing 
for higher consumption in real world driving51 - some time after that. The reported fuel 
consumption thus seems to be broadly consistent with the average fleet in the EU. 

40%

35%

30%

25%

20%

15%

10%

5%

0%

Fuel consumption

35%

14%

20%

12%

4%

<5

5-7

7-9

9-11

>11

Litres / 100km

Figure 12 

15%

Don't
know

Modal split: daily travels

Company car
7%

Car & publ. tr.
8%

Public 
transport
20%

Ow n car
38%

Walk/cycle
27%

Figure 13 

50 

51 

The average CO2 emissions from newly sold cars in 1999 were 176g/km for EU-15. Source: Sixth 
annual Communication on the effectiveness of the Strategy to Reduce CO2 Emissions from Cars - 
COM(2006) 463. 
The fuel consumption reported in the annual monitoring reports relates to the so-called NEDC test 
cycle. 

EN 

51 

   EN 

 
 
 
                                                 
For daily trips such as going to work (Figure 13), cars are being used in a little more than 
half  of  all  cases  (53%),  mostly  using  an  own  car  (38%),  a  company  car  (7%)  or 
combining  the  car  with  public  transport  (8%).  Non-motorised  transport  accounts  for  a 
quarter  of  all  daily  trips  as  reported,  with  20%  taken  up  by  public  transport 
(bus/tram/train). 

The  questionnaire  invited  the  respondents  to  rank  how  important  they  felt  that  certain 
criteria  were  in  buying  a  car,  ranging  from  1  (unimportant)  to  6  (very  important).  The 
criteria were as follows: 

•  Vehicle type (e.g. SUV, sedan, hatchback) 

•  Number of seats 

•  Vehicle size (exterior, interior, boot space…) 

•  Fuel consumption 

•  Engine power 

•  Brand image/prestige 

•  Take back of end of life vehicle 

•  Design 

•  Safety standards 

•  Low emissions of CO2 

•  Low emissions of other pollutants 

•  Comfort 

•  Noise 

•  Vehicle price 

•  Reliability 

•  Alternative fuels compatibility (e.g. biofuels, natural gas) 

•  Cost of insurance 

•  Fuel used 

•  Maintenance/repair 

•  Tax 

•  Resale value 

EN 

52 

   EN 

 
•  Particulate filter (for diesel cars) 

Looking  at  how  many  people  gave  the  highest  rank  (6=very  important)  to  the  various 
criteria,  a  picture  emerges  where  four  criteria  are  clearly  perceived  as  more  important 
than  the  rest.  These  are  fuel  consumption,  low  CO2  emissions,  reliability,  and  low 
pollutant  emissions.  Brand  image/prestige  is  the  criterion  identified  by  the  smallest 
number  of  people  as  very  important.  Looking  in  turn  at  what  people  think  is  the  least 
important  criterion,  brand  image/prestige  is  identified  by  a  strong  majority  as 
unimportant,  while  it  appears  that  most  other  criteria  are  seen  as  important  to  a  certain 
degree so there is only a comparatively small number of people ranking any of the other 
criteria as unimportant.  

The strong emphasis on fuel consumption as the top criterion is not entirely surprising in 
view  of  the  current  high  fuel  prices,  both  experienced  at  the  pump  and  extensively 
reported on in the media. The almost equally high emphasis on low CO2 emissions can 
be  explained  by  assuming  a  wide  awareness  among  the  population  that  CO2  emissions 
are coupled to fuel consumption. However, an alternative explanation is that the sample 
was not fully representative of  the average car buyer.  The  hypothesis of a self-selected 
audience  with  above-average  knowledge  of  and  concern  for  the  environment  is 
strengthened  by  the  strong  ranking  of  pollutant  emissions  as  a  criterion  for  the  buying 
decision. It must also be noted that the observed profile of responses sits oddly with the 
realities  of  the  car  market,  where  image  and  prestige  are  all-important  while 
environmental  considerations  are  often  reported  as  being  of  minor  importance  to  the 
average customer. For example, a study on the effectiveness of the labelling Directive52 
found that "Fuel economy  and environmental impact  are  in general  no major  factor  in 
vehicle purchase decisions". Specifically on the weak role of prestige and brand image, 
the reason for the observed behaviour may be an unrepresentative sample of respondents 
or a lack of honesty on this particular criterion. 

The rest of the criteria achieve a variety of middle-ranking results as shown in Figure 14. 
They are not discussed in further detail here. 

52 

Study  on  the  effectiveness  of  Directive  1999/94/EC  relating  to  the  availability  of  consumer 
information  on  fuel  economy  and  CO2  emissions  in  respect  of  the  marketing  of  new  passenger 
cars. September 2004. http://ec.europa.eu/environment/co2/report/final_report.pdf 

EN 

53 

   EN 

 
                                                 
s
e
s
n
o
p
s
e
r

f
o
r
e
b
m
u
N

700

600

500

400

300

200

100

0

Criteria when buying a car, and how people rank them

1

2

3

4

5

6

Rank

Figure 14 

Fuel consumption

Low CO2 emissions 

Reliability

Low pollutant emissions

Vehicle type

Safety standards

Vehicle price

Particulate filter (diesel)

Fuel used (petrol, diesel)

Alt. fuels compatibility

Vehicle size

Number of seats

Noise

Maintenance/repair

Comfort

Take back of ELV

Cost of insurance

Tax

Design

Engine power

Resale value

Brand image/prestige

The  preferences  for  more  power  versus  higher  efficiency  was  probed  by  referring  to  a 
hypothetical situation in which the respondent was purchasing a new car of the same type 
and  price  as  their  current  car,  and  giving  the  alternative  of  either  purchasing  a  car  as 
powerful as the current one but 20% more fuel efficient, or a car as fuel efficient as the 
current one but 20% more powerful. The response showed a strong preference (86%) for 
higher  efficiency.  Again  this  result  seems  at  odds  with  recent  trends  in  new  car 
purchases, where the average (ACEA) car sold over the period 1995-2004 experienced a 
surge in power of +28% while CO2 emissions decreased by a mere 12.4%, which would 
tend to indicate that power has been a strong selling point of cars, to some extent due to 
consumer preferences, and to some extent due to manufacturers' offer. 

3.2.  Awareness about climate change 

"Do you feel well informed about the climate 
change impacts of road transport? "

"Do you feel well informed about the impact of 
driving style on CO2 emissions from cars? "

66,3

100

90

80

70

60

50

40

30

20

10

0

28,1

5,7

67,5

100,0

80,0

60,0

40,0

20,0

0,0

28,6

4,0

Yes

No

Don't know

Yes

No

Don't know

EN 

54 

   EN 

 
 
 
 
Figure 15 - Climate change impacts of 
road transport 

Figure 16 - Impact of driving style on 
CO2 emissions 

Circa two thirds of respondents felt well informed about the climate change impacts of 
road transport, and of the impact of driving style on CO2 emissions from cars (see Figure 
15  and  Figure  16).  In  order  to  test  people's  awareness  of  the  orders  of  magnitude 
involved, one question asked "How much CO2 would you think a car emits if it consumes 
6  litres  of  fuel  per  100  kilometres?".  About  half  of  all  respondents  picked  the  correct 
response (about 150 g CO2/km), while 29% responded "don't know" (see Figure 17). 

% Requested records

100,0

80,0

60,0

40,0

20,0

0,0

49,3

29,4

11,9

5,7

3,7

Don't know

About 150
grams of
CO2 per
kilometer

About 15
grams of
CO2 per
kilometer

About 1.5
gram of CO2
per kilometer

About 1500
grams of
CO2 per
kilometer

Figure 17 - How much CO2 would you think a car emits if it consumes 6 litres of 
fuel per 100 kilometres? 

69%  of  respondents  stated  that  they  were  aware  of  the  existing  Community  strategy  to 
reduce CO2 from cars. Two thirds of respondents feel well informed about the impacts of 
driving style and the use of air conditioning on CO2 emissions (Figure 18). 

Do you feel w ell inform ed about the im pact 
of driving style on CO2 em issions from  
cars?

Don't know
4%

Do you feel w ell inform ed about the im pact 
of the use of cars' air conditioning system s 
on fuel consum ption and thus CO2 
em issions?
Don't know
3%

No
29%

No
34%

Yes
67%

Yes
63%

3.3. 

Policy objectives 

EN 

Figure 18 

55 

   EN 

 
 
 
In  this  section  of  the  questionnaire,  people  were  asked  to  indicate  to  what  extent  they 
agreed with certain policy objectives. 

Figure  11  shows  that  there  was  a  large  degree  of  agreement  that  road  transport  should 
make  further  efforts  to  mitigate  climate  change  and  improve  security  of  energy  supply 
(e.g. by reducing fuel consumption  and/or  varying the fuels used) (90% either agree or 
strongly  agree).  There  was  also  pronounced  agreement  that  the  responsibility  for  the 
reduction of CO2 emissions from cars should be shared by various stakeholders (i.e. not 
only  the car industry,  but  also the fuel industry,  consumers,  public authorities…) (87% 
either  agree  or  strongly  agree),  although  for  that  second  question  the  support  was  not 
quite as enthusiastic (66% strongly agree, as opposed to 77% with the first question). 

The  question  whether  CO2  reduction  efforts  should  include  also  light  commercial 
vehicles  (e.g.  delivery  vans)  achieved  the  strongest  agreement  of  all  questions  in  this 
section  (95%  either  agree  or  strongly  agree,  see  Figure  19,  left).  Despite  their  own 
relatively high level of awareness about CO2 emissions from cars, the respondents also 
overwhelmingly  support  efforts  to  improve  the  consumer  awareness  about  the  CO2 
emissions of their cars (89% either agree or strongly agree, see Figure 19, right). 

Do you agree that road transport should 
m ake further efforts to m itigate clim ate 
change and im prove security of energy 
supply (e.g. by reducing fuel consum ption 
and/or varying the fuels used)?

Undecided
3%

Disagree
2%

Strongly 
disagree
5%

Agree
13%

Do you agree that the responsibility for the 
reduction of CO2 em issions from  cars 
should be shared by various stakeholders 
(i.e. not only the car industry, but also the 
fuel industry, consum ers, public 
authorities…)?

Strongly 
disagree
4%

Disagree
4%

Undecided
5%

Agree
21%

Strongly agree
77%

Figure 19 

Strongly agree
66%

EN 

56 

   EN 

 
 
Do you agree that efforts to reduce CO2 
em issions in the EU should cover not just 
passenger cars but also light-com m ercial 
vehicles (e.g. delivery vans)?

Do you agree that the aw areness of 
consum ers about the CO2 em issions of 
their cars should be im proved?

St rongly 
disagree
2%

Undecided
2%

Disagree
1%

Agree
12%

Strongly 
disagree
3%

Disagree
3%

Undecided
5%

Agree
18%

St rongly agree
83%

Strongly agree
71%

Figure 20 

3.4.  Approaches to reducing CO2 emissions from road passenger transport 

In  this  section,  people  were  asked  to  rate  various  approaches  to  reducing  the  CO2 
emissions  from  road  passenger  transport.  They  were  also  asked  how  much  they  were 
willing to pay for this. The possible approaches identified on the questionnaire were as 
follows: 

•  Gradually improve car technology for example through legislation or voluntary efforts 

by the industry? 

•  Reduce  car  taxes  for  cars  that  emit  less  CO2  and  increase  them  for  cars  that  emit 

more, in order to promote fuel efficient cars? 

•  Better  inform  consumers  when  they  are  buying  a  car  about  the  fuel  efficiency  and 

CO2 emissions of the car? 

•  Better  inform  consumers,  when  they  are  buying  a  car,  about  how  much  the 
components on the car influences the fuel consumption and CO2 emissions (such as 
tyres with high or low rolling resistance, different types of lubrication oil)? 

•  Promote  the  use  of  alternative  fuels,  like  bio-fuels  or  natural  gas  which  lead  to  less 

CO2 emissions 

•  Teach  "eco-driving"  (driving  in  a  way  that  uses  less  fuel)  as  part  of  the  training  for 

obtaining a driving licence, and through campaigns for experienced drivers 

•  Promote the purchase of more eco-friendly tyres and engine lubricants, which would 

have a positive impact on fuel consumption and CO2 emissions? 

EN 

57 

   EN 

 
 
The  pattern  of  the  responses  overall  is  such  that  all  these  options  are  considered 
worthwhile  doing.  The  two  possible  negative  response  types  (not  so  interesting  /  not  a 
good approach at all) did not draw much support for any of the options. However, some 
options  are  clearly  identified  as  more  urgent  than  others.  The  improvement  of  car 
technology  comes  out  top,  with  70%  of  respondents  saying  that  this  should  be  done  as 
soon as possible. It is followed by tax differentiation, consumer information  about cars 
and  the  promotion  of  alternative  fuels.  Relatively  lower  urgency  is  expressed  for  the 
promotion  of  eco-driving  and  the  promotion  of  efficient  tyres  and  lubricants,  with  the 
least  urgency  for  improving  consumer  information  about  the  efficiency  of  components, 
which  just  55%  of  respondents  feel  should  be  done  as  soon  as  possible.  The  order  of 
preference is practically inverse in the category "worth examining". This means that most 
respondents who did not consider a certain option as an urgent priority still thought that it 
would be worthwhile pursuing. 

Rating of approaches to reduce CO2 from cars

s
e
s
n
o
p
s
e
r

f
o
e
r
a
h
S

80%

70%

60%

50%

40%

30%

20%

10%

0%

Improve car technology

Differentiate taxes

Inform consumers about car

Promote alternative fuels

Teach eco-driving

Promote efficient tyres and lubricants

Inform consumers about components

As soon as
possible

Worth
examining

Not so
interesting

Not a good
approach at all

Figure 21 

The  last  two  questions  in  this  section  concerned  the  willingness  of  consumers  to  pay 
more for a vehicle in return for a certain reduction in the cost of fuel of €150 each year. It 
can be seen in Figure 14 that some 70% would be willing to pay more in principle for 
this. Of those who gave an indication how much this would be, 50% would be willing to 
pay  no  more  than  €1,000  (Figure  21),  with  a  majority  of  some  40%  willing  to  pay 
between  €500  and  €1,000.  Another  22%  would  be  willing  to  pay  between  €1,000  and 
€1,500, with almost 20% willing to pay more than €1,500.  

These responses can be used to deduct de facto discount rates, using assumptions about 
the time horizon considered for the fuel savings. Assuming a long-term time horizon53, 
the  sum  of  €1,000  corresponds  to  the  net  present  value  of  the  stated  amount  of  annual 

53 

14 years, taken to be the average lifetime of the car. 

EN 

58 

   EN 

 
 
 
 
                                                 
fuel saving if the discount rate is assumed to be slightly less than 12%.Therefore, half of 
those who provided a response seem to apply an implied discount rate of less than 12% 
under  these  assumptions.  This  is  at  odds  with  the  usual  notion  of  consumer  myopia 
which would imply much higher discount rates, but it is consistent with the high rating 
for fuel consumption as a criterion for vehicle purchase expressed by the respondents, as 
shown  above.  For  the  largest  group  of  respondents  (between  €500  and  €1,000),  the 
implied  discount  rate  is  around  18%54.  For  the  second-largest  group  (between  €1,000 
and €1,500), it is below 8%. 

"Are you ready to pay more money to purchase a 
car if it has lower fuel consumption and will save 
you 150 € of fuel costs every year? "

"If yes, how much? "

100

80

60

40

20

0

70,6

14,4

13

Yes

No

Don't know

100

80

60

40

20

0

39,4

22,1

8,5

10,8

10,8

more than
2000€

betw een
1500€ and
2000€

betw een
1000€ and
1500 €

betw een
500€ and
1000 €

less than
500 €

Figure  22  Willingness  to  pay  for  a  more 
fuel efficient car 

Figure  23  -  If  willing  to  pay  more  for  a  fuel 
efficient car, how much? 

3.5.  Additional comments 

The  questionnaire  allowed  for  the  free  formulation  of  additional  comments.  Somewhat 
less than half of all respondents made use of this possibility. Individual comments often 
contained more than one argument. In the detailed lists below, groups of equal or similar 
arguments are shown if these arguments were made more than two times.  

Comments that concern cars directly, including the car market and the way it is regulated 

This  group  of  remarks  relates  directly  the  subject  of  the  questionnaire  itself,  CO2  from 
cars. There were a large number of comments that demanded regulatory action (44), and 
almost as many that wanted to see more pronounced fiscal instruments (38). Support for 
new technologies and research was also strong (33, and 29 for hybrids). 

The table shows the number of times a particular argument has been made. 

44  Binding CO2 standards for cars or other regulatory action needed 

38  Fiscal  instruments  should  be  more  developed:  tax  large  cars  /  SUVs  more 

strongly; tax fuel more or by carbon content 

54 

Assuming a price increase of € 750, and assuming an annual saving of € 150 over 14 years. 

EN 

59 

   EN 

 
 
                                                 
33  Support or develop new propulsion technologies such as hydrogen fuel, electric 

vehicles, new vehicle concepts, undertake more research 

29  Support for hybrid technology 

9 

5 

Cars  are  not  as  bad  as  thought,  other  modes  are  worse;  cars  are  singled  out 
unfairly 

Ban the sale of high consuming cars 

Comments on wider transport issues and fuels 

Many  respondents  also  commented  that  CO2  emissions  of  the  transport  system  overall 
needed  attention,  either  in  addition  or  instead  of  CO2  from  cars.  Indeed  the  largest 
number  of  comments  on  any  single  issue  (61)  was  the  proposal  for  more  support  for 
public transport. Biofuels received expressions of support (38) but also critical remarks 
(11).  Non-motorised  transport  (cycling  and  walking,  35)  and  transport  demand 
management (27) were advocated frequently. Urban transport policy and the instruments 
available  to  it  received  considerable  attention  too  (21).  A  number  of  responses  (18) 
favoured fuel tax as an alternative to vehicle tax, or gave conditions on how to tax fuel. 

61  More support needed for public transport and rail, including higher investment 

38  Support for biofuels and renewable energy; also through fiscal measures 

35  Support  for  non-motorised  transport  (cycling  and  walking);  combined  with 

public transport 

27  Reduce the demand for transport; also for freight; support local production 

21  Use  various  instruments  of  urban  transport  policy,  including  urban  planning; 

company transport plans; urban road charging 

18  Higher fuel tax / energy tax / fuel tax on C basis, instead of vehicles tax  

15  Support for 2 wheelers 

12  Educate drivers and their children; the public; raise awareness; driver training 

11  Action is urgent 

11  Critical  view  of  biofuels,  doubts  on  well-to-wheel  effectiveness,  concern  about 

side effects 

10  Consumers won't pay more for green cars, must coerce or give incentives 

10  Must also look at other pollutants, air quality 

9 

Ban / restrict SUVs from cities or from city centres 

8  Maintain old cars better, producing new ones consumes too much energy; look 

also at emissions from car production 

7 

7 

7 

6 

6 

4 

Reduce CO2 emissions from aviation - in addition to or instead of cars 

Support car sharing / car pooling 

Need a new transport policy / approach to transport overall 

Concern about impact on vintage car collectors 

Include other transport modes / other vehicles / other sectors as well 

Tackle industry / power generation instead 

EN 

60 

   EN 

 
4 

4 

4 

3 

3 

Ban all car transport in cities / city centres 

Support efficient cars rather than penalise inefficient ones – social implications; 
affordability 

Support telecommuting, videoconferencing 

Ban car advertising 

Speed limits, speed limitation of cars to 120 / 130 km/h 

Other comments 

A number of critical remarks was received on the questionnaire itself (35). In addition, 
some respondents from the UK (14) complained that litres per 100 km was an unsuitable 
unit for them and they would need miles per gallon instead. 

35  Various  critiques  of  the  questionnaire:  biased;  unintelligible;  not  sufficiently 
publicised;  too  restrictive;  superficial;  method  of  cost  question  unclear;  leading 
questions 

14  Complaints  from  UK  respondents  that  they  were  used  to  miles  per  gallon  and 

could not cope with l/100km 

A  certain  number  of  respondents  questioned  the  existence  of  climate  change,  or  the 
contribution of CO2 to it, or the contribution of cars to CO2. 

25  Solar activity / water vapour is the cause of climate change; climate change not 

man-made; climate change doesn't exist 

14  Question evidence that transport is causing climate change, or that anything can 

be done about climate change 

3 

keep energy and CO2 separate as CO2 is the wrong issue 

EN 

61 

   EN