COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document A Strategy for Reducing Heavy Duty Vehicles' Fuel Consumption and CO2 Emissions
Date: 2014-05-21
Institutions: European Commission
Subjects: Community certification, commercial vehicle, energy consumption, engine, motor fuel, motor vehicle pollution, reduction of gas emissions














EUR-Lex - 52014SC0159 - EN











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52014SC0159

COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document A Strategy for Reducing Heavy Duty Vehicles' Fuel Consumption and CO2 Emissions /* SWD/2014/0159 final */









1.           Problem definition
The nature of the problem
Greenhouse gas emissions from road
transport increased by 29% during the period 1990 to 2007 but have since fallen
on the back of high oil prices, increased efficiency of passenger cars and
slower growth in mobility.  According to the Commission's Roadmap for moving to
a competitive low carbon economy in 2050[1]
and Transport White Paper[2],
transport as a whole has to reduce its CO2 emissions by 2050 of
about 60% vs their 1990 level.
Heavy Duty Vehicle (HDV) CO2
emissions, that represent about one quarter[3]
of road transport CO2 emissions, are currently not regulated,
contrary to car and van emissions. In view of increasing freight volumes in the
EU, except for the economic crisis period, these emissions have been rising in
spite of some improvements in vehicle fuel consumption and CO2
performance. Estimates suggest that between 1990 and 2010 the CO2
emissions of HDVs increased by around 36%[4].
Without action HDV CO2 emissions are expected to remain some 35% above
their 1990 level in 2050. In view of their absolute size, trend and relative
share HDV CO2 emissions need to be addressed and curbed.
HDV CO2 emissions are currently
not measured in a standard way. The market lacks transparency in this respect
and this creates a bottleneck that will have to be addressed. Furthermore,
Japan, the US and Canada have already legislated and China is considering
action on how to measure and curb HDV CO2 emissions. 
In June 2007 the Council invited the
Commission "to develop and implement policy instruments and measures to
reduce greenhouse gas emissions from those HDV vehicles"[5]. The Commission, in its
April 2010 Communication on "A European strategy on clean and energy
efficient vehicles"[6],
announced that it would propose a strategy targeting fuel consumption and CO2
emissions from HDVs. 
How will the problem evolve without new
EU action?
The main drivers of HDV CO2 emissions
are (i) overall transport demand which is linked to economic activity, (ii) modal
split among road, rail, air and waterways, (iii) the uptake of technological
change influencing vehicle performance, (iv) the fuel carbon content and (v)
the HDV fleet operating mode. 
Under the business-as-usual "baseline"
scenario of the Commission PRIMES-TREMOVE model, based on no policy change
assumptions, total transport activity is projected to grow in the next 40 years[7]. A certain degree of
decoupling can however be observed in the baseline model results and GDP
trends, with road transport growing at slower rates. Notwithstanding EU policy
to promote less carbon intensive modes such as rail transport, road transport
is expected to maintain its dominant role in both passenger and freight
transport within the EU, with a rather moderate shift of freight from road to
rail. As regards HDVs, after two decades devoted to reducing pollutant
emissions to comply with EU legislation, HDV manufacturers are expected to
focus their efforts on reducing fuel consumption and CO2 emissions. As
a result, HDV CO2 emissions should broadly remain constant over the
period 2010-2050.
Subsidiarity
EU action is necessary in order to avoid
the emergence of barriers to the Single Market in the automotive sector and
because of the transnational nature of climate change. The absence of action at
the European level could result in a series of national schemes to reduce CO2
emissions of HDVs, hence to market fragmentation and losses in economies of
scale. 
HDV CO2 emission reduction
potential
Studies by AEA-Ricardo[8] and TIAX[9] have identified
possible fuel and CO2 saving technical improvements to HDVs.
According to the TIAX study, which broadly concurred with the AEA-Ricardo
findings, 30% to 50% fuel savings and CO2 emission reductions would
be possible on new vehicles as of 2014, translating into a HDV fleet emissions
reduction of some 28% by 2030. Mainly based on TIAX estimates, a study by CE
Delft produced marginal abatement cost curves[10]
and identified a high potential for cost effective technologies, possibly
translating into 35% average reductions for new HDV fuel consumption and CO2
emissions. 
Market barriers to uptake of HDV fuel
saving and cost effective technologies
Market barriers to the uptake of more
efficient fuel cutting technical improvements are difficult to assess due to
the interaction of the different business models of vehicle manufacturers, body
and trailer manufacturers, HDV operators and financial and leasing companies. A
study from CE Delft[11]
looked into this issue and identified the most obvious market barrier to the
uptake of the most fuel efficient technologies as the inability of transport
operators to assess fuel saving and CO2 reduction effects of
technologies and to compare the various HDV manufacturers' sales offers in this
respect. Other barriers are also evident in specific situations. For example,
in some countries limited access to financial instruments makes it hard to
finance fleet modernisation. In some but not all cases, the technology purchase
is separated from the fuel-saving benefits from the efficiency technology (i.e.
split incentives).
2.           Objectives
The general
objective is to contribute to meeting climate goals by reducing CO2 emissions
in the HDV transport sector.
Specific objectives include:
"Effectiveness": effectively contributing to reducing HDV fuel consumption and CO2
emissions in the EU in view of the overall objective to reduce transport GHG
emissions by 60% in 2050 (compared to their 1990 level); and contributing to
reducing economy-wide CO2 emissions being relevant in assessing
instruments which have a scope beyond the HDV sector, such as the ETS.     
"Efficiency": efficiently, in a cost effective and proportionate way,
contributing to reducing HDV fuel consumption and CO2 emissions in
the EU. 
"Predictability": providing EU industry, transport operators, public sector and
consumers with a clear and coherent vision on the policy framework and likely
regulatory developments as regards HDV CO2 emissions, thereby
facilitating decision making and investment planning.            
Operational objectives
consist of: 
- Monitoring, reporting and verifying
EU-wide CO2 emissions of new HDVs;
- And setting a carbon constraint on CO2 emissions from HDV
transport to achieve emission reductions.
3.           Policy options
Baseline "no policy change"
scenario
This scenario incorporates a number of decided
or proposed developments, including the revised Energy Taxation Directive[12]. The baseline scenario
notably assumes the implementation of recent legislation on public procurement
for road vehicles, road user charging, and the incentivised used of alternative
fuels. 
Option 1: improve knowledge,
comparability and accountability of HDV CO2 emissions
This option examines two alternatives (i)
the certification and reporting of HDV engine-only fuel consumption and CO2
emissions pursuant to the entry into force of the Euro VI Regulation; or (ii)
the certification and reporting of HDV whole vehicle fuel consumption and CO2
emissions for new registered vehicles. The latter would require the entry into
operation of the VECTO HDV CO2 emissions simulation tool currently
under development.
Option 2: include
road transport CO2 emissions in the EU Emissions Trading Scheme
The ETS would be extended to the whole road
transport sector. The inclusion would take place upstream, at the level of fuel
suppliers defined as the participating entities in the ETS.
Option 3: introduce legislation setting
mandatory HDV CO2 emission ceilings
In line with option 1 which is a
pre-requisite for option 3, such ceilings could be introduced: either on (i)
engine-only emissions; or (ii) on whole vehicle emissions. The aim of this
option is accelerating the roll-out of technologies enabling significant HDV CO2
emission abatement. 
4.           Assessment of Impacts
Baseline "no policy change"
scenario 
The baseline "no policy change"
scenario was assessed with the support of the Commission PRIMES-TREMOVE model.
The conclusion was that without further action HDV CO2 emissions
would remain roughly constant over the long term (2030-2050), i.e.
significantly above their 1990 level (about +35%), which is incompatible with
the Transport White Paper's objectives to curb overall transport emissions by
60% in comparison to the 1990 baseline level. 
Option 1: improve knowledge,
comparability and accountability of HDV CO2 emissions.
Option 1(i) on the certification and
reporting of engine-only emissions, while efficient as it
requires limited action and involves low costs, would not be expected to effectively
address HDV CO2 emissions and curb them. Option 1(ii) on the
certification and reporting of whole vehicle CO2 emissions could
only be implemented upon the completion of the VECTO simulation tool currently
under development. It will be more effective than 1(i) as it will
provide a comprehensive knowledge of new vehicle CO2 emissions,
facilitating the market uptake of the most energy efficient ones. Overall, in
view of its expected limited costs the latter sub-option would also meet the efficiency
objective. Both options, while contributing to increased awareness and
transparency, would not on a stand-alone basis be sufficient to provide
stakeholders with long-term guidance and predictability on the
regulatory environment. 
The economic, social
and environmental impacts of both options are either negligible or very
limited.
Option 2: include
road transport CO2 emissions in the EU Emissions Trading Scheme
Including HDV emissions, together with
other road transport emissions, in the ETS would contribute to reducing GHG
emissions EU-wide, as the effectiveness of meeting the cap on
emissions for all sectors covered by the scheme is fairly certain. However, in
view of relative carbon prices and fuel excises, and of fuel price
elasticities, including HDV emissions in the ETS would not trigger any sizeable
improvements in fuel efficiency. The allocation within ETS sectors of emission
abatement efforts along the most efficient cost structure ensures
a high level cost effectiveness and efficiency of this instrument. Predictability
with regard to compliance with the overall quantitative emission cap would be
ensured by the ETS mechanism, at the cost of price uncertainty. Economic
impacts are to a large extent contingent upon the evolution of carbon
prices. Overall social impacts are expected to be limited. Environmental
impacts, beyond the achievement of overall CO2 objectives,
would be related to the sectors where abatement takes place.
Option 3: introduce legislation setting
mandatory HDV CO2 emission ceilings
Option 3(i) on HDV engine-only limits on CO2
emissions would effectively contribute to curbing fuel
consumption and CO2 emissions, but would leave an untapped potential
of emission cuts. Option 3(ii) on the setting of limits for whole vehicle
emissions (for new registered vehicles) would more satisfactorily address the
full potential of emission abatement cuts and thereby have a higher
effectiveness. It would thereby contribute more to meeting the long-term
Transport White Paper objective. Both options would require limited means to
achieve their objectives. Assuming standards are defined in such a way that
investment costs to improve vehicles translate into higher prices for HDVs,
which are recovered by end-users through savings in fuel consumption, option 3
would overall rank well in terms of efficiency. Both options
would contribute to an increased predictability in the regulatory
environment.
An indicative quantitative assessment
of economic and social impacts shows that the HDV manufacturing
industry, due to the added value of its vehicles, and HDV transport operators,
due to lower fuel consumption, would be expected to reap substantial benefits.
Similarly in terms of environmental performance lower fuel
consumption would lead to a lower level of other pollutant emissions.
5.           Comparison of options
with regards to the main objectives
  Options   Objectives ||   Baseline || Option 1: Improve knowledge, comparability and accountability of HDV CO2 emissions || Option 2: Include road transport CO2 emissions in EU ETS || Option 3: Set mandatory CO2 emission limits for new registered vehicles 
   Effectiveness in reducing fuel consumption and CO2 emissions ||     - (low) ||   + Modest reduction of HDV emissions ||  + likely (low) for HDV, though potentially high (+++) for the rest of the economy in sectors with lower marginal abatement costs || (i) engine-only emissions ceiling: ++ (medium) (ii) whole-vehicle emissions ceiling +++ (high) 
     Efficiency     ||     = ||   + Modest costs || + Could use existing fuel taxation infrastructure, ||   (i) motor-only emissions ceiling: +++ (ii) complete vehicle emissions ceiling  ++ 
 Predictability of regulatory environment ||   Currently no clear perspective || + some partial degree of improvement calling for further clarifications || ++ on emission levels (fixed by cap) - on costs due to uncertainty of carbon price evolution || (i) motor-only emissions ceiling: + (ii) complete vehicle emissions ceiling : ++ 
 
6.           Conclusion
This Impact Assessment underpins a
Commission strategy for reducing HDV fuel consumption and CO2
emissions in the EU. Any subsequent legislative proposal will be subject to a
more specific Impact Assessment.
Options 1(i) on the recording of
engine-only emissions and subsequently 3(i) on setting limits on engine-only
emissions would only have been considered further if the VECTO simulation tool
feasibility were not confirmed. In April 2013 however the Joint Research Centre
issued a report on the "proof of concept" of the VECTO simulation
approach confirming that it can provide accurate and reliable estimates of HDV
fuel consumption and CO2 emissions and that a future certification
scheme of CO2 emissions can be based on such a simulation tool. In
view of this latest positive development options 1(i) and 3(i) will hence not
need to be considered any further.
The successful deployment of the VECTO tool
and the implementation of option 1(ii) on the certification and reporting these
emissions are expected remedy this situation.
These are necessary priority short and
medium-term steps before more ambitious actions can be envisaged in the medium
and longer term:        
- either to curb HDV CO2 emissions – option 3(ii) on the setting of
emission limits;            
- and/or to consider including HDV transport with road transport as a whole
into the ETS as foreseen under option 2.  
Both options would require further in depth analysis in the framework of future
Impact Assessments.
7.           Monitoring and evaluation
Upon completion of VECTO simulation tool
and the implementation of option 1 the Commission will monitor HDV fuel
consumption and CO2 emissions, as well as the costs of
implementation. It will also monitor market and technological developments.
These monitoring actions will permit subsequent evaluation of this initiative.
[1]               COM/2011/0112 final 
[2]               'Roadmap
to a Single European Transport Area – Towards a competitive and resource
efficient transport system' , COM/2011/0144 final
[3]               Estimated at 26.6% of total EU GHG
emissions by AEA-Ricardo in "Lot1" Report, Reduction and Testing of
GHG emissions from Heavy Duty Vehicles, February 2011, p 170. Available
under
http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf

[4]               Source:
Odyssee-Mure database, available under: http://www.odyssee-mure.eu
[5]              http://register.consilium.europa.eu/pdf/en/07/st11/st11483.en07.pdf
[6]              COM(2010)186
final, p 6,
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0186:FIN:EN:PDF
[7]               The “Reference scenario 2010” has been
finalised at the beginning of 2012.
[8]               http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf
[9]               http://ec.europa.eu/clima/policies/transport/vehicles/heavy/docs/icct_ghg_reduction%20_potential_en.pdf
[10]             http://ec.europa.eu/clima/policies/transport/vehicles/heavy/docs/hdv_2012_co2_abatement_cost_curves_en.pdf
[11]             http://www.theicct.org/market-barriers-increased-efficiency-european-road-freight-sector
[12]             COM(2011) 168/3.