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













EUR-Lex - 52014SC0160 - EN











|



52014SC0160

COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Strategy for Reducing Heavy-Duty Vehicles Fuel Consumption and CO2 Emissions /* SWD/2014/0160 final */









TABLE OF CONTENTS
1........ Procedural issues and
consultation of interested parties................. 3
1.1........ Organisation and timing............................................................................................... 3
1.2........ Consultation and expertise........................................................................................... 3
1.3........ Results of the consultation of the Impact Assessment
Board...................................... 4
2........ Problem definition............................................................................ 5
2.1........ General context............................................................................................................. 5
2.2........ Description of the main drivers of HDV CO2 emissions............................................. 6
2.3........ Expected trends under no policy change assumptions
suggest a stabilisation of CO2 emissions    9
2.4........ The scope for HDV improved fuel efficiency and reduced
CO2 emissions.............. 13
2.5........ Market barriers to cost effective technology uptake.................................................. 15
2.6........ Voluntary unilateral commitments may help but are
insufficient to significantly curb emissions   18
2.7........ International experience in measuring HDV emissions and
setting standards........... 18
2.8........ Who is affected and how?.......................................................................................... 18
2.9........ Does the Union have the right to act?........................................................................ 19
3........ Objectives........................................................................................ 20
3.1........ General objectives....................................................................................................... 20
3.2........ Policy objectives......................................................................................................... 20
3.3........ Operational objectives................................................................................................ 21
3.4........ Consistency with horizontal objectives of the European
Union................................. 21
3.5........ Trade-offs and synergies between sustainability goals............................................... 21
4........ Policy options.................................................................................. 22
4.1........ Option 1 (short- and medium-term): Improve knowledge,
comparability and accountability of HDV CO2 emissions..................................................................................................................... 22
4.2........ Option 2 (long-term): Include Road Transport CO2
emissions in the EU Emissions Trading Scheme       23
4.3........ Option 3 (long-term): Introduce legislation setting
mandatory HDV CO2 emission ceilings         24
5........ Impact analysis of policy options................................................... 25
5.1........ Option 1 assessment: Improve knowledge, comparability
and accountability of HDV CO2 emissions     26
5.2........ Option 2 assessment: Include Road Transport CO2
emissions in the EU Emissions Trading Scheme       28
5.3........ Option 3 assessment: Introduce legislation setting
mandatory HDV CO2 emission ceilings          32
6........ Comparing the options................................................................... 42
6.1........ Comparing the options in terms of effectiveness in
reducing fuel consumption and CO2 emissions         42
6.2........ Comparing the options in terms of efficiency............................................................ 42
6.3........ Summary of intervention logic: policy mix................................................................. 42
6.4........ Contribution of the options to the objectives............................................................. 43
6.5........ Impacts for SMEs, including micro-enterprises.......................................................... 45
6.6........ Comparing the options in terms of coherence with EU
objectives............................. 45
6.7........ Concluding remarks.................................................................................................... 47
7........ Monitoring and evaluation............................................................ 48
Annex 1 : results
of the public consultation.............................................................................. 50
Annex 2 :
stakeholder meetings................................................................................................ 68
Annex 3 : Transport
White Paper Actions................................................................................ 78
Annex 4 : modelling
framework............................................................................................... 80
Annex 5 : HDV fleet
segmentation.......................................................................................... 92
Annex 6 :
statistical data........................................................................................................... 94
Annex 7 :
Simulation tool development................................................................................. 101
Annex 8 : Option 3,
setting emission limits: quantitative assessment..................................... 106
Annex 9 :
International Comparison....................................................................................... 109
Annex 10 :
Competitiveness Assessment............................................................................... 112
Annex 11 : HDV CO2
emission abatement potential and cost curves per vehicle category.. 128
Annex 12 : 
Indicative assessment of administrative costs under option 3.ii......................... 138
Annex 13 :
Methodology........................................................................................................ 140
Acronyms and definitions
ACEA                          Association des
Constructeurs Européens Automobiles (the European Association of Automotive Manufacturers)
Carbon footprinting     Method or scheme to assess the carbon
content (footprint) of a product or service.
CH4                             Methane. By-product
of conventional fuel engines' combustion that has a higher global warming potential
than CO2 (25 fold over 100 year horizon). Conventional fuel engines
however emit only very small quantities of methane.
CNG                            Compressed
Natural Gas
CO2                                                          Carbon dioxide. The main gas with global
warming effect emitted by conventional fuel engines. The combustion of 1 litre
of diesel fuel emits about 2.65 kg CO2.
ETS                             Emissions
Trading Scheme. The EU emissions trading scheme (carbon market on which tons of
CO2 are being traded among participating entities) does not
currently include road, waterways and maritime transport emissions (aviation emissions
have been included as of 1.1.2012).
ETD                             Energy
Taxation Directive (2003/96/EC). The Commission proposed in 2011 a
revision of the ETD (COM(2011) 169/3) with the aim of rebalancing fuel prices
and including a carbon price in fuel taxation.
Euro VI                       HDV exhaust gas and
PM emission standards (Regulation (EC) 595/2009). Euro VI – and previous
generations of Euro standards - have been adopted on grounds of environmental
public health policy considerations and are not meant to address emissions with
global warming effects.
GHG                            Greenhouse
gases: gases that have a global warming effect.
GWP                           Global Warming
Potential. The intensity of global warming effect of a gas, usually measured as
a ratio of its GWP compared to the GWP of CO2  over a defined time
horizon (e.g. 100 years).
HDV                            Heavy-Duty
Vehicle, i.e. trucks, coaches and buses (vehicles of more than 3.5 tons).
ITS                              Intelligent
Transport Systems facilitating vehicle fleet management with the support of IT
and e-connections, including satellite transmission.
LDV                            Light-Duty
Vehicle, i.e. cars and vans.
LPG                             Liquefied
Petroleum Gas is a by-product of the hydrocarbon fuel chain. Its use in
transport increases resource efficiency.
N2O                             Nitrous Oxide.
By-product gas of fuel combustion with a high GWP (298 fold that of CO2 over
100 year horizon). Conventional fuel engines however emit only very small
quantities of N2O.
OEM                           Original
Equipment Manufacturer: the main truck and bus manufacturers of complete
vehicles, tractors and chassis/cabin unfinished vehicles
PM                              Particulate
matters, which constitute an important pollutant emitted by diesel fuel engines.
TPMS                          Tyre Pressure
Monitorting Systems. TPMS are mandatory for cars, but not vans and HDVs 
Tailpipe emissions        (see below TTW emissions)
TTW emissions             "Tank-to-wheel"
–or tailpipe- emissions that occur throughtout the drive cycle of vehicles.
WTW emissions            "Well-to-wheel"
emissions = TTW + upstream "well-to-tank" emissions attached to the
fuel production
Introduction
1.          
Road transport contributes some 19% to the EU's
total emissions ("tank-to-wheel" emissions[1]) of carbon
dioxide (CO2), the main greenhouse gas. Producing the fuel consumed
by road transport ("well-to-tank" emissions)[2] adds about a
further 14% to these emissions, bringing them to 22.8% of total EU emissions.
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 (by 6%
between 2007 and 2011).   Heavy-Duty Vehicle (HDV) CO2 emissions represent about one quarter[3]
of road transport CO2
emissions. This is some 5% of total EU greenhouse gas
(GHG) emissions. In view of regularly increasing freight volumes in the EU
(except in 2008-2009 due to the economic crisis), these emissions have been
rising in spite of some improvements in vehicle fuel consumption and CO2
performance. 
2.          
In order to tackle road transport emissions, the
European Commission has implemented a strategy on Light-Duty Vehicles (LDVs) with
an objective of limiting average CO2 emissions.
Regulations (EC) 443/2009 and (EU) 510/2011 set out mandatory CO2 emission standards for the new passenger car and light commercial
vehicle fleets respectively. It was however not considered possible to apply identical
CO2 emission rules to HDVs, as those introduced for LDVs, in view of
(i) HDVs’ characteristics, i.e. being a wide range of vehicles customised to
end-users' needs, and (ii) the absence of a common measurement methodology for
these emissions. Hence there is a lack of knowledge on exact HDV CO2 emissions.

3.          
The main drivers of HDV CO2 emissions
are overall transport demand which is linked to economic activity, the modal
split for freight and passenger transport between road, rail, air and
waterways, the fuel carbon content, technological change influencing vehicle
performance, and the modus operandi of the HDV fleet. Over the long-term
freight transport is expected to continue to grow and emissions to contribute
an increasing share of transport and overall GHG emissions. The 2011 Roadmap
to a Single European Transport Area[4]
("the Transport White Paper") has set a long term
objective of overall EU transport GHG emissions reductions of about 60% in 2050
(vs 1990 their level). Without action HDV CO2 emissions are expected
to remain about 36% above their 1990 level in 2050, which is incompatible with
the overall reduction objective. Consequently they need to be addressed and
curbed. 
4.          
Furthermore,
Japan, the US and Canada have already legislated and China is considering
action on how to measure and curb HDV CO2 emissions. Measuring and
curbing HDV fuel consumption and CO2 emission may have significant
industrial consequences and the EU needs to act in order to keep its HDV
manufacturing industry in the lead. In this context EU HDV manufacturers are
eager to obtain more predictability on the future policy requirements applying
to EU HDV CO2 emissions.
5.          
In June 2007 the Council invited the Commission
to "to develop and implement policy instruments and measures to reduce
greenhouse gas emissions from those [HDV] vehicles"[5]. The
Commission announced in its April 2010 Communication on "A European
strategy on clean and energy efficient vehicles"[6] - and
subsequently confirmed in the Transport White Paper - that it would propose a
strategy targeting fuel
consumption and CO2 emissions from HDVs.  
6.          
The present Impact Assessment underpins this
strategy and to this effect examines the possible policy options for addressing
EU HDV CO2
emissions from both passenger and freight transport.
Before possible legislative action considered in the present Impact Assessment
can be implemented, more specific, focussed Impact Assessments would be carried
out in due course supporting each legislative proposal.
1.           Procedural
issues and consultation of interested parties
1.1.        Organisation
and timing
7.          
The present Impact Assessment work was launched
in September 2011. It was elaborated by DG Climate Action in collaboration with
the Secretariat General and DGs ENTR, MOVE, ENER, ENV, RTD, TAXUD and JRC.
8.          
The draft Impact Assessment report was discussed
with members of the Inter-Service Group on CO2 emissions on 1
October 2012 and 4 December 2012. A first version was sent to the Impact
Assessment Board on 21 December 2012. Following a discussion in the Board on 30
January 2013 and a request from the Board, a revised version was submitted to
the Board on […March 2013].
1.2.        Consultation
and expertise
External expertise
9.          
A study by Faber and Maunsell in 2008, "Reducing
Greenhouse Gas Emissions from Heavy Duty Vehicles: the Role of the European
Commission Policy Instrument Recommendations" examined the road
transport industry GHG emissions and policy options to address these emissions[7]. 
10.       This study was followed in 2011 by a report from AEA and Ricardo
"Reduction and Testing of GHG Emissions from Heavy-Duty Vehicles- Lot 1:
Strategy". This report examined the main HDV market characteristics in
the EU, technologies available to reduce HDV emissions, and the likely uptake
of these technologies in three different scenarios. It also reviewed some of
the main policy options that could address these emissions[8].
11.       In December 2011 TIAX, in a report commissioned and financed by the
International Council for Clean Transportation (the ICCT), "European
Union Greenhouse Gas Reduction Potential for Heavy-Duty Vehicles",
reviewed the AEA/Ricardo estimates in the above report on the potential for HDV
CO2 emission abatement and costs associated to the main technological
improvements expected to be available until 2030, and proposed revised
estimates on the potential for each of eight categories of HDVs and as a whole.[9]
12.       A study on Marginal abatement cost curves for Heavy Duty
Vehicles[10]
was carried out by CE Delft for the Commission in the second quarter of 2012.
CE Delft reviewed the above mentioned AEA-Ricardo and TIAX emission abatement
and cost estimates, and estimated cost curves, both from an end-user
perspective, and societal perspective. 
13.       Another study by CE Delft on Market Barriers to Increased
Efficiency in the European On-road Freight Sector[11] carried
out for the ICCT was completed in October 2012, and its findings were discussed
in a workshop on 15 October 2012 in Brussels.
Stakeholder meetings
14.       A first stakeholder meeting was held on 22 February 2012 to discuss
the potential and ways for reducing HDV CO2 emissions as well as to
sound out participants on their favoured policy options for curbing emissions.
A second stakeholder meeting took place on 3 July 2012 to discuss the outcome
of the public consultation (see below), progress with the development of a
simulation tool to measure HDV CO2 emissions and emission abatement
cost curves prepared by CE Delft. Policy options of the present Impact
Assessment were presented by the Commission and discussed with stakeholders on
this occasion (for more details see annex 2).
On-line public consultation 
15.       An on-line public consultation on road vehicle emissions was carried
out between 19 September and 9 December 2011 (12 weeks)[12]. A total of 3,233
replies were received which includes 137 stakeholder organisations. As regards
HDVs particularly, stakeholders and citizens overwhelmingly supported the need
for a strategy for reducing HDV greenhouse gas emissions. While most citizens
agreed that additional regulation, as opposed to non-regulatory measures, was
needed for this purpose, stakeholder organisations and enterprises agreed (46%)
or partly agreed (36%) that such regulation was needed. Respondents
overwhelmingly considered that if the Commission proposes a HDV greenhouse gas reduction
strategy, it should cover all HDVs (see annex 1).
1.3.        Results
of the consultation of the Impact Assessment Board
16.       The Impact Assessment was first discussed in
the Impact Assessment Board on 30 January 2013. The Board asked for the
submission of a revised version with clarifications on emission drivers (see
revised section 2.2), the need for action (see revised introduction and whole
section 2) and market barriers to the uptake of innovation improving vehicle
efficiency (see revised section 2.5). It requested measurable and time-related
objectives (see revised objectives section 3.2 with timeline and indicators)
and an intervention logic based on identified underlying drivers of CO2
emissions (see "problem tree" end of section 4 and new section 6.3 on
intervention logic). The Board requested options to be focussed on policy
choices with a clarified sequencing (see revised section 4). It suggested
further clarifications on options' impacts, notably social and economic impacts
(see revised section 5), including administrative costs (see indicative
assessment under 5.1 and new annex 12). In line with Board requests, DG CLIMA subsequently
re-submitted the present revised version. The Board on 17 April 2013 approved
this Impact Assessment, suggesting further clarifications on market barriers,
the current need for a strategy, objectives, as well as a clear identification
of short and long term options. Such clarifications have been introduced in the
text.
2.           Problem
definition
2.1.        General
context
2011 Low
Carbon Economy and Transport Roadmap objectives 
17.       To avoid the most dangerous impacts, the EU has a stated objective
of limiting global climate change to a temperature increase of 2ºC above
pre-industrial levels. The Copenhagen Accord[13]
included a reference to this objective. This was further confirmed within the
United Nations Framework Convention on Climate Change (UNFCCC) in the decision in
the 16th Session of the Conference of the Parties to the UNFCCC[14]. In order to have a
likely chance to limit long term global average temperature increase to 2°C or
less compared to pre-industrial levels, global emissions need to peak by 2020
and be reduced by at least 50% globally by 2050 compared to 1990. 
18.       The EU has established a binding legal framework[15] to reduce greenhouse
gas (GHG) emissions. This Climate and Energy Package sets out for the EU
binding reduction targets for 2020 and includes a fully-fledged set of policies
to deliver this. The Council has approved[16]
the EU target of 80-95% by 2050 compared to 1990 in the context of reductions
that are necessary, according to the IPCC[17],
by developed countries as a group, with the aim of keeping average global
temperature rise below 2° as compared to pre-industrial levels. The European
Commission 'Roadmap for moving to a competitive low carbon economy in 2050'[18]
(hereinafter 'the Roadmap') looked beyond the 2020 objectives and set out a
plan to meet the 2050 long-term target. 
19.       In March 2011 the Commission also adopted the 'Roadmap to a
Single European Transport Area – Towards a competitive and resource efficient
transport system' (hereinafter the 'Transport White Paper')[19] which outlines the main challenges facing transport, including
scarcity of oil in future decades, volatility of oil prices and the need to
drastically reduce GHG emissions. It sets out a future transport strategy within
a frame of achieving a 60% reduction in transport GHG emissions by 2050 (compared
to 1990). 
2.2.        Description
of the main drivers of HDV CO2 emissions
20.       HDVs are defined as freight vehicles of more than 3.5 tonnes
(trucks)[20]
or passenger transport vehicles (buses, coaches)[21] of more than 8 seats.
The AEA-Ricardo report[22]
estimated the EU truck fleet at around 6.5 million vehicles in 2008. The HDV
fleet is heterogeneous with very dissimilar vehicles that have different uses
and drive cycles. It can be segmented into six categories of trucks (see more
details in annex 5 table 1) and two categories of passenger vehicles: buses and
coaches[23].
Most fleet operators are SMEs and even micro-enterprises, with 81% of the truck
fleet owned by enterprises having less than 10 trucks (see Annex 6).  
21.       Contrary to cars and vans' emissions that were measured and
monitored under existing type-approval legislation even before the recent
introduction of CO2 emission limits, HDV CO2 emissions
are not measured and recorded. The market lacks transparency in this respect
and this knowledge gap (see section 2.5) is a bottleneck that needs to be
addressed. HDV CO2 emissions are not subject to EU legislation other
than the future measurement –as of 1.1. 2014 - of CO2 emissions from
engines under Regulation (EC) No 595/2009 (Euro VI). One should further note
that each tightening of exhaust gas and particulate matters (PM) standards
triggers losses in fuel consumption and CO2 efficiency that tend to
neutralise energy efficiency improvements on new HDV models (also see section
3.5 below).  
HDV CO2 emissions' main drivers

22.       The main drivers of HDV CO2 emissions are (a) transport
demand which is linked to economic activity, (b) modal split among
road, rail, air and waterways, (c) the fuel carbon content, (d) the uptake
of technological change influencing vehicle performance and (e) the modus
operandi of HDV fleets that influences fuel consumption and CO2 emissions.
Since 1995 HDV transport has grown due to a combination of moderate GDP growth,
modal shift with an ever increasing relative share of road transport, rather
stable vehicle fuel consumption - HDV fuel and CO2 performance only
slightly improved over this period - and limited decarbonisation of fuel. This
has led to increased emissions. Historical series do not allow for a precise
calculation of fuel consumption and CO2 emissions associated with
this increase; from 1990 to 2010 HDV CO2 emissions are estimated to
have grown by some 36%[24].
The 2008-2009 crisis interrupted the steady growth in road freight transport
and the sector has not yet fully recovered from this sharp drop. 
23.       (a) Overall transport demand has steadily increased
over the recent decades, at a pace that was until recently –before the
2008-2009 crisis- more rapid than GDP growth, mainly due to the large increase
in freight transport, the main source of emissions. Versus its 2000 level
freight transport for inland modes had grown in 2008 by 19% in the EU, GDP by
16% and the population by only 3% [25].
While the relationship between transport activity and GDP trends is not
irrevocable and may slowly change over time (see next section), this
macro-economic driver of CO2 emissions is beyond the scope of the
present sector specific strategy.
24.       (b) Modal share and shift.  Road freight transport,
the main component, has had the most steady growth and increasingly high
relative share among the main transport modes. From 1995 to 2009 road freight
volumes increased by 31%, with the modal market share (in volume) of road
freight in total freight transport (including maritime transport) increasing
from 42% to 47%. Conversely HDV passenger transport (bus, coaches) activity
remained almost constant over the 1995-2009 period (+3% in volume), around a
volume of 500 billion kilometres[26].
A breakdown of the evolution of the transport modes' relative share is provided
in Annex 6 (tables 7 and 8). EU policies aim at re-balancing transport to less
carbon intensive modes, in particular rail. Modal share and shift has been
addressed by the Marco Polo programme to support inter-modality.  The revised
Union guidelines for the development of the
trans-European transport network[27] foresee clear climate change mitigation criteria in the programming of
EU funding for new infrastructure. These policies are expected to result in a
slow reversal of the trend that led to an increasing share of road transport. The Transport White Paper has further foreseen a number of actions[28] that will influence
modal shares, notably through the development of multimodal transport. While
options in the present Impact Assessment may also have indirect modal shift
effects, the primary purpose of an HDV CO2 emissions strategy will
not be addressing modal shift.
25.       (c) Fuel carbon content.  The fuel carbon content is
another factor influencing HDV CO2 emissions. Diesel fuel remains
the main fuel used in road transport, with a share estimated[29] around 64%, a
proportion that is even significantly higher in the case of HDVs.  Low carbon
fuels (mainly bioethanol, biodiesel, LPG and CNG) have a limited penetration of
some 6% altogether (2010) in road transport: EU existing legislation[30] favours the use of
renewable energy in transport and has set quantitative targets to this effect
that are currently being reviewed[31].
The recent "Clean Power for Transport" Commission initiative and
the revised TEN-T guidelines, supported by the Connecting Europe Facility,
further support the development of alternative fuel infrastructure[32],[33],[34]. In 2011 the
Commission proposed[35]
a revision of the "Energy Taxation Directive"[36] that would
restructure the current energy tax system. The proposed revision is: (i) to
rebalance the charge between different fuels, including renewable energies, in
an objective manner (based on energy content and CO2 emissions); and
(ii) provides a framework for CO2 taxation in the internal market,
putting a price on CO2 emissions which are not covered in the
Emissions Trading Scheme.           
26.       (d) Vehicle performance. One
specific challenge lies with the fact that, according to data from industry,
individual new HDV fuel consumption and CO2 emissions performance,
after a steady improvement until the mid-1990s, stabilised and did not
materially improve further in the last decade. This may be due to a number of
reasons: the need for new models to comply with increasingly stringent exhaust
gas emission standards that trigger energy efficiency losses (see section 3.5
on trade-offs below), but also market barriers to the penetration of innovation
due the business model of the HDV transport sector (see section 2.5 below).
Thus, in spite of fuel representing a significant share of HDV transport
operating costs (20 to 30%), this did not translate in recent years into
reduced fuel consumption and CO2 emissions. This remains an area
with considerable scope for further action. Given the slow rate of renewal of
the HDV fleet (with an average lifetime superior to 11 years), actions to
improve new vehicle fuel consumption and emissions will inevitably have delayed
impacts on the whole HDV fleet emissions.       
A number of EU policies already support improved vehicle energy efficiency, in
particular: 
- EU R&D programmes geared at improving HDV fuel efficiency and
reducing CO2 emissions. Under the 7th Framework
Programme improving HDV fuel efficiency and reducing CO2 emissions
was included in the "Green Car Initiative". Support to clean and
efficient vehicles is expected to figure in the proposed "Horizon 2020 -
Framework Programme for Research and Innovation"[37].  
- Directive 2009/33/EC[38] on the
promotion of clean and efficient road transport vehicles requires public
administrations and public undertakings purchasing road transport vehicles to
take into consideration operational lifetime energy and environmental impacts.          
- The type approval legislation[39]
on weights and dimensions recently introduced an allowance (50 cm) for
aerodynamic devices fixed at the rear of new trucks/trailers. In line with
this, the Commission has recently proposed[40]
a revision of Directive 96/53/EC on weights and dimensions of vehicles in
international traffic that goes further by proposing a new set of allowances
that should support solutions to improve the aerodynamics of HDV.
27.       (e) Operation of the HDV fleet. A number of factors in
the operation of the HDV fleet can influence fuel consumption and CO2
emissions: the maintenance of vehicles, driver performance that can be improved
with training, capacity utilisation that relies a series of factors that can be
micro-economic (quality of management, use of IT tools) but also regulatory
with constraints put on HDV transport by cabotage limitations as foreseen under
Regulation 1072/2009/EC. Action has already been taken to address a number of
these factors and will need to be continued:          
- Improved logistics and fleet management. The recent Directive
2010/40/EU on the deployment of Intelligent Transport Systems (ITS) will
contribute to accelerating the development and deployment of ITS in the field
of road transport and for interfaces with other modes of transport[41].
            
- While not including carbon pricing, EU road user charging legislation
contributes to improving transport efficiency and lowering fuel consumption and
CO2 emissions. The new European framework law[42] approved in
2011 (Directive 2011/76/EU which is a revision of the Eurovignette Directive of
1999) aims at reducing pollution from road freight transport and making traffic
flow smoother by levying tolls. The revised Eurovignette Directive will have to
be transposed by October 2013 into national legislation and start thereof
producing its effects.      

2.3.        Expected
trends under no policy change assumptions suggest a stabilisation of CO2 emissions
Baseline
scenario assumptions
28.       Under the business-as-usual or baseline
scenario of the Commission PRIMES-TREMOVE model (hereunder referred to as
"baseline"), finalised early 2012, based on no policy change
assumptions, the EU population is expected to slowly grow until 2030, and
remain broadly stable between 2030 and 2050. GDP growth, after a post crisis
resumption, is expected to slowly decrease from some 2.2% in the present decade
down to 1.45% in 2040-2050, in line with the 2009 Ageing Report assumptions.
Energy import price assumptions, based on the world energy PROMETHEUS model, anticipate
regular increases of oil prices from USD 85.2 per barrel oil equivalent (boe)
in 2010 to USD 127.6 / boe in 2050 (in 2010 prices). 
29.       HDV fuel efficiency is assumed to improve by close to 1% annually over
the period 2015-2030: this is a reversal versus latest fuel efficiency trends
that have been influenced by the regulatory introduction of several generations
of new 'Euro' exhaust gas pollutant standards, leading to some fuel efficiency
losses (see below section 3.5 on trade-offs) and an overall standstill of HDV
fuel consumption performance in the recent years. In the assumed absence of new
and more stringent exhaust gas pollutant standards (the baseline scenario is
prepared on a no-policy change basis) a resumption of regular vehicle fuel
efficiency improvements appears realistic, even without policy actions to curb
fuel consumption and CO2 emissions.
30.       As the Commission
PRIMES-TREMOVE model is a modelling tool that is widely used by Commission
services in policy planning and impact assessment exercises, with details
publicly available (see links in annex 4), the present Impact Assessment will
not present the detailed model's characteristics.
31.       Existing policies have been embedded in the baseline scenario. As
foreseen in the Transport White Paper, a number of policy reviews and new
initiatives shall reinforce the current transport policy framework but have not been quantified
in the baseline as their impacts are currently being assessed and cannot be
pre-empted:            
(i)                   the Transport White Paper also identifies the
"elimination of the remaining restrictions on cabotage" as a means of
making road transport more efficient and more competitive, including by
increasing loading factors of vehicles;     
(ii) A review of road user charging legislation aims to promote a more
systematic use of distance related road charging reflecting infrastructure and
external costs based on the polluter-pays and user-pays principles;          
(iii) an E-freight initiative;  
(iv) A carbon foot-printing initiative is under preparation to
support improved transparency and end-user information on the CO2
impact of freight and passenger transport;          
- (v) A recast of the driving licence directive in 2012 included eco-driving
requirements for truck drivers' examinations and further efforts are
planned to implement these provisions; and 
(vi) The Transport White Paper also announced a strategy for near
"zero-emission urban logistics" providing guidelines to better
monitor and manage urban freight flows. In December 2013 the Commission put forward specific recommendations for coordinated
action between all levels of government and between the public and the private
sector in urban logistics area, urban access regulation area, deployment of
intelligent transport system (ITS) solutions and urban road safety area.           

32.       While the primary objectives of these actions are varied (see more
detailed account of these legislative reviews or initiatives under Annex 3)
they shall directly or indirectly also contribute addressing climate change
objectives[43].  
Baseline
scenario main results
Figure 1 :     Energy
use (*) of heavy duty vehicles in baseline scenario
33.       Total transport activity is projected to continue to grow in the
next 40 years. Even though some decreases were observed recently as a
consequence of the economic crisis, the recovery is reflected by transport
activity returning to its long-term positive trends. However a certain degree
of decoupling can be observed in the baseline model results vs. GDP trends,
with road transport growing at slower rates. This is in line with recent trends
observed in some Member States[44].
In term of modes, notwithstanding the EU policy to promote less carbon
intensive modes such as rail transport, road transport is overall expected to
maintain its dominant role in both passenger and freight transport within the
EU, with a rather moderate shift of relative percentage shares from road to
rail in the case of freight and a more pronounced one from road to air as
regards passenger transport (see annex 4 – Table 5).
Figure 2 :                           HDV
CO2 emissions (*) in baseline scenario
  
                 Source: European Commission.
(*) tailpipe = "tank-to-wheel" energy use and emissions (i.e.
excluding upstream "well-to-tank" emissions) 
34.       As regards HDVs, three
factors are anticipated to moderate the modelled accounted growth of CO2
emissions that has been observed in the past:            
- the above mentioned decoupling between road transport activity rates and GDP;
- HDV efficiency improvements;   
- and increased use of bio-fuels[45] with the full
implementation of Directives 2009/28/EC[46]
which foresees that the share of energy from renewable sources in the transport
sector must amount to at least 10 % of final energy consumption in the
sector by 2020. This model-based analysis was however carried out before the
recent review[47] in October 2012 by the Commission
of the EU bio-fuels policy that led to a proposed limitation to 5% for
food-based bio-fuels. As a result, taking into account the latter an increase
in CO2 emissions by few percentage points versus the modelling
results may be expected. 
35.       As
a result:      
- the use of energy by HDV transport is expected to grow only marginally in
view of HDV efficiency improvements over the period 2010-2030 (Figure 1);        
- and CO2 emissions would remain broadly constant over the
programming period assuming an increased share of bio-fuels in the EU, also as
a result of a full implementation of Directives 2009/28/EC and 2009/30/EC
(Figure 2).
36.       While this reversal of previous growth trends may contribute to
curbing HDV CO2 emissions, this baseline scenario should be seen against
the desired contribution of transport to reducing EU CO2 emissions.
The 2011 Transport White Paper objective set an overall reduction of EU
transport emissions of 60% by 2050 versus 1990 levels. As regards specific
modes including road and HDVs in particular no quantitative policy objective
was set. While
detailed official historical statistics of CO2 emissions from HDVs
within the road transport sector are not available, estimates suggest that
between 1990 and 2010 the CO2 emissions of heavy duty vehicles
increased by around 36%. Against this background, one can roughly estimate CO2
emission baseline levels with respect to 1990: in both, 2030 and 2050, at
around +35% (tailpipe emissions, i.e. "tank-to-wheel") of their 1990
level.
37.       This implies that under the baseline –no policy change- scenario HDV
transport overall would not contribute to curbing transport CO2 emissions[48]
and that its CO2
emissions would remain significantly above 1990
emission levels. The main conclusion of this modelling exercise is that
the baseline scenario cannot be considered sustainable in view of EU
policies to curb GHG emissions, and of the Transport White Paper's
sector-specific objectives. 
38.       Sensitivity analysis conducted on the Primes-Tremove baseline (see annex 4),
while confirming that long term simulation results are sensitive to modelling
assumptions, does not put into question this above core conclusion.
Opportunity losses in case action is not taken to curb EU HDV CO2 emissions
39.       The EU automotive industry currently has a leading position on the
HDV market. The major European manufacturers account for over 40% of total
global production[49].
While the EU-based production of HDVs represents a much lower share of world
production (some 12%-14% depending on the year), the worldwide signalling role
of EU standards is considerable. This was demonstrated in the case of EU
exhaust gas emissions and PM standards that have been adopted by numerous large
emerging economies, notably China, India, Russia, and Indonesia. 
40.       European manufacturers have an interest in remaining in a leading
position as regards HDV CO2 emissions measurement, and possibly
thereafter standards, to increase market transparency and to lead in terms of
energy efficiency. They have therefore engaged in an ambitious co-operative
exercise with the Commission on the development of a simulation tool, VECTO, to
determine HDV emissions (see annex 7). If standards were eventually to be
introduced, manufacturers would need to plan R&D for the next generations
of vehicles complying with new requirements. Should such standards have a
similar world-wide impact, as in the case of exhaust gases and PM, European
manufacturers could benefit from considerable economies of scale and first
mover advantage. 
41.       Without EU action, a number of opportunities for curbing HDV CO2 emissions would be wasted, and the current leadership of the EU
automotive industry in the HDV market could be affected. While EU initiatives
have already been taken or set out in a number of areas such as vehicle design,
management of transport operations, the internalisation of external costs,
fuels and purchase decisions[50],
a comprehensive EU strategy to curb HDV CO2 emissions is needed. 
2.4.        The
scope for HDV improved fuel efficiency and reduced CO2 emissions
HDV technical
improvements leading to lower fuel consumption and CO2 emissions
42.       Two recent studies have provided useful insight to assess the scope
for curbing HDV CO2 emissions in Europe. The AEA-Ricardo report
assessed possible future emissions under three scenarios:        
- a "business-as-usual" scenario, to a large extent based on the 2010
TREMOVE model baseline (with no policy change), with however an important
deviation. While the 2010 Commission TREMOVE baseline assumes a
"natural" rate of new HDVs' fuel efficiency improvement of 1% per
year, AEA-Ricardo's "business-as-usual" scenario, in view of recent
developments, reduced this annual improvement to a lower value of around 0.5%;
- a "cost effective" scenario with technology payback of about two
years;          
- a challenging scenario that assumes a higher degree of incentivisation to
adopt new fuel efficient technologies.
43.       Under the "business-as-usual" scenario, it was assumed
that emissions would continue increasing from 2010 to 2030 (by 15%) in spite of
some progress in vehicle efficiency, mainly due to increased traffic and HDV
fleet. Against this "business-as-usual" scenario the AEA-Ricardo
report found that emissions could potentially be reduced by 6.2% in the
"cost-effective" scenario and 14.5% under the "challenging"
scenario (i.e. bringing them only slightly below 2010 levels). This study
however did not examine a number of means to cut emissions such as fossil fuel
savings, weights and dimensions adjustments, and the rolling out of ITS
technologies. 
44.       The 2011 TIAX study reviewed the findings of the AEA-Ricardo study
along the eight vehicle categories HDVs of the AEA-Ricardo study. As the
latter, it assessed a large spectrum of possible technological improvements,
with:              
- fuel consumption and CO2 emissions benefits associated to each
technology;
- and the incremental investment costs required case-by-case.                  
Technical improvements in a number of areas can contribute to improved fuel
consumption and reduced CO2 emissions: aerodynamics;
light-weighting; tyres and wheels; transmission and driveline; engine;
hybridisation; and management.
Applied to new vehicles, new
state-of-the-art technologies would by 2030 allow for substantial benefits in
percentage terms compared to the estimated performance of "baseline" vehicles
defined as those due to be commercialised in the EU as of 2014 and meeting Euro
VI standards. These benefits would broadly range between 30% and 50% for new
vehicles, depending on the vehicle category (See Figure 1 in annex 11). The
benefits of their roll-out for the whole fleet would be slower to materialise
but still substantial, between 25% and 28% by 2030 (see Table 1 in annex 11,
TIAX assessed reductions were broadly in line with the ones assessed by
AEA-Ricardo).
45.       The above assessment concludes that, in spite of an expected HDV
fleet growth in the EU of close to 30% over the period 2010-2030, emission
levels could be substantially reduced by 2030, with CO2 emissions
cut by 22% (versus business-as-usual levels, as defined in the Lot1 report) if
only technologies with a payback period of a maximum of 3 years are introduced
in the HDV fleet[51].
Without this 3-year payback constraint fuel consumption reduction and emission
cuts would potentially be larger, estimated at some 28% below business-as-usual
levels.
Improved fleet operation leading to
reduced HDV fuel consumption and CO2 emission
46.       Technological improvements are not the only ones that can lead to
reduced HDV fuel consumption and CO2 emissions. Other factors to be
taken into consideration mainly relate to the operation of HDVs such as fleet
maintenance, driving performance, capacity utilisation/optimisation. According
to the International Road Transport Union (IRU) HDV fuel consumption can be
reduced by 30% by 2030 due to improved HDV performance (10%), fleet management
with the support of ITS tools (10%) and drivers' improved training and
performance management (10%). While the first of these figures does not match
with more ambitious HDV abatement potential assessed by AEA-Ricardo and TIAX,
these IRU objectives tend to confirm a specific potential that lies with HDV
operation. Such factors would complement EU initiatives in support of more
energy efficient fleet operation that have been embedded in the baseline
scenario.
Cost benefit analysis
47.       Based on cost estimates from TIAX[52],
a cost benefit analysis was carried out by CE Delft to examine the economic
sustainability of technical improvements that can improve HDV performance. CE
Delft produced two types of marginal abatement cost curves, from an end-user perspective
(economic sustainability of technical improvements leading to fuel savings and
reduced emissions) and from a societal perspective (eliminating from the latter
tax distributional effects that play an important role given the high degree of
taxation of fuel). Results are summarised in table 2 in Annex 11, with the
detailed cost curves for each category also attached in Annex 11.
48.       These results confirm a considerable discrepancy of potential for CO2
abatement according to vehicle categories: according to this analysis urban and
municipal delivery, as well as construction vehicles, and also buses, which
have the common feature of low-speed drive cycles with a high proportion of
"stops and starts" can be equipped in a cost effective way with
hybrid technologies. Long haul vehicles that have the highest annual mileage
could as well, even though hybrid would at the present stage not be cost
effective for them, benefit from a combination of technologies to improve
aerodynamic and rolling resistance, as well as the best state-of-art diesel
engine improvements. Sensitivity tests carried out suggest that these results
are relatively robust: due to the shape of the cost curves breakeven levels do
not vary materially with different assumptions e.g. on the rate of return or
even oil price developments. Conversely results would change significantly if
CE Delft assumptions taken from the TIAX report on the magnitude of emission
abatements and related costs change significantly.
49.       One should further take note of the recent experience with cars, for
which cost curves were estimated prior to the introduction of the EU Regulation
on CO2 emission limits in 2009, and recently (2012) reviewed:
initial cost estimates turned out in the latter review to have been
over-estimated, with a number of costs falling sharply once products and
technologies mature with industrial mass series and increased competition[53]. This suggests
significantly higher cost effective emission abatements.   
50.       Due to the shape of cost curves, benefits estimated from an
"end-user" perspective or societal one are broadly similar: only very
few technical upgrades would not be worth investing in from a societal
perspective while they are profitable from an end-user (the fleet operators)
perspective. This leads to the important conclusion that the incentive
structure for end-users is broadly also the one to take into consideration from
a societal perspective. 
Scope for further policy action
51.       Comments made by OEMs suggest that the above abatement values may
have been overestimated, notably due to several factors: the baseline to take
into consideration (Euro VI HDVs) may actually perform better than assumed in
these analysis; combining several technology packages is complex and may not
result in abatement benefits simply by adding them up; and as regards
conventional diesel engines, the scope for reduced emissions would be lower
than assumed as there is a performance limit that cannot be surpassed.  
52.       The exact amount of emission reductions that could be targeted for
HDVs cannot be set at this stage :            
- the exact values of HDV fuel consumption and CO2 emissions remain
to be assessed in a way that is agreed with stakeholders, and the on-going
project of establishing the VECTO simulation tool is expected to address this
gap;                
- a further review would be needed screening the degree of maturity of
techniques and, for those technical upgrades that are still under development,
the timeline necessary for rolling them over on the market.  
Once a track record of actual emissions is available for new HDVs registered on
the EU market (as foreseen under option 1.ii), the potential for emission
abatements should be re-assessed and revised cost-curves re-established, with
the benefit of knowledge gained by the time on latest technology developments
and the evolution of production costs. 
53.       At this stage, the above studies and analysis lead to the conclusion
that there exists a considerable potential for curbing new HDV CO2
emissions with technical upgrades on vehicles, which can even be further
topped up with improved driving and fleet maintenance and management. While
more shall be needed over the long term, the magnitude of estimated emission
abatements by 2030 appears broadly consistent with the Transport White Paper
quantitative objectives set for 2050. This points to existing market barriers
to the uptake of a number of promising technologies.
2.5.        Market
barriers to cost effective technology uptake
54.       Possible reasons for the lack of uptake by HDV freight transport of
all state-of-the-art cost effective technologies are complex and linked to the
interaction of different business models of the main actors, OEMs and HDV fleet
operators, but also of other actors such as component manufacturers, body and
trailer manufacturers, shippers and financing companies (banks, leasing
companies). The AEA-Ricardo report already pointed to a three-year amortisation
of investment costs by transport operators, which is significantly below the
average lifetime of vehicles (around 11 years for trucks, 15 years for buses)
and limits the uptake of innovation: this may be due to the difficulty of
long-term planning in micro-enterprises and rapid renewal of the large
enterprises' fleets.         
55.       Market barriers have been investigated in a recent study by CE Delft[54].
The study's findings[55]
suggest that :    
- European companies are aware of innovations that can deliver significant fuel
savings and CO2 emissions reductions (table 2 below); however few
respondents to CE Delft's enquiry believed that these technologies were cost
effective;                     
- OEMs, while offering fuel saving technologies as options, do not in many
cases offer them as standard on basic vehicles (table 1);    
- only a minority of manufacturers offer systematic training which could reduce
fuel consumption and emissions (table 1);        
- European HDV operators do not appear as pro-active in improving the technical
fuel-efficiency of their new trucks as they are in improving the operational
fuel-efficiency of their existing fleet through various measures such as tyre
control, axle alignment or effective fuel consumption monitoring. For instance,
full skirts on the side of the body/trailer, easy to install at low cost, are
not purchased in more than 70% of cases; and tyre pressure monitoring systems
(TPMS), although easily accessible on the market at low cost, are not being
installed in a majority of cases;   
Table 1.      The
offer of fuel saving technologies by OEMs and body builders.         
Table
2.      Overview of transport companies’
awareness and implementation of different fuel-saving technologies

- in spite of fuel efficiency being ranked first among purchase criteria by
transport companies when acquiring a new truck, the lack of uptake of fuel
saving technologies is linked to the truck purchase process where hardly any
transport company uses available data to evaluate technologies or compare
trucks. This is made more difficult by the absence of a commonly agreed
methodology to measure fuel consumption;  
- financial constraints may play an important role as well, with a large share
of truck purchasing companies having recourse to borrowing and leasing. Lending
institutions were reported as not taking fuel efficiency into account when
providing loans for the purchase of new trucks, a situation that implies split
incentives;   
- split incentives exist whenever decision making on HDV purchase is separated
from the benefits of fuel-saving technologies. One such split-incentive example
is when shippers purchase and make investment decisions regarding fuel-saving
technologies on trailers (e.g., tyre and aerodynamic features), but transport
companies that own the tractors and operate the trailers would receive the
potential benefits. Another split-incentive example is when transport companies
operate under an open book contract, under which they can bill the shipper for
the actual fuel consumption. However, few companies operate exclusively with
open book contracts. 
56.       The most obvious findings of this study will have to be addressed in
the policy responses, with a clear priority given to the most important market
barriers, notably the inability of HDV transport operators to precisely assess
fuel saving and CO2 reduction effects of various technical upgrades
already offered – in spite of being well aware of the existence these upgrades
- and to compare the various HDV manufacturers' offers in this respect, most
likely due to the absence of a commonly agreed methodology to measure fuel
consumption and emissions. 
57.       Questions related to market barriers will be further investigated,
notably bearing in mind the lack of response of SMEs and micro-enterprises which
represent the largest share of the transport sector (see Annex 6, table 10) to the
CE Delft enquiry that led to these results. 
2.6.        Voluntary
unilateral commitments may help but are insufficient to significantly curb
emissions
58.       Transport operators, and, more
broadly, actors in the logistics chain can influence fuel consumption by
assessing the footprint of transport and taking action to reduce it by various
means such as driver training, quality control of vehicles, fleet use and
vehicle load optimisation with improved IT management tools. A number of
schemes have been established at a national level or Europe-wide, such as for
instance the Green Freight Europe[56]
scheme. These initiatives can contribute to reducing transport fuel consumption
further, on top of savings possible with vehicle technology. The International
Transport Union has set objectives of reducing significantly fuel consumption
and CO2 emissions by 2030 by some 20% with such means. The
Commission announced support in the Transport White Paper to transport
foot-printing (see annex 3). Such reductions, even though appreciable, remain
far from the ambitious 2050 targets set by the Transport White Paper and, even
if achieved, would have to be topped up by other means.
59.       HDV manufacturers have also made
some announcements and notably pledged in 2008[57]
to reduce new truck CO2 emissions by 20% by 2020. This undertaking
was not monitored in the absence of a commonly agreed measurement methodology.
It signals efforts to be made over the medium term, without binding obligation.
Past similar undertakings from car manufacturers have failed in reaching
significant car emission abatements. Basing an EU HDV C02 emission
strategy on such declarations would be hazardous. 
2.7.        International
experience in measuring HDV emissions and setting standards
60.       Japan introduced in 2007 a fuel consumption rule
for HDVs based on best vehicle performance. The US introduced legislation on
HDV CO2 emissions in 2011, followed by Canada. China also recently made first steps in this direction (see annex 9). The US (and Canadian)
target engine and chassis-cabin CO2 emissions, implemented via
simplified performance values and manufacturers' declarations. The US
Environment Protection Agency intends more ambitious legislation, focussing on
the measurement of whole vehicle emissions, which would converge with the
approach followed by the Commission’s proposed VECTO tool. 
2.8.        Who
is affected and how?
61.       Major stakeholder groups affected include the general population,
freight and passenger transport operators, logistics companies, HDV manufacturers,
automotive component suppliers and fuel suppliers.
62.       The EU population is increasingly affected by climate
change through the increased climate variability and more frequent extreme
weather events, and their related impacts. Reduced CO2 emissions from HDV transport would thus benefit the overall
population.
63.       Buyers of HDVs, be it companies for
their own use, logistics operators or transport operators of freight and
passengers services are affected as CO2 emissions are strictly
proportional to fuel consumption that represents a high share of their
operating costs. 
64.       Vehicle manufacturers would be
directly affected by the obligation to comply with a new legislative framework
to monitor or reduce CO2
emissions. 
65.       Component suppliers would also be
affected by increasing demand for advanced fuel saving technologies and are
expected to benefit from this higher demand. 
66.       Fuel suppliers would also be
affected by policies to lower HDV CO2 emissions as they are likely
to see lower demand for transport fuels in the future as a result of reduced
HDV fuel consumption and CO2
emissions.
67.       All end-users of freight transport, i.e. industry and
trade sectors in the economy, and eventually consumers, would benefit from
lower fuel consumption in transport provided overall transport costs, including
the cost of HDVs, does not increase more than the related decrease in (fuel)
operating costs. In the same way, all passenger clients from bus and coach
transport services would benefit from lower bus and coach fuel consumption
provided the overall operating cost of passenger transport, including
amortisation of HDV equipment cost, is reduced.
68.       Finally Member States, in their capacity of tax
authorities, would be affected by lower fuel consumption as their excise and
VAT tax revenues on fuel would decrease. Conversely they would benefit from VAT
collected on higher value HDVs.
2.9.        Does
the Union have the right to
act?
69.                                                   
Legal basis
          The EU has
already acted in this area when it adopted Regulations (EC) 443/2009 and (EU) 510/2011.
These Regulations were based upon the Environment chapter of the Treaty and in
particular Article 175 (i.e. 192 TFEU). In the same way, the EU treaty provides
the legal basis for acting on HDV fuel consumption and CO2 emissions.
The Single Market also provides grounds to act at EU level rather than at Member State level so as to ensure common requirements across the EU and thus minimise
costs for manufacturers as well as distortion of competition among transport
operators based in different Member States. 
70.                                                   
Subsidiarity: test of necessity and EU added value
          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. This would be of
particular disadvantage to vehicle manufacturers and component suppliers as,
while the HDV market is currently Europe-wide, differing ambition levels and
design parameters would require a wide range of technology options and vehicle
configurations, diminishing the economies of scale. Un-harmonised action across
the EU would increase the cost of compliance by manufacturers that may hold
differing shares of the vehicle market in different Member States and would
therefore be differently impacted by national legislation. Such market
fragmentation would also affect consumers who would not benefit from lower
costs and economies of scale that an EU wide policy would deliver.
71.                                                   
Proportionality analysis
          According to EU climate
and energy legislation[58],
all sectors of the EU economy should contribute to achieving GHG emission
reductions, including HDV road transport which is currently not subject to
legislation regulating its GHG emissions. Particular attention is being further
given in the present Impact Assessment to proportionality aspects of each
possible means of policy intervention, that are assessed for each option when
examining compliance with the policy objective of efficiency (see below section
3.2 and relevant sections of the options' assessment). 
3.           Objectives
3.1.        General
objectives
72.       The Treaty foresees that environmental
protection must be built into all policy areas and action to reduce climate
change is specifically foreseen within the Treaty as an environmental
objective. The transport sector is the second largest GHG emitting sector in
the EU. In view of these factors, further action is needed and since HDVs
account for a significant share of transport emissions and unlike cars and vans
are not yet subject to regulation. The general
objective of this initiative is to contribute to meeting climate goals by reducing
CO2 emissions in the HDV sector, in line with the objectives of the
Roadmap and the Transport White Paper. 
3.2.        Policy
objectives
73.       Specific objectives of the various policy
options to be assessed include:  
74.       Objective 1 "effectiveness" in
curbing emissions : effectively contributing to reducing HDV fuel consumption
and CO2 emissions in the EU in a significant way 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
by a certain date, the latter being relevant in assessing instruments which
have a scope beyond the HDV sector, such as the ETS;       
-  the relevant quantitative indicators for this policy objective will
be (i) HDV fuel consumption and (ii) CO2 emissions;      
- the timeline for this objective is a medium- and long-term one as a
number of preliminary short-term steps are required to address the identified
knowledge gap. 
75.       Objective 2 "efficiency": in a cost
effective and proportionate way for stakeholders and society contributing to
reducing EU HDV fuel consumption and CO2 emissions in the EU;
- the relevant quantitative indicators for this policy objective will be
(i) administrative costs for the EU and Member States' administrations; (ii) 
costs and benefits for the HDV manufacturing industry; and (iii) costs and
benefits for HDV fleet operators;  
- the timeline for this objective is a short-, medium- and long-term
one, that should be assessed ex-ante before issuing legislation and
evaluated ex-post following the introduction of relevant legislation.        
76.       Objective 3 "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;     
- indicators: this objective can only be monitored by thorough contact
with the relevant stakeholders;  
- the timeline for this objective is permanent : a strategy can upfront
contribute to a more predictable regulatory environment, that will
progressively be clarified as action is taken. 
3.3.        Operational
objectives
77.       The above objectives can only be assessed through a precise
understanding of the GHG emissions from the HDV transport sector. However,
these emissions are not currently monitored. Therefore, introducing
requirements for monitoring, reporting and verification of GHG emissions from
the HDV freight and passenger transport sector is an operational objective that
must be achieved by the policy options under consideration. Operational
objectives will thus consist in :            
- monitoring, reporting and verifying EU-wide CO2 emissions
of new HDVs;    
- for the longer-term, beyond 2020, setting a quantitative constraint
on CO2 emissions from HDV transport to achieve emission reductions. 
The latter operational objective is a long-term one as it can only be achieved
with the support of long term policy instruments that are being considered in
the present Impact Assessment.
3.4.        Consistency
with horizontal objectives of the European Union
78.       The above objectives are consistent with the low carbon economy
objectives of the Council of the European Union and the European Parliament[59] and more particularly
objectives pursued under :  
- the European Strategy on Clean and Efficient Vehicles (COM(2010)186);       
- the Roadmap for Moving to a Competitive Low Carbon Economy (COM(2011)112);
- the White Paper on a Roadmap to a Single European Transport Area
(COM(2011)144);
- the Energy Roadmap 2050 (COM(2011)885)[60]; 
- and, overall, the EU 2020 Strategy on a Smart, Sustainable and Inclusive
Growth[61].
3.5.        Trade-offs
and synergies between sustainability goals
79.       Synergies. Synergies between the
objective of reducing HDV CO2 emissions and the objectives of a
sustainable energy and transport policy pursued under the above mentioned
policy initiatives are strong: reducing HDV CO2 emissions will at
the same time reduce energy consumption, contribute to reduce energy
dependency, curb the environment footprint of road transport and make it more
sustainable over the long term. It will also shift added value to the
manufacturing sector and contribute to growth in the EU. It will contribute to
the establishment a more sustainable growth model in the EU.
80.       Trade-offs. Conversely there are
specific trade-offs between on the one hand the objective of reducing HDV CO2 emissions and, on the other hand, environmental and
public health objectives pursued with the reduction of exhaust gas emissions and
particulate matter under type approval regulations Euro V and more recently
Euro VI (coming into force on 1.1.2014)[62].
The introduction of such standards in the 1990s and their regular revision over
the recent years led to losses in fuel efficiency and CO2 emissions
performance, in such a way that it interrupted the previous trend of improved
vehicle fuel and CO2 performance, which as a result has broadly
stagnated over the last 15 years. The report by AEA and Ricardo Consultants[63] estimated that the
foreseen upgrade from Euro V to Euro VI emission standards as of 2014 would –
if not compensated by additional technical improvements as this has been
regularly the case when previous standards were adopted- result in an increase
of fuel consumption and CO2 emission by some 3%. 
4.           Policy
options
 Baseline: no policy change,
implement already existing or already proposed policy actions that will
contribute curbing CO2 emissions
81.       The main baseline assumptions and features have been described in
section 2.3 above (including embedded policies that were identified in section
2.2) and in more detail in Annex 4 on the modelling framework. 
Methodology
82.       The main methodological aspects of the present assessment are
presented in annex 12.
Discarded
option: additional tax on fuel for HDV Transport.
83.       The current Commission proposal on a revised Energy Taxation
Directive, which, as indicated above, is part of the baseline scenario, is the
current reference. It foresees the inclusion of carbon pricing in the fuel
excise duties. As the proposal is still under discussion, an alternative
involving additional taxes for specific sectors seems unlikely in the short
term. 
4.1.        Option
1 (short-term): Improve knowledge, comparability and accountability of HDV CO2
emissions
(i)
Determination of HDV engine-only fuel consumption and CO2 emissions
84.       From 1 January 2014 all new HDVs will be subject to the measurement
of engine CO2 emissions under the Euro VI Regulation. Those emission
values would be relevant for identifying the engine performance in terms of
fuel consumption and CO2 emissions but would not be indicative of
the performance of the complete vehicle. The data could hence be certified and
reported. This option would require (i) an adaptation (through comitology) of
the relevant type approval legislation to include information on CO2
values for certification, and (ii) the adoption of a Decision (ordinary
legislative procedure) on the reporting of engine CO2 emissions. The
authorities in charge of implementing this option would be registration and
type approval authorities in Member States.
(ii)
Determination of HDV full vehicle fuel consumption and CO2 emissions
85.       The absence of baseline on actual HDV CO2 emissions is an
impediment to further possible policy actions: HDV fuel consumption and CO2
emissions are currently not recorded. For this reason the Commission is establishing
a simulation tool ("VECTO", see annex 7) customised to measuring HDV
fuel consumption and CO2 emissions. A test phase starting in autumn
2012 is expected to be completed in May 2014. 
86.       Upon the completion of this simulation tool, this option consists in
the certification of HDV (whole vehicle) fuel consumption and CO2 emissions
as calculated by the simulation tool, with the necessary proofs and checks, and
the reporting of those emissions from new vehicles entering into service.
Certification is expected to increase end-user information and awareness,
facilitate comparability and stimulate competition among manufacturers in
meeting best state-of-the-art performance standards. This action requires (i)
an adaptation (through comitology) of the relevant type approval legislation to
include the methodology for determining whole vehicle CO2 emissions
for the purposes of certification of new vehicles by Member States, and (ii) the
adoption of a new Decision (ordinary legislative procedure) on the reporting of
HDV CO2 emissions. The authorities in charge of implementing this
option would be registration and type approval authorities in Member States.
87.       Actions foreseen under option 1 are primarily meant to address
vehicle performance (driver d/ identified in section 2.2) and the
"knowledge" gap market barrier that has been identified. The main
addressees of these actions are vehicle manufacturers. 
4.2.        Option
2 (medium- to long-term): Include Road Transport CO2 emissions
in the EU Emissions Trading Scheme 
88.       The EU ETS is a cap-and-trade scheme established in 2005 for a range
of industrial activities. Under such a scheme, emissions
are capped. To meet this cap, economic actors with favourable cost reduction
options are financially incentivised to implement them, while economic actors
with unfavourable cost reduction options for their CO2 emissions
prefer to buy emissions allowances on the market, thus becoming net buyers on
the market. The EU ETS was recently (as of 1.1.2012)
extended to cover aviation CO2 emissions. It could also conceivably
be extended to new sectors. This option requires an
amendment of Directive 2003/87/EC establishing the ETS. 
89.       It should be noted that the CO2 component of energy
taxation under the proposed Energy Taxation Directive would not be levied for
installations under EU ETS. Including road transport in the EU ETS would
therefore be an alternative to taxing the CO2 emissions under the
Energy Taxation Directive. It should be pointed out, that the inclusion of the
transport sector in the EU ETS is an alternative to the proposal for the
revision of the Energy Taxation Directive which is currently under discussion
and which extends CO2 taxation to sectors not covered by the EU ETS.

90.       The Impact Assessment carried out for the revision of the ETS
directive[64] considered different methods to include road
transport in the EU ETS. Under a 'downstream' approach, individual owners of
vehicles would be liable for compliance. Under an 'upstream' approach fuel
suppliers would be defined as participants under the EU ETS. The above
mentioned Impact Assessment concluded that it was too early to take a decision
on these options. It seemed likely, however, that the upstream approach would
be administratively less complex and have considerably lower transaction costs,
as including some 1 million HDV transport operators EU-wide, most of which are
micro-enterprises (see Annex 6, table 10) with a fleet of less than 10
vehicles, would be a real challenge. Under an upstream approach it would be
challenging to specifically include the HDV sector, rather than the road transport
sector as a whole, as fuel suppliers cannot at present monitor to whom the fuel
is sold: targeting HDV consumption only, without other vehicles being included,
would raise compliance issues with considerable risks of fraud. 
91.       In the recent Report on the state of the carbon market in
2012 [COM(2012)652 final],  the expansion of the scope of ETS to other sectors
is one of six (non-exhaustive) structural measures identified by the
Commission, which could solve the structural supply-demand imbalance in the
carbon market. It is therefore one of several options for ETS under
consideration and development, and could impact policy making for HDVs in the
longer term.
92.       Provisionally, this Impact Assessment will take the upstream
inclusion of the entire road transport sector into EU ETS as the option to be
considered. As with the other options, the effectiveness, efficiency and predictability
of this option will be assessed, however not only from the perspective of the
HDV sector itself, but also from an overall climate policy perspective. Considering
the links it creates with other sectors, further studies would however be
required to fully assess, in a quantitative way, the possible design and modus
operandi of this option. 
93.       Inclusion within the ETS would contribute addressing emission
drivers (c) on the carbon content of fuels and indirectly also (e) on the
operation of HDV fleets that were identified in section 2.2. The main
addressees of this option would be fuel suppliers (directly) and HDV operators
(indirectly). 
4.3.        Option
3 (medium- to long-term): Introduce legislation setting mandatory HDV CO2
emission ceilings 
94.       Setting CO2 emissions ceilings or fuel consumption
targets has been the EU chosen approach on cars and vans. A pre-requisite to
such an option is the possibility to measure, certify and report emissions:
this implies that Option 1 is a prerequisite to Option 3.
(i) Option 3.i:
set performance ceilings on engine-only CO2 emissions of new
registered vehicles
95.       Following the full entry into force of the Euro VI Regulation in
January 2014, HDV engine emissions are being measured[65]. Subject to
the prior establishment of a reporting scheme, engine CO2 emission
standards would be introduced in the following years. This option requires the
adoption of an EU Regulation under ordinary legislative procedure.
(ii) Option 3.ii
: set performance ceilings on HDV whole vehicle  CO2 emissions of
new registered vehicles
96.       To reap the full benefits of available technologies a regulatory
approach establishing emission standards/ceilings could, in the same way as for
cars and vans, accelerate the roll out of more energy efficient HDVs on the
market, that would emit less CO2. This option requires the adoption
of an EU Regulation under ordinary legislative procedure. Prior to this, the
simulation tool under development will have to become fully operational, and
option 1.ii be implemented.
97.       Option 3 addresses the uptake of technological innovation to
increase vehicle performance (driver (d) of HDV emissions identified in section
2.2). It is expected to provide a strong response to existing market barriers.
First, in complement with option 1, by further increasing awareness and
enhancing transparency and comparability among new models, thereby addressing
the identified knowledge gap. And second, by setting emission limits that
become industry performance targets, addressing core residual rigidities in the
uptake technological change leading to energy savings. The main addressees of
this action are vehicle manufacturers. 
5.           Impact
analysis of policy options
98.       The baseline scenario has been assessed (see section 2.3) and
considered unsustainable in view of the EU policy objectives to curb emissions
in general and more specifically in the transport sector. Other options will be
assessed against this baseline. 
99.       Option 1 can only address short-term transparency and knowledge
needs while options 2 and 3 are key medium- and long-term components of a
comprehensive strategy. Given long-term policy goals, these must be considered
as well. However a full assessment of option 2 is only possible once the
current Carbon Market Report consultation of stakeholders, and a series of
studies, is completed. Option 3 can only be realised upon the successful
implementation of option 1. While an assessment of its potential impacts has
been carried out, a full re-assessment of this option is necessary before
deciding whether to introduce emission limits. 
5.1.        Option
1 assessment: Improve knowledge, comparability and accountability of HDV CO2 emissions
Option 1(i) Determination of HDV
engine-only fuel consumption and CO2 emissions
100.   Following the entry into force in 2014 of the Euro VI Regulation,
engine CO2 emission values will be measured and can hence be
collected and monitored. This option is limited in scope: engines are only one
component of the vehicle, and engine-only emissions recorded with the agreed
test cycles under the Euro VI Regulation only partly reflect full vehicle
on-road emissions. 
101.   In terms of effectiveness, this option, while raising
awareness of engine performance –provided the necessary methodology[66] can be established for
this-, is not expected to directly and materially affect vehicle performance
beyond the engine itself. It will thus not capture the bulk of HDV CO2
emissions. It could indirectly play a role in establishing a track-record
enabling manufacturers to compare all HDV engines' performance in relation to
their respective power, thereby stimulating competition to align production on
best performing engines. Increased transparency and competition may translate
into a few percentage points fuel efficiency and CO2 savings. 
102.   In terms of efficiency, this option will have a low
marginal (additional) cost. The additional costs involved are: (i)
administrative costs related to establishing a methodology and amending the
relevant type-approval Regulation; (ii) administrative costs of reporting the
measured emissions at national level, and (iii) administrative costs related to
the adoption and implementation of an EU reporting legislation. 
103.   As regards predictability of the regulatory environment affecting stakeholders' decision
making, this option is expected to provide guidance, and could be a first step
part of a broader package, already signalling the importance of cuts in CO2
emissions to the HDV industry. 
104.   Economic[67], and social impacts of this option
are negligible.
105.   Only negligible environmental impacts (related to
other exhaust gases and particulate matters regulated under Euro VI) can be
expected as fuel consumption would not be materially affected. Even assuming
slightly lower fuel consumption (and CO2 emissions), HDV
manufacturers may optimize engines in such a way that lower fuel consumption
and CO2 emissions may not lead to significant overachievements to
existing thresholds in air pollutants (as set under Euro VI), as there is no
linear relationship between engine fuel consumption and air pollutant emissions.

106.   Provided the necessary methodology is established beforehand, there
have been no identified risks associated to the implementation of
this option.
Option 1(ii) Determination of HDV
whole vehicle fuel consumption and CO2 emissions
107.   Contrary to experience in the case of cars and vans, there is no
agreed method of recording HDV CO2 emissions: each country having
considered an HDV rule thus needs to base itself either on dynamometer
measures, simulation tools, real driving condition tests, manufacturers' declarations
or default values. Given that real driving condition tests are not an option
for all registered vehicles –this would be too cumbersome and costly- methods
pursued so far are a combination of the other means. 
108.   While simulation appears the most promising avenue, there is
currently no open public simulation tool able to reliably measure whole vehicle
HDV CO2 emissions. OEMs have a number of such tools, that are
however calibrated and designed according to their specific needs, and provide
non comparable results. The EU VECTO simulation tool under development aims at
addressing this gap and providing a reliable measurement of HDV CO2
emissions, that could be made available not only within the EU, but in other
countries as well. This would open the possibility of international cooperation
and even possibly facilitate regulatory convergence. In order to enhance
consumer information and awareness the option considered may also entail a form
of labelling. 
109.   Effectiveness. Effectiveness of this
option in curbing HDV fuel consumption and CO2
emissions is expected to be real even though limited: this action would
establish a reliable track record of whole HDV emissions, independent from each
manufacturer's measurement, providing reliability and transparency to the
market as to real vehicle performances. This would be expected to increase
awareness among fleet operators on the most cost effective vehicles to operate,
and influence decision making in purchasing new HDVs. While a precise
quantification of this action's effect over time (this would apply only to new
vehicles and only progressively affect the whole HDV fleet) on HDV fuel
consumption and emissions in the EU is not possible (there is no reliable
methodology for such an assessment), its impact is however not expected to be
considerable in curbing HDV CO2 emissions in view of the Transport
White Paper's objectives. Emissions may only be reduced by a maximum of a few
percentage points. 
110.   Efficiency. The costs involved would
be:  administrative costs incurred in preparing and adopting the legislation;
VECTO development and operation (costs supported by the Commission);
registration and reporting costs for national authorities, as well as
monitoring cost of the Commission; and for HDV OEM manufacturers, preparing and
submitting HDV technical data for the assessment and registration of HDV CO2 performance. An indicative assessment was carried out
(see annex 12), except for the last category (costs for the OEM manufacturers).
This assessment suggests that administrative costs :     
- for Member States' type approval authorities would be limited and possibly
comprised between €130.000 and €650.000, under the assumption that OEMs would
register vehicles by series with homogeneous characteristics (and not
individually); part or the totality of these costs would be charged to OEMs by
type approval authorities;                       
- for the Commission, costs are related to preparing the legislation,
monitoring[68]
developments, and the development and operation of the VECTO tool, and would
possibly be comprised between around € 0.7 million annually.        
A more complete assessment of costs –including for OEMs- will only be carried
out at a later stage. Such an assessment would also need to take into
consideration the cost of proofs and checks of the certification procedure to
be carried out. Overall in view of its expected limited costs this option would
meet the efficiency objective.
111.   Predictability. While this option would
be insufficient to provide strong guidance to stakeholders in decision making
and investment decisions, it is a preliminary step to option 3. As such it
would contribute establishing a predictable regulatory environment.
112.   Economic and social impacts.       This
option is not expected to trigger material economic impacts, beyond
those already listed above. A more transparent HDV market would contribute to
an improved level playing field among HDV manufacturers and transport
operators. While this option would create a few jobs linked to the preparation
/ submission of data by manufacturers, and the implementation of the simulation
tool and reporting on HDV emissions at national and European levels, no further
material social impacts of this option have been identified. 
113.   Only negligible environmental[69]
impacts (related to other exhaust gases and PMs already regulated under Euro
VI) can be expected. While the relationship between total non-CO2 pollutant
emissions and energy consumption may not be linear since pollutant emissions
per kwh may vary, it seems reasonable to assume that pollutant emissions will
slightly decrease. Quantitative estimates cannot be provided at this stage.
114.   Risks to this option are related to
the setting up of the VECTO simulation tool. While the current development of
this tool is progressing satisfactorily, success cannot yet be fully
guaranteed. A failure to finalise the simulation tool would jeopardize the
implementation of this option.
Stakeholders views on option 1
115.   The establishment of the VECTO simulation tool to measure HDV CO2 emissions is supported by ACEA, its members, and component
manufacturers. ACEA established a technical working group that provided input
in the development of the tool, e.g. on the definition of vehicle categories
and driving cycles that need to be agreed to measure emissions. In the two
stakeholder consultation meetings that took place in February and July 2012,
stakeholders generally supported sub-option 1 (ii). One engine manufacturer was
however also in favour of sub-option (i) on the measurement of engine-only
emissions. 
5.2.        Option
2 assessment: Include Road Transport CO2 emissions in the EU Emissions
Trading Scheme 
116.   As indicated above (section 4.2), the assumption in the present
Impact Assessment is that HDV transport would be integrated into the EU ETS
with road transport as a whole. This would take place upstream, with fuel
suppliers defined as participating entities within the ETS. Fuel suppliers'
related costs –i.e. purchasing emission allowances on the ETS carbon market
that are required to meet the ETS policy cap- would be contingent upon the
level of the policy cap and the carbon price, and expected to be passed through
to HDV operators (and in the same way, to light-duty vehicles' users) in the
fuel price. 
Effectiveness
117.   While an option based on mandatory limits aims to improve the
technical CO2 efficiency of new HDV vehicles, this measure takes a
broader perspective. It also incentivises operational CO2 improvements
in the HDV sector, as well as potential shifts towards low carbon fuels and
modes. This measure would therefore be consistent with potential energy system
changes such as the move towards alternative fuels (whether it is electricity,
gas, second generation biofuels or hydrogen), and could therefore support the
Clean Power for Transport Initiative (as described under the baseline). The
reason is that a switch to such fuels would require incentives for the use of
these fuels consistent with their carbon content. It is to be noted that an
electrification of road transport leads to the inclusion of electric vehicles
in EU ETS by default. 
118.   As inclusion in the EU-ETS is a cross-sectoral measure, affecting
the distribution of effort between sectors, as well as modal and fuel shift, a
full assessment would need to consider this broader perspective. Given the
long-term nature of these processes, and the link with other parameters such as
fuel prices, overall climate ambition, technological developments and
infrastructure requirements, long term scenarios would be required to analyse
in detail the expected effects. These issues are beyond the scope of the
present analysis. 
119.   The EU-ETS extension to road transport would be effective in
reducing economy-wide CO2 emissions. As the regulator has control over the
total number of allowances and as compliance is enforced through Monitoring,
Reporting and Verification (MRV) and strict penalties, the effectiveness of
meeting the cap on emissions for all sectors covered by the system over a
prescribed period of time is largely guaranteed under a cap-and-trade scheme
such as the EU ETS, taking into account flexibilities allowed under the system
(e.g. banking). This reduction is highly certain and immune to rebound effects.
Would a rebound effect occur within one sector, the sector in question would
have to buy allowances on the market, thus contributing to reductions
elsewhere. 
120.   The effectiveness of the ETS would be more limited in terms of
incentivising the CO2 efficiency of new HDV vehicles, as foreseen
under option 3. The reason for this is two-fold:
- first as the system allows more flexibility as to in which sectors and by
which means emission reductions are to be achieved, other and cheaper options
may be available;
- secondly, a market based instrument such as the ETS is less well suited to
address specific market barriers, such as those described in the problem
definition : market barriers may prevent the price signal to have a material
effect on technological or operational improvements.
121.   Additional non-market instruments, from improving the quality and
dissemination of data and knowledge, to standard setting, could therefore still
be needed.  
122.   For the HDV sector, cost abatement curves for technical measures
calculated with fuel savings alone (see Annex 10) and fuel savings topped up
with a carbon price virtually coincide as long as carbon prices are low. Under
such circumstances, including road transport in the ETS (indirectly via fuel
suppliers) would provide a limited incentive to invest in technical measures to
improve vehicle technologies and would most likely not trigger any sizeable
reduced HDV fuel consumption in view of low fuel use price elasticities[70]. Such a development
would prevent the HDV sector from fully contributing to the Transport White
Paper's objectives, although a shift to lower carbon fuels (such as gas) might
still occur. 
Efficiency
123.   The technical feasibility of the inclusion of road
transport in the EU ETS was already considered in the 2008 Impact Assessment
accompanying the proposed revision of the ETS Directive 2003/87/EC, which
concluded that this would potentially be technically feasible. In the case of
upstream integration through participation of fuel suppliers, administrative
burdens would probably be limited, as monitoring could be based on the already
mandatory monitoring of fuel trades for energy taxation[71]. A full assessment of
the modalities under which transport could be included in EU ETS is however
beyond the scope of this impact assessment. 
124.   A market instrument will in principle incentivise all possible
abatement options, including yet unknown technical measures, behavioural and
operational changes. The wide range of abatement options considered across
sectors covered by the ETS should lead to a more efficient outcome. The
allocation within ETS sectors of emission abatement efforts along the most
efficient cost structure, with costs minimised and investments realised in
those sectors with the most favourable marginal abatement costs ensures a high
level cost effectiveness and efficiency of this instrument.
125.   Furthermore, a level playing field is established among participants
to ETS: all emitters of CO2 face the same market carbon price,
irrespective of sector or fuel used. There would in this respect be no
difference in the carbon price faced by (electric) freight rail, aviation and
HDV road transport. 
126.   In so far as revenues from the ETS are used to support climate
policy goals, within or outside the HDV sector, further abatement, or a
lowering of abatement costs, are both possible. To give a single example,
recent research using endogenous technology models has shown[72] that combining support
for research and development with a market incentive will improve dynamic
efficiency compared to the market incentive alone, by lowering the long term
costs of abatement. In addition, previous impact assessments have shown
positive macro-economic effects in terms of jobs and growth of revenue
recycling, for instance by lowering labour costs. 
127.   The above does neither prejudge, nor prevent, a possible unilateral
inclusion of a number of transport operators in the ETS pursuant to Article 24
of the ETS Directive (2003/87/EC) which is possible any time, e.g. the
inclusion of some of the largest transport operators in Member States applying
pursuant to Article 24 provisions.
Predictability
128.   One the recognised advantages of a cap-and-trade scheme consists in
ensuring some predictability as to the quantity of emissions that will be
allowed overall. The (indirect) inclusion of HDV transport in the EU ETS would,
for those liable, contribute to a high degree of predictability on the
quantitative effort that needs to be made in contributing to curbing EU CO2 emissions. In this sense, predictability provided by this option is
very high and the emissions reduction (or the "cap") set by
legislation will be reached, with no chance of overshooting, for instance due
to rebound effects. In addition, the definition of the cap on a long term basis
and the carbon price creates the necessary transparency for market operators to
make informed decisions. Nevertheless, fuel suppliers made accountable, and
indirectly HDV operators, will be faced with uncertainties in the price
inherent to markets that may make it more difficult for them to respond to
potential price signals. In this sense this option includes a degree of
uncertainty. 
Economic, social, and
environmental impacts
129.   Economic impacts of this option are
to a large extent contingent upon the evolution of the carbon price. A full
analysis of the economic impacts of ETS expansion to the transport sector is
beyond the scope of this impact assessment. Depending on the modalities by
which it is implemented, it would generate costs to sectors where the abatement
potential is low, benefits to other economic actors within the carbon market
–unless market barriers prevent such benefits to be grasped-, and a decline in
fuel imports. Effects on modal shift and fuel switch are likely. 
130.   The manner in which the revenues of ETS are generated and used has a
large influence on the economic impacts. Using the revenues to
lower tax rates on labour could have large social benefits for employment. This
has been most recently analysed in the accompanying Member state results
(SWD(2012) 5 final) of the Analysis of options to move beyond 20% greenhouse
gas emission reductions and assessing the risk of carbon leakage
COM(2010)265 final.
131.   Implementing this option would likely generate opportunity costs for
HDV fleet operators, if market barriers to the uptake of less carbon intensive
technologies within the sector are not removed. 
132.   Inclusion of the transport sector in the EU ETS will have an effect
on carbon prices, though the size and direction of this effect depends on the
modalities of its inclusion. Some researchers have argued that too stringent
caps on transport would risk raising carbon prices by a large amount, due to
low elasticities in the sector. Others dispute this conclusion[73] and argue carbon
prices could even drop under certain circumstances. 
133.   Any future analysis of the distribution of economic
effects due to the inclusion of transport in the ETS shall require assumptions
about the generation and use of revenues from ETS. It is clear however, that
those revenues could be used to reach distributional goals or mitigate some of
the effects of ETS inclusion.
134.   Given assumptions on the use of revenues, further analysis would at
the very least need to take into account: a) effects linked to actual
investments possibly taking place to improve performance (also see assessment
of option 3 below); b) effects linked to the cross sectoral trade of emission
allowances within the ETS; and c) effects linked to reduced fuel consumption,
for the state, the transport sector, oil companies and balance of payments d)
effects linked to modal shift.
135.   Overall potential social
impacts of the inclusion of transport CO2 emissions in the
EU ETS are expected to be minimal. The ETS would replace the carbon taxation in
the proposed Energy Taxation Directive (the revised draft directive would only
apply to non-ETS sectors) which is included in the baseline. The effects on the
price of transport, which generate the above social impacts, are therefore
muted by the fact that a different source of carbon pricing would be removed.
Some job creations would be related to the use of revenues, and others attached
cross-sectoral reallocations of value with sectors from which ETS allowances
would be purchased by fuel suppliers. 
136.   Environmental (other than CO2
emissions) impacts, beyond the achievement of overall CO2
objectives, would be related to the sectors where abatement takes place, modal
shifts and fuel switches. 
Risks to this
option
137.   Further analysis and research is needed to investigate the
feasibility of this option, related risks, and modalities under which a scope
expansion of the ETS to the whole road transport sector could be carried out. 
Stakeholders
views on option 2
138.   In the 3 July 2012 stakeholder meeting, HDV industry and transport
services stakeholders generally argued that it was important to widen the
analysis and conduct further studies into the possible benefits of joining the
ETS scheme. One NGO suggested rejecting this option, noting that a previous
consultation that took place in a Member State reached such a conclusion. 
5.3.        Option
3 assessment: Introduce legislation setting mandatory HDV CO2
emission ceilings
139.   While the EU has only regulated HDV exhaust pollutant emissions so
far, Japan (2007), the US (2011) and more recently Canada (2012) have
introduced rules to curb HDV fuel consumption or CO2 emissions in
various ways. Setting such rules for HDVs may facilitate regulatory convergence
over the long term. 
Option 3(i): set
performance ceilings on engine-only CO2 emissions of new registered
vehicles
140.   This option should be seen as the continuation of option 1(i) which
considers the certification and reporting of engine-only emissions that, as of
1.1.2014, will start being measured as foreseen in the Euro VI Regulation. Once
a baseline is established with reference values over a significant period,
limits on engine CO2 emissions could be established with appropriate
metrics (as a function of the engine power). This would require the adoption of
a new Regulation through the ordinary legislative procedure. Altogether this
process will require several years before standards can actually be
established.
Effectiveness
141.   The effectiveness of this option in curbing fuel consumption and CO2
emissions is proportionate to the potential of economically achievable CO2
emission cuts in HDV (mostly diesel) engines. The latter potential is related
to this option's rather limited scope, since HDV CO2 emissions are
not only a function of engine, but also transmission, auxiliaries, rolling
resistance, and aerodynamics. One risk associated with this option is linked to
its focus on conventional fuel engines only that may become increasingly
irrelevant and limited in scope with the progressive penetration of hybrid
technologies.
142.   The CE Delft study on abatement cost curves estimated the potential
for reduced engine emissions. This suggests that on average about a third of
the technical savings feasible to reduce whole vehicle emissions would be
achievable at the level of the engine (see table 1, Annex 8). These estimates
may however not fully materialise:                        
- while the reported negative marginal cost estimates are averages on
technology packages, some single independent components within these packages
may have positive marginal abatement costs, which would imply that they would
not be included, and hence that the level of economically sustainable increased
engine performance and reduced CO2 emissions would be lower than
assumed;            
- the combination of several technologies may not allow for a strict addition
(through incremental multiplication of percentages gained) of individual
abatement rates: interactions in a system such as a full vehicle or an engine
may not allow for this.       
OEMs further argued in bilateral contacts with the Commission that thermal
efficiency limits (of a rate of some 52% thermal efficiency vs. some 43-45%
currently) make every percentage point gained on engine efficiency extremely
challenging. 
143.   Furthermore, the scope of engine CO2 emission measurement
under Euro VI is ring-fenced and appears narrower than the above estimate on
engine-related abatements. For instance, while waste heat recovery on exhaust
engine gases allowing for some of the estimated emission abatements is included
in the above estimate, the measurement of CO2 emissions foreseen
under Euro VI would not cover those, and thus any limit on engine-only
emissions would need to disregard waste heat recovery technical upgrades (which
according to one OEM estimate allow for a reduction in fuel consumption and CO2
emissions of some 3% on a Euro VI engine).
144.   CO2 emissions benefits of improved engine technologies
for new vehicles could possibly comprised be between 10% and 12% of the whole
vehicle emissions (table 1, annex 8), i.e. some 28% to 34% of the total savings
that are achievable through HDV technical upgrades. Assuming regulatory
objectives with such abatement rates set for the year 2030, this would allow
for HDV CO2 emission abatements of some 5% to 7% by 2030 (whole
fleet efficiency improvements are always delayed versus new vehicles'). By
2030, this would represent EU-wide annual savings in HDV CO2
tailpipe emissions - versus the baseline scenario - comprised between 16.3 and
19.6 Mt CO2. 
Efficiency
145.   This option would be implemented through legislation. Beyond the
preparatory work and administrative costs that this involves, it would not
trigger any additional administrative costs (for the Commission and Member States) other than those already necessary for the implementation of option 1(i) on
the certification and reporting of engine emissions. OEMs would recover extra
costs in the price of HDVs sold and, assuming limits are set at breakeven level
of marginal abatement cost curves, HDV operators would recover additional
purchase prices with fuel savings made (see table 3 below). In proportion of
its possible benefits it can thus be considered as efficient. 
Predictability

146.   Establishing engine-only limits for HDV CO2 emissions would
contribute to establishing a more predictable regulatory environment in the
same way as the one that has been established for cars and vans, and provide
some guidance to HDV engine manufacturers –mainly the OEMs- in their decision
making and investment, including for the purpose of their R&D programmes.
In view of the Transport White Paper objectives this cannot be the unique
policy response to the identified problem: other complementary actions would be
needed to curb CO2 emissions. In this respect, it will not alone
provide the comprehensive degree of predictability that stakeholders,
particularly OEMs, are expecting.
Economic impacts
147.   Economic effects of this option mainly relate to (i) technical
upgrade investments in more fuel and CO2 efficient engines to comply
with regulatory limits and the distribution of the eventual burden for these
efforts; (ii) the fuel saving effects distribution among the various
stakeholders, and their effects for the EU as a whole:     
- i/. Technical upgrades of engines needed to comply with a regulation on
engine-only CO2 emissions would be contingent upon the regulatory
limit level chosen. Assuming a regulatory limit set at breakeven level of
technology upgrades, and further assuming that by 2030 all new registrations
would comply with the regulatory limit, the annual additional cost of HDV
upgrades would amount to around €6,300 for each vehicle (see table 1, Annex 8)
and €5.1 b for the whole EU[74].
This cost would be passed on to HDV fleet operators in the vehicle price.
One should take into consideration as noted above that by the time costs to
achieve such engine improvements may most likely have fallen sharply; 
- ii/. This should be compared with the benefits and possible distribution of
economic impacts related to HDV fuel consumption savings. Even with
conservative assumptions on fuel savings benefits -lower than the ones reported
by TIAX and CE Delft- an engine-only CO2 emissions rule would
possibly result in fuel benefits for HDV fleet operators at least outweighing
additional investment costs in upgraded HDVs, with Member States losing excise
tax revenue (they would conversely benefit from VAT collected on higher value
HDVs), and oil companies losing significant turnover and gross margins. The EU
as a whole could see its oil imports reduced by some €5.8 to 6.9 b annually
(indicative values, see table 2 in Annex 8).
Table 3           Summary
of option, indicative distribution of annual economic impacts by 2030 vs. the
baseline
148.   Annex 9 further assesses competitiveness aspects of the setting of
possible regulatory limits on HDV emissions. The EU HDV industry would be
expected to benefit as a whole from improved fuel and CO2 efficiency
of its production and remain competitive vis-à-vis other regions of the world
that are also expected to progressively require increased HDV fuel performance
and reduced CO2 emissions. 
149.   Overall, the HDV manufacturing industry (mainly OEMs that produce
the engines, and component manufacturers) would gain additional production
value, and fleet operators would significantly reduce their operating costs:
both would benefit from the introduction of emission limits on HDV engines. The
EU as a whole would benefit from reduced fuel consumption. Under the assumption
of a competitive environment reduced HDV fleet operators' operating costs would
be passed on downstream to their clients in their prices and onwards to the
whole economy, making it more competitive as a whole.
 Social impacts
150.   Assuming a competitive environment –and thereby a pass-through of
economic benefits to their clients- HDV fleet operators would not directly see
any employment impacts (unless second round effects trigger higher transport
volumes; such possible effects have not been assessed, see methodology in annex
13). 
151.   With reduced fuel imports and added value in the HDV industry which
has a positive trade balance, the social impacts of a regulatory requirement
would normally be expected to be positive. Employment losses would be expected
in the oil refinery and distribution industry, with conversely job creation in
the HDV industry, mainly within OEMs and possibly some component manufacturers.
The balance between positive and negative employment effects can be
approximated in view of the respective labour intensity of oil companies and
automotive manufacturers. Given the high labour intensity in the automotive
industry compared to the oil industry (achieving a turnover of €1 billion
requires on average 3,600 employees in the HDV industry and 380 employees in
the oil companies), oil companies would be expected[75] to lose a small amount
of jobs (potentially 1,500 to 2,000) compared with the potential amount of job
creation in the automotive industry (potentially some 18,000 job creations).
These indicative values suggest an overall favourable employment impact of the
option. While the oil refinery and distribution industry is fairly evenly
distributed among Member States[76],
close to consumption markets, this is not the case for HDV manufacturing, with
5 countries (Germany, the Netherlands, France, Sweden and Spain)[77] accounting for 75% of
the EU production: this implies an uneven geographical distribution of
employment benefits.
Environmental impacts
152.   Favourable environmental impacts (related to other exhaust gases and
particulate matters already regulated the Euro VI) are not to be excluded, if significantly
lower engine fuel consumption allows for reduced pollutant emissions. This can
however not be taken for granted, since HDV manufacturers may optimise engines
in such way that significant overachievements to existing thresholds in air
pollutants (as set under Euro VI, with pollutant limits expressed as a ratio
per kWh) would not necessarily derive from reduced engine fuel consumption and CO2
emissions. Hence, while the environmental impact of this option can only be
positive due to lower engine fuel consumption, it may not be sizeable: there is
no linear relationship between fuel consumption and air pollutant emissions. Quantitative
estimates of environmental benefits of this option cannot be provided at this
stage.
Risks 
153.   Risks to this option are minimal, its main pre-requisite is the prior
implementation of option 1(i). One important risk however that is associated
with this option is that its emphasis on conventional fuel engines may become
partly irrelevant with the evolution of technology, notably hybridisation that
it will not capture.
Stakeholder
views
154.   In the stakeholder consultation on 22 February 2012, one engine
manufacturer supported this option. In the stakeholder consultation meeting of
3 July 2012, two participants provided comments. ACEA considered that engine
only limits would not provide consistent incentives and may not be the most
cost effective option. Transport & Environment, while concurring with ACEA,
nevertheless suggested to pursue mandatory recording and reporting of engine CO2
emissions in parallel with that of full vehicle emissions.
Option 3(ii): set performance ceilings
on whole HDV CO2 emissions of new registered vehicles
155.   This option considers the setting of emission limits for new EU
registered HDVs in the same way as followed for cars and vans to act upstream
on vehicle performance and the renewal of the fleet with more energy efficient
vehicles. Vehicle manufacturers would be made accountable for compliance with
the regulated limits on new vehicles' emissions. This option requires the preliminary
completion of the VECTO emissions simulation tool and prior implementation of a
reporting regulation (see section 5.1 on option 1.ii). As long as a precise
record of these emissions is not available, setting limits for new registered
vehicles cannot take place in a reliable way. This implies that this option is
a medium- to long-term one.
Effectiveness
156.   Curbing vehicle emissions cannot take place overnight: rolling-out
technical upgrades is a process that needs to be managed over time, taking into
consideration the rhythm of fleet renewal: the lifetime of HDVs is on average
around 11 years, with important variations among vehicle categories (buses and
coaches appear to have a longer lifetime than trucks). Assuming for instance
(see below) CO2 emission limits set for 2030, their fully-fledged
roll-out for the whole EU HDV fleet would not materialise before 2040.
Estimates on progress that can be achieved are an approximation of information
available ex-ante, that may turn out to be under- or over-optimistic. The same
applies to costing estimates of such technical upgrades. Benchmarks need to be
established with a long term view and regular updates and corrections to
integrate latest developments.
157.   The absence of a clear baseline on HDV emissions –as long as they
are not recorded in a reliable way- further implies caution as to estimates on
the potential for fuel savings and CO2 emission abatement. The TIAX
study, which reviewed the findings of AEA-Ricardo (see section 2.4), estimated
the potential for abatements on a generation of Euro VI 2014 vehicles with
technologies widely available over the period 2015-2020 that could be rolled out
to the EU HDV fleet by 2030. Both the abatement potential and the costing
estimates only give a photograph at the time of the study (December 2011) and
will have to be reviewed. 
158.   Notwithstanding these limitations, available estimates (from
AEA-Ricardo and TIAX on emissions abatement potential and related costs, and CE
Delft cost curves) provide an indication on the direction and magnitude of the
medium- and long-term potential for HDV CO2 emission reductions.
These are used on an indicative basis in the present Impact Assessment, taking
note of some reservations expressed by a few OEMs, and without at this stage
deciding on any limit values. They would be reviewed in due course in case this
option is implemented.
159.   Reported marginal abatement rates of breakeven levels for technical
upgrades that could improve suggest two main categories of vehicles: (i) those
for which hybridisation is already expected to be a beneficial upgrade, i.e.
vehicles with a frequent "stop and start" drive cycle –municipal
utility vehicles, urban delivery, construction, and buses- that could achieve
on average a 43% cut in their fuel consumption and emission levels (with
technologies expected to be available over the 2015-2020 period); and others –
service, regional delivery, long haul, and coaches- for which hybridisation is
not yet beneficial, which lowers the potential for emission abatements, on average
31% : costs may however go down with mass production and technical
improvements, which would significantly influence estimates made by CE Delft on
breakeven levels (see cost curves study) and possibly allow for some of these
vehicle categories to breakeven for hybrid. Even for the latter category there
appears to be a considerable potential. Setting limits would imply a close
assessment of the potential improvement that can reasonably be expected for
each category, with important variations across vehicle categories. As noted
for option 5.i, overestimates of the emissions abatement potential may take
place.   
160.   Notwithstanding upside and downside risks on estimates – which may
to some extent neutralise each other - the AEA-Ricardo, TIAX and CE Delft analysis
provide a useful indicative assessment of the abatement potential, that will be
re-assessed in due course.
161.   Using this weighed potential of some 35% (see table 3 in Annex 8) of
emission abatement as an indicative 2030 reference target (for a regulation applying
to 2014 Euro VI reference HDVs) would imply that new HDV emissions could be
reduced in 2030 by some additional 20% vs. the baseline scenario that assumes a
+/- 1% annual improvement in fuel efficiency of new registered HDVs over the
period 2015-2030. Setting such limits would normally take place with
intermediate steps and several reviews to adjust market uptake objectives with
actual ones and technical and economic possibilities.
162.   Assuming on an indicative basis-regulatory requirements setting such
limits for 2030 –i.e. a reduction of 35% of CO2 emissions vs. 2015
levels - are introduced no later than in 2020, and a progressive adjustment of
new vehicle registrations with this objective, this fuel efficiency and CO2
emissions reduction objective would translate into fleet efficiency
improvements of a lower level by 2030 (possibly around 12.4% below the baseline
scenario estimates for 2030[78])
with subsequent HDV fleet emission savings of 36.7 MTCO2. The full
impact would further materialise beyond 2030 with the rolling out of the
emissions limit for the whole EU HDV fleet (the full effect on fleet emissions
would materialise only by 2040). As moving targets would most likely be
introduced, beyond 2030 further CO2 emission reductions would be
achieved with more ambitious reduction levels.
163.   The current impact assessment does not assess potential
"rebound" or "second round" effects (see methodology in
annex 13): if fuel consumption can be effectively curtailed by double digit
percentage values as expected with this option, operational costs of HDV
transport may decrease – subject to the evolution of fuel prices – and demand
could increase for this mode of transport in spite of other transport modes –
particularly rail – being less carbon intensive. Some of the CO2
emission benefits of this option would thereby be lost due to higher HDV
transport activity. This risk should not be underestimated: such rebound
effects would have to be monitored closely and addressed. At this stage, as the
extent to which such rebound effects may occur is also very much contingent
upon the evolution of the market price of fuel (expected to increase), no other
operational conclusion on this issue can be reached than the need for close
monitoring.
Efficiency
164.   Industrial costs and benefits are assessed below under the section
on economic impacts. Given that this option already assumes the implementation
of a certification and of a reporting regulation on HDV CO2 emissions
(see above indicative assessment of administrative costs under option 1.ii),
the only additional administrative costs involved are (i) administrative costs
related the adoption of the new regulation itself,  (ii) administrative costs
on the side of national authorities and vehicle manufacturers related to
compliance with this regulation and its implementation and monitoring, and
(iii) monitoring costs. Assuming OEMs which produce the engine-chassis-cabin of
vehicles would be accountable for CO2 emissions, their limited
number (eight) would facilitate implementation. In view of the likely benefits
of curbing CO2 emissions (as reported in table 4), and provided
economic benefits at least outweigh costs (which would be guaranteed by
recourse to regulatory objectives based on marginal emission abatement costs'
breakeven levels) it can be concluded that this option complies with the
efficiency objective.
Contribution
to the predictability objective
165.   Setting medium- and long-term CO2 emission objectives for
new registered vehicles would enable HDV manufacturers - in particular OEMs
that at least produce the cabin, chassis and motor, - to plan ahead the
development of their new models in liaison with component manufacturers that
provide a number of technical upgrades. This process is already taking place
with cars and vans with favourable results, allowing car manufacturers to plan
investments and upgrades required for their new models. This will also
facilitate renewal choices of HDV fleet operators, mainly transporters, and
give them an indication of fuel savings that may be achievable with upcoming
models. It can thus be expected that this option will contribute to improve
predictability on the regulatory environment and thereby facilitate investment
and decision making for the main stakeholders.
Economic
impacts
166.   As in the previous option on engine-only limits, the main economic
impacts of this option relate to: (i) technical upgrade investments in more
fuel and CO2 efficient vehicles to comply with regulatory limits and
the distribution of the eventual burden for these efforts, as well as the chain
of consequences that this may imply in particular for the HDV industry and also
HDV fleet operators; and (ii) the fuel saving effects distribution among the
various stakeholders, and their effects for the EU as a whole.
167.   Investments in necessary technical upgrades can be approximated on
the basis of marginal abatement curves produced by CE Delft and breakeven
levels. The first low cost upgrades are expected to take place in any event
under the baseline scenario. They would under a regulation setting limits be
topped up by additional upgrades to reach the regulated level by 2030. On an
annual basis, the cost of fleet renewal (new HDVs registered) would accordingly
be increased by some €11,300 per vehicle, i.e. €9.2b with the baseline
Primes-Tremove estimate of annual vehicle registrations in 2030 (see table 4 in
annex 8)
168.   This cost would represent a corresponding annual turnover increase
(€ 9.2b) for the HDV automotive industry, with the related added value shared
among OEMs, body/trailer builders and component manufacturers. It represents a
sizeable commercial opportunity for the industry.
169.   Against this investment needed to upgrade HDV performance, the cost
of which would be passed on to HDV fleet operators, the latter would be
expected to make significant savings in fuel consumption more than compensating
for the increased HDV price: having determined the regulatory limit with the
breakeven point of marginal abatement costs would ensure that savings will be
more important than costs. Annual savings for the HDV fleet would amount to
some 12.4% of fuel consumption by 2030. 
Table 4: Summary indicative[79]
distribution of annual economic impacts 
by 2030 vs. the baseline
170.   The analysis of distribution effects shows, as in previous options,
that HDV fleet operators would be the first beneficiaries of improved vehicle
performance with fuel savings of about €32 billion annually by 2030 vs. the
baseline assumed level. Under the assumption of a competitive environment, this
benefit is expected to be passed on downstream to their clients, and would
benefit the whole EU economy, making it more competitive by reducing the cost
of transport. Moreover, reduced fuel consumption would trigger a favourable
balance-of-payments benefit through a reduction in oil imports of some €13billion
by 2030 (annex 8, table 5). As a consequence Member States would lose fuel
excises revenue and oil companies fuel sales and related margins. 
171.   Overall, the indicative distribution of potential effects of this
option among the main EU stakeholders is the following (table 4 above),
compared with the baseline scenario. Introducing CO2 emission limits
set at marginal breakeven abatement cost levels would hence be beneficial for
the EU economy, reduce its energy dependency, and create new growth
opportunities for the HDV industry. While HDV fleet operators are expected to
be the primary beneficiaries of this policy measure, its benefits would under
the assumption of a competitive economic environment be passed on to end-users
of transport and eventually consumers through reduced transport prices.
172.   Competitiveness. As already
mentioned in the case of option 3.i, Annex 10 further assesses competitiveness
aspects of the setting of possible regulatory limits on HDV emissions. The EU
HDV industry is highly competitive, has a positive trade surplus and
specialisation index in HDV production and trade. It would further be expected
to benefit as a whole –both OEMs and component manufacturers- of improved fuel
and CO2 performance of its production –by adding value to its
products- and improve its competitiveness vis-à-vis other regions of the world
that also already require (Japan, US, Canada, China) or are expected to require
increased HDV fuel performance and reduced CO2 emissions. 
173.   It can be concluded that the economic impacts of this option are
favourable for the EU, prone to support innovation improving HDV performance,
employment, competitiveness and growth, and to reduce energy dependency.
Social impacts
174.   One of the important potential economic effects of this option (see
table 4) is a shift of added value:   
- from the oil refinery and distribution sector that would lose some
significant amounts of fuel demand and hence need to curb its production;           
- to HDV manufacturing that would have to increase the value of its production
by incorporating on new vehicles technical upgrades needed to reduce fuel consumption
and CO2 emissions in line with the regulatory limits objectives.      
175.   This implies potential employment losses in the first one, and job
creations in the second. The net balance has to be examined in light of both
sectors' respective labour intensity: generating €1 b turnover requires on
average 380 employees in the oil industry, vs. 3 600 in the automotive
industry, i.e. a labour intensity 9.5 fold more important in the automotive
sector[80].
As estimated in table 4, the potential turnover impact of this option (vs.
baseline scenario) may in 2030 amount to:  
- € 9.2b additional turnover for the automotive industry; 
- reduced turnover of some € 15.2b in the oil industry (indicative values).          
Given the above compared labour intensities, this shift could potentially translate
into 5.800 job losses in the oil industry –under constant labour productivity
assumptions-, compared with job creations of some 33.000 in the automotive
industry[81]
(indicative values). This assessment does not include potential job creations
through spill-over effects in component and auxiliary manufacturers' companies,
which would be sizeable as well. 
176.   The conclusion of such estimates, while not a forecast, confirms a
very favourable impact of this option on employment. The expected geographical
distribution of such employment benefits is :   
- on one side expected to be rather evenly distributed among Member States as
regards job losses in the oil industry, except for a few countries such as the
Netherlands that have an over-representation of refinery production, or
conversely very small countries without refineries;            
- this is unlikely to be the case for jobs gained in HDV manufacturing, with
five countries[82]
accounting for about 75% of the total EU production (see annex 6, table 1),
which suggests an uneven distribution of job benefits. 
177.   As regards HDV operators of freight and passenger services, assuming
a continued competitive environment –and thereby a pass-through of this
option's economic benefits to their clients- there would not be direct employment
impacts of the present option (unless second round effects trigger higher
transport volumes which have not been assessed). Finally the economy would
benefit of a more competitive transport industry, with employment benefits
spread over the whole economy.
178.   This indicative assessment is consistent with the recent findings of
a recent literature review on employment impacts of GHG reduction policies
for transport that confirms positive effects in terms of jobs creation[83].
Environmental
impacts
179.   Under the Euro VI Regulation HDV non-CO2 pollutant emissions are regulated
on the basis of permitted mass of pollutant emissions per KWh. In view of this,
CO2 reducing measures which reduce total power use of the HDV would
lead to a corresponding reduction in aggregate pollutant emissions. Generally,
cost effective measures that will be deployed reduce energy use since they
reduce energy losses for example through improved aerodynamics or reduced
friction. While the relationship between total non-pollutant emissions and
energy consumption may not be linear since pollutant emissions per KWh may
vary, it nevertheless seems reasonable to assume that pollutant emissions will
decrease with fuel consumption savings made as a result of application of these
measures. Quantitative estimates cannot be provided at this stage.
Risks
180.   Risks to this option mainly relate to (i) a satisfactory completion
of the simulation tool development to measure HDV CO2 emissions; and
(ii) to a subsequent satisfactory implementation of option 1.ii. As long as
these preliminary steps have not been fulfilled a regulation setting limits
based on a reliable record of emissions cannot be introduced. Finally, while
the risk of rebound effects of fuel consumption has not been assessed
quantitatively, it should not be underestimated and would have to be both
monitored and to the extent needed addressed in due course.
Stakeholders
views on option 3.ii
181.   HDV industry and transport operators, as well as some logistics
companies were generally reluctant as regards the introduction of new binding
emission limits, and instead favoured industry initiatives to improve the
energy efficiency of HDV vehicles and the footprint of operating HDV fleets. One
  Member State supported this view, others considered that the introduction of
emission limits would need to be envisaged. OEM and transport operators'
representatives considered that end-users, i.e. transport operators, should
reap clear economic benefits of such mandatory limits in case they are
introduced. Some stakeholders suggested not to exclude alternative fuels from
the solution eventually pursued, which would imply taking into consideration
well-to-wheel emissions. 
6.           Comparing
the options
6.1.        Comparing
the options in terms of effectiveness in reducing fuel consumption and CO2
emissions
182.   Improving transparency and knowledge of HDV emissions on whole
vehicle emissions (option 1.ii) may contribute to curbing emissions by raising
awareness, and facilitating benchmarking of vehicles and fleet performance. 
183.   Based on the above assessments, the option expected to trigger the
highest HDV fuel savings and CO2 emission reduction is the setting
of CO2 limits for whole vehicles (3.ii), followed by the option
setting limits for engine-only CO2 emissions (3.i). These options
would contribute to an accelerated uptake of technological improvements within
the sector. The inclusion of transport in EU-ETS (option 2) would be the most
effective in delivering overall GHG objectives, as the goals set by the cap
would be met without any risk of rebound effect. Options 2 and 3 are
furthermore not mutually exclusive.
6.2.        Comparing
the options in terms of efficiency 
184.   The setting of CO2 emission limits
for engine-only CO2 emissions (option 3.i seen in conjunction with
option 1.i), may have slightly lower costs compared to the setting of
whole-vehicle emission limits (option 3.ii seen in conjunction with option 1.ii
which has higher administrative costs), due to costs associated with the
development and operation of the VECTO simulation tool on HDV emissions
necessary under options 1.ii and 3.ii. Setting emissions limits for the whole
vehicle will however most effectively address the uptake of abatement
technology and overall achieve cost efficient emission reductions. If the
inclusion of road transport in the ETS is implemented by targeting fuel
suppliers, the administrative burden for this option will be limited, as the
existing infrastructure for fuel taxation could be used. ETS extension would
aim for maximum cost-effectiveness across all sectors covered, but would be
less appropriate to exploit the negative cost abatement potential that is
untapped because of market barriers. Finally option 1, even as an intermediate
step, would involve limited costs, while contributing
to curbing emissions, and thus comply with efficiency
requirements. 
6.3.        Summary
of intervention logic: policy mix. 
185.   The various options presented complement each other and potentially
constitute a consistent package addressing the main drivers of HDV CO2 emission
increases, and addressing problems that have been identified. Options can be implemented
simultaneously and/or independently, except option 3 that requires prior
implementation of option 1.
186.   Drivers of emission increases would be addressed
by various means:                  
- the carbon content of fuels : the inclusion of road transport
in the ETS (option 2) and the introduction of emission limits (option 3) would
further incentivise low carbon fuels;     
-  performance of new vehicles is expected to be fostered by
increased knowledge and transparency under option 1 and boosted by mandatory
limits on vehicles' emissions under option 3;          
- good practices in HDV fleet operation will benefit from option
1 that would increase awareness on fuel consumption and CO2 emissions 
and facilitate energy savings in HDV fleet operation.
Table 5       Policy mix: how do
options address emission drivers and identified barriers 
   || Option 1: Improve knowledge, comparability and accountability for HDV emissions || Option 2: Include road transport emissions in EU ETS || Option 3: Set mandatory CO2 emission limits for new registered vehicles 
 Main addressees of actions || HDV manufacturers || Primarily fuel suppliers, indirectly fleet operators || HDV manufacturers 
 Drivers of emissions directly addressed ||   ||   ||   
 c./carbon content of fuels || Increase awareness on emission performance of low carbon fuels || ETS inclusion due to foster use of low carbon fuels in road transport || Foster sale of vehicles with engines using low carbon fuels (including hybrids) and use of the low carbon fuels 
 d./ performance of new vehicles || Improve transparency +comparability among new vehicles and thereby foster fuel and CO2 performance based competition ||   || Emissions ceilings becoming industry performance targets fostering uptake of low carbon technologies 
 e./ modus operandi of HDV fleet || Increase awareness of fleet operators on fuel consumption and CO2 emissions || Pass-through carbon pricing in fuel price and thereby reduce fuel consumption (see assessment section 5.2) ||   
 Market barriers ||   ||   ||   
 - knowledge gap has a market barrier effect || - revised legislation to register emissions,  -new legislation to report emissions ||     || Further increase awareness by introducing  mandatory emission limits 
 - rigidities in uptake of cost effective technological change leading to energy savings ||   ||   || Emissions ceilings becoming industry performance targets that prevail on  resistances to uptake of low carbon technologies 
 Timeline || Short-term || Medium- to long-term || Medium- to long-term 
 Inter-dependence between options || Stand-alone || Stand-alone || Prior completion of option 1 required 
187.   Market barriers would also be addressed by complementary actions:       
- the knowledge gap would be addressed by option 1 which is meant
to focus on this issue;
- rigidities in the uptake of carbon saving cost effective innovation
would be phased out if emission ceilings are introduced (option 3) and become
industry targets internalised by vehicle manufacturers. 
188.   As regards the timeline, option 1 is a
short-term (completing simulation tool VECTO) and medium-term one (amending
exiting type-approval legislation, enacting new one). Including road transport
within the ETS (option 2) or introducing mandatory emission limits (option 3)
have a medium- to long-term horizon notably, in the case option 3, as it is
contingent upon prior implementation of option 1.
6.4.        Contribution
of the options to the objectives
189.   The ETS option (option 2), even though addressing fuel suppliers,
provides clarity on overall emission reduction objectives: by construction, the
ETS sets a cap that if needed will be complied with by trading carbon with
other enterprises/sectors. The two options suggesting limits on
engine-only (3.i) and whole vehicle emissions (3.ii), like the cars and vans
regulations, provide certainty as to the future standards and vehicle upgrades
that will be required. Compliance costs (abatement costs of each technology),
as shown in the AEA-Ricardo and TIAX studies, are broadly known in these two
options, even though as in the case of cars and vans may turn out ex-post
to have been over-estimated ex-ante. Option 1 on the adoption of
regulatory requirements establishing more knowledge and transparency on the
level of emissions would contribute to more market clarity. 
Table 6: Comparison
of Options in view of 3 main pursued objectives
              Options   Objectives ||   Baseline || Option 1: Improve knowledge, comparability and accountability for 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 : ++ 
6.5.        Impacts
for SMEs, including micro-enterprises
190.   Impacts for SMEs in the manufacturing industry. The design and production of complete trucks, tractors, or
motor-chassis-cabins is a highly concentrated industry dominated by OEMs.
However, SMEs play an important role within the industry of component
manufacturers and also that of trailers manufacturers and body builders. Option
1 would not be expected to have sizeable impacts for SMEs of the manufacturing
industry. Neither would option 2 on ETS inclusion that would apply to
operations of HDVs with effects on manufacturing, given that emission
abatements would be externalised to ETS participants in other sectors. Option 3
on the setting of limits would be expected to trigger a higher value for the EU
HDV manufacturing industry as a whole that would benefit both OEMs and SMEs
producing components, trailers or HDV bodies.
191.   Impacts for transport operators, most of which are micro-enterprises. As shown in Annex 6, table 10, haulage companies with more than 50
trucks represent less than 3% of the total EU truck fleet, while companies with
less than 10 trucks represent around 84% of the fleet: freight remains to a
large extent an activity of very small firms. Turnover data (Annex 6, table 6)
suggest that firms are even smaller for passenger transport, with an average
turnover per enterprise of only € 0.3 million, versus € 0.5 million for freight
enterprises. Option 1 on increased transparency will facilitate the choice of
energy efficient HDVs for transport SMEs and thereby contribute lowering their
operating costs. Option 2 on ETS inclusion of the transport sector would use
existing fuel taxation infrastructure. It could raise operating costs if SMEs
are not able to overcome market barriers to the uptake of abatement measures.
If these can be overcome, SMEs could profit from ETS inclusion, depending on
the way the scope expansion is designed. If used for this purpose, the use of
revenues from ETS could further help SMEs. Option 3 on setting HDV CO2
emission limits will affect SMEs in the same way as all transport operators
(see section 5.3) with additional costs to purchase increasingly efficient
HDVs, benefits due to fuel savings, and an overall net benefit provided
regulated emission ceilings are set close to the breakeven level of marginal
abatement cost curves.
192.   Overall, micro-enterprises would not
be directly subject to options 1 and 3 that are addressed to HDV manufacturers,
nor directly to option 2 which is addressed to fuel suppliers. Option 2 would
only potentially marginally affect the fuel purchase price that they have to
pay. They could potentially benefit from more transparency in the market
(option 1), and more efficient vehicles as a result of option 3. There does
hence not appear to be a real case, should a number of these options be
implemented, for sheltering micro-enterprises from EU actions and legislation
in this respect.
6.6.        Comparing
the options in terms of coherence with EU objectives
193.   Beyond the specific objectives considered in this Impact Assessment,
the broader EU objectives (see section 3.4) to which it relates are mainly:        
- sustainable growth;          
- the decarbonisation of the EU economy, with the overall policy objective of
GHG emissions reduced by some 80-95%% in 2050 vs. 1990;           
- sector specific objectives as defined in the Transport White Paper, with the
objective of reducing CO2 emissions in the transport sector by some
60% in 2050 vs. 1990 levels.        
194.   Option 1 on improving knowledge and transparency of HDV CO2
emissions and Option 3 on the introduction of mandatory CO2 emission
limits for new vehicles contribute to lowering the transport sector's CO2
emissions and hence overall EU CO2 emissions. Option 2 on the
inclusion of road transport CO2 emissions in the EU ETS would reduce
overall CO2 emissions with a high degree of certainty. It would be
consistent with potential energy system changes such as the move towards
electrification of road transport, and the use of gas and biomass in all energy
related sectors. A level playing field would be established for the
participants to ETS, irrespective of sector or fuel used. Revenues from the ETS
could be recycled into various goals. On its own, however, ETS extension would
not tackle market barriers to the uptake of more energy efficient technologies,
which leave economic benefits unrealised. Because of this, and at current market
prices, it would not materially lower emissions in the HDV sector, and
guarantee this sector's contribution to the objectives of the Transport White
Paper.
195.   Option 3.ii on the setting of limits for whole-vehicle emissions,
would, by overcoming market barriers to the adoption of negative
cost-technologies, significantly reduce the transport services' operating costs
and would make them more competitive and contribute to a more competitive EU
economy as a whole. It would also be effective in reducing energy consumption
and emissions and thus contribute to a more sustainable EU economy, with
reduced EU oil imports and energy dependency. As is shown is section 5.3, by
shifting value and jobs from the oil industry to the HDV manufacturing
industry, it would contribute to industrial growth, competitiveness, and
employment. This option is however sensitive to rebound effects, making the
overall reduction less certain. Targets which require the uptake of abatement
measures with positive marginal costs might be more difficult to enforce,
unless incentives are given to lower these marginal costs. Being a medium and
long term option with preliminary requirements, i.e. the completion of the HDV
emissions simulation tool under development and the implementation of option 1.ii,
it would thus support the medium and long-term growth agenda beyond 2020,
looking towards the 2030 horizon. This legislative action would furthermore
overall support innovation and job creation in the HDV manufacturing industry.
6.7.        Concluding remarks
196.   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.
197.   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’s feasibility were not
confirmed. In April 2013 the Joint Research Centre issued a report on the
"proof of concept" of the VECTO simulation tool 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 could
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 further.
198.   The current market is characterised by a lack of knowledge and
comparability of actual HDV CO2 emissions. The successful deployment
of the VECTO tool and the implementation of option 1(ii) on the certification
and reporting these emissions are expected to remedy this situation.
199.   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. As regards the latter option, more
research is needed on the modalities of addressing road transport emissions as
a whole, and examining whether they could and should be addressed upstream by
making fuel suppliers accountable on behalf of road transport in the ETS.                  
Subject to their eventual design both options may not be mutually exclusive and
require further in depth analysis in the framework of future Impact Assessments.
7.           Monitoring
and evaluation
Monitoring
200.   Effectiveness objective: with regard
to the effectiveness objective, monitoring is closely linked to a successful
deployment of the VECTO simulation tool. The foreseen short and medium-term
follow-up developments are:  the completion of the HDV CO2 emissions
simulation tool, which requires a close monitoring of its performance and
reliability throughout its development process; a possible adaptation of the type
approval legislation; and a new regulation proposal to record information on
HDV CO2 emissions (option 3.ii). Once an HDV emission simulation
tool is in operation together with registration and recording legislation, this
will provide the data required to monitor the effectiveness of the present
strategy. The main quantitative indicators in this respect will
be (i) new vehicle fuel consumption and (ii) CO2 emissions for each
HDV category.
201.   Efficiency/cost proportionality objective: upon the introduction of certification and reporting legislation,
detailed enquiries shall assess implementation costs: quantitative indicators
will consist in administrative costs that lie with the European Commission, national
authorities, and the HDV manufacturing industry. 
202.   Predictability objective: will be
monitored through close inter-actions with stakeholders and enquiries on their
degree of awareness of EU policy in this field.
203.   Commission Services will further continue to closely monitor market
and technological developments in this field.
Evaluation
204.   Evaluation of this strategy and its various options will only come
at a later stage, upon its implementation.
Annexes
Annex 1: Results of public
consultation on reducing CO2 emissions from road vehicles
Annex 2: Stakeholder
meetings, summary minutes
Annex 3: Transport White
Paper actions
Annex 4: Modelling
framework and main results 
Annex 5: HDV fleet
segmentation
Annex 6: Statistical data
Annex 7: Development of
the VECTO simulation tool 
Annex 8: Option 3: setting
emission limits, quantitative assessment tables
Annex 9: International
comparison
Annex 10: Competitiveness
assessment
Annex 11: HDV CO2
emission abatement potential and cost-curves per vehicle category
Annex 12: Indicative
administrative assessment of administrative costs under option 3.ii        
Annex 13: Methodology                        
              Annex 1: results of the public consultation
REDUCING
CO2 EMISSIONS FROM
ROAD VEHICLES
RESULTS
OF THE PUBLIC CONSULTATION
SEPTEMBER
2011–DECEMBER 2011
EVALUATION
OF THE ONLINE STAKEHOLDER CONSULTATION ON REDUCING CO2 EMISSIONS
FROM ROAD VEHICLES
1.           Summary
Highlights
This document provides an evaluation of the
responses from individuals and stakeholders to a public consultation (conducted
through an online questionnaire) on reducing CO2 emissions from
road vehicles. In total, 3 233 responses were submitted via the online
questionnaire. The online consultation was only available in the English,
German and French languages, and the majority of responses came from
stakeholders/individuals from the United Kingdom, Germany and France. Responses were also submitted from organized stakeholders (137 out of 3233), with
very active participation from companies/professional associations followed by
NGOs.
While there was some differing views
between respondents on the appropriate methods, policies and initiatives for
reducing road vehicle emissions, there was an overwhelming consensus that the
reduction of CO2 emissions from road vehicles is a key aspect in the
EU effort to reduce greenhouse gas (GHG) emissions and slow down the effects of
climate change. Some respondents acknowledged the progress to date in this
particular policy area, however, the main theme identified in the majority of
responses was a desire for Europe to continue focussing on and improving its
efforts to reduce CO2 emissions from road vehicles. A large number
of respondents, primarily individuals, felt that binding legislation with
ambitious targets was essential if overall road vehicle emissions are to
continue to be reduced. On the other hand, some representatives of vehicle
manufacturers raised concerns over setting new long-term targets and called for
the focus on implementation of the existing legislative framework, highlighting
that the targets in place are already challenging. 
A range of initiatives and policy areas
were highlighted as being important in the on-going effort to reduce CO2 emissions
from road vehicles. These included measures to affect consumer purchasing
decisions, the need to provide further education for the public, the
development of public transport, a modal shift to less energy and resource
intensive modes of transport, the need to further incentivise the development
of and research into alternative fuels and fiscal measures to incentivise the
use and development of cleaner vehicles.
Some of the main obstacles to reducing CO2
emissions from road vehicles identified by respondents are a lack of ambition
in terms of targets, resistance from manufacturers, an over reliance on
personal vehicles and a lack of promotion and incentives to encourage the
development and purchase of more efficient vehicles. The majority of comments
focussed on light duty vehicles, although comments were also submitted in
respect of heavy duty vehicles.
2.           Introduction
The Climate Action Directorate-General of
the European Commission launched this public consultation on road vehicle CO2
emissions as part of its preparation for a revision of Regulation (EC) No
443/2009, Regulation (EC) No 510/2011 and the development of a HDV strategy.
The consultation was open from 16 September 2011 to 09 December 2011. It
was conducted online through an interactive questionnaire which was posted on
the website of DG Climate Action http://ec.europa.eu/clima/consultations/0012/index_en.htm
together with additional documents as required in the stakeholder consultation
guidelines (protection of personal information note and specific privacy
statement). 
3.           Basic Quantitative Description (Evaluation of Part A)
In total, 3233 responses have been
submitted via the online questionnaire and evaluated. The vast majority of
these responses were from individual citizens (3096) with a relatively small
proportion from organized stakeholders (137). The fact that the questionnaire
was only available in English, German and French has probably influenced the
results, as evident from Figure 1. None of the stakeholders or citizens who
responded to the consultation indicated to being from Bulgaria, the Czech Republic, Estonia, Hungary, Latvia or Lithuania and thus these countries are not
shown in Figure 1. Although an overwhelming majority of responses were
submitted by individual citizens, Poland was the only Member States where
organised stakeholders submitted more than half of responses. 
Figure 1: Received responses by country of origin indicated in the
questionnaire
In total 137 organised stakeholders
answered the questionnaire. Most of these contributions were received from
companies or professional associations, followed by NGOs and associations of
NGOs (ses Figure 2).
Figure 2: Received responses from
stakeholders by affiliation
A further 6 responses were received by
email due to technical difficulties with responding to the online IPM
questionnaire. Answers and attachments in these emails were in various formats.
These responses were not evaluated as part of the quantitative evaluation shown
in this document, but their content was taken into the respective qualitative
evaluation sections. If relevant, position papers from registered stakeholders
(regardless of the method of submission) who agreed to the publication of their
responses are published on the website[84].
Respondents had to make a choice about the
confidentiality of their responses by selecting one of the following 3 options:
·                    
under the name indicated - I consent to
publication of all information in my contribution and declare that none of it
is under copyright restrictions that prevent publication.
·                    
anonymously - I consent to publication of all
information in my contribution and declare that none of it is under copyright
restrictions that prevent publication.
·                    
not at all – keep it confidential - my
contribution will not be published, but it will be used internally within the
Commission.
The breakdown of the
choices made by respondents in respect of confidentiality is shown in figure 3.
Figure 3: Confidentiality of received
responses
4.           EU
  policy on road-vehicle greenhouse emissions
(Evaluation of Part B)
Analysis of responses to Questions
B.1-B.5
B.1 Setting
greenhouse emission standards for road vehicles is an important aspect of EU
action to reduce such emissions.
B.2 These
standards should be in line with the greenhouse targets in the EU's roadmap to
a low carbon economy and Transport White Paper.
B.3 Road
vehicle greenhouse gas emissions standards should be set based on the average
greenhouse gas emissions of new vehicles entering the vehicle fleet.
B.4
Standards for road vehicles should apply equally to different technologies used
for powering road vehicles.
B.5 EU
regulation of road-vehicle emissions stimulates innovation in the automotive
sector and helps keep Europe's automotive industry competitive.
In general, the responses to section B of
the consultation questionnaire were quite similar amongst stakeholders and
individuals. For most questions, there was stronger support amongst individuals
towards entirely agreeing with the policy statements, while with stakeholders
there was more of a split between those who entirely agreed and those who
partly agreed with the policy statements set out in section B. 
Of individuals, 95% agreed that it was
important to set greenhouse gas (GHG) emission standards as part of overall EU
action to reduce such emissions while 55% of stakeholders entirely agreed and
31% partly agreed. A majority of respondents (89% of individuals
entirely/partly and 77% of stakeholders entirely/partly) agreed that these
standards should be in line with the GHG targets set out in the EU's roadmap to
a low carbon economy and Transport White Paper. The choice of the appropriate
measurement approach for setting GHG emission standards provoked a broader range
of responses. While 64% and 59% of individuals and stakeholders respectively
were in favour (entirely/partly agreed) of using the (current) fleet average
approach, 33% of all respondents were either neutral or disagreed to some
extent with setting targets based on the average GHG emissions of new vehicles
entering the entire fleet. 
Stakeholders (72% entirely/partly agreed)
and individuals (69% entirely/partly agreed) were mainly supportive of applying
standards equally to different technologies used for powering road vehicles,
while 72% of stakeholders and 83% of individuals agreed or partly agreed that
EU regulation of road-vehicle emissions stimulates innovation in the automotive
sector and helps keep Europe's automotive industry competitive. The number of
stakeholders who disagreed or partly disagreed that standards should be applied
equally to different technologies or that EU regulation had had a positive
impact in terms of innovation and competitiveness (12% and 13% respectively)
was proportionately higher than that of individuals.
These results are shown graphically in
figures 4 and 5.
Figure 4: Answers from all citizens to
questions in Part B
Figure 5: Answers from organized
stakeholders to questions in Part B
5.           Heavy-duty
vehicles (Evaluation of Part D)
Analysis of responses to Questions
D.1 & D.2
D.1 The EU
should have a strategy for reducing HDV greenhouse gas emissions.
D.2
Additional regulation (as opposed to non-regulatory measures) is needed for
this purpose.
In relation to heavy duty vehicles, over
92% of individuals entirely agreed that the EU should have a strategy for
reducing GHG emissions, with 88% of individuals also (entirely or partly)
agreeing that additional regulation was the best approach for such a strategy.
The support from stakeholders for a strategy on reducing heavy duty vehicle GHG
emissions was proportionally less than that from individuals although it was
still strong, with 82% either entirely or partly agreeing that an EU strategy
was necessary and 64% agreeing that regulation was needed as the main approach
of such a strategy. 11% of stakeholders had either neutral views or disagreed
that an EU strategy was required and furthermore, 20% of stakeholders had
either neutral views (3%) or disagreed entirely or partly (17%) that regulation
was needed for the purpose of a HDV strategy.
Figure 6: Answers to questions D.1 & D.2
in Part D
Analysis of responses to Question
D.3
D.3 If the
Commission proposes a HDV greenhouse gas strategy, which types of HDVs should
it cover (as far as is feasible)? (single choice)
With regard to the types of HDVs which
should be covered by an EU HDV GHG strategy (if proposed), the vast majority of
stakeholders (77%) and individuals (88%) felt that such a strategy should cover
all HDVs. Only 9% of stakeholders and 4% of individuals felt that an EU HDV
strategy should narrowly and specifically focus on certain types of HDVs.
Figure 7: Answers to question D.3 in Part D
Analysis of responses to Question
D.4
D.4 And what
sort of measures should be considered for inclusion? (max 3 choices)
In terms of the measures which should be
considered for inclusion in any EU HDV GHG strategy, respondents were permitted
to select up to three of the five options presented. The percentages given in
the following analysis represent the proportion of individuals and stakeholders
who selected each option. 
The overall range of opinions was similar
across stakeholders and individuals. A combination of measures from all areas
was the most popular choice for stakeholders (45%) and individuals (53%). 38%
of individuals and 26% of stakeholders also selected measures affecting HDV
design as being important, while 24% of stakeholders and 32% of individuals
felt that measures affecting HDV usage should be included in any strategy.
Measures influencing decisions in relation to the purchase of HDVs (26%
stakeholders, 25% individuals) and the type of fuel or energy used by HDVs (23%
stakeholders, 26% individuals) were also selected as being an important part of
any HDV GHG emissions reduction strategy.
Figure 8: Answers to question D.4 in Part D
              7.       Future
developments – beyond 2020 (Evaluation of Part E)
Analysis of responses to Questions
E.1 and E.3
E.1
Road-vehicle emissions may be reduced by changes in other policies, such as
taxation. Should targets for road vehicles continue to be set, regardless?
E.3 Should
the approach to regulating road-vehicle emissions consider emissions from the
whole energy lifecycle?
With regard to developments beyond 2020,
there was a slight variation in the views expressed overall between
stakeholders and individuals. A majority of individuals (81% entirely/partly
agreed) and stakeholders (64% entirely/partly agreed) felt that targets for
road vehicles should be set, regardless of the potential impact of other
measures on road-vehicle emissions. Quite a significant number of stakeholders
(20%) partly or totally disagreed that targets should continue to be set for
road vehicles while less than 5% of individuals made similar responses.  
There was general support for a life cycle
energy approach to regulating road-vehicle emissions from individuals, with 66%
entirely agreeing that this approach should be taken and 11% partly agreeing.
Proportionally a smaller number of stakeholders were in favour of such an
approach (69% entirely/partly in favour), with 13% either being neutral on the
issue or disagreeing that a life-cycle energy approach should be adopted.
Figure 9: Answers to questions E.1 & E.3
in Part E
Summary of responses to Question E.2
E.2 In your
opinion, which are the policies in which changes might affect the setting of
greenhouse gas targets for road vehicles? 
Respondents to this question highlighted a
range of general policy areas in which changes might affect the setting of GHG
targets for road vehicles. A common theme in a large number of responses (over
300 individual responses and over 30 responses from organisations) was a belief
that taxation or fiscal policies could have a significant effect on the setting
and achievement of targets. Many organisations listed taxation as a key policy
area without providing further detail while some individuals highlighted
specific tax policies including general taxes on fuel/cars/maufacturers, tax
reductions/exemptions for company cars, lower taxes for low emitting vehicles,
taxation on alternative fuels and carbon taxes. A large number of respondents
(over 200 individuals) argued that policies promoting the use of alternative
transport for freight, such as rail and river, and for people, such as walking,
cycling, electric and hybrid vehicles, would have a significant effect on the
setting of GHG targets. Furthermore over 100 respondents (inc. 5 from
stakeholders) felt that policies promoting, developing and improving public
transport would be important. In addition over 60 respondents argued that
congestion policies, including environmental zoning and road charging, would
reduce overall road usage and influence the setting of GHG targets. Further
policy areas aimed at reducing road usage and long distance travel, such as
general foreign & trade policies and the promotion of local production and
consumption (over 75 individuals) were highlighted as being influential on the
setting and achievement of targets. Improved industrial and employment policies
and practices were also considered to be potential mechanisms through which
road usage could be reduced.
A large number of respondents (over 120,
including Transport & Logistiek Vlaanderen (Road Haulage Association) and
European Road Haulers Association (UETR)) identified policies concerning the
design, manufacturing and sale of vehicles as being areas in which further
changes and improvements could impact on the setting of GHG targets. Policies
in respect of research, development and promotion of alternative fuels (over 90
respondents) and energy/renewable energy (over 70 individuals) were also highlighted
by respondents as important. A number of individual respondents (over 40) and
organisations (including International Council on Clean Transportation,
European Tyre & Rubber Manufacturers Association (ETRMA), Fédération
nationale des transports routiers (FNTR), Federeation Internationale de
l'Automobile (FIA)) felt that policies concerned with improving public
education/awareness of emissions/green technology and behavioural campaigns
could have an impact on the setting of GHG targets. A large number of
respondents also felt that R&D and innovation (over 75, including 18
organisations) and investment in infrastructure and improved urban planning
(over 60) could affect the setting of GHG targets.
Organisations such as Transport for London,
Jumbocruiser Limited, International Association of Public Transport (UITP) and
Verband Deutscher Verkehrsunternehmen (VDV) highlighted emission policies such
as the EURO classes legislation as an area which could affect the setting of
targets while a significant number of individuals (over 90) provided general
comments on the actual setting of emission limits and targets. Respondents also
highlighted other general policy areas as being significant. These included
general transport policy (150+), environment policy (70+), climate change
policy (20+), air quality policy (8+), agricultural policy (10+), economic
policy (75+), social policy (30+) and health policy (10+). 
Analysis of responses to Question
E.4
E.4 Should
other road-vehicle greenhouse emissions also be measured, alongside carbon
dioxide (CO2)?
Individuals tended to be more demanding
with regard to the issue of other road-vehicle greenhouse emissions being
measured alongside CO2. 70% of individuals agreed that other
greenhouse emissions should be measured with 5%, 3% and 4% specifically
agreeing that methane, nitrogen oxides and black carbon respectively should be
measured. Less than 1% of individuals felt that other greenhouse emissions
should not be measured. 53% of stakeholders agreed that other greenhouse emissions
should be measured with 6%, 4% and 6% specifically agreeing that methane,
nitrogen oxides and black carbon respectively should be measured. 16% of
stakeholders specified that other road-vehicle greenhouse emissions should not
be measured.
Figure 10: Answers to question E.4 in Part E
Analysis of responses to Questions
E.5 & E.6
E.5 Should
longer-term indicative targets (for after 2020) be set? 
E.6 Please
specify for what time period (following adoption of the related legislation)?
While the majority of both stakeholders
(67%) and individuals (80%) agreed that longer term indicative targets should
be set for after 2020, there was more opposition to this amongst stakeholders
with 23% disagreeing with the setting of longer term indicative targets as
opposed to only 3% of individuals disagreeing with the setting of longer term
targets. 17% of individuals and 10% of stakeholders provided no opinion on
question E5. 
Responses in relation to the time frame for
such legislation were quite mixed amongst both stakeholders and individuals. A
quarter of all individuals chose not to answer question E6 or expressed no
opinion, but of those that did 32% felt that the time frame for targets
(following adoption of the related legislation) should be within 5 years, 29%
specified 10 years, 15% specified 15 years and 33% specified that 20 year
targets should be set. With regard to the stakeholder responses, 63% provided
an answer to E6. Of these respondents, 17% felt that the time frame for targets
(following adoption of the related legislation) should be within 5 years, 43%
specified 10 years, 15% specified 15 years and 24% specified that 20 year
targets should be set.
Figure 11: Answers to questions E.5 &
E.6 in Part E
Summary of responses to Question E.7
(only answered if respondents answered No to Question E5)
E.7 Please
specify why long term indicative targets for after 2020 should no be set 
The respondents who did not agree that long
term indicative targets (for after 2020) should be set mostly argued that it
was more appropriate to focus on implementing action in the short term to
reduce CO2 and achieve the targets already set for 2020. Around 10
organisations (including representatives of the car industry) and 20 individuals
questioned the practicality of setting indicative targets for beyond 2020
without having knowledge of the developments in technology which may or may not
materialise between now and then. In addition, 10 respondents claimed that
short term targets are more achievable than unrealistic long term targets. The
International Road Transport Union further stated that, in the absence of new
procedures for the declaration of fuel consumption and CO2 generation
of complete transport units being designed, voluntary targets set by the
transport industry should be encouraged. Other comments raised by a small
number of respondents (<3) included the setting of conditioned fleet
targets, the limited positive impact of legislation on small business, the
restriction of private vehicle use and the inconvenience for hauliers of too
many policy changes.
Figure 12: Answers to questions E.8 in Part
E
Analysis of responses to Question
E.8 
E.8 The
current legislation contains vehicle-based targets until 2020. For post-2020,
should we consider alternatives to vehicle-based greenhouse gas regulation?
In relation to question E.8 and the
possible consideration of alternatives to vehicle-based targets post 2020,
responses were generally quite similar amongst stakeholders and individuals.
34% of stakeholders and 29% of individuals agreed that alternatives to vehicle
based regulation post 2020 should be considered. 31% of stakeholders and 28% of
individuals felt that alternatives to vehicle based regulation should not be
considered now but be reconsidered in the future, while 15% of stakeholders and
10% of individuals felt that alternatives to vehicle based regulation should
not be considered. A significant number of stakeholders(20%) and individuals(32%)
had no opinion or chose not to answer the question.
Summary of responses to Question E.9 
E.9 Please
specify which alternatives
The respondents who provided comments on
alternatives to vehicle based greenhouse gas regulation (post 2020) highlighted
a number of other policy areas and initiatives in which further measures could
be implemented to reduce the emission of greenhouse gases. A common theme in a
number of responses from individuals (around 65) was a desire for the promotion
and development of improved rail and river networks for the transportation of
both people and goods. These individuals argued that a reduction of road usage
is key to reducing pollution and a proportion of these respondents also
recommended that more widespread, targeted congestion measures and
road-charging policies should be implemented in towns and cities. In tandem
with these comments, a significant number of other respondents (around 40) highlighted
the importance of developing, promoting and incentivising the use of public
transport, walking and cycling as viable, affordable and safe alternatives to
the use of private vehicles. Further promotion and development of electically
powered vehicles was supported by organisations including Shecco and Going
Electric as well as individuals, as was the research, development and promotion
of alternative fuels and more sustainable/renewable energy sources
(individuals). The promotion of local production and consumption was also
considered to be economically and enviromentally advantageous by individuals.
A large number of respondents (greater than
60) argued that a holistic approach was required with regard to the regulation
of all industries/sources of pollution in society, with particular reference
being made by some to the airline and energy production industries. A number of
transport and motoring organisations, including Transfrigoroute International
and IRU, highlighted the importance of implementing a wide range of initiatives
in the field of transport, energy and fiscal policy as well as industry led
initiatives to reduce fuel consumption. Taxation policy was also viewed as a
key tool by individual respondents (around 40), who argued that further
initiatives, ranging from the introduction of a carbon tax to having higher
taxes on companies/consumers producing/purchasing high emitting vehicles and
vice versa, could have a significant effect on the manufacturing, promotion and
sale of goods (in particular vehicles) with a subsequent effect on the
environment. Some respondents (around 30) also pointed out the fact that
well-to-wheel emissions should be part of all future targets (City of
Stockholm), while other respondents (around 15) supported the introduction of a
personal carbon allowance (or cap and trade) scheme. 
Both individual (around 15) and
organisational (including ETRMA) respondents supported the undertaking of
further research and stakeholder engagement on possible alternative policy
options and the development of new technology for reducing pollution. A number
of individuals (around 15) supported measures to regulate and improve the
design and production of vehicles, with particular focus on the energy costs
and emissions from vehicle production, the weight of vehicles and the type and
recyclability of materials used in vehicle production.
              8.
Additional comments (Evaluation of part F)
The comments provided as additional input
covered a wide range of issues concerning heavy-duty vehicles. 
While most individual respondents' comments
focussed on cars and, to a lesser extent, vans' emissions, some also (around
230) made comments on HDV emissions and ways to curb them (primarily in the
additional comments section but also in other parts of the questionnaire).
Among those a significant majority (65%) insisted on the need for a policy
supporting a freight transport modal shift to less energy and lower GHG
emission intensive modes such as trains and waterways. A number (69) of these
individual respondents also considered that, in order to curb emissions, the
transport and logistics chain should be reorganised with a more extensive
recourse to local rather than remote suppliers of goods. 
Among other comments made by individuals, a
number of options were supported: the need to regulate heavy duty vehicles'
emissions (10), with two respondents even suggesting that a 2025 emissions
target should be set for HDVs in the same way as for cars and vans; charging
external societal costs of road freight transport(1); taxes on road
freight(15), higher taxes on fuel(4), avoiding lower pricing of fuel in favour
of duty-vehicles(1); carbon foot-printing of merchandises (4); the use of
bio-fuels by HDVs(7), with one respondent suggesting a ban from town centres of
HDVs powered by fossil fuels; the use of hydrogen and electricity by buses(1);
the need to improve HDV performance through further R&D (6); providing
incentives for influencing purchasing decisions, i.e. encouraging business to
invest in more efficient vehicles (5); having more stringent checks, controls
and speed limits for HDVs(5); and restricting the size of HDVs (4). 
Various organisations (43) also provided
comments on HDVS within the questionnaire and in written submissions: NGOs,
enterprises, public authorities, and professional associations or federations.
A large number of organisations (13, including Transport for London and
Fenebus) were in favour of policies which encouraged an active modal shift in
favour of less energy and emission intensive transport modes such as rail or
waterways for freight, as well as the promotion of public transport for
passengers. Furthermore some organisations (8, including Fenebus, Jumbocruiser
and Federal Association of German Bus and Coach Operators (BDO)) specifically
highlighted the promotion of buses and coaches as a means to reducing overall
transport emissions and felt that the benefits of imposing fiscal and
legislative measures on buses were questionable. Other organisations (2,
including Argyll and Bute Council) felt that the promotion of local suppliers,
and thus shorter delivery journeys, would have a positive effect. A significant
number of organisations (13), including NGOs (World Wildlife Fund (WWF)) and
professional associations (Transfrigoroute International) felt that a
comprehensive strategy to reduce emissions was required. A number of organisations
(8, including the Swedish Transport Agency and Administration, Greenpeace, WWF)
argued that specific legislation and targets were essential in respect of HDVs,
with some suggesting milestone targets, while a number of other respondents (9,
including Le Poste, IRU) felt that market forces would be more effective than
regulation in reducing fuel consumption and CO2 emissions.
The positive impact of further support for
R&D into improving the efficiency of HDVs was highlighted by a number of
organisations (11, including Bundesverband Güterkraftverkehr
Logistik und Entsorgung (BGL), ETRMA, UITP)
while others highlighted the need to pursue measures which affect purchasing
decisions and incentivise the move to more efficient vehicles (11, including
Jumbocruiser, Le Poste, Transport for London). Support was also expressed for
the increased use of bio-fuels and non-fossil fuels by a range of organisations
(10, including UETR). A number of organisations (9), in particular professional
associations and public authorities (Swedish Transport Agency and
Administration, IRU, Transport for London) commented on the need for a
measurement methodology/tool for measuring HDV CO2 emissions.
Furthermore, other organisations (10, including IRU) commented on the appropriate
measurement metrics with regard to assessing HDVs, for example, CO2
per ton-km or per passenger/km, m3-km of goods. A small number of organisations
commented on the Energy Taxation Directive (3, including VDV, European Express
Association) and the need to focus on measures which reduce fuel consumption
(5, including BGL and BDO). While the Community of European Railway and
Infrastructure Companies (CER) and the European Express Association was in
favour of charging for the external costs of transport (all types), European Association for Forwarding, Transport,
Logistics and Custom Services (CLECAT) emphasised the importance of
recognising that transport companies already incur costs which are internalised
through excise, taxes or charges.
Other comments made by a small number of
organisations included the taxation of freight transport, increasing fuel
taxes, the recyclability of HDVs, the need to focus on the classes which emit
the most, the need to focus specifically on measures which reduce fuel consumption,
labelling, the importance of regulating engine-only emissions, allowing longer
vehicles for transporting freight and banning the use of HDVs altogether.
_______________________________
              Received
Written Contributions 
Please visit our website to see the
specific concise contributions and position papers received. Only contributions
from organized stakeholders who provided their registration number in the
Transparency Register and at the same time indicated that their contribution
should be treated as "under the name indicated" are published on our
website. All contributions have not been edited and are shown as
submitted. They do not represent the opinions and views of the European
Commission and are the sole responsibility of those submitting these responses.
http://ec.europa.eu/clima/consultations/0012/index_en.htm
              Annex 2 : stakeholder meetings
              Stakeholder
meetings, Commission summary 
I.          22 February stakeholder
meeting
Chairman:     Philip
Owen, DG Climate Action
List of
participants attached
1. Reducing
Heavy-Duty Vehicle (HDV) CO2 emissions, ways and scope
Introduction
An EU strategy for
reducing LDV CO2
emissions was adopted in 2007 and legislation has been
enacted setting limits on car and van CO2 emissions. In contrast HDV
emissions have so far not been regulated and therefore the Commission announced
in 2010 that it would prepare an HDV emissions strategy. A public internet
consultation was held in autumn 2011 and responses largely support such a
strategy. In September 2011 the Commission started work on the Impact
Assessment which will assess options for the strategy, expected to be adopted
in 2013. The aim of this meeting was to discuss the potential for curbing CO2
emissions and policy options. A second meeting would take place later before
the summer, to discuss possible approaches for the EU strategy.
Presentation of
analysis on potential for reduced HDV emissions
The contractor[85] presented the main
findings from a recent report on European Union Greenhouse Gas Reduction
Potential for Heavy Duty Vehicles. The study found
that across the eight HDV segments examined, potential CO2 savings
from all technologies available during the years 2015-2020 range from 30 to 52%
for new vehicles. Applying these fuel-saving technologies to all new vehicles
as of 2020 had the potential to reduce fleet-wide HDV greenhouse gas emissions
to 28 % below projected business-as-usual levels in 2030, in spite of
significant expected HDV fleet growth. This is broadly consistent with findings
from a previous Commission study on HDV emissions in the EU[86].
Summary of
discussion
Stakeholders
generally welcomed the consultation. A number asked for clarifications
regarding underlying assumptions of the study.
Original Equipment
Manufacturers (OEMs) expressed doubts with regard to the magnitude of
achievable HDV fuel consumption and CO2 emission reductions. In
contrast it was stated by an NGO that experience shows ex-ante estimated costs
are always higher than the outcome for environmental measures. OEMs noted that
one of the effects of environmental legislation to reduce pollutant emissions
(Euro IV, V and VI standards) had been some loss in fuel efficiency and
increased CO2 emissions. Some technologies would be more promising
for specific vehicle segments than others, and there were in particular
uncertainties as regards the possible costs and rate of uptake of
hybridisation. 
There was consensus
that improved aerodynamics could play a role. A number of figures were quoted
all pointing to small changes enabling significant benefits at low costs.
Several
participants considered that increasing weights and dimensions of HDVs could
achieve additional savings. This was contested by others who argued that longer
and heavier vehicles would not be a solution in view notably of rebound effects
of increasing load and dimensions.
Participants from
the transport and logistics sector reported that a number of schemes were
already in place in their sector to reduce freight fuel consumption and CO2
emissions. New initiatives were being launched to measure transport's carbon
footprint: a collective approach was preferable in this respect, and many
improvements in fleet operations were taking place without legislation. Driver
training was considered important, but needed to be followed by actions
managing driver performance and actual fuel consumption. It was suggested that
it was more important to focus on the results than the training. Public
transport operators insisted on the importance of modal shift to public
transport as a means of reducing emissions, and the need for improved operating
conditions, notably an increased operational speed of buses in cities. 
The metric for a
future measurement methodology and efficiency registration was considered
sensitive by a number of participants and should not merely be based on fuel
and CO2 emissions per km. 
One NGO participant
considered that there was a clear market failure in view of the lack of recent
new HDV performance improvements and the very short payback periods considered
by operators. 
2. Discussion of
policy options to curb emissions
Participants were
invited to indicate which options the Commission should consider and privilege
among a number of listed possible policy options. 
A methodology and
tool to measure emissions in a standard way, thereby ensuring transparency and
comparability, was considered by most stakeholders as a priority. Testing
procedures are key to ensuring this is relevant to real world operations. One
manufacturer suggested that engine rather than full vehicle emissions should be
targeted. 
According to
numerous participants the strategy should be comprehensive and aim at
reinforcing European HDV manufacturers perceived leadership, encouraging continuous
improvement in HDV performance. Manufacturers and operators generally expressed
preferences for a non-regulatory approach. Transport and logistics operators'
representatives generally favoured industry initiatives, several noting the
advantages of collective approaches. According to a number of participants
incentives would be welcome to support industry initiatives, the use of
biofuels, and investments in refuelling infrastructure for alternative less GHG
intensive fuels. Subsidies to support R&D were also needed to prepare
future more efficient vehicles. Participants also stated that due consideration
should be taken of the fact that transport is very much an SME activity. 
It was suggested
that economic factors such as fuel price escalators, fuel price cost pass
through clauses and the possibility for third party logistics providers to
profit on sub-contractors' fuel costs all reduced incentives to reduce CO2
emissions. There was evidence that the level of fuel use is linked to the type
of contract in force. An OEM noted that uncertain fuel prices hamper
investments in technology.
There was a
widespread view that vehicle emissions certification could be beneficial and
improve transparency once an emissions measurement tool is in place. Labelling
was favoured by a number of participants but needed cautious consideration in
view of the variety of vehicles, technologies and operating conditions.
A strategy should
encompass already existing actions such as the existing type approval
legislation. A number of participants considered that EU legislation on weights
and dimensions, currently under review, should be made more flexible, allowing
for larger trucks, and/or more aerodynamic ones. 
The possible
inclusion of HDV emissions in the European Trading System was briefly
discussed. It was pointed out that it would be ineffective since in view of the
relative costs the transport sector would rather purchase allowances than
invest in CO2 emission abatement. 
NGOs noted that
voluntary processes and regulatory approaches were not necessarily
contradictory as this has been the approach followed so far in Japan and the US. A step-wise comprehensive approach to curb HDV CO2 emissions would be
required. 
Some Member States
participants considered that a strategy should take into consideration specific
national situations and be technology neutral (Finish Transport Safety Agency).
A comprehensive long-term strategy would be needed (Swedish Transport
Administration), including possibly a regulatory approach over the long term.
The UK (Office of Low Vehicle Emissions) favoured an integrated approach based
notably on support to industry initiatives and the uptake of more efficient
vehicles rather than recourse to regulatory measures.
Commission
closing remarks
The Commission
chairman confirmed that a holistic approach would be required. Some avenues
already appeared more promising than others. Commission services remained
available for further bilateral contacts with stakeholders. Before the
completion of the Impact Assessment foreseen by the end of 2012 another
stakeholder meeting will be organised in June or July. 
List of
participants
 Organisation ||   
 AB Volvo ||   
 Association des Industries de Marque || AIM 
 Association for Emissions Control by Catalyst || AECC 
 Austrian Ministry of Transport and Noise ||   
 Belgian Shippers’ Council || OTM 
 Belgium Ministry of the Environment ||   
 Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (DE) ||   
 Bundesverband Güterkraftverkehr Logistik und Entsorgung || BGL 
 Community of European Railways || CER 
 Cummins Ltd ||   
 DAF Trucks N.V. ||   
 Daimler AG ||   
 Danish Transport Authority ||   
 DHL ||   
 Environmental Ministry Belgium ||   
 Europe (Natural & Bio Gas Vehicle Association Europe) || NGVA 
 European Aluminium Association ||   
 European Association of Automobile Suppliers || CLEPA 
 European Automobile Manufacturers' Association || ACEA 
 European Biodiesel Board || EBB 
 European Brands Association || AIM 
 European Express Association || EEA 
 European Road Haulers Association || UETR 
 EVO – The Dutch Shippers’ Council ||   
 EvoBus GmbH / Daimler Buses ||   
 Fédération Nationale des Transports Routiers ||   
 Fédération Nationale des Transports Routiers (F) || FNTR 
 Finnish Transport Safety Agency ||   
 FLUXYS SA/NV ||   
 Freight Transport Association || FTA 
 Greater Than ||   
 Heineken ||   
 International Association of Public Transport || UITP 
 International Council on Clean Transportation  || ICCT 
 International Road Transport Union || IRU 
 KTI Institute for Transport Sciences (Budapest) ||   
 La Poste (F) ||   
 Liaison Committee of the Body and Trailer Building Industry || CLCCR 
 Low Carbon Vehicle Partnership (UK) ||   
 MAN SE ||   
 MAN Truck & Bus AG ||   
 Meta-Ricerche Cornetti Diol. (It) ||   
 Ministère de l'Écologie, du Développement durable, des Transports et du Logement || MEDDTL 
 Ministry of Infrastructure and the Environment (NL) Climate, Air Quality and Noise Department-Environmental Protection Office ||   
 Natural & bio Gas Vehicle Association || NGVA Europe 
 Nordic Logistics Association ||   
 Permanent Representation of the Netherlands to the EU ||   
 Permanent Representation of the Republic of Poland to the EU ||   
 Polish Automotive Industry Association ||   
 Procter & Gamble ||   
 Ricardo UK Ltd ||   
 Scania ||   
 Society of Motor Manufacturers and Traders || SMMT 
 Spanish Federation of Transport by Bus || Fenebus 
 Spanish Urban Collective Surface Transport Association ||   
 Swedish Transport Administration ||   
 Tesco ||   
 The European Tyre and Rubber Manufacturers’ Association || ETRMA 
 TNO ||   
 Transfrigoroute International ||   
 Transport & Environment ||   
 Transport & Environment ||   
 Transport and Logistics Netherlands ||   
 Transport en Logistiek Nederland ||   
 TU Delft – Delft University of Technology ||   
 United Parcel Service || UPS 
 Verband der Automobilindustrie || VDA 
 Vlaamse overheid, Departement Leefmilieu, Natuur en Energie ||   
 Volvo Buses ||   
 Wirtschaftskammer Österreich ||   
II.        3 July 2012 Stakeholder
meeting
Chairman: Philip Owen, DG Climate Action
List of participants in Annex
1.    Introduction 
The chairman
introduced the meeting and welcomed the participants. The Commission is
currently considering and developing options with regard to an EU HDV strategy
and will prepare and finalise an Impact Assessment (IA) by the end of 2012 with
a view to having a Communication on an HDV CO2 emissions strategy adopted in
summer 2013. No further stakeholder meetings are planned prior to the adoption
of a strategy, although the Commission is happy to meet with stakeholders
individually during early autumn 2012.
2.       Results of the Public Consultation
on Reducing CO2 Emissions from Road Vehicles (Ian Hodgson, DG
Climate Action)
The Commission gave
a short presentation on the results and comments, relevant to HDVs, provided in
respect of a public consultation on reducing CO2 emissions from road vehicles.
There was significant overall support for a HDV emissions strategy and a
consensus that any Commission proposal should cover all types of HDVs. In
general, individuals expressed stronger support than organisations for setting
long term targets and adopting a regulatory approach while organisations'
support for such actions tended to be more nuanced. Individuals expressed
strong support for a modal shift in transport, while a broad range of comments
in respect of HDVs was received from organisations. A summary of the responses
is available on the DG Climate Action website at: http://ec.europa.eu/clima/consultations/0012/summary_en.pdf 
3.       Development of a simulation tool to
measure HDV emissions. State of play & discussion (Peter Brunner, DG
Climate Action)
The Commission
provided an overview with regard to the development of the HDV CO2 emissions
simulation tool. Detail on the methodology was presented including a
description of the input parameters for the tool. The tool will be further
developed under a new contract. It should be completed by mid-2014. The aim is
to develop a tool which is sophisticated and accurate while also being user
friendly. The Commission thanked JRC, ACEA and OEMs for providing assistance
and expertise in the development process. 
Participants
highlighted other fuel consumption measurement industry initiatives and
foot-printing schemes which are currently in place or being developed such as
the Green Freight Initiative. Some participants requested clarity on the
timeline in view of the adoption of a HDV strategy foreseen in 2013. The
Commission stated that it should be possible to confirm the tool's feasibility
in early 2013, well in advance of any proposed strategy. Controlling
environmental conditions during testing, identifying accountability for meeting
standards and the relationship with CEN standards were raised as issues by
other participants. The Commission confirmed that the simulation tool aims to
facilitate technology uptake and incentivise the promotion of greater fuel
efficiency. Other issues raised included the metrics being used and whether the
tool was designed to simulate lifecycle (Well-To-Wheel) or tailpipe
(Tank-To-Wheel) emissions. It was confirmed that it is intended to simulate
tailpipe emissions.
4.       Presentation and discussion of the
first results of an on-going study on cost curves on HDV CO2
emissions abatement costs (Arno Schroten, CE Delft)
The contractor[87] presented some
detail and examples of the marginal abatement cost curves in respect of
packages of technical measures which it has developed for the Commission.
Curves were derived for 8 vehicle categories, with average curves also being
derived for trucks and buses. Tailpipe emissions are considered and biofuels
were not taken into account. The project considered the AEA Ricardo[88] and TIAX[89] studies which
covered abatement technologies for HDVs. The input values were eventually based
on the TIAX study. Sensitivity analyses were carried out using the CE Delft
model and adjusting different variables. The main conclusion of the project was
that there is significant CO2 abatement potential with zero or negative costs
for operators of trucks and buses and from society as a whole. 
Several
participants sought further clarity with respect to the break-even abatement
potential tables. The contractor reiterated that the analysis presented
provided an indication of costs and potential savings which could be achieved
over the lifetime of the vehicles. The Commission indicated that internal
analysis concluded that the effect of adding a carbon price to the oil price
had a minimal impact on the cost curves. A number of participants suggested
that biofuels (in particular bio-methane) should have been considered in the
study. The contractor confirmed that biofuels were not considered mainly
because they currently do not greatly reduce emissions and their costs would be
at the high end of the scale. The contractor also indicated that a study
assessing market barriers to implementing reduction measures is currently being
performed. Costs for measures referred to in the study were based on mass
deployment of these technologies and so the actual cost may still be greater at
the moment. 
The exclusion of
vehicles powered by natural gas in the study was considered disappointing by a
number of participants. The ACEA representative highlighted reservations with
regard to the original TIAX study, which was based on the US market and adapted to the EU market. The Commission confirmed that further analysis and
studies would be carried out before any decision to legislate is taken. T&E
supported the cost curves study's findings and emphasised that the industry was
capable of achieving large reductions in emissions at costs beneath current
estimates. This was considered premature by another stakeholder. 
The cost curves
report and calculator will be placed on the DG CLIMA website by the end of
July.
5.       Main Policy options: Commission
preliminary assessment and discussion (Christophe Pavret De La Rochefordiere,
DG Climate Action)
A preliminary
assessment of the main EU strategy policy options was provided. 
Baseline Scenario
The baseline
scenario differs slightly from that in the 2011 Transport White Paper (TWP) and
incorporates policies which are already proposed by the Commission but not yet
formally adopted by the co-legislators. The scenario assumes some decoupling
with GDP and 1% per year improved fuel efficiency of vehicles. The outcome is
that the rate of HDV emissions increase slows down beyond 2020, stabilising and
returning to 2005 emission levels by 2050. This option was not considered
compatible with the Commission CO2 policy objectives as announced in the
Transport White Paper.
ACEA suggested that
this may under-estimate possible annual improvements in fuel efficiency,
indicating that a 20% improvement versus 2005 levels was possible by 2020. The
Commission highlighted that the decoupling assumption was based on increasing
energy prices and the impact of existing policies to shift more traffic to rail
and waterways. Some stakeholders stated that restrictions caused by HDV size
and weight legislation were counter-productive. Following a query on
differentiating between decoupling of freight and passenger transport from GDP,
the Commission confirmed it was expected that freight transport would grow
slightly more than passenger transport.
Implement Transport White Paper (TWP)
actions (DG MOVE)
The Commission gave
indications on the timing of a number of initiatives foreseen in the 2011 TWP
for which impact assessments are on-going. A Clean Power for Transport
Initiative proposal will be finalised in the 4th quarter of 2012 as will a
proposal on the review of the weights and dimensions legislation. The announced
"e-freight" initiative proposal will be finalised in the 1st quarter
of 2013. A review of the cabotage legislation proposal should be finalised in
the 2nd quarter of 2013. The review of the road user charging directive will
also be completed in the 2nd quarter of 2013. Finally, work on the "zero
emissions urban logistics" initiative is on-going and it is planned to
bring a proposal forward in the 2nd quarter of 2013. DG MOVE was working
closely with DG CLIMA on all of these areas.
It was asked
whether DG MOVE's initiative on CO2 foot-printing was linked to DG CLIMA's
calculation project on HDV emissions. The Commission confirmed that the DG MOVE
project was linked to action 29 from the TWP and would rather support private
sector schemes. It was also considered unlikely that carbon pricing would be
included in the revised road charging legislation given the Commission proposal
in the draft revised Energy Taxation Directive to already include a carbon
price in fuel prices.
Improve Knowledge and Transparency of HDV
CO2 emissions
This option is
linked to the simulation tool being completed. It foresees a subsequent
introduction of registration and reporting legislation and the possible
development of a certification or labelling scheme. Legislation would be
required to introduce recording of emissions and some data would have to be
available before a labelling scheme could be introduced. Reporting would apply
to new vehicles. This option would not be expected to contribute sufficiently
to the level of emission reductions required and committed to under the TWP and
the 2050 Roadmap. 
Some participants
argued that increased transparency would increase competition and drive the
industry towards further emission reductions and possibly be sufficient to
achieve objectives. Others felt that increased transparency should only be part
of the overall package of measures considered. ACEA stated that market forces
can be a significant factor in reducing emissions but recognised that they
would not be sufficient to achieve the overall reduction objectives being
considered. A more comprehensive strategy was required. The UK FTA highlighted
the 2.6% reduction in carbon emissions recorded by its members in the second
annual report of its scheme. 
The Commission
emphasised that option 3 was not about foot-printing but would complement such
schemes in place or envisaged. It was considered appropriate for the Commission
to discuss the methodological aspects further with Green Freight Europe
representatives. A query concerning possible scrappage schemes was raised, and
the Commission confirmed that the Impact Assessment will not cover such
schemes. As regards availability of CO2 information upon completion of the
simulation tool, the Commission confirmed its intention in principle to make
the information publicly available in a transparent way.
Include HDVs in Emissions Trading Scheme
(ETS)
This option involves
including HDV CO2 emissions in the existing EU ETS. The most likely
outcome would be that HDV operators would purchase allowances for their
emissions rather than invest in upgraded vehicles and it could therefore have
limited effectiveness in curbing HDV CO2 emissions. An alternative
solution may be to integrate HDV CO2 emissions in the ETS at the
level of fuel distribution companies but this could also have a limited effect
in reducing their emissions. In conclusion this option may face limitations in
terms of achieving overall transport emission objectives. The purchasing of
allowances would mean that more emissions reductions in other sectors would be
achieved. Furthermore, the purchasing of allowances from other sectors would be
accompanied by overall cost savings due to the increased flexibility. 
T&E agreed that
this option would not deliver CO2 savings in transport or have any benefits for
the ETS. Other participants argued that it was important to widen the analysis
and conduct further studies into the possible benefits of joining the ETS
scheme. 
Limits on HDV CO2 emission
The final option
presented by the Commission was the setting of either engine-only CO2 limits or
whole vehicle limits. Setting engine-only limits would be quite straightforward
and practical since Euro VI legislation already covers measurement of engine
CO2 emissions. The Commission was still assessing the legal aspects of this
option. This option would have limitations in terms of lowering emissions. ACEA
highlighted developments in the U.S where there are engine regulations and a
simulation approach for the rest of the vehicle, but they did not consider this
to be the most cost effective and consistent approach. T&E considered that
the engine only approach was inferior to the whole vehicle analysis.
The second option
in terms of CO2 emission limits (whole vehicle) would be a medium to long term
option requiring the simulation tool to be finished, a registration and
reporting system to be in place and an appropriate dataset available from which
to arrive at appropriate limits. Further cost curve studies and cost benefit
analyses would be needed before finalising a proposal to legislate for whole
vehicle limits. Initial indications are that this option could be effective in
contributing to meeting transport CO2 reduction targets. The IA will provide
indicative estimates of the likely costs and benefits for different sectors of
introducing such legislation. 
One participant
emphasised the importance of providing incentives for hauliers to implement
improved management and driving practices. The issues of WTW emissions and
accountability for achieving limits within the multi-stage manufacturing
process of vehicles were again highlighted. T&E considered the setting of
limits to potentially be beneficial but emphasised that it is also important to
concentrate on making progress in the short term. The Netherlands representative supported the setting of limits as market forces would not be
sufficient to reach the level of reductions required. Participants emphasised
that OEMs and transport operators would have to be confident about gaining an
adequate return for investment in new technologies. The Commission recognised
the issue of designating accountability for meeting limits as one which would
have to be given further consideration and a solution arrived at before any
legislation could be drafted.
6.         Commission concluding remarks
The chairman
provided a short summary of some of the key issues which had been raised. It
was noted that stakeholders wanted the simulation tool development to be
coordinated with private foot-printing schemes already in place. The request
for considering biofuels and gas powered vehicles was noted. With regard to the
main options presented, it was noted that stakeholders asked for a coordinated
approach on the various policies monitored and implemented by DG MOVE and DG
CLIMA. Transparency was considered important. Stakeholders requested that the
Commission ensures that the cost-benefit outcome of options eventually pursued
should be favourable for the transport industry and technologically neutral.
Participants were also keen for the Commission strategy to be consistent with
voluntary private carbon emissions mitigation and foot-printing schemes already
launched in a number of Member States. Finally, the Commission confirmed that
the Impact Assessment will be finalised by the end of the year with a view to
having a strategy Communication adopted in summer 2013.
Annex - List of Participant organisations
 Organisation 
 AEA consulting ||   
 Association des Industries de Marque, AIM Delegation (Procter & Gamble / Unilever) || AIM 
 Association for Emissions Control by Catalyst || AECC 
 Association of European Vehicle Logistics || ECG 
 Association of French Road Haulage ||   
 BAE Systems ||   
 Belgian federal administration of environment ||   
 Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (Germany) ||   
 CE Delft ||   
 Comité de Liaison de la Construction de Remorques || CLCCR 
 Climate, Energy and Building Affairs Energy Agency ||   
 Continental Automotive GmbH ||   
 Continental Reifen Deutschland GmbH ||   
 Cummins Ltd ||   
 DAIMLER ||   
 Dr. Koch Consulting e.K. On behalf of Continental ||   
 European Biodiesel Board || EBB 
 European Aluminium Association ||   
 European Association for Electric Vehicles || AVERE 
 European Association for Forwarding, Transport, Logistic and Customer Services || CLECAT 
 European Association of Automobile Suppliers (CLEPA(DELPHI/DENSO/ZF/BOSCH) || CLEPA 
 European Automobile Manufacturers' Association || ACEA 
 European Renewable Ethanol || ePURE 
 European Shippers Council ||   
 European Small Business Alliance ||   
 EvoBus GmbH/Daimler Buses ||   
 Flemish Government - Environment, Nature and Energy Department ||   
 Freight Transport Association || FTA 
 General Directorate of Traffic, Ministry of Interior, Government of Spain ||   
 Goodyear Innovation Center ||   
 Greater Than AB ||   
 Green Freight Europe ||   
 HARTENERGY ||   
 International Council for Clean Transportation || ICCT 
 International Association of Public Transport || UITP 
 International Road Transport Union || IRU 
 IVECO ||   
 MAN SE ||   
 Michelin ||   
 Ministerio de Industria, Energía y Turismo (Spain) ||   
 Ministry of Environment of the Republic of Lithuania ||   
 Ministry of Environment, Climate Change Section, Belgium ||   
 Ministry of Infrastructure and the Environment, Netherlands ||   
 National Union of Road Hauliers from Romania || UNTRR 
 Natural & bio Gas Association || NGVA Europe 
 Nordic Logistic Association || NLA 
 Permanent Representation of Lithuania to the European Union ||   
 Polish Automotive Industry Association || PZPM 
 Robert Bosch GmSH ||   
 Royal Federation of Belgian transport and logistics service providers || FEBETRA 
 Scania ||   
 Spanish Confederation of Freight || CETM 
 Spanish Federation of Transport by Bus || Fenebus 
 Swedish Transport Agency ||   
 Transport & Environment || T&E 
 Transport en Logistiek Nederland ||   
 United Parcel Service || UPS 
 Verband der Automobilindustrie || VDA 
 Voith Turbo GmbH & Co. KG ||   
 Volvo Group ||   
 Volvo Trucks ||   
              Annex 3 : Transport White Paper Actions
The following actions, foreseen in the
Transport White Paper, are expected to contribute –directly or indirectly-
curbing HDV CO2 emissions.
(i)         Review cabotage legislation 
The Transport White Paper also identifies
the "elimination of the remaining restrictions on cabotage" (Regulation
1072/2009/EC) as a means of making road transport more efficient and more
competitive, including by increasing loading factors of vehicles.
(ii)        Review road user charging 
An on-going review of road user charging
legislation aims to promote a more systematic use of distance related road
charging reflecting infrastructure and external costs based on the
polluter-pays and user-pays principles
(iii)       Review the weights and
dimensions legislation, notably with the aim of reducing fuel consumption and
CO2 emissions
The type approval legislation[90]
on weights and dimensions recently introduced an allowance (50 cm) for
aerodynamic devices fixed at the rear of new trucks/trailers. In line with
this, the Commission has proposed[91]
a revision of Directive 96/53/EC on weights and dimensions of vehicles in
international traffic that goes further by proposing a new set of allowances
that should support solutions to improve the aerodynamics of HDV.
(iv) E-freight 
The aim of the initiative is to create the
appropriate framework to streamline the electronic flow of information
associated with the physical flow of goods, in support of planning, execution,
monitoring and reporting on multimodal freight transport, to ensure liability
for intermodal transport and to promote safe, secure and clean freight
transport.
(v) Transport carbon footprint: method
and schemes
A carbon foot-printing initiative
is under preparation to support improved transparency and end-user information
on the CO2 impact of freight and passenger transport;
(vi) Adopt and implement a strategy for
near-"zero-emission urban logistics" in 2030
The Transport White Paper also announced a strategy
for near "zero-emission urban logistics" providing guidelines to
better monitor and manage urban freight flows. In December 2013 the Commission
put forward specific recommendations for coordinated action between all levels
of government and between the public and the private sector in urban logistics
area, urban access regulation area, deployment of intelligent transport system
(ITS) solutions and urban road safety area.
(vii) "Clean Power for
Transport" - an alternative fuel strategy – and the revised TEN-T
guidelines
              The recent “Clean Power
for Transport” initiative (also foreseen in the Transport White Paper) and the
revised TEN-T guidelines, supported by the Connecting Europe Facility, further
support the development of alternative fuel infrastructure and increased use of
natural gas for HDV[92],[93],[94].  
              Annex 4 : modelling framework
              modelling
framework - main results as regards HDV emissions
1.           Transport
business as usual developments up to 2050
1.1.        Modelling
Framework
European Commission services have
carried out an analysis of possible future developments in a scenario at
unchanged policies, the so-called “Reference scenario 2010”. The “Reference
scenario 2010” was used in the impact assessment accompanying A Roadmap for
moving to a competitive low carbon economy in 2050[95], the impact
assessment accompanying the White Paper - Roadmap to a Single European
Transport Area – Towards a competitive and resource efficient transport system[96] and the
impact assessment accompanying the Energy Roadmap 2050[97]. The
Reference scenario is a projection of developments in the absence of new
policies beyond those adopted by March 2010. In order to take into account the
most recent developments (higher energy prices) and the latest policies on
energy taxation and infrastructure adopted by November 2011, an additional
scenario (also
named Scenario 0 here) was modelled to serve as a business as usual scenario
for the present impact assessment. 
This "business as usual"
scenario (Scenario 0) is a projection, not a forecast, of developments in
absence of new policies beyond those adopted by November 2011. It therefore
reflects both achievements and limitations of the policies already in place.
This projection provides a benchmark for evaluating new policy measures against
developments under current trends and policies. 
Scenario 0 builds on a modelling
framework including PRIMES energy model and its transport model
(PRIMES-TREMOVE)[98],
PROMETHEUS and GEM-E3 models. Scenario 0 has been finalised at the beginning of
2012. The starting point for developing Scenario 0 is the “Reference scenario”.
This “Reference scenario” has been extensively described in:
Ø    
The
impact assessment accompanying A Roadmap for moving to a competitive low
carbon economy in 2050, which also provides in its Annexes additional
information on PRIMES modelling undertaken in the decarbonisation framework.
Ø    
The
impact assessment accompanying the White Paper - Roadmap to a Single
European Transport Area – Towards a competitive and resource efficient
transport system, Appendix 3 (pages 130-152). The list of policy measures
included in the “Reference scenario” is provided in Appendix 4: Inventory of
policy measures relevant for the transport sector included in the 2050
Reference scenario (pages 153-155).
Ø    
The
impact assessment accompanying the Energy Roadmap 2050, Part A of Annex
1, which describes assumptions, results and sensitivities in much details with
respect to the Reference scenario (pages 49-97)[99].
It is thus deemed not necessary to
reproduce all information contained in the above listed references, but rather
to discuss the common and different assumptions included in Scenario 0 relative
to the “Reference scenario” and to provide the most relevant information with
respect to the subject of this Impact Assessment.
Due to the detailed structure of
the data by transport mode in the PRIMES-TREMOVE model and the lack of
statistics, detailed data are not available for periods before 2005 and thus
not shown in this section, even if data on aggregated level are shown prior to
1990 elsewhere.
1.2.        Key
assumptions of Scenario 0
The population projections
draw on the EUROPOP2008 convergence scenario (EUROpean POPulation Projections,
base year 2008) from Eurostat, which is also the basis for the 2009 Ageing
Report (European Economy, April 2009)[100]. The key drivers for
demographic change are: higher life expectancy, low fertility and inward
migration.
Table
1. Main baseline scenario indicators 2005-2050
The macro-economic
projections reflect the recent economic downturn followed by sustained economic
growth. The baseline scenario assumes that the recent
economic crisis has long lasting effects, leading to a permanent loss in GDP.
The recovery from the crisis is not expected to be so vigorous that the GDP
losses during the crisis are fully compensated. In this scenario, growth
prospects for 2011 and 2012 are subdued. However, economic recovery enables
higher productivity gains, leading to somewhat faster growth from 2013 to 2015.
After 2015, GDP growth rates mirror those of the 2009 Ageing Report. Hence the
pattern of our baseline scenario is consistent with the intermediate scenario 2
“sluggish recovery” presented in the Europe 2020 strategy[101]. The medium and long term
growth projections follow the “baseline” scenario of the 2009 Ageing Report
(European Economy, April 2009)100, which derives GDP
growth per country on the basis of variables such as population, participation
rates in the labour market and labour productivity. 
The population and macroeconomic assumptions used in Scenario 0 are common with those
of the “Reference scenario 2010”. 
Table 2:                      Growth rates for key baseline
assumptions
 Annual growth rates [%] || 2010 > 2020 || 2020 > 2030 || 2030 > 2040 || 2040 > 2050 
 Population || +0.29 || +0.12 || +0.00 || -0.09 
 Number of households || +0.65 || +0.40 || +0.31 || +0.23 
 GDP || +2.21 || +1.74 || +1.50 || +1.45 
 Household income || +1.91 || +1.43 || +1.58 || +1.55 
The energy import prices
projections in Scenario 0 are based on a relatively high oil price environment
and are similar to reference projections from other sources[102],[103]. The baseline
price assumptions for the EU27 are the result of world energy modelling (using
the PROMETHEUS stochastic world energy model[104])
that derives price trajectories for oil, gas and coal under a conventional
wisdom view of the development of the world energy system. This stochastic
model is particularly well suited given the great uncertainty regarding future
world economic developments and the extent of recoverable resources of fossil
fuels. The price development to 2050 is expected to take place in a context of
economic recovery and resuming GDP growth without decisive climate action in
any world region. Prices were derived with world energy modelling that shows
largely parallel developments of oil and gas prices whereas coal prices remain
at much lower levels[105].
Table 3:                      Energy import prices
 €'10 per boe (*) || 2010 || 2020 || 2030 || 2040 || 2050 
 Oil || 85.2 || 89.0 || 106.6 || 116.9 || 127.6 
 Gas (NCV) || 53.8 || 62.5 || 77.1 || 87.4 || 99.0 
 Coal || 22.8 || 28.9 || 32.8 || 32.8 || 33.7 
(*) boe = barrel
oil equivalent
Similarly to the “Reference
scenario 2010”, the price of the CO2 emissions allowances in
the EU Emissions Trading Scheme reaches 15 €'10/tCO2
by 2020 and is further projected to reach and stay around 50 €'10/tCO2
in period 2040-2050 in Scenario 0. 
The following policy assumptions
are included in Scenario 0 in addition to the “Reference scenario”:
 Area || Measure || How it is reflected in the model 
 Pricing and taxation 
 Taxation || Energy taxation Directive (revision 2011) || Changes to minimum tax rates to reflect the switch from volume-based to energy content-based taxation and the inclusion of a CO2 tax component. Where Member States tax above the minimum level, the current rates are assumed to be kept unchanged. For motor fuels, the relationships between minimum rates are assumed to be mirrored at national level even if the existing rates are higher than the minimum rates. Tax rates are kept constant in real terms. 
 Internalisation of local externalities || Eurovignette Directive (Directive 2011/76/EU) || Reflected through the introduction of infrastructure charges in Poland (starting with 2011) and the announced introduction of distance based infrastructure charges in Denmark and Belgium (from 2014). 
 Infrastructure || TEN-T guidelines (revision 2011) and Connecting Europe Facility. || Reflected through the increase in the capacity and performance of the network resulting from the elimination of bottlenecks and addition of missing links, and increase in the train length (to 1.5 km) and maximum axle load (to 22.5 tonnes), reflected through decreases in operation costs and time costs and higher load factors for freight. 
 Internal market || Recast of the first railway package (EC proposal 2010) || Reflected through a reduction of average operating costs for railway undertakings. 
 Other assumptions 
 Energy import prices ||   || Short-term increase to reflect the evolution of prices up to 2010 as in the Energy Roadmap 2050. 
 Technology assumptions || Higher penetration of Electric Vehicles reflecting developments in 2009-2010 national support measures and the intensification of previous action programmes and incentives, such as funding research and technology demonstration (RTD) projects to promote alternative fuels. || Slightly higher penetration of Electric Vehicles. Assumed specific battery costs per unit kWh in the long run: 390-420 €/kWh for plug-in hybrids and 315-370 €/kWh for electric vehicles, depending on range and size, and other assumptions on critical technological components[106]. 
1.3.        Scenario
0 results
Total transport activity is
projected to grow in the next 40 years. Even though some decreases were
observed recently as a consequence of the recent economic and financial crisis,
the recovery foreseen is reflected by transport activity returning to its
long-term trends. Road transport is expected to maintain its dominant role in
both passenger and freight transport within the EU. Passenger transport by rail
is projected to grow faster than passenger transport by road, while the growth
rates in road and rail freight transport are expected to be in the long run
more similar. Air transport and fast passenger trains are foreseen to grow
significantly (and roughly at the same rate) and thus increase their shares in
transport demand.
Table 4:                      Transport activity annual growth rates
in the baseline scenario
   || 2010 > 2020 || 2020 > 2030 || 2030 > 2040 || 2040 > 2050 
 Activity changes measured in Gvkm 
 Road transport || 1.35 || 0.68 || 0.60 || 0.38 
       Public road transport || 0.87 || 0.44 || 0.41 || 0.24 
              Busses || 1.76 || 1.18 || 0.43 || 0.22 
              Coaches || 0.47 || 0.07 || 0.39 || 0.26 
       2Wheelers || 1.39 || 1.02 || 0.60 || 0.41 
       Private cars (M1) || 1.33 || 0.69 || 0.55 || 0.36 
              Small cars || 1.22 || 1.10 || 0.67 || 0.40 
              Medium cars || 1.93 || 0.27 || 0.27 || 0.22 
              Big cars || -2.02 || 1.76 || 1.80 || 0.95 
       Passenger LDV (N1) || 1.58 || 0.78 || 0.62 || 0.38 
 Road Freight Transport || 1.46 || 0.65 || 0.82 || 0.52 
       Trucks (HDV) || 1.66 || 0.53 || 0.80 || 0.50 
              HDV 3.5 - 7.5 tons || 1.52 || -0.08 || 1.03 || 0.43 
              HDV 7.5 - 16 tons || 2.10 || 0.67 || 0.63 || 0.52 
              HDV 16 - 32 tons || 1.57 || 0.79 || 0.88 || 0.49 
              HDV >32 tons || 1.56 || 0.55 || 0.62 || 0.54 
       Freight LDV (N1) || 0.69 || 1.16 || 0.99 || 0.65 
 Activity changes measured in Gpkm for passenger and Gtkm for freight 
 Passenger trains || 1.87 || 1.95 || 1.05 || 0.72 
 Freight trains || 2.34 || 1.35 || 0.78 || 0.58 
 Aviation || 3.79 || 2.55 || 1.50 || 1.28 
 Passenger inland navigation || 0.96 || 0.86 || 0.47 || 0.31 
 Freight inland navigation || 1.45 || 1.43 || 0.56 || 0.27 
As shown in Table 4 modal
shift in the area a passenger transport is taking place due to an increase of
the relative share of aviation. Conversely, the situation in the area of
freight is expected to be more stable (however Primes-Tremove did not model air
freight), with a modest shift of the relative share of HDV transport to train,
and HDV freight retaining the bulk of its overall market share. 
Table 5:          Distribution per mode, baseline scenario (in
percentage shares)
Figure 1:                     Transport activity of heavy duty
vehicles
Figure 2:                     Energy use of heavy duty vehicles
NB: Ktoe =
Kilotonnes oil equivalent

Figure 3: Energy use of heavy duty
vehicles by fuel
Figure 4: TTW CO2 emissions of heavy duty vehicles              TTW = tank-to-wheel
Figure 5:         Decomposition of
TTW CO2 emissions of heavy duty vehicles 
As can be seen from Figure 3, the energy
use of heavy-duty vehicles is projected to increase and after 2025
stabilise at around 112 Mtoe, despite increased activity. This is due to
improvements in the efficiency of new heavy duty vehicles as well, to a lesser
extent, as a consequence of implementing the proposal for the revision of the
Energy Taxation Directive. 
Evolution of CO2
emissions (Figure 4)
is showing slightly less growth then energy use due to anticipated small
increase in the use of biofuels. Compared to 2005, CO2 emissions
from heavy duty vehicles in the baseline scenario are expected to peak around
2015-2020 (10% above 2005 levels). In periods 2030-2050 they are expected to be
stabilised at approximately 2% above 2005 levels. While detailed official
historical statistics of CO2 emissions from heavy duty vehicles
within road transport sector are not available, estimates suggest that between
1990 and 2010 the CO2 emissions of heavy duty vehicles increased by
around 36%. With that in mind, one can roughly estimate CO2
emissions changes with respect to 1990: in both, 2030 and 2050, at around the
2010 level.
A decomposition of heavy
duty vehicles CO2 emissions into the product of population, GDP per
capita, tonne-km per GDP, energy per tonne-km (approximation for the energy
efficiency) and carbon intensity of fuels is shown in Figure 5. While in last
20 years (period 1990-2010) the improvements in energy efficiency and fuel
carbon intensity were not able to offset the activity increases, the expected
change in the economies transport intensity (tkm/GDP) results in profound
effect on CO2 emissions. As a consequence of increasing fuel prices
as well as recent financial and economic crisis, we can see some significant
improvements for all efficiency related indicators affecting CO2
emissions from heavy duty vehicles in the period 2010-2030. The rate
improvements for fuel carbon intensity in period 2030-2050 slow down significantly.
2.           Scenario
1 - sensitivity of the baseline: efficiency improvements 
Scenario
1 assumes efficiency improvements in the next 40 years for heavy duty vehicles
considerably lower than in the baseline scenario (scenario 0). This allows to
quantify how much further efficiency improvements bring in terms of energy and
CO2 savings. In the Table  5 the exact rates of improvements in Scenario 0 and Scenario
1 are compared. 
Table 6:          Improvements in
average efficiency of new registrations             
(diesel conventional engine)
 % p.a. || Scenario 0 || Scenario 1 
 10 > 20 || 20 > 30 || 30 > 40 || 40 > 50 || 10 > 20 || 20 > 30 || 30 > 40 || 40 > 50 
 Buses || -1.09 || -1.13 || -0.56 || -1.11 || -0.64 || -0.37 || -0.14 || -0.39 
 Coaches || -1.31 || -1.21 || -0.52 || -0.99 || -0.89 || -0.48 || -0.13 || -0.34 
 HDV 3.5 – 7.5t || -0.39 || -1.00 || -0.42 || -0.38 || -0.08 || -0.33 || -0.15 || -0.23 
 HDV 7.5 – 16t || -0.21 || -1.11 || -0.34 || -0.35 || 0.11 || -0.45 || -0.12 || -0.21 
 HDV 16 – 32t || -0.36 || -1.24 || -0.26 || -0.33 || 0.01 || -0.49 || -0.07 || -0.20 
 HDV above 32t || -0.30 || -1.30 || -0.37 || -0.34 || 0.04 || -0.54 || -0.15 || -0.23 
In general the
impact of this lower vehicle fuel and CO2 efficiency on total HDV freight
transport activity is small – slight reductions up to 3% in 2050. The increases
in CO2 emissions in Scenario 1 are the same as the increases in
energy use, however due to no changes at all in the structure of fuel use (near
100% of diesel use).
Table 6:          Key
differences for trucks in Scenario 1 compared to Scenario 0
 trucks || 2020 || 2030 || 2040 || 2050 
 vehicle-km || -0.4% || -1.6% || -2.9% || -3.0% 
 tonne-km || -0.9% || -1.5% || -2.2% || -2.5% 
 energy || +1.8% || +6.4% || +9.7% || +11.6% 
 TTW CO2 || +1.8% || +6.4% || +9.7% || +11.6% 
For buses and
coaches the trend is also affected by lower efficiency in passenger cars and
some small shift of passengers from cars to public transport on road. However
the differences in activity are very small in Scenario 1 when compared to
Scenario 0 (see 7).
Table 7:    Key differences for buses and coaches in Scenario 1 compared
to Scenario 0
 buses & coaches || 2020 || 2030 || 2040 || 2050 
 vehicle-km || +0.2% || -0.0% || -0.1% || +0.4% 
 passenger-km || +0.2% || +0.0% || +0.0% || +0.5% 
 energy || +1.9% || +8.4% || +14.1% || +19.8% 
 TTW CO2 || +1.9% || +8.3% || +14.0% || +19.4% 
There
is no significant direct impact on air pollutants. If fuel consumption
decreases, truck manufacturers may optimize the engines in such way that
significant overachievements to existing in air pollutants limits (Euro6/VI)
should not be expected. 
Overall if
efficiency improvements in future are not as high as claimed by industrial
actors in the HDV field (around 1% p.a.), but roughly more than halved,
additional CO2 emissions in 2020 amount around 6 Mt CO2.
These additional CO2 emissions increase to 19 Mt CO2 in
2030 and 35 Mt CO2 in 2050. The cumulative additional emissions in the
period 2030-2040 can be estimated (based on the modelling results) at around
272 Mt CO2, which is roughly equivalent to annual CO2
emission of trucks in 2035 (283 Mt CO2). Total cumulative additional
CO2 emissions in period 2020-2050 are at 715 Mt CO2,
which is roughly equivalent to the average annual emissions of total road
transport in the baseline scenario in this period.
3.           Sensitivity
analysis
A number of other
sensitivity analysis tests were carried on the baseline scenario by running
alternative PRIMES-TREMOVE scenarios. In particular:   
- i./ in case the
revised Energy Taxation Directive proposed by the Commission in 2011 - which
foresees a rebalancing of diesel fuel and gasoline prices and pricing CO2
within the gasoline and diesel fuel price (the proposed revised ETS assumed a
CO2 /Ton price of EUR 20) is not adopted - an alternative run of the baseline
scenario suggests that HDV tailpipe emissions would increase only slightly
more, i.e. 2.6% in 2030 and 2.4% in 2050 above the baseline;    
- ii./ conversely,
assuming significantly higher oil prices with an oil price reaching USD 167.3
boe in 2050 vs. USD 128 boe in the current baseline (in 2010 prices), i.e. some
30% above baseline assumptions, HDV 2050 tailpipe emissions would decrease by
5% vs. the baseline, i.e. an increase moderated to some 31% above their 1990
level.
              Annex 5: HDV fleet segmentation
Main
characteristics of the Heavy-Duty Vehicles'  Fleet
HDVs are defined as
freight vehicles of more than 3.5 tonnes (trucks)[107] or passenger
transport vehicles (buses, coaches)[108]
of more than 8 seats. The EU HDV market has been highly vulnerable to recent
economic cycles and crises: as in the case of a number of investment goods
markets, sector cyclical adjustments tend to be much sharper and radical –both
ways- than overall GDP growth cycles. Truck registrations fell sharply in 2009
(-44%), recovered in 2010 and 2011 but fell again in 2012 (- 9% ) against the
background of a worsening economic environment, with altogether around half a
million (499,895) vehicle registrations[109].
As a result 2012 truck registrations remained significantly below 2008 levels.
The market of buses and coaches appears less cyclical, with about 32,000
registration in 2012, up 1.2% against 2011. In view of the much smaller numbers
of buses and coaches passenger transport emissions represent a minor share of
total HDV CO2 emissions. 
Table 1:                                      
Main HDV categories (trucks)
 Category || Main vehicle mission || Registrations last decade (%) 
 3.5-7.5 tons: Service and delivery  || Distribution of goods mainly in cities || 18.7% 
        above 7.5 tons: ||   ||   
 Urban delivery and collection || Distribution in cities or suburban sites from a central store to selling points || 6,7% 
 Municipal utility || Refuse collection trucks, road sweepers. || 6,8% 
 Regional delivery and collection || Distribution of consumer goods from a central warehouse to local stores || 20,4% 
 Long haul || Delivery to national and international sites of 1 day or more trips || 32,5% 
 Construction || On- and off-road construction site vehicles || 14,9% 
                                                                                                                                   
Source: AEA, based on ACEA input
Primary fleet data
are not available, with estimates relying on a number of assumptions: the  
AEA-Ricardo report[110]
estimated the EU truck fleet around 6.5 million vehicles in 2008. The HDV fleet
is heterogeneous with dissimilar vehicles that have different uses and drive
cycles. AEA, based on data and definitions provided by the professional
automotive industry association, ACEA[111],
segmented the HDV market along six categories of trucks (table 1) and two of
passenger vehicles[112].
Most fleet operators are SMEs and even micro-enterprises, with 81% of the truck
fleet owned by enterprises having less than 10 trucks (see Table10 in Annex
5).  The average lifetime of trucks appears to be shorter (around 11 years)
than that of buses and coaches (some 15 years)[113].
Among passenger
HDVs, the two main categories are buses and coaches with :      
- buses representing 76% of registrations[114],
that can be split into: city buses representing 45% of registrations; and
inter-city buses representing 31% of registrations;
- and coaches representing 24% of registrations (also AEA estimates based on
ACEA input).
The heterogeneity of
the fleet is even higher than it would appear based on these eight categories,
as each category can be further segmented according to the size and weight of
vehicles, the number of axles etc. Furthermore, contrary to cars and vans that
have long series of production, HVDs are to a large extent customised to
end-users' needs, implying only rather short series of production of
homogeneous vehicles. Other factors also play a role such as shape and
aerodynamic performance, real drive cycle, effective average load, etc. This
altogether makes the assessment of fuel consumption and vehicle's CO2
emissions more challenging than in the case of small road vehicles such as
cars. 
              Annex 6 : statistical data
Table 1:            Heavy Duty Vehicle Production in the EU by
Country in 2010

              Source: ACEA
2011 (National automobile associations)
    http://www.acea.be/images/uploads/files/20110921_Pocket_Guide_3rd_edition.pdf
Table 2:                      Vehicle registrations in the EU by
Country in 2010
Source: ACEA 2011 (National automobile
associations)
http://www.acea.be/images/uploads/files/20110921_Pocket_Guide_3rd_edition.pdf
Table
3:                New Vehicle (HDV) registrations in the EU-15 
Table
4:                EU Automotive industry trade 
Table 5:                      Employment
by Mode of Transport
Table 6:          Turnover
and Number of Enterprises, Freight and Passenger Transport
Table 7:          Modal Split, Freight Transport (inland modes)
Table 8:          Modal Split, Passenger Transport
Table 9: Compared labour intensities, automotive manufacturing and
oil industry
Table 10:                                EU fleet
distribution 
Table 11 
              Annex 7 : Simulation tool development
Determination of CO2
emissions from HDVs:
development of a new simulation tool, VECTO[115]
1. Current situation
Unlike for cars and vans, where pursuant to
the existing type-approval regulation the fuel consumption of each new type
approved vehicle is tested on a chassis dynamometer, there is no official and
comparable determination for the fuel consumption or its equivalent for the CO2
emissions for a whole new HDV. For a consistent policy on reducing CO2
emissions and measuring the future achievement of fuel efficiency a robust,
reliable and cost effective determination of fuel consumption has to be
established.
Several approaches for the determination of
CO2 emissions have been investigated:

 Chassis dynamometer
 Portable Emission Measurement Systems (PEMS) and
 Component testing and computer simulation

Due to multiple combinations of axle type, number
of driven axles, gear boxes, engines and cabins, the number of variations
within one HDV model range can exceed 1000. Therefore measuring every possible
configuration on a chassis dynamometer or with PEMS would be a very burdensome
approach.
2. Development of a simulation tool of
whole HDV CO2 emissions
The Commission has since 2009 engaged with
main industry stakeholders in the development of a simulation tool for whole
vehicles CO2 emissions and fuel consumption that should be
applicable to all main categories of HDVs.
In the project “Reduction and testing of
Greenhouse Gas Emissions from Heavy duty vehicles” - (call for tender
ENV.C.3/SER/2009/0038) a simulation based test procedure where the relevant
components of the HDV were tested and based on this data a simulation tool
calculating the fuel consumption and the CO2 emissions in vehicle
class specific test cycles was chosen as the method that delivers robust
results of CO2 figures for HDVs and appears manageable for the
manufacturers and public administrations that have to deal with a test
procedure. 
The relevant data needs for the simulation of
HDV CO2 data that have been identified include the engine fuel
efficiency map, vehicle weight, rolling resistance coefficients, aerodynamic
drag specifications, moments of inertia from the vehicle including standardised
bodies or trailers, the specifications of the gear boxes and efficiency of the
auxiliaries.
Such a simulation based approach should allow
cost efficient testing of multiple HDV variations by compiling the measured
component data in the simulator. This approach also makes it possible to easily
assess the CO2 emissions impact of improved trailer and body
structure design. The proposed test procedure has been applied experimentally
on three HDV categories and appears to give reliable results. 
The simulation-based method consists of: 

 On-road measurement of driving resistances
 Determination of drivetrain losses 
 Determination of power demand of engine auxiliaries and other
     consumers
 Measurement of the engine fuel consumption map as extension to
     the engine's type approval tests 
 Simulation of the fuel consumption and the resulting CO2-emisions
     from the vehicle using the aforementioned input data for predefined
     representative driving cycles.

The single steps described in brief:
The driving resistances of the vehicle will
be measured during constant speed or coast down rides on a test track.
Standardized bodies and trailers will be used to obtain reliable air resistance
values. For reproducible results, corrections for influences of road gradient,
wind speed, ambient temperature and air pressure as well as for velocity
unsteadiness have to be applied to the measured driving resistance values. 
For the body and trailer manufacturers an
option for a less extensive procedure can be applied. Improved bodies or
trailers (aerodynamics, curb weigh) can be tested in comparison to the standard
components via constant speed tests or via coast down tests at high velocities.
The relative change against the standard body or trailer can then be introduced
into the simulation tool to calculate the fuel consumption and the CO2 emissions
of the alternative vehicle and body-configuration.
Drivetrain friction losses and the power
demand of engine auxiliaries like fan, air compressor or air conditioning, will
be defined as default functions. If OEMs use more efficient components, the
default values can be replaced by component specific efficiency maps.
Since several technical options to improve
the fuel efficiency of HDV have different reduction potentials at varying
driving conditions, the definition of representative driving cycles is
important for a realistic ranking of the specific fuel consumption. Driving
cycles for the different categories and usage of HDVs are newly developed to
give more realistic results on fuel consumption.
It is desirable for the methodology to
address all characteristics that are relevant to the efficiency of the entire
vehicle. Realistic values for the fuel efficiency of various HDV in different mission
profiles will improve customer information and incentivise manufacturers to
develop and apply fuel saving technologies. In future a standardised test
procedure could support other measures in the HDV sector including CO2
emissions monitoring, labelling or programmes for HDV customers to calculate
HDV fuel efficiency.
The main targets for the test procedure
are:

 Repeatable (within same laboratory) and reproducible (between
     different laboratories)
 Incentive to apply efficient technologies and to optimise the
     entire vehicle set-up
 High sensitivity for fuel saving measures
 Reasonable costs and efforts to run and examine the procedure 
 Simple and robust

Schematic
overview of simulation model and
computational programme
Figure 1 below gives an overview of the test
procedure. Rolling resistance, air resistance, power to accelerate
translational and rotatory moved masses, power resulting from road gradients,
losses in the transmission system and power demand from auxiliaries are
considered in the simulation. 
Figure 1:         Schematic
picture of the test procedure
All the measured data of the components /
subsystems of a HDV will then be used as input data in a HDV energy/CO2
simulation.
Figure 2:         Structure
of the simulation tool
The structure of the simulation tool is shown
below:
The simulation tool will calculate the energy
consumption of the whole HDV and give as a result the fuel consumption or CO2
emissions in g/km, g/t*km, g/m3*km, g/passenger*km.
3. On-going and future development steps
of the VECTO tool.
The development of the VECTO tool entered in
October 2012 in a new phase with tests of the methodology with an active
participation of the manufacturers to prove the reliability of the test
procedure and simulation. 
Until May 2014:

This phase (on-going), based on currently
contracted assignments, is expected to last until May 2014, and includes:            
- the current development and test of the VECTO tool which covers three
categories of HDV vehicles, i.e. long haul, regional/city delivery, and coaches
(completion May 2014);             
- and the preparation of the required documentation of
certification/registration process (already started, to be defined and finalised
in 2014 upon completion of the VECTO tool).
By May 2014 the model is expected to be
validated for the above mentioned three categories of vehicles that represent
more than 50% of new HDV registrations. 
Mid-2014 until end 2015 (tentatively):
The VECTO tool thereafter will have to be
extended to other categories of HDVs (e.g. city and inter-city buses, municipal
utility trucks, service and urban delivery trucks, construction trucks).
Moreover, the IT platform of VECTO will have to be created. The next and last
phase of development of the VECTO tool is thus expected to include:
- the further development and finalisation of
VECTO to cover other categories of HDVs; 
- the IT development of a user-friendly software platform to support the
deployment of the VECTO tool ;          
- and the adaptation of the required documentation of the
certification/registration process for all relevant categories of vehicles.
              Annex 8 : Option 3, setting emission
limits - quantitative assessment
Option 3.i. Setting
HDV engine-only emission limits
Table 1           Improved
(diesel) engine, potential for CO2 emissions abatement 
Table 2.  Indicative
distribution effects of reduced fuel consumption in 2030
Option 3.i. Setting
HDV engine-only emission limits
Table 3           Indicative EU HDV fleet emissions reduction by
2030 with regulated CO2 emission limit
Table 4:          Indicative
cost of HDV technical upgrades vs. baseline scenario 
Comment: this table is a
conventional allocation of vehicle innovations for a Regional delivery vehicle
(used as "average" vehicle) along (i) the baseline scenario and (ii) option
3 on regulated limits. The baseline scenario assumes vehicle energy efficiency
improvements of around 1% per year over the period 2014-2020 (which would conventionally
by 2030 correspond to the first three lines' benefits under the assumption of
100% implementation). Additional conventional improvements are listed in the seven
following lines (4 to10) and have marginal costs that are negative, i.e. they
all allow for breakeven levels to be reached. The last two lines would not be
cost effective –they have positive marginal costs, see in annex 10 table on
regional delivery vehicles - and would not allow to reach breakeven. If the
regulatory CO2 emissions limit applying in 2030 under option 3 is
set around breakeven levels, this would imply that only innovations of lines
1-10 would be implemented by 2030, and not the last two ones (Gen.II dual
hybrid & Automatic tire inflation). Summing up marginal costs of lines 4-10
one concludes that the cost of individual vehicle upgrades to comply with the
regulatory limit is around 11.356 euros, with the latter set at -33.5% of its
2014 level, or below 15.6% the level that would be reached in 2030 under the
baseline scenario (right column).  The reality would differ from this
conventional allocation of innovations with a broader match of innovations
implemented under the baseline scenario, with different penetration rates (and
not 100% as assumed here for the first three lines).
Setting
regulatory emissions target levels, possible policy methods
One important
policy decision to be made under this option relates to the method to be used
in due course for setting the CO2 emissions reduction target, with
several main options:                               
- (i) either setting the policy target around the estimated breakeven level of
technology uptake based on marginal costs (this would mean a 30% to 35%
emissions reduction level under the present CE Delft estimates, i.e. not
requesting technology uptakes with positive marginal abatement costs), thus in
the worst case neutralising the economic impact and cost of this regulatory requirement
for the HDV fleet operators. This would ensure that regulatory requirements
concur with the cost incentive structure. The HDV industry would be expected to
benefit from this method since most technical upgrades considered have
significantly negative marginal abatement cost. If the sector is also included
in ETS, the breakeven level of technology would shift due to inclusion in ETS, notably
if carbon prices were to rise significantly. The latter combined option
requires further research and is not analysed in detail within this Impact
Assessment.           
- (ii) or neutralising the overall cost of regulation for HDV operators, which
implies that marginal costs of technology uptakes would be averaged, ensuring
that upgrades with positive marginal abatement rates may be required as long as
their net cost is covered by gains made on other upgrades at negative costs. In
spite of its overall fairness, the disadvantage of this method is a
disconnection between regulatory and marginal cost incentives, with high risks
of missing the regulation's target, with those technical upgrades that have a
negative marginal cost not being introduced.            
 - or (iii) requesting an additional effort from HDV transport by setting an
even more stringent limit, with –in order to ensure a level playing field with
other sectors of the economy - this effort being made financially equivalent to
a carbon emissions ETS price contribution from HDV operators, thereby
equalising marginal costs with those of sectors and enterprises that belong to
the ETS.          
                
This neutralising or equalising objective under options (ii) and (iii) would
however require high non-compliance penalties adding, beyond breakeven levels
of marginal costs, a regulatory ad-hoc incentive.         
The option retained on an indicative basis in the quantitative analysis of the
present Impact Assessment is the first one, i.e. the setting of emission
ceilings at the breakeven point of emission abatement marginal cost curves. The
method to be eventually followed in setting emission limit value(s) would have
to be endorsed in due course as part of policy choices to be made.
Table 5:
Indicative distribution effects of reduced fuel consumption in 2030 vs.
baseline 
              Annex 9 : International Comparison
International experience in setting HDV CO2 emission
limits
Japan
Japan was the first
to introduce in 2007 a fuel consumption based rule for HDVs. The Japanese
provisions and limits expressed as Reference Energy Consumption Efficiency are
laid down in the Japanese Energy Conservation Standards. The corresponding test
procedure, called the TRIAS, was also published in 2007. The standards are
given as km/litre and become applicable form April 1st, 2015. The Japanese law
also provides provisions for vehicle sticker in the case that a vehicle to be
type approved over-fulfils / under runs the CO2-standard.
Based on the
"Top Runner Programme" (that requires current best in class
performance to become the average performance level by a target date),
manufacturers are required to improve the fuel economy of heavy duty vehicles
from the year 2015. Target values are set by category of gross vehicle weight.
For some categories, there are sub-categories based on payloads.
The simulation
method uses a computer programme that converts a vehicle-based driving cycle
into an engine-based operation cycle using vehicle specification data, and
thereby calculates fuel efficiency using the data from engine-based tests. This
test method mainly measures the fuel efficiency of engines, but factors such as
aerodynamics and tyre rolling resistance that could have an impact on on-road
fuel efficiency are calculated by standard values. Japan is preparing further
developments of the test method and with the possible inclusion of important
real world factors like rolling resistance and aerodynamics.
United States
In September 2011
the U.S. adopted legislation on HDV CO2 emissions. These rules,
which have been supported by the trucking industry, set standards for new
vehicles of model years 2014 through 2018 and will require manufacturers to
improve fuel economy and greenhouse gas emissions by up to 20 per cent for the
targeted models by 2018.
This rulemaking was
directed by the U.S. government to EPA (Environmental Protection Agency) and
NHTSA (National Highway Traffic Safety Administration) in order to develop a
joint national program for reducing GHG and fuel consumption in the U.S.
Heavy-Duty Sector. The regulation includes testing and verification provisions
as well as standards for CO2 emissions and the fuel consumption of heavy-duty
trucks and vehicles. The CO2-emission standards are set to values in
gram/ton-mile and the standard for the Fuel Consumption is expressed in
gallon/1000 ton-miles. The CO2 standard is set by EPA and the fuel consumption
standard by the NHTSA as a part of the U.S. Department of Transportation (DOT).
Along with the CO2, EPA is also regulating CH4 (Methane) and N2O (Nitrous
Oxide) in a set of greenhouse gases (GHG). CO2 credits from an ATB (Averaging,
Trading and Banking) program can be used if the CH4 or N2O limit values are
“slightly” exceeded. In addition the proposal comprises new engine standards
with respect to CO2 in g/bhp-hr and Fuel Consumption in gallon/100 bhp-hr. As
the U.S. truck market allows the vehicle buyer to choose between different
engines (also by means of manufacturer) a dual approach applying to engine and
vehicle emissions was applied. 
The rule does not
set separate standards for the trailers themselves. However, EPA and NHTSA are
reflecting on ways to include them in regulations beyond model year 2018. For
heavy-duty pickup trucks and vans, the final rules require improved fuel
consumption and greenhouse gas emissions by 15% by 2018 with separate standards
for diesel and gasoline engines. For delivery trucks, buses, and garbage
trucks, known as “vocational vehicles,” the final rules require improved fuel
economy and greenhouse gas emissions by 10% by 2018. 
Manufacturers of
heavy-duty trucks and vans will also have a fleet-wide averaging system similar
to that used by passenger vehicle manufacturers to meet their fuel economy
requirements.
The standards for
combination tractors and vocational vehicles include both engine and vehicle
based CO2 and fuel consumption limits. Compliance with the engine emission
limits will be determined through engine dynamometer testing, while compliance
with vehicle-based standards will be determined based on a customized vehicle
simulation model, called the Greenhouse gas Emission Model (GEM), developed by
EPA specifically for this regulation. Instead of using a chassis dynamometer as
an indirect way to evaluate real-world operation and performance, various
characteristics of the vehicle are used as inputs to the model, such as
aerodynamic features, weight reductions, tire rolling resistance, the presence
of idle-reducing technology, and vehicle speed limiters.
Canada
The Canadian rule
was adopted in 2012 and is based on the US one.
China
China recently
defined an approach on how to measure and report fuel consumption and CO2
emissions, without however yet any limits or declaration procedures. The
standard is applicable to all heavy-duty vehicles with a gross vehicle weight
above 3.500 kg. The Chinese CO2 standard is based on vehicle chassis-dynamometer
testing for the so-called “basic” vehicle type. All other vehicles
characterised by the “basic” vehicle are called “variant” vehicles. For the
“variants”, a simulation model can be used as alternative to the chassis-dynamometer.
Nonetheless all variants can be tested on the chassis-dynamometer too. The
simulation model will make use of the above mentioned engine test data as well
as of the driving resistance data. The standard allows determining the fuel
consumption either by a carbon balance or direct mass or volumetric
measurement.          

              Annex 10 : Competitiveness Assessment
Impacts on competitiveness
Introduction
Policy measures
assessed in the present competitiveness analysis are those that would legislate
on HDV CO2 emissions levels, i.e. the inclusion of HDVs in the
Emissions Trading Scheme (ETS, option 4 in section 5 of the present Impact
Assessment) or the mandatory introduction of emission limits (option 5 in
section 5). In analysing impacts of the considered policy measures on
competitiveness a distinction should be made between different affected sectors
and different markets. There may be an effect on the competitiveness of
European businesses, relative to each other or to companies from outside the
EU, on the European market and on other, global markets. Impacts on
competitiveness may be viewed from the perspective of the European economy as a
whole based on the competitiveness of European companies on global markets.
Overall economic impacts of legislative measures for reducing Heavy Duty
Vehicle (HDVs) emissions would not directly lead to impacts on competitiveness.
To analyse these one needs to assess, for different categories of companies,
whether various economic impacts are different for different companies
operating on the same market.
All affected sectors
will be discussed but the focus of this annex will mainly be on competitiveness
impacts in the HDV sector of the automotive industry: if new legislative
measures require the production of new HDVs with lower fuel consumption and
reduced CO2 emissions, the onus will primarily be on the automotive
industry to produce vehicles that meet the new requirements. Due to limited
data, in some aspects it has been difficult to obtain specific figures and
indicators for the HDV sector as a separate entity and as such an analysis of
the overall automotive industry in the EU is presented.
This annex first
identifies the sectors which are possibly affected. Then an assessment is given
of impacts with respect to general drivers that may affect competitiveness. In
addition to that impacts on the capacity of affected companies to innovate are
assessed. Based on these general evaluations and additional information from
available studies the impacts on competitiveness of businesses in different
affected sectors are analysed in more detail. Some analysis is also paid to the
impacts on SMEs.
Which are the
affected sectors?
The main sectors
affected by the impact of legislative measures that are examined and assessed
in the present Impact Assessment for reducing HDV fuel consumption and CO2
emissions would be HDV manufacturers and automotive component suppliers. Other
major stakeholder groups affected include freight and passenger transport
operators and logistics companies.
Buyers of HDVs,
including companies for their own use, logistics operators and transport
operators of freight and passengers services are affected. CO2
emissions are strictly proportional (except if fuel includes an increasing
proportion of non-fossil fuel) to fuel consumption with a currently stable
conversion parameter (1 litre fuel being equivalent to around 2.6 kg CO2
emissions). High HDV CO2 emissions hence translate to high fuel
consumption and operating costs. Conversely, significant savings in fuel
consumption and CO2 would reduce operating costs and increase
competitiveness. The benefits of increased fuel efficiency and lower CO2
emissions need to be assessed against the background of additional investment
costs required in manufacturing more efficient HDVs.
Vehicle
manufacturers would be affected by the obligation to comply with a new
legislative framework to reduce CO2 emissions from HDVs. This should
be seen against the background of recent regulatory developments which required
manufacturers to upgrade their vehicles to comply with European pollutant
regulations (the latest one being the Euro VI regulation that will enter into
force in 2014). Manufacturers may over time have to introduce technical CO2
reduction measures, either under the option of the inclusion of HDV transport
into the EU Emissions Trading Scheme (ETS) –Option 4 in the present Impact
Assessment-, or if emission limits are in due course introduced in the same way
as for cars and vans –Option 5 in the present Impact Assessment-. In the
short-term, this is likely to result in increased production costs and could
affect the structure of their product portfolios. However, given that demand
for low carbon vehicles is expected to increase throughout the world as climate
change policies continue to develop and third countries are increasingly
introducing similar CO2 / fuel efficiency standards, manufacturers
have an opportunity to gain first mover advantage, providing them with a
possibility to export advanced low carbon HDVs to other markets. Component
suppliers would also be affected by increasing demand for advanced technologies
and are expected to benefit from this higher demand. As with the vehicle
manufacturers they would benefit from the possibility to export these advanced
technologies to other markets around the world.
Fuel suppliers would
also be affected by policies to lower HDV C02 emissions as they are likely to
see lower demand for transport fuels in the future as a result of reduced HDV
fuel consumption and CO2 emissions. Other users of fuel and
oil-related products (e.g. chemical industry, heating) are expected to benefit
from lower prices if demand from the transport sector decreases. All end-users
of freight transport, i.e. industry and trade sectors in the economy, and
eventually consumers, would benefit from lower fuel consumption in transport
provided overall transport costs, including the cost of HDVs, does not
increase. In the same way, all passenger clients from bus and coach transport
services would benefit from lower bus and coach fuel consumption provided the
overall operating cost of passenger transport, including amortisation of HDV
equipment cost, remains lower. Finally, reduced CO2 emissions would
also have health benefits for the overall population.
Overview of
the most affected sectors
The automotive
industry is one of Europe’s key industrial sectors, and its importance largely
derives from its linkages within the domestic and international economy and its
complex value chain. In 2007, the automotive sector (enterprises involved in
the manufacturing of motor vehicles, trailers and semi-trailers) had a turnover
of over €780 billion[116]
and value added in the automotive sector amounted to around €140 billion,
representing about 8% of European manufacturing value added. The sector
directly employs more than 2.3 million people (or around 6% of manufacturing
employment) and is responsible in total for more than 12 million jobs across
Europe, about 5.5% of EU-27 employment. Most of the employees (ca. 60-70%) are
engaged in skilled (or semi-skilled) manual work, while 30-40% are trained
professionals or technicians (e.g. engineers, business and sales specialists,
IT, quality control, marketing, management). 
Automotive industry
employment in manufacturing is particularly important in Germany (≈ 13% of
manufacturing employment), Sweden (≈ 9%) and in France, Belgium, the Czech
Republic and Spain (≈ 8% each). Before the financial crisis, there had also
been a trend of increasing employment in the automotive sector in the new
Member States, where some manufacturers have been installing substantial
additional production capacity, while declines have been observed in some EU-15
countries. A decline in demand and production in the automotive industry (and
HDV sector) since mid-2008, due to the financial crisis, brought a significant
number of job cuts. The industry has strived to preserve its core and
most-skilled staff by reducing its temporary and agency workforce and
short-term measures (temporary shut-downs, shorter working weeks, salary cuts,
voluntary departures and early retirement). Although job losses at this time
were heavily impacted by the crisis they also reflected the restructuring
effort undertaken by the industry. Recent statistics, such as those in the
European Competitiveness Report 2011, have indicated that market conditions
improved in 2010 with a subsequent increase in production following the decline
in the previous two years. 
In terms of the
general HDV sector, it is estimated that almost 3 million people work directly
for the trucking transport industry: drivers, logistics experts, dispatchers,
operations managers, etc. Another 3.5 million people earn their living in
directly related industries[117],
such as truck manufacturing, repairing, selling, leasing and insuring. Even
those figures do not give the full picture, because jobs that depend on the
trucking industry are far more numerous than those related directly to it. The
importance of road freight to the overall transport industry is also clear:
about 75% of the freight volume and 90% of the value of all goods in Europe are
transported by road (this includes freight by heavy and light duty vehicles)[118].
Eurostat estimates suggest that over one third of people employed across all
transport modes are employed in road freight transport. The freight and
passenger transport industry is to a large extent an SME industry with almost
one million enterprises across the EU (925.000 according to Eurostat in 2008),
most of which are very small firms operating just a few trucks or
buses/coaches: the average turnover of enterprises was in 2008 EUR 537,000 in
the area of freight transport and EUR 337,000 for passenger transport firms. 
The number and
distribution of firms in the HDV sector including the share of SMEs
In general terms,
the automotive sector can be divided into suppliers (who, in turn are split
into different “tiers” depending on the complexity of the contribution to the
automotive product) and Original Equipment Manufacturers (OEMs, who are
responsible for the final product itself). Supply chain management (process
innovation) is one of the key strengths of the European automotive industry and
major European suppliers are among the world leaders. According to CLEPA (the
European Association of Automotive Suppliers), the supplier sector includes
some 3000 companies, of which 2500 are SMEs employing over 3 million people.
European suppliers are recognised as world leaders in technology and
innovation, particularly in electronics, powertrain and driveline components.
The automotive value-chain provides an important outlet for sectors such as
mechanical and electrical engineering, electronics, steel, metal-working,
chemicals and rubber. It is estimated that for €1 of value added by the
automotive industry itself, supporting industries generate approximately €2.7
of additional value added. The automotive aftermarket consists of approximately
665,000 companies[119],
the vast majority of which are SMEs and employs approximately 3.5 million
people and provides around €82 billion worth of components (spare parts, tyres,
accessories, etc.). 
The HDV sector is
more complex than that of passenger cars and Light Commercial Vehicles (vans),
in that, although there are a relatively small number of major manufacturers,
the OEMs are for the most part not responsible for the final vehicle
configuration (at least for rigid vehicles) other than the powertrain, chassis
and cabin. Essentially all rigid trucks go through (sometimes several)
bodybuilders to provide the additional body/superstructure and any additional
auxiliaries (e.g. tail lifts, cranes, cement mixers, refuse collection systems,
etc.) for most cases specific customer requirements. Road tractors in contrast
are essentially finished products although there may be some additional
modifications (e.g. for alternative layout of fuel tanks/capacity, cooking
facilities for overnight cabs, etc.). In addition, the end performance
/characteristics of the full articulated vehicle (= road tractor + semi-trailer)
will be highly dependent on the characteristics of the semi-trailer type pulled
by the tractor unit. Engine manufacturers (beyond the major manufacturers) only
have a very limited role to play in the EU HDV market, as the vast majority of
the engines used in EU HDVs are produced by the major manufacturers.
While the EU HDV
market is dominated by seven major European manufacturers (DAF Trucks, Daimler,
M.A.N., Renault, Scania, Volvo, Iveco Trucks), the trailer and body-builder
sector is highly diverse with thousands of organisations (Daimler alone has
over 5000 in its database), most of which operate only in local markets.
Consequently very little information is available on the EU market as a whole.
Labour
productivity 
The EU HDV market is
dominated by the seven major European manufacturers (accounting for 93% of EU
registrations), which also account for an estimated 40% of worldwide HDV
production[120].
The production of
HDVs worldwide increased by over 90% between 2000 and 2008, before a sharp 19%
fall in 2009 due largely to the global recession. Production in the EU
increased by just over 50% in the same 2000-2008 period and accounted for 17.5%
of all HDV production in 2008 before dropping by over 60% in 2009. In contrast
the proportion of production outside of the EU has risen significantly since
2000 (more than doubling in production to 2008) and had a more modest fall in
production (at -10%) in 2009. Total HDV production is dominated by trucks,
which account for almost 91% of all HDVs manufactured worldwide (and over 94%
in the EU). The reduction in production in the bus and coach markets between
2008 and 2009 was slightly lower (at -15%) with EU production fairing slightly
better (at -12%) compared with production in the rest of the world. In terms of
global production by manufacturer, the major European manufacturers account for
over 40% of total global production(of all vehicles above 3.5 tonnes) according
to OICA[121]
statistics, with Daimler being the largest European HDV manufacturer (and the
second largest worldwide after Isuzu) and the Volvo Group (which includes Volvo
Trucks and Renault Trucks) being the second largest. In the buses and coaches
subsector the proportion of production by the major EU manufacturers is lower at
around 28%. 
In 2010, the
European automotive industry produced about 380,000 commercial vehicles
(>3.5 tonne) and around 32,000 buses and coaches(>3.5 tonnes) in the EU,[122]
equivalent to about 15% of total production worldwide (based on figures from
the LMC Automotive Global Commercial Vehicle Forecast, Quarter 1, 2012). The
sector has on average produced around 490,000 heavy duty commercial vehicles
(>3.5 tonne) and 28,000 buses/coaches over the period 2007-2010 in the EU,
which, considering that this covers the financial downturn and particularly a
significant decline in production in 2009, is an indication of overall strength
and robustness. 
New truck
registrations
Following the
decline in production and sales in 2009, improvements in the market could be
seen in 2010. In 2010, a total of 249,869 new trucks
were registered in the EU, or 6.4% more than in 2009. Results were mixed across
countries as registrations slipped by 0.8% and 0.9% in the UK and France, while
they were down 5.0% in Italy and up 12.1% and 19.7% in Spain and Germany. Six
months into 2011, all significant markets expanded, leading to an overall 43.6%
increase of new truck registrations in the region. France saw its demand for
new trucks rise by 52.2%, Germany by 38.1%, the UK by 36.4% and Spain by 35.9%.
In total, 158,947 new vehicles were recorded in the EU in the first six months
of 2011.6
New bus &
coach registrations
In 2010, registrations of new buses and coaches fell by 10.4%. New
registrations of buses and coaches were down 9.6% in 2009, amounting to 37,533
units in the EU. From January to June of 2011, EU markets performed diversely,
resulting in an overall 2.4% contraction with a total of 16,364 new
registrations.
Registrations of
trailers
In 2008, EU wide new
registrations of trailers equalled approximately 250,000, of which 200,000 were
semi-trailers and 50,000 were drawbar trailers[123]. In terms
of manufacturers, the European trailer manufacture is highly diverse with
thousands of organisations, most of which operate only in local markets.
However, the top seven suppliers produced over 53% of the trailers manufactured
in 2008 and the top 69 suppliers produced over 90% of the total trailers
produced.
For the recent past,
it is difficult to disentangle the evolution of the entire automotive industry
from the effects of the economic downturn. In view of this the figures given
below for the period 2005-10 (which cover HDVs and passenger cars) should be
treated with caution since they cover the period of extreme turbulence. 
·                    
Average annual growth rate of employees was
-2.4%. 
·                    
Average annual growth rate of hours worked was
-2.6%.
·                    
Average annual growth rate of labour
productivity per person employed, which measures output divided by the number
of people employed was 1.4%. 
·                    
Labour productivity per hour worked average
annual growth rate was 1.5%.
·                    
Average annual growth rate of unit labour cost,
which measures the average cost of labour per unit of output was 0.3%.
Market share
of the world market
In 2007, the overall
EU automotive industry held a global market share of about 27% and this remains
relatively stable. In terms of HDVs, in 2010 it was estimated that EU-27
exports of Commercial vehicles (over 5 tonnes) and Buses & Coaches amounted
to €3.6 billion and imports €716 million, giving a trade surplus of €2.9
billion[124].
This included a 43% growth in exports and a 69% growth in trade balance as
opposed to 2009, which was a poor year for the worldwide HDV industry. In 2007,
around 22% of worldwide (new) truck (>6 tonne) sales were in Europe while
this figure was closer to 27% for trucks heavier than 16 tonnes. These
percentages fell due to the financial downturn and the strength of the Asian
commercial vehicle market in 2009 and 2010, although estimates for 2011 and
2012 indicate that sales figures were returning to somewhere approaching pre-2009
levels. The overall market share of EU companies in the HDV sector remained
above 20% in 2010 with Daimler Trucks having a 9.7% worldwide market share[125].

The major European
manufacturer groups dominate the EU market, accounting for 95% of all new
registrations of trucks and 75% of bus and coach registrations. The major EU
manufacturers are also major players globally with EU registrations of their
HDVs representing only around 15% of their total global production in 2008.
Hence developments within the EU will have the potential for significant
impacts more globally, where EU measures have a global relevance (i.e.
cost-effective on a global perspective). Other manufacturers play a more
significant role in the bus and coaches subsector. Ford accounts for around 7%
of this subsector, with the remainder due to smaller specialised manufacturers,
such as Alexander Dennis Group and Wright Group, which in particular serve a
significant portion of the UK market. 
In terms of the
overall automotive industry in Europe, the revealed comparative advantage ("RCA")
index, which compares the share of a given industry's exports in the EU's total
manufacturing exports with the share of the same industry's exports of a group
of reference countries, was 1.22 in 2007 and 2008 and 1.3 in 2009. In
comparison, the revealed comparative advantage index in the USA in 2009 was
0.96 and in Japan was 2.13. An RCA index greater than one indicates that the EU
vehicle manufacturing industry continues to be very competitive at an
international level. The implementation of legislative measures to reduce HDV
CO2 emissions (combined with legislation setting CO2
emission targets for passenger cars and LCVs) is unlikely to change this
position. In the long-term, European manufacturers are therefore well placed to
take advantage of any market opportunities under the assumption that Community
trade policy plays a supportive role in terms of enabling fair market access.
In terms of market share, production volumes, value added, employment levels
and net trade position, the industry has maintained its global competitiveness
in recent years. The EU has traditionally enjoyed a significant trade surplus
in automotive industry products and it is not expected that the assessed
options for reducing HDV fuel consumption and CO2 emissions (or
passenger cars/LCV targets) would impact on this. 
Foreign Direct
Investment (ratio of inward/outward FDI stock to value added)
In 2008, Eurostat
estimated that the level of inward FDI (stocks), which measures the direct
investment from outside the EU in the EU27 in respect of vehicles and other
transport equipment to be €22.9 billion. The outward investment, which
indicates the level of investment of EU companies in foreign markets, was
estimated to be €60.4 billion.
Indirectly affected
sectors
Indirect impacts on
sectors outside the supply chain are likely to be mainly felt in the fuel
supply sector and also by buyers of HDVs and end-users of freight transport.
These changes would lead to further more indirect impacts as the cost of energy
and the transport elements of business decrease. 
Fuel supply
sector[126]
In terms of the fuel
supply sector, the two main types of enterprises which would be affected are
filling stations and fuel refineries. In 2006 there were around 74,000 enterprises
classified as being involved in the retail sale of automotive fuel in the
EU-27, less than 10% of all motor trade enterprises (which includes the
wholesale, retail sale and repair of motor vehicles and motorcycles, as well as
the retailing of automotive fuels and lubricants). These enterprises generated
€178 billion of turnover, from which resulted €14 billion value added,
13.4 % and 8.6 % of the motor trades total respectively. The sector
employed half a million people, 11.8 % of the motor trade workforce.
Contributions from some Member States (e.g. France) may be low, due to a large
proportion of fuel being sold through service stations that belong to retailers
classified under retail trade rather than retailing automotive fuels. 
The pattern of turnover
for the retail sale of automotive fuels in the EU-27 was less steady than the
motor trade as a whole, particularly between 1998 and 2005. The retail sale of
automotive fuels grew strongly to 1999 and flattened out from 2000 to 2002, at
a time of continued growth across motor trades as a whole. This was followed by
much stronger growth through to 2005. However oil prices changes should be
taken into account when analysing these findings, as the volume of automotive
fuel may have fallen while sales in value terms rose (due to significant price
increases). 
In 2006 there were
around 1100 enterprises classified as concerned with fuel processing and the
refining of petroleum products in the EU 27, of these around 100 are
refineries. Turnover was estimated to be around €476 billion with around €30
billion value added. Over 128,000 people were employed in the sector. Between
1997 until 2007 average growth for the refined petroleum products sector was
0.8% per year. 
It is likely that
implementing legislative measures to reduce HDV CO2 emissions would
impact negatively on the fuel supply sector due to a lower demand for fuel.
However, in the case of the filling stations, there is a trend of steadily
reducing numbers of filling stations and increasing diversification with a
major part of their revenues coming from activities other than selling fuel. 
What is the
overall effect on cost and price competitiveness?
The impacts on costs
are extensively discussed in section V of the main text. The total impact on
costs comprises changes in the costs of manufacturing HDVs, possible additional
compliance costs for manufacturers and changes in the usage costs of HDVs,
mainly associated with possibly increased purchase prices and reductions in
fuel consumption.
Do the envisaged
policy measures cut or increase compliance costs of the affected sector(s)?
For HDV
manufacturers there may be, on top of investments to produce more fuel
efficient & CO2 efficient HDVs, administrative costs related to
the registration of CO2 emissions that are expected to be minor in
relation to the latter. For the HDV transport industry (freight industry),
subject to the calibration of legislative requirements, benefits (fuel savings)
are expected to outweigh costs (more expensive HDVs meeting higher efficiency
requirements).
Do the
envisaged policy measures affect the prices and cost of intermediate
consumption?
Intermediate
consumption is an accounting flow which consists of the total monetary value of
goods and services consumed or used up as inputs in production by enterprises,
including raw materials, services and various other operating expenses. A
distinction needs to be made between impacts on the amount of intermediate
consumption (amount of products or services used in production) and the costs
or price of intermediate consumption (cost or price of a given product or
service used in production).
For HDV
manufacturers the amount of intermediate consumption is expected to increase
relative to a situation without the implementation of the reduction targets
through legislative measures, as a significant part of the additional
technologies to be applied to new vehicles is likely to be purchased from
suppliers. Whether this leads to a net increase in the cost of intermediate
consumption depends on the extent to which additional technology costs are
compensated by reductions in the costs of other supplied products and services
due to other drivers. As part of the applied technologies may also provide
added value to the user the gross added value may increase. If manufacturers
are able to increase the sales price accordingly, an increase in the cost of
intermediate consumption, therefore, does not necessarily lead to an increase
in the share of intermediate consumption in the gross turnover.
For sectors that use
HDVs the costs of intermediate consumption –mainly fuel that represents some
25-30% of road transport operating costs- are expected to decrease as the net
cost of using HDVs decreases. Subject to the level of requirements of the
legislative measures that are assessed in the present Impact Assessment, this
impact may be significant and lead to net benefits (costs being outweighed by
savings). 
Do the
envisaged policy measures affect the cost of capital?
As the
implementation of legislative measures to reduce HDV emissions does not
directly affect the financial sector, there are no direct effects to be
expected on the cost of capital. Indirect impacts could occur if the examined
legislative measures would lead to drastic (i.e. sudden or very large) changes
in the need for investment capital by automotive manufacturers, suppliers or
other affected sectors or if the risks associated with providing such
investment capital would increase.
As there may be an
acceleration in terms of innovation and the application of new technologies, an
increased demand for investment capital is to be expected. However, compliance
only involves the introduction and gradual increase in the level of application
of additional technical adaptations in HDVs. It does not require a major
restructuring of the automotive sector’s operations or structure. There are no
negative impacts expected on the demand for HDVs and there is no reason to
believe that the implementation of legislative measures for reducing HDV
emissions would lead to significant impacts on the cost of capital.
Do the
envisaged policy measures affect the cost of labour?
The only possible
changes in the cost of labour would be those resulting from the additional or
new labour demand (e.g. due to new skills requirements). In the automotive
R&D departments there may be some shift in competences from mechanical to
electrical engineering to prepare the development of hybrid HDVs for some
segments of the market, but if shortages in new engineering disciplines would affect
wages the impact on average labour costs for vehicle manufacturing of the
manufacturing industry in general would be small. As far as requirements for
labour skills in the actual manufacturing of components and vehicles are
concerned, no significant deviations from the existing situation are expected. 
As the
implementation of legislative measures for reducing HDV emissions does not
affect labour law or labour conditions, there would be no additional compliance
costs related to employment.
Do the
envisaged policy measures affect the cost of energy?
The objective of the
legislative measures assessed in the present impact assessment is to reduce CO2
emissions. The implementation of legislative measures to reduce HDV emissions
does not directly affect the costs of producing energy carriers for the
transport sectors or for other sectors. Achieving the CO2 reduction
goal, however, would indirectly contribute to reduce energy use. This would
have a dampening or even lowering effect on energy prices, which would be
beneficial to the transport sector as well as to other sectors of the economy.
Do the
envisaged policy measures affect consumer’s choice and prices?
The measures would
not limit consumer choice directly. Cost assessments as presented in section 5
of the present Impact Assessment are carried out under the assumption that fuel
consumption and CO2 emission reductions are achieved without
affecting the other performance of HDVs and the distribution of new vehicle
sales over different marketing segments, and show that meeting a number of
target levels examined in the options assessment is technically and
economically feasible without violating this assumption. 
Companies using HDVs
are likely to benefit indirectly since their costs of vehicle operation are expected
to decrease.
It is likely that
the implementation of legislative measures to reduce HDV emissions would
increase costs of manufacturing HDVs and is thus in the end expected to lead to
increased HDV prices, as increased costs can only temporarily be absorbed by
manufacturers and at some point need to be passed on to consumers. However,
benefits from fuel savings are expected to outweigh these increased purchasing costs.
Would the
impacts above require a major restructuring of affected enterprises’ operations?
For some of the
technologies that are expected to be applied, some innovations in production
processes may be necessary. But there is no reason to believe that any major
restructuring of the HDV sector’s operations would be required.
Effect on enterprises’
capacity to innovate
The automotive
sector invests significantly in R&D. According to the 2011 EU Industrial
R&D Investment Scoreboard, the R&D expenses of European automotive
manufacturers were just over €21 billion in 2010, 4.4% of their turnover.
According to CLEPA, component suppliers invest about €15 billion in R&D,
which is approximately 5% of turnover and receive the majority of the patents.
This is complemented by investments in the production process and fixed assets
amounting to over €40 billion per annum. European automotive firms are leaders
in some transitional drive-train and fuel technologies and are investing in
ground-breaking technologies, such as battery-powered hybrid vehicles, electric
vehicles and hydrogen. As products are becoming increasingly complex from a
technological point of view (e.g. the role of electronics), the industry is
focusing increasingly on advanced, high technology products which necessarily
rely on a highly skilled workforce.
Overall the
implementation of legislative measures to reduce HDV fuel consumption and CO2
emissions should promote innovation in that sector and may as such be expected
to increase rather than decrease the automotive sector’s capacity to innovate.
The issues are what the size of the additional demand for innovative capacity
is that the measures require, whether the sector would be able to mobilise this
in time, or whether increased focus on innovation with respect to efficiency
improvement and CO2 emission reduction would go at the expense of
innovation in other important areas.
There is no evidence
of a shortage of skills needed either for the development of the potential
technologies required or for their application in HDV production. There does
not appear to be any issue relating to IPR protection specific to the automotive
sector. The automotive sector is constantly innovating by bringing new products
to the market. Marketing new vehicle types and new technologies forms a key
aspect of encouraging vehicle purchase. This would continue and as a part of
this trend CO2 reducing technologies would be incorporated in a
somewhat higher pace than before. Overall it is considered that the additional
demand for innovation with respect to CO2 reducing technologies can
be catered for within the industry’s R&D capacity or by a manageable
increase in this capacity.
Distribution,
marketing and after-sales services are also well developed in the automotive
sector and the necessary management and organisational skills and talents are
demonstrably available and are expected to be able to adequately deal with the
new technologies applied to reduce CO2 emissions of vehicles. In the
on-line consultation in the context of the present Impact Assessment, 72% of
stakeholders and 83% of individuals supported the view that EU regulation of
road vehicle emissions stimulates innovation in the automotive sector and helps
keep Europe's automotive industry competitive. It is likely that the sector
would continue to invest in similar levels of R&D to remain competitive and
to develop more efficient vehicles. 
What is the
effect on the competitiveness of HDV manufacturers?
There would be
different impacts on different manufacturers. The additional manufacturer costs
per vehicle for implementing legislative measures to reduce HDV emissions
depend on the actual reduction level required and the current level of
investment and focus by the manufacturer on reducing emissions. 
Estimates indicate
that truck production may increase from the second half of 2012 onwards due to
customers increasingly starting to place orders in the build-up to the Euro 6
emissions mandate which will be effective from January 2014.[127] This
suggests that the introduction of tighter standards and stricter limits can be
positive for those manufacturers of HDVs who can produce more efficient
vehicles and should enable them to retain a strong position in terms of
competitiveness.
For manufacturers of
HDVs who have further to go to comply with and implement measures to reduce
emissions, the costs associated are likely to be larger. This would possibly
result in a longer payback period (or higher increase / lower reduction of the
total cost of ownership- TCO) for the users of their vehicles and thus a
reduced attractiveness of these vehicles compared to products from other
manufacturers. Changes in TCO can thus be a basis for assessing impacts of the
implementation of the legislative measures for reducing HDV emissions on mutual
competitiveness of HDV manufacturers on the EU market.
In principle
therefore the implementation of legislative measures to reduce HDV emissions
may affect the mutual competitiveness of HDV manufacturers on the European
market. Such changes in mutual competitiveness may in turn affect the extent to
which different companies are able to pass through the costs of additional
technologies applied to meet the targets contained in legislative measures to
reduce HDV emissions. These impacts on the profitability of HDV manufacturers
may more indirectly also affect their competitiveness on global markets.
TIAX[128]
concluded that, in spite of an expected HDV fleet growth in the EU of close to
30% over the period 2010-2030, emission levels could be substantially reduced
by 2030, with emissions cut by 22% (versus business-as-usual levels, as defined
in the AEA-Ricardo Lot1 report) if only technologies with a payback period of a
maximum of 3 years are introduced in the HDV fleet. Without this 3-year payback
constraint fuel consumption reduction and emission cuts would potentially be
larger, estimated at some 28% below business-as-usual levels. A reduction in
emissions of this level would help to ensure that the EU HDV sector remains
competitive going forward. These estimates apply to the whole HDV fleet
emissions in the EU. They assumed even much higher levels of improved fuel and
CO2 emissions performance of new vehicles and have been considered
over-ambitious by some OEM stakeholders.
What is the
effect on competitiveness of incumbents compared to new entrants?
Incumbents on the EU
market have the advantage of large sales and an established product portfolio
allowing them to optimise costs for complying with legislative measures to
reduce HDV emissions through internal averaging. This option is generally not
or less available to new entrants.
What is the
effect on the competitiveness of component suppliers?
The implementation
of legislative measures to reduce HDV emissions would have positive economic
impacts for component suppliers in the automotive industry, resulting from the
demand for additional components. Implementation of legislative measures to
reduce HDV fuel consumption and CO2
emissions is therefore expected to have negligible impacts on the mutual
competitiveness of European component suppliers. 
Impacts on
competitiveness between European suppliers and companies from outside on the
European market and on foreign markets may depend on the extent to which other
regions adopt similar measures in terms of CO2 reduction. The demand
for new advanced components may spur competition among suppliers, whereby the
most innovative companies are expected to be able to capture a larger share of
the market. This is to be considered an indirect but generally positive
consequence of the implementation of legislative measures to reduce HDV fuel
consumption and CO2 emissions.
What might be
the effect on the HDV sector’s international competitiveness?
What is the
likely impact of the assessed measures on the competitive position of EU firms
with respect to non-EU competitors?
According to the Porter hypothesis advanced national / regional environmental
policy stimulates innovation which in the longer term improves the
competitiveness of the region / country. Whether this is also true for
regulation on a market with a large number of foreign suppliers is debatable.
Nevertheless, as a result of EU legislative measures to
reduce HDV emissions, HDV manufacturers might have a competitive advantage over
non-EU companies, as the measures affect their home market where they generally
dominate total sales. For manufacturers without or with less stringent CO2
regulation on their home market it might be more expensive to adapt a small
share of their production to comply with the EU regulation. However, CO2
standards in different markets are rapidly converging. Outside of Europe, Japan
is already regulating for the fuel efficiency of HDVs (since 2007) and the US
(2011) and Canada (2012) recently adopted rules on HDV CO2 efficiency. In the
US, mandatory heavy-duty fuel consumption reductions of up to 23% by 2017 are
moving OEMs to adopt improved technologies, including aerodynamic improvements,
engine friction reduction, advanced fuel injection, advanced turbocharging,
parasitic loss reduction, waste heat recovery, light-weighting, low rolling
resistance tyres, and idle reduction. 
It is also important
to take into account regional differences when considering the applicability of
experiences in other regions to Europe. For example, the European HDV market is
already more significantly focused on improving fuel efficiency due to high
fuel prices compared to the rest of the world. As a result, the European
manufacturers of HDVs are at the forefront of efficient HDVs. Nonetheless, an
increased focus on HDV emission reductions across the globe (as described
above) means that non-EU manufacturers have to achieve CO2 emission
reductions on their home markets, which reduces the possible competitive
advantage of EU manufacturers on the EU market. At the same time, however, this
also implies that the EU regulation does not place EU manufacturers in a
disadvantageous position in markets outside the EU. 
The competitive
position of European component suppliers relative to non-EU competitors might
be improved by the introduction of legislative measures to reduce HDV
emissions. If EU measures and targets are more ambitious than those in other
countries the technology-readiness of suppliers based in these countries may be
expected to lag behind that of European companies. This improves the
attractiveness of European suppliers for EU HDV manufacturers and might also
provide them a competitive edge in other markets. Given that EU manufacturers
may need the new technologies to comply with reduction measures examined in the
present Impact Assessment, this might also allow EU-based suppliers to increase
their margins and improve their profitability. This would bring them in a
better position to expand business to other markets. However, as with
manufacturers, further efforts, legislation and initiatives to reduce HDV
emissions in the US and in Asia, may limit the potential competitive advantage
for EU suppliers.
As argued above the
impacts of the implementation of legislative measures to reduce HDV fuel
consumption and CO2 emissions on the costs of purchasing and using
vehicles affects the costs of business operations for all similar vehicle users
alike. For EU firms using HDVs therefore no change in competitive position with
respect to non-EU competitors on the EU market is to be expected.
What is the
likely impact of the assessed measures on trade and trade barriers?
In line with what is
argued under the previous point, the regulation is not effectively causing
trade barriers for non-EU manufacturers. The regulation is not expected to have
an impact on existing trade barriers.
Possible impacts on
trade volumes and balances could result from changes in the competitiveness of
vehicle manufacturers and component suppliers as described above. Improved
competitiveness of EU-firms on the EU market may lead to lower imports, while
improved competitiveness of EU-firms on non-EU markets may lead to higher
exports.
Do the
considered policy options concern an area in which international standards,
common regulatory approaches or international regulatory dialogues exist?
There are no
international standards for new HDV CO2 emissions. 
Are the
considered policy options likely to cause cross-border investment flows,
including the relocation of economic activity inward of outwards the EU?
There are no
constraints on cross-border investments in the automotive sector. Since
projections are for a generally consistent level of growth in the market for
HDVs in the EU and considering the dominance of EU HDV manufacturers in the
home market, it is unlikely that there will be substantial inward or outward
investment as a result of the considered policy measures. Investment flows do
not seem likely to be affected by measures to reduce HDV emissions.
What is the
effect on the competitiveness of other sectors in the automotive supply chain?
The TIAX report
suggested that the main technologies which could drive efficiency and
reductions across multiple HDV segments include low rolling resistance tyres,
transmission friction reduction, and predictive cruise control. Among the least
cost effective technologies are automatic tyre inflation and material
substitution for light weighting. There may be indirect impacts on other
sectors in the vehicle manufacturing supply chain which might arise due to
demand for different components. For example, if hybrid technology takes off
for some vehicle categories, some component manufacturers that innovate and
come up with the most competitive offers may benefit from this. It is difficult
at this stage to predict where the possible indirect impacts on the vehicle
manufacturing supply chain may occur.
What is the
effect on the competitiveness of HDV dealers and distribution networks?
While the
implementation of legislative measures to reduce HDV emissions may have
economic impacts on HDV dealers and distribution networks (e.g. through
pressure on dealer margins) it is not expected that their mutual
competitiveness will be directly affected. Indirect effects could result from
the impacts of the measures on the HDV manufacturers represented by these
dealers, but such effects are not considered intrinsic to the nature of the
assessed measures.
What is the
effect on the competitiveness of suppliers of complementary or alternative goods and services?
It is not expected
that there will be major impacts on markets for complementary goods, i.e.
suppliers of alternative forms of multiple passenger transport or goods
transport. For multiple passenger transport, alternatives are collective
transport services such as rail or aviation. Given the impact of the assessed
measures on costs of operating HDVs and the strength of the road freight sector
overall relative to other transport modes, it is unlikely to have significant
impacts on the modal split, unless new emission requirements would make HDV
transport significantly more costly : this is not the conclusion of the
cost/benefit analysis in section V of this Impact Assessment, which suggests
that required CO2 emission abatements would be more than compensated
by savings on fuel purchases. For goods transport by means of heavy commercial
vehicles there are few alternatives other than those mentioned above.
What is the
effect on the competitiveness of vehicle users?
The implementation
of legislative measures to reduce HDV emissions may also directly or indirectly
affect the competitiveness on the EU market of European businesses which use
HDVs. Direct effects could exist for companies with a large share of transport
activities in their operations. The use of HDVs for passenger (buses/coaches)
or goods transport or for providing other types of services, however, will
mainly be part of operations undertaken by such companies on the European
market or even on national markets. Possibly affected competitiveness of such
companies using HDVs will thus mainly concern competition relative to each
other on the European and national markets. The implementation of legislative
measures to reduce HDV CO2 emissions impacts on the costs of
purchasing and using HDVs and may thus affect the costs of business operations,
but it affects the costs of HDVs for all similar users alike, as companies
competing on the same market will have similar fleets and vehicle use patterns.
Consequently a change in overall costs resulting from the measures is not
expected to have significant impacts on the mutual competitiveness of companies
which use HDVs. 
Users of HDVs will
benefit from the lower fuel costs and the lower total cost of vehicle
ownership. As shown in the cost/benefit analysis in section V of this Impact
Assessment, the cost of compliance with new legislative measures assessed may
more than compensated by fuel savings realised with more efficient vehicles.
These changes will lead to further indirect impacts as costs of using energy
and of carrying out the transport elements of business will decrease. As
mentioned above this is not expected to affect the competitiveness of companies
competing on the European market, but may to some extent benefit the global
competitiveness of internationally operating companies and of the European
economy as a whole.
What is the
effect on the competitiveness in the fuel supply sector?
The assessed policy
measures would lead to a reduction in the consumption of oil-based fuels by
HDVs. This is to be considered a desired consequence of achieving the policy’s
goals with respect to reduction of GHG emissions. It will also contribute to an
improvement of energy security. In first order this reduced demand is expected
to affect different fuel producers alike. 
The consequences for
individual companies in terms of the resulting impacts on business
(profitability, market share, etc.) would be different and would depend on
their individual ability to respond to the challenge of declining sales in
Europe. As such the impacts on individual fuel producers can be considered a
consequence of the companies’ current competitiveness rather than an impact of
the measures on their competitiveness. Nevertheless oil companies with a large
market share in Europe might be affected more strongly than oil companies that
are mainly focussed on the US or Asia. So from a global perspective, regulation
may affect the competiveness of these companies. Table 1 below shows that there
is a large number of smaller fuel supply companies that operate largely or
entirely on the European market. These companies might be expected to be
affected more than larger, globally operating companies such as ExxonMobil, BP
and Shell.
Table 1           Sales of petrol and diesel in Europe as share of the
total petrol and diesel sales of various fuel supply companies[129]
What is the
effect on the competitiveness of other businesses?
More generally the
implementation of legislative measures to reduce HDV fuel consumption and CO2
emissions may change the costs of intermediate products and hence also the
costs of final products through changes in transport costs. On the EU market
this would only affect the competitiveness of companies operating in the same
market if they have very different shares of transport costs in their product
costs. For products offered on a global market, the change in transport costs
due to measures aimed at reducing HDV CO2 emissions may also affect
the global competitive position of European companies. For both situations,
however, it must be stated that transport costs are generally a small share of
overall product costs. Direct or indirect impacts on competitiveness in the EU
market through changes in the cost price of intermediate and final products are
therefore assumed negligible. In any case, impacts on other businesses from the
implementation of legislative measures to reduce HDV CO2 emissions
can generally be considered positive due to the fact that the regulation
reduces the total cost of ownership of HDVs in Europe. If at all significant,
the impact on the competitiveness of European companies on the global market
would improve as a result of this.
What is the
effect on SME competitiveness?
There are two main
categories of SMEs that might be affected by the implementation of the measures
to reduce HDV emissions. One category is SMEs operating as small volume HDV
manufacturers (of which there are only a small number) or as suppliers to the
automotive industry. The other category consists of SMEs which use HDVs.
The main indirect
effects could arise for SMEs that supply components to vehicle manufacturers.
SMEs represent a significant number of companies in the overall automotive
sector. The main impact would be an increased demand for CO2
reducing technologies and other measures to be deployed in HDVs. However, it is
difficult to foresee how that would affect the competitiveness of such SMEs. 
First of all it
should be noted that the technologies required to enable compliance with
measures and targets for reducing HDV emissions only concern a limited share of
all components supplied to the automotive manufacturing industry. And many of
the key-technologies, especially those related to engine, tyres and
powertrains, may be expected to be produced by the larger Tier-1 suppliers.
SMEs seem equally well placed to cater for such innovations as large companies.
In general SMEs are more flexible with respect to minor changes in products and
production processes. On the other hand they may have more difficulty to obtain
financial means to deliver more radical product innovations or invest in major
changes their production process.
Other indirect
effects can arise from the use of HDVs. Since the impact of the implementation
of measures to reduce HDV emissions is likely to be beneficial in terms of
total vehicle cost of ownership, this indirect effect is likely to benefit SMEs
along with other vehicle operators. Overall their competitiveness compared to
other SMEs or to larger companies is not expected to change as a result of this
regulation.
As European SMEs may
be assumed to be mostly operating on the European market, impacts on
competitiveness in other, global markets is less relevant for this category of
companies.
              Annex 11 : HDV CO2 emission abatement potential - 
Cost curves per vehicle category
Emission abatement potential
Figure 1 :  Potential New EU Vehicle GHG Reductions from All
Technologies

(A-R: AEA-Ricardo)                                                                                            Source:
TIAX
Table 1:                      Potential for EU HDV (fleet) GHG
reduction per segment
Table 2           Breakeven levels of technology uptakes: 
% cuts of CO2 emissions for new HDVs      
Cost curves per vehicle category
                                                                                                                        Source: CE
Deflt
                                                                                                                                                                Source:
CE Delft
                                                                                                                        Source: CE
Delft
                                                                                                                        Source: CE
Delft
                                                                                                                        Source: CE
Delft
                                                                                                                        Source: CE
Delft
                                                                                                                        Source: CE
Delft
                                                                                                                        Source: CE
Delft
              Annex 12 :  
Indicative assessment of administrative costs under option 3.ii
              Annex 13 : Methodology. 
Methodology
Emission
abatement potential. The present analysis
examines the EU potential for HDV fuel consumption savings and CO2
emission abatements based on expert analysis (see above mentioned AEA-Ricardo,
TIAX studies) that to a large extent relies on industry information. This
allowed for an indicative assessment of the range of fuel consumption and CO2
emission improvements (in % terms) that are technically achievable by 2030 with
state-of-the-art technologies[130].
Cost/benefit
analysis. A second step was to carry out a
cost-benefit analysis: a cost was associated to each technical
innovation contributing to emission abatements (see above mentioned TIAX report).
Based on these costs, marginal cost abatement curves have been
established in the CE Delft study[131]
from the perspective of HDV users (i.e. transport operators mainly, or
companies' owned fleets). 
Externalities. To complete the cost benefit analysis, a second group of abatement
cost curves were produced by CE Delft taking a societal perspective by
eliminating distributional effects of taxation. It was not deemed possible to
include environmental benefits of lower fuel consumption and CO2 emissions as the relationship between reduced fuel consumption and
exhaust emissions is not a straightforward one : OEM manufacturers can adjust
in several ways their engine parameters, and there is no simple relationship
and accounting rule between fuel savings due to HDV upgrades and potential
benefits in terms of exhaust gas emissions levels.
Modelling. In the context of the present Impact Assessment, recourse to
modelling (with the PRIMES/TREMOVE model) was limited to the baseline, not
being feasible for the assessment of each single policy action. PRIMES/TREMOVE
modelling provided a quantification of the reference baseline scenario, and
rather than predicting the effect of each policy option, provided an
illustration of potential developments along a few generic scenarios. These
generic scenarios (see annex 4), including the baseline scenario, must be
considered with caution: they are a projection -not a forecast- whose results
are partially dependent on assumptions such as GDP and fuel price developments,
which are uncertain by nature. Each scenario is differentiated from the others
by exogenous inputs based on experts' views. Modelling was further useful in
carrying out a sensitivity analysis on a number of variables (see section 2.3
above).
Quantitative
estimates on the effect of each alternative
option to the baseline, for those for which this has been deemed feasible
(options 3.i and 3.ii ) are thus not the result of alternative runs of the
PRIMES-TREMOVE model but indicative estimated variants of the baseline
scenario, with so-called second round or rebound effects (e.g. a possible
increase in road transport demand linked to lower transport fuel consumption
and operating costs) not being quantified (see section 5.3).
Addressing
CO2 emissions as a proxy for GHG emissions. CO2
is not the only vehicle exhaust gas with
a global warming effect. Methane (CH4) and nitrous oxide[132] (N2O) are
both pollutant emissions with high global warming potential (GWP) (on a 100
year horizon their GWP is 25 and 298 respectively compared to 1 of CO2)[133]. For road transport
they constitute the two most important GHGs after CO2 and can
originate either as fuel combustion by-products (or incomplete combustion
products) or either during processes involved in the fuel production phase.
However, their relative share versus CO2 is a very minimal: for conventional diesel and gasoline HDVs CH4
emissions comprise between some 0.1% and 0.7% of the total HDV GHG emissions; N2O
represents 0.6% as a share of the total GHG potential
in real driving conditions[134].
Additionally, even though as stated above there is no straightforward
relationship between reduced fuel consumption and (reduced) exhaust gas
emissions, measures to curb fuel consumption and CO2 emissions should over time also contribute to reducing CH4
and N2O emissions. For all these reasons, the present strategy is
primarily considering a reduction of CO2 emissions as a satisfactory proxy for total GHG emissions. While CH4
emissions are already curtailed pursuant to the Euro VI Regulation, this does
not exclude also targeting, at a later stage, N2O emissions as such.
Targeting CO2 tank-to-wheel (tailpipe) emissions rather than well-to-wheel emissions (see definitions p1). Current emission standards applying to cars
and vans' CO2 emissions focus on tank-to-wheel emissions: upstream
"well-to-tank" GHG emissions are actually already to large extent
addressed in the EU through the inclusion of the oil industry and energy
production sector into the EU Emissions Trading Scheme, and the same remark
would apply to HDV emissions. While the uptake of technological change –
notably the progressive increase in alternative power modes,
including electricity, in new vehicles' production - may in due course require
a re-assessment of this mainstream tank-to-wheel approach, it is the one
followed in the present Impact Assessment. 
[1]               Tank-to-wheel –often referred
to as tailpipe emissions- are assessed without taking into consideration
upstream  emissions (i.e. well-to-tank) that occur in the production and
distribution of fuels, as opposed to well-to-wheel emissions that take the
latter into consideration. 
[2]              Source: EEA,
"Towards a resource efficient transport system", 2010, p 15 with
well-to-tank and tank to wheel data in life-cycle analysis of passenger cars. The
proportions for well-to-tank and tank-to-wheel for HDVs are assumed to be
identical. Available under http://www.eea.europa.eu/publications/towards-a-resource-efficient-transport-system

[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]              COM/2011/144 final                                                                                                         
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0144:FIN:EN:PDF
[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]              http://ec.europa.eu/clima/policies/transport/vehicles/heavy/docs/hdv_ghg_faber_maunsell_en.pdf
[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]            Summarised
in Annex 1.
[13]            UNFCCC, 2010,
Decision 2/CP.15, Copenhagen Accord
[14]            UNFCCC, 2010,
Decision -/CP.16, Outcome of the work of the Ad Hoc Working Group on long-term
Cooperative Action under the Convention
[15]            Decision No 406/2009/EC of the European Parliament and of the
Council of 23 April 2009 on the effort of Member States to reduce their
greenhouse gas emissions to meet the Community’s greenhouse gas emission
reduction commitments up to 2020, OJ L 140, 5.6.2009, p. 136–148 ,                 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32009D0406:EN:NOT
[16]            Council
Conclusions on EU position for the Copenhagen Climate Conference (7-18 December
2009) 2968th Environment Council meeting, Luxembourg, 21 October 2009
[17]            Inter-governmental
Panel on Climate Change (IPCC)
[18]            COM/2011/0112
final 
[19]            COM/2011/144 final,
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0144:FIN:EN:PDF
[20]            According to
international classifications, N2 and N3 vehicles used for the carriage of
goods and having a maximum mass between 3.5 tonnes and 12 tonnes (N2) or
exceeding 12 tonnes (N3).
[21]            According to international
classifications, M2 and M3 vehicles used for the carriage of passengers and
comprising more than eight seats in addition to the driver's seat and having a
maximum mass not exceeding 5 tonnes (M2) or exceeding 5 tonnes (M3).
[22]            Already quoted report available
under :
http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf
[23]            For more details, also see
AEA-Ricardo report "Reduction and Testing of GHG Emissions from
Heavy-Duty Vehicles- Lot 1: Strategy", pp57-72, available under:       
http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf
[24]            Odyssee-Mure
database, available under: http://www.odyssee-mure.eu/.
[25]            Source: Eurostat
[26]             Source: Eurostat
[27]             Regulation (EU) No 1315/2013 of
the European Parliament and of the Council of 11 December 2013 on Union
guidelines for the development of the trans-European transport network and
repealing Decision No 661/2010/EU Text with EEA relevance 
[28]             Transport White Paper, actions 1
"internal market of rail services", 5 "a suitable framework for
inland navigation", 7 "multimodal transport of goods", 23
"zero-emission urban logistics 2030", 35 multimodal freight
corridors. See
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0144:FIN:EN:PDF
[29]             Source: Eurostat
[30]             Directive 2009/28/EC1 on the
promotion of the use of energy from renewable sources (the "Renewable
Energy Directive") established mandatory targets to be achieved by 2020
for a 20% overall share of renewable energy in the EU and a 10% share for
renewable energy in the transport sector. At the same time, an amendment to
Directive 98/70/EC2 ("the Fuel Quality Directive") introduced a
mandatory target to achieve by 2020 a 6% reduction in the greenhouse gas
intensity of fuels used in road transport and non-road mobile machinery.
[31]             COM(2012)595,
http://ec.europa.eu/energy/renewables/biofuels/doc/biofuels/com_2012_0595_en.pdf
[32]             Commission Communication
COM(2013)17 "Clean power for transport: a European alternative fuels
strategy", and proposed Directive COM(2013)18 on the deployment of
alternative fuels infrastructure. 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0018:FIN:EN:PDF
[33]             Regulation (EU) No 1315/2013 of
the European Parliament and of the Council of 11 December 2013 on Union
guidelines for the development of the trans-European transport network and
repealing Decision No 661/2010/EU
[34]             Regulation (EU) No 1316/2013 of
the European Parliament and of the Council of 11 December 2013 establishing the
Connecting Europe Facility, amending Regulation (EU) No 913/2010 and repealing
Regulations (EC) No 680/2007 and (EC) No 67/2010
[35]            COM(2011)
168/3.
[36]            Council
Directive 2003/96/EC of 27 October 2003 : Restructuring the Community framework
for the taxation of energy products and electricity, OJ L 283, 31.10.2003, p
51.
[37]            http://ec.europa.eu/research/horizon2020/index_en.cfm?pg=h2020
[38]            OJ L120/5,
15.5.2009
[39]            Regulation EC 661/2009 and
Directive 2007/46/EC
[40]            COM(2013) 195 final
[41]             In addition to this, R&D
support to the development of ITS is being provided under the current 7th
Framework Programme and will be continued under the next Financial Perspective
for 2014-2020.
[42]            Directive
2011/76/EU, OJ L269/1, 14.10.2011, 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:269:0001:0016:EN:PDF
[43]             The assessment of these various
actions' impacts is currently being prepared in ad hoc Impact Assessments. 
[44]             Prf. Alan McKinnon found that a
significant decoupling took place took place in the UK already in the early
2000s decade and investigated the possible explanations for this change. "The
Decoupling of Road Freight Transport and Economic Growth: an exploratory
analysis". Logistics Research Centre, October 2006.              
http://www.mcrit.com/transvisions/documents/decoupling/Decoupling%20of%20Road-tonne-km%20and%20GDP.pdf
[45]             While tailpipe (tank-to-wheel)
emissions would normally not be expected to be affected by assumptions made on
the use of bio-fuels – the latter only have a bearing on full well-to-wheel CO2
emissions taking into account upstream fuel production modes-, nevertheless
pursuant to Commission Decision of 18 July 2007, p 24, (OJ 31.8.2007 L229) and
IPCC 2006 Guidelines, the accounting rule used in the baseline scenario
PRIMES-TREMOVE for bio-diesel, bio-gasoline and other liquid bio-fuels and
bio-gas is a zero % CO2 emission factor, see
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:229:0001:0085:EN:PDF 
[46]              OJ L140/16
5.6.2009,
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:140:0016:0062:EN:PDF
[47]             COM(2012)595,
http://ec.europa.eu/energy/renewables/biofuels/doc/biofuels/com_2012_0595_en.pdf
[48]                    The
Impact Assessment accompanying the 2011 Transport White Paper in particular
assumed that HDVs could achieve a 40% in energy efficiency improvement by 2050 (vs. 2005 levels)
in a decarbonisation context.            http://ec.europa.eu/transport/strategies/doc/2011_white_paper/white_paper_2011_ia_full_en.pdf

[49]            Source: AEA–Ricardo report
(already quoted), notably pp 26-27, based on statistics from the International
Organisation of Motor Vehicle Manufacturers (OICA). Available on :    http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf
[50]            See section
4.2.1 below on the baseline option, which takes stock or recent EU initiatives
in the areas of energy taxation, public procurement, R&D support,
Intelligent transport systems, incentivising alternative fuels, and road user
charging.
[51]             The EAE-Ricardo
"business-as-usual" (b-a-u) reference scenario in their 2011
"Lot1" report (already quoted) differs from the Reference
"baseline" scenario of the present Impact Assessment. By 2030, HDV
emission levels in the AEA-Ricardo b-a-u would have increased by 12% above
their 2010 levels. This figure can hence not be strictly compared to the
present baseline assumptions. 
[52]             CE Delft reviewed TIAX
estimates: it retained most abatement estimates, and adjusted a number of the
TIAX findings.
[53]             "Support for the
Revision of Regulation EC/443/2009 on CO2 emissions from cars" study
by TNO, CE Delft, AEA, Ricardo, IHS Global Insight, Ökopol and Transport &
Mobility Leuven, pp 43-46, available on the DG CLIMA website, 
http://ec.europa.eu/clima/policies/transport/vehicles/cars/docs/study_car_2011_en.pdf
The study reviewed in section 2.5 previous cost curves
prepared in 2006 and 2009 with the latest ones of 2011 and found that both
costs and the potential for abatements made in earlier years turned out
ex-post, based on latest information available and estimates, to have been
underestimated. 
[54]                    Market Barriers to Increased Efficiency in
the European On-road Freight Sector, CE Delft, 2012, available on: http://www.theicct.org/market-barriers-increased-efficiency-european-road-freight-sector
[55]             41 transport companies, 6
shippers, 3 logistics service providers, and 3 OEM truck manufacturers.
[56]           http://www.greenfreighteurope.eu/
[57]            The pledge covered "modern
truck" emissions expressed per tonne-kilometre,       http://www.acea.be/index.php/news/news_detail/commercial_vehicle_manufacturers_push_fuel_efficiency_and_environmental_pro
[58]             Recital
2 of Decision n°406/2009/EC and recital 3 of Directive n°2009/29/EC.
[59]       See in particular Council Conclusions of the 20
February 2007, 
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/envir/92864.pdf
[60]     http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0885:FIN:EN:PDF
[61]     European
Commission Communication of 3.3.2010,
ftp://ftp.cordis.europa.eu/pub/etp/docs/europe2020_en.pdf
[62]     Regulation EC 595/2009, OJ L188/1,
18.7.2009.
[63]       See section 3.2.1 page 117, http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf
[64]             COM 2008 (16) Final
[65]            The date of
entry into force of the Euro VI Regulation is 31st December 2012 for new
engines and 31st December 2013 for all engines (new vehicles
only).
[66]             Under the current EURO VI
legislation for HDV all values for the engine are measured in g per kilowatt
hour (g/kwh). Therefore also the measured fuel consumption is measured as g
[fuel]/kwh or g [CO2]/kwh. The metrics and the reference is totally different
from the perspective of a typical truck customer who is used to have a metrics
for fuel consumption in litres per 100 kilometres (l/100km). This would not
provide practical customer information. Also, the measurement under the current
EUROVI legislation uses one more or less artificial cycle for all engines.
Considering the different use of the engines in the different trucks (long
haul, regional delivery, construction, coach, bus etc.) the actual measured
fuel consumption is not representative for all the different duties of the
trucks. This requires some adaptation through a proper methodology to be
established. 
[67]             Other than already mentioned
administrative costs.
[68]             Monitoring
costs could be shared with the European Environment Agency.
[69]             CO2 emissions have been dealt
with under the impact on "effectiveness", and are not considered in
this section on "environmental" impacts that applies to exhaust gases
and particulate matters, which are Regulated by the Euro V and, as of 2014, the
Euro VI Regulations.
[70]             See
"Price sensitivity of European Road Freight Transport, towards a better
understanding of existing results". Survey for Transport and Environment
by CE Delft and Significance, June 2010, available on : 
http://www.transportenvironment.org/sites/te/files/media/2010_07_price_sensitivity_road_freight_significance_ce.pdf.
The survey concludes that freight fuel consumption elasticity to fuel price
increases is low, at only 0.3% (a fuel price increase of 1% triggers a fuel
consumption reduction of only 0.3%).
[71]             It should be noted that it is
very unlikely that the existing monitoring system for energy tax would match
the requirements for ETS, therefore, a certain level of modification to
existing rules on tax warehouses and to movement control would most probably be
necessary. 
[72]             See, for instance, Acemoglu et
al. American Economic Review 2012, 102(1): 131–166        
http://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.102.1.131
[73]             Flachsland
et al. Energy Policy 39(4): 2100-2110: Climate policies for road
transport revisited (ii): Closing the policy gap with cap-and-trade.
[74]             In 2010 euros. assuming an
annual HDV fleet renewal of around 0.8 million by 2030 as assumed in the
Primes-Tremove baseline. This estimate assumes no effect of engine upgrade
requirements on HDV demand (additional vehicle costs being more than recovered
through fuel savings).
[75]             Assuming
constant labour productivity
[76]             With some exceptions however:
Belgium and the Netherlands have higher than average share and are net
exporters; conversely some very small countries do not have any oil refinery
and are net importers of oil refined products, see Annex 6, table 11.
[77]             See Annex 6, table 1.
[78]             This estimated -12.4% reduction
of HDV fleet emissions by 2030 is lower in % terms than the TIAX and
AEA-Ricardo reports' estimated ones (respectively -28% and -25%), the main
reason being that TIAX used a different baseline with the b-a-u scenario of the
AEA-Ricardo Lot1 report that foresees increasing HDV emissions over the period
2015-2020.
[79]             The Reference scenario 2010,
developed with the PRIMES-TREMOVE model, has been finalized in the beginning of
2012 and has been calibrated on available statistics for the year 2005.
Therefore, results for HDVs registrations for 2010 in PRIMES-TREMOVE represent
projections rather than historical data and are different from recent Eurostat
2010 HDV registration data. The 2030 projections on HDV registrations should be
regarded as an indication on the nature, potential magnitude and direction of
the main impacts, bound by the uncertainties associated with the projections.
As mentioned in annex 13, "second round" effects have not been
assessed either, that could trigger increased transport activity as a result of
lower costs vs. the baseline assumptions. 
[80]             See annex 6, table 9.
[81]             Assuming similar and constant
labour productivity, as in the previous section. 
[82]             Germany,
the Netherlands, France, Sweden and Spain.
[83]             CE Delft report , July 2012 by
S.de Bryun, L. Brinke, B.Kampman, M. Koopmann, Commissioned by the European
Climate Foundation.
[84]             http://ec.europa.eu/clima/consultations/0012/index_en.htm
[85] TIAX consulting, author of the report of December 2011on European Union
Greenhouse Gas Reduction Potential for Heavy Duty Vehicles.               
http://ec.europa.eu/clima/policies/transport/vehicles/heavy/docs/icct_ghg_reduction%20_potential_en.pdf
[86] AEA – Ricardo report, February 2011: Reducing and Testing of Greenhouse
Gas Emissions from Heavy-Duty Vehicles: Lot1: Strategy
http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf
[87] CE Delft, author of
the report on Establishing marginal abatement cost curves for Heavy Duty
Vehicles for packages of technical measures
[88] http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf

[89] http://ec.europa.eu/clima/policies/transport/vehicles/heavy/docs/icct_ghg_reduction%20_potential_en.pdf 
[90]              Regulation EC 661/2009 and Directive
2007/46/EC
[91]              COM(2013) 195 final
[92]             Commission Communication
COM(2013)17 "Clean power for transport: a European alternative fuels strategy",
and proposed Directive COM(2013)18 on the deployment of alternative fuels
infrastructure. 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0018:FIN:EN:PDF
[93]             Regulation (EU) No 1315/2013 of
the European Parliament and of the Council of 11 December 2013 on Union
guidelines for the development of the trans-European transport network and
repealing Decision No 661/2010/EU
[94]             Regulation (EU) No 1316/2013 of
the European Parliament and of the Council of 11 December 2013 establishing the
Connecting Europe Facility, amending Regulation (EU) No 913/2010 and repealing
Regulations (EC) No 680/2007 and (EC) No 67/2010
[95]              http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2011:0288:FIN:EN:PDF 
[96]              http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2011:0358:FIN:EN:PDF 
[97]              http://ec.europa.eu/energy/energy2020/roadmap/doc/sec_2011_1565_part1.pdf 
[98]              http://www.e3mlab.ntua.gr/e3mlab/PRIMES%20Manual/The_PRIMES_MODEL_2010.pdf 
[99]            Short-term projections for oil, gas and coal prices were
slightly revised according to the latest developments in the   Reference scenario as 2010 compared to the
version used in A Roadmap for moving to a competitive low carbon economy in
2050.
[100]            European Commission, DG Economic and Financial
Affairs: 2009 Ageing Report: Economic and budgetary projections for the EU-27
Member States (2008-2060). EUROPEAN ECONOMY 2|2009, http://ec.europa.eu/economy_finance/publications/publication14992_en.pdf . The
“baseline” scenario of this report has been established by the DG Economic and
Financial Affairs, the Economic Policy Committee, with the support of Member
States experts, and has been endorsed by the ECOFIN Council.
[101]            http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:2020:FIN:EN:PDF 
[102]            The US Energy Information Administration and
the International Energy Agency.
[103]            Projections
for oil, gas and coal prices are similar to those used in the “Reference
scenario” in the Energy Roadmap       2050.
[104]            http://www.e3mlab.ntua.gr/e3mlab/PROMETHEUS%20Manual/prometheus_documentation.pdf 
[105]            In PRIMES and PRIMES-TREMOVE models all
monetary values are expressed in constant terms (without inflation). The
economic modelling is based on Euro (€), for which the exchange rate is assumed
to depreciate from the currently high levels of around 1.4 $/€, there will be a
somewhat faster increase in energy prices in euros than in dollar.
[106]           International Energy
Agency (2009), Transport, Energy and CO2: Moving Towards Sustainability.
[107]            According to international classifications, N2
and N3 vehicles used for the carriage of goods and having a maximum mass
between 3.5 tonnes and 12 tonnes (N2) or exceeding 12 tonnes (N3).
[108]            According to international classifications, M2
and M3 vehicles used for the carriage of passengers and comprising more than
eight seats in addition to the driver's seat and having a maximum mass not
exceeding 5 tonnes (M2) or exceeding 5 tonnes (M3).
[109]            Source: ACEA
[110]            Aleady quoted report available under :
:http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf
[111]            Association des Constructeurs Automobiles
Européens.
[112]            For more details, see AEA-Ricardo report
"Reduction and Testing of GHG Emissions from Heavy-Duty Vehicles- Lot
1: Strategy", pp57-72, available under:       
http://ec.europa.eu/clima/policies/transport/vehicles/docs/ec_hdv_ghg_strategy_en.pdf
[113]            Source: AEA-Ricardo report, p
175.
[114]            Period 2007-2009, same AEA
source as above.
[115] VECTO = Vehicle Energy
Calculation Tool
[116]            Eurostat 
[117]            International
Road Transport Union
[118]           Eurostat, 2009
[119]            According
to CECRA (customer services, repair and servicing, spare parts, accessories and
tuning) statistics 
[120]            AEA- Reduction and Testing of
Greenhouse Gas (GHG) Emissions from Heavy Duty Vehicles – Lot 1: Strategy - Final
Report to the European Commission – DG Climate Action
[121]            OICA (Organisation Internationale des
Constructeurs d‘Automobiles), is the International Organization of Motor
Vehicle Manufacturers. Compiled vehicle production data is available from
OICA‘s website at: http://oica.net/category/production-statistics/
[122]                  ACEA EU Economic Report July 2011
[123]            CLEAR International Consulting (2010)
[124]            ACEA
Pocket Handbook 2011statistics. 
[125]            KPMG-Competing
in the Global Truck Industry Emerging
Markets Spotlight
[126]            Source of figures on the retail
sale of fuel - EUROSTAT
[127]            LMC
Automotive Global Commercial Vehicle Forecast, Quarter 1, 2012
[128]            In a report commissioned and
financed by the International Council for Clean Transportation (ICCT), "European
Union Greenhouse Gas Reduction Potential for Heavy-Duty Vehicles",
[129]            Based on
information from companies' websites
[130]            See above-mentioned TIAX report, notably tables 5-1 to 5-9
and 6-3.
[131]            Marginal abatement cost curves for Heavy Duty Vehicles, CE
Delft, September 2012,         
http://ec.europa.eu/clima/policies/transport/vehicles/heavy/docs/hdv_2012_co2_abatement_cost_curves_en.pdf
[132]                  Commonly known as "laughing gas" or "sweet gas".
[133]            IPCC (2007). IPCC fourth assessment report: climate change
2007. Working group I: The physical science basis, www.ipcc.ch, 2007.
[134]            Source: Joint Research Centre estimates.