EUROPEAN COMMISSION

Brussels, 11.7.2012
SWD(2012) 214 final

COMMISSION STAFF WORKING DOCUMENT
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT

Accompanying the documents
Proposal for a regulation of the European Parliament and of the Council amending
Regulation (EC) No 443/2009 to define the modalities for reaching the 2020 target to
reduce CO2 emissions from new passenger cars
and
Proposal for a regulation of the European Parliament and of the Council amending
Regulation (EU) No 510/2011 to define the modalities for reaching the 2020 target to
reduce CO2 emissions from new light commercial vehicles
{COM(2012) 393 final}
{COM(2012) 394 final}
{SWD(2012) 213 final}

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COMMISSION STAFF WORKING DOCUMENT
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT

Accompanying the documents
Proposal for a regulation of the European Parliament and of the Council amending
Regulation (EC) No 443/2009 to define the modalities for reaching the 2020 target to
reduce CO2 emissions from new passenger cars
and
Proposal for a regulation of the European Parliament and of the Council amending
Regulation (EU) No 510/2011 to define the modalities for reaching the 2020 target to
reduce CO2 emissions from new light commercial vehicles

1.

PROBLEM DEFINITION

1.1.

The nature of the problem

Road transport is one of the few sectors with rapidly rising emissions and between 1990 and
2008 emissions from the sector increased by 26%. This trend is not sustainable in view of the
EU's climate policy. According to the Commission's 'Roadmap for moving to a competitive
low carbon economy in 2050'1 and Transport White Paper2, road transport has to significantly
reduce its CO2 emissions by 2050.
Light-duty vehicles (LDVs) are responsible for a significant part of overall transport
emissions and emit around 13.5% of total EU CO2 emissions and about 15% when the
emissions from supplying the fuel are included. In view of the expected increase in the LDV
fleet, a continuation of the effective application of mandatory CO2 targets is necessary to
ensure further reduction of road transport emissions of CO2.
The two-step approach of the Regulations requires that the Commission proposes modalities
of meeting the 2020 targets by end of 2012. Proposals to amend the Regulations should be "as
neutral as possible from the point of competition, socially equitable and sustainable".3 This
necessitates updating the formulae in Annex I to the Regulations for the 2020 targets. In
addition, the vans target for 2020 requires confirmation of feasibility. Modalities are taken to
mean aspects of the implementation which impact on how the emission targets are achieved.
The level of stringency of the Regulations for 2020 is determined by the target values
established within them. The targets were established in the co-decision process and are not
reconsidered in the review.

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COM/2011/0112 final
'Roadmap to a Single European Transport Area – Towards a competitive and resource efficient
transport system' , COM/2011/0144 final
Article 13(5) of Regulation (EC) 443/2009 and Article 13(1) of Regulation (EU) 510/2011

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The two Regulations leave uncertainty for the period beyond 2020. However, the automotive
industry works to planning cycles that suggest the need to know approximately ten years in
advance the broad framework within which LDVs need to be designed, and a shorter period
of around five years for more precise decisions on variants that will actually be produced. It is
thus important to provide indications as to the future reductions early enough to allow for
appropriate planning certainty.
1.2.

How will the problem evolve without new EU action?

Without action the 2020 car and van CO2 targets could not be implemented and no reduction
beyond respectively 2015 and 2017 would be required. This is because neither 2020 target can
take effect without legislation defining and implementing the modalities for 2020. This
requires the amendment of the Regulations in the ordinary legislative procedure. Without
further EU action it is likely there would be little additional CO2 reduction from new LDVs.
Further progress in fuel efficiency could not be assumed, as evidence from the EU and US
indicates that in the absence of regulatory requirements or large fuel price increases, LDV fuel
consumption improves at only a modest rate.
This 'do nothing' option forms the baseline scenario of the Impact Assessment and the
modelling supporting it. In case of no new EU action the following impacts of implementation
of the 2020 targets would not be realised:
•

An approximately 25% reduction in car and van oil consumption, saving
approximately €25bn in consumption annually. Around 25mtoe per year lower
energy use in 2030, saving in total around 160 mtoe in the period 2020 to 2030. An
estimated aggregate energy security benefit between 2020 and 2030 of €20bn.

•

Avoided fuel use increases progressively from €27bn per year over the 2020 to 2025
period to €36bn per year over the 2025 to 2030 period. Avoided expenditure on fuel
imports is substituted by spending on capital and technology which increases
domestic demand. Input-output analysis suggests that this can be expected annually
to increase GDP by around €12bn and expenditure on labour by around €9bn.

•

Estimated fuel savings from implementation of the 2020 targets more than
compensate the expected costs of compliance. The net cost to society ranges from
around minus €80 to €230 per tonne of CO2 avoided for cars4 and minus €172 to
€295 for vans. The range depends on the oil price which for the analysis is varied
between $90 and $140 per barrel.

1.3.

The stakeholders affected

The main stakeholder groups affected by the Regulations include the general population,
vehicle purchasers, vehicle manufacturers, automotive component suppliers and fuel
suppliers. The impact routes are primarily as follows:
•

The EU population is increasingly affected by the impacts of climate change.

•

Buyers of vehicles are affected by possible vehicle price increases and reduced
running costs due to lower fuel consumption. Fuel savings outweigh vehicle cost
increases.

•

Vehicle manufacturers are affected by the obligation and need to introduce technical
CO2 reduction measures. This may increase production costs and affect their product

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Under cost scenario 2 with a 60% slope

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portfolios. It will give them the opportunity to gain first mover advantage and the
potential to sell advanced low CO2 vehicles in other markets.
•

Component suppliers are expected to benefit from higher demand for advanced
technologies and the possibility to export them to other markets.

•

Fuel suppliers are likely to see lower demand for transport fuels.

•

Other users of fuel and oil are expected to benefit from lower prices.

•

There will be reduced pressure on GHG emitting sectors other than transport to
further reduce emissions to compensate for increased transport emissions.

2.

ANALYSIS OF SUBSIDIARITY

The EU has already acted in this area when it adopted Regulations (EC) 443/2009 and (EU)
510/2011 based upon the environment chapter of the Treaty (cars on Article 175 of TEC5 and
vans on Article 192(1) of TFEU6). 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.
3.

OBJECTIVES

GENERAL
Provide for a high level of environmental protection in the European Union and contribute to
reaching the EU's climate change targets while reducing oil consumption, thus improving the
security of energy supply in the EU, stimulating innovation and boosting competitiveness of
the EU industry.
SPECIFIC
Ensure the continued and effective application of the car and van CO2 regulations
particularly in respect of the 2020 targets.
OPERATIONAL
•

Ensure that the 2020 van CO2 target is feasible.

•

Ensure the environmental benefits of the 2020 light duty vehicle CO2 targets are achieved
cost-effectively.

•

Ensure the modalities of achieving the 2020 targets do not have unacceptable social
impacts.

•

Ensure the modalities of achieving the 2020 targets do not have undesired
competitiveness impacts for the EU automotive sector.

•

Create sufficient certainty for the automotive sector with regard to future light duty
vehicle CO2 requirements.

•

Minimise where possible the administrative burden and costs for SMEs of the Regulations.

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Treaty of the European Communities amended by TFEU (see footnote 6)
Treaty on the Functioning of the European Union

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4.

POLICY OPTIONS

4.1.

Identification of policy options

A broad approach has been taken to identifying policy options. These cover issues raised in
the legislation, those arising with implementation and those assessed in the studies analysing
possible approaches to improve the legislation's effectiveness. The following aspects are
analysed:
a) 'Do nothing' option;
b) Confirmation of feasibility of the 2020 target for vans;
c) Within each modality of meeting the car and van targets different options are analysed:
–

Different utility parameters, shapes and slopes forming the limit value curve

–

Excess emissions premia (no change or adjustments)

–

Derogations (no continuation, continuation or adjustments)

–

Eco-innovations (phase-out or prolongation)

–

Phase-in (no phase-in of the 2020 targets or inclusion of phase-in)

–

Super-credits (no prolongation, prolongation or modification of the scheme)

–

Banking and borrowing

–

Combining car and van targets

–

Mileage weighting

–

Vehicle based limits

d) Simplification and reduction of administrative burden
e) Adaptation to the new test cycle
f) Form and stringency of legislation beyond 2020
4.2.

Conclusions of the preliminary assessment of options

A preliminary assessment has been made of these issues, primarily based upon external
studies and input from the stakeholders.
(a)

'Do nothing'

This option is equivalent to the baseline scenario and means the car and van 2020 targets are
not implemented due to a lack of definition of the modalities to meet them. This option is
discarded because it is counter to the general, specific and operational objectives.
(b)

Confirmation of feasibility of the 2020 target for vans

The 2010 emissions data shows the reduction to be achieved to meet the 2020 target has
reduced significantly without major technological change. Average CO2 emissions in 2010
reduced for all van segments as compared to 2007 although the level of reduction differed
between classes. The updated cost curves show greater reduction potential and lower costs

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compared to the 2009 analysis. The timeframe available for the reduction is consistent with
development times. As a result, it is concluded that the 2020 van target is feasible.
(c)

Modalities of meeting the car and van targets

The modalities assessed are not alternatives to each other with the exception of phase-in and
banking and borrowing which preferably should not be combined. Therefore, for each
modality a set of alternative policy options is assessed against the objectives specified in
section 3.
Certain options regarding the utility parameter, the slope of the limit value curve, changes to
derogations and simplification are retained for further assessment. In addition, it is concluded
that it may be desirable to continue with the eco-innovation scheme. With regard to the excess
emissions premia these are currently higher than the van marginal costs and are, overall,
consistent with the average car marginal cost. In view of the lower stringency of the van target
compared to cars and a potential overlap between some larger cars and vans, it is concluded
that the premia should continue at the current level.
Phase-in and super-credits are discarded from further analysis. The former is not seen as
necessary in view of the current trajectory of new car emissions and the expectation that the
overall target will be met in 2020. Furthermore, any additional intermediate targets would
make the obligation on manufacturers more costly due to reduced flexibility. A phase-in
ending later than 2020 would undermine the ambition of the Regulation and thus lead to lower
CO2 savings. In addition, it would undermine the regulatory certainty for the automotive
industry keen to recoup earlier investments in CO2 reducing technology. These arguments are
even more pertinent for vans in case of which the 2020 target is easier and less costly to meet.
Super-credits for low emitting cars are discarded for cars and vans based on their potential
perverse impact on meeting the overall target. This approach undermines the effort needed
from conventional vehicles by allowing them to emit more and reduces the overall costeffectiveness of the policy. In addition, it runs counter to the objective of technology
neutrality. However, these undesirable impacts can be limited with a low multiplier and
capping the number of affected vehicles.
Further modalities not present in the current Regulations such as banking and borrowing,
combining car and van targets, mileage weighting and vehicle based limits are also discarded
from further analysis as either overly complex, running counter to the objectives of planning
certainty and ensuring the environmental targets are achieved, adding to the administrative
burden, imposing disproportionate compliance costs on some manufacturer or due to lack of
sufficiently robust data on mileage of different car segments.
(d)

Simplification and reduction of administrative burden

The potential simplification of the current Regulations and reduction of administrative burden
are assessed for the following provisions: reduction of the number of modalities,
simplification of the implementing measures, simplification of rules for SMEs and microSMEs. Pre-screening of policy options results in a reduction of the number of modalities. In
addition, the implementing measures can mostly be simplified due to the review provisions
set out in therein. However, the simplification of rules for SMEs by inclusion of a de-minimis
threshold and reduction of the administrative burden of the derogation procedure by making it
more flexible is retained for further analysis.

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(e)

Adaptation to the new test cycle

With regard to adaptation to the new test cycle, the Regulations already empower the
Commission to adapt them to a new test procedure. However, since the revised test procedure
is unlikely to be adopted prior to the coming into force of the amended Regulations this
cannot be done at present. To minimise uncertainty, it would be possible to describe in outline
the principles and procedure that will be used for adaptation of the legislation. This could
potentially increase manufacturer certainty and thereby lower compliance costs.
(f)

Form and stringency of legislation beyond 2020

With regard to the regulatory regime beyond 2020 it is considered desirable to publish a
consultative communication. This would set out the Commission's analysis of alternative
regulatory approaches and an illustration of the likely range of stringency that would be
required for future CO2 limits. Future changes to the regulatory approach and making the
level of emission reduction mandatory would be carried out at a second legislative stage.
4.3.

Options retained for further analysis

The following options are taken forward for detailed analysis.
Car specific options:
–

Utility parameter – mass and footprint

–

Utility function – linear

–

Slope of the limit value curve – 60 to 100%

–

Changes to derogations- 'de minimis' rule, amendment of the niche derogation

–

Simplification and reduction of administrative burden connected to derogations

Van specific options:
–

Utility parameter – mass and footprint

–

Utility function – linear curve for mass and non-linear curve for footprint

–

Slope of the limit value curve – 80 to100%

–

Changes to derogations- 'de minimis' rule

–

Simplification and reduction of administrative burden connected to derogations

5.

ASSESSMENT OF IMPACTS

Policy options have been assessed on the basis of the objectives, ensuring they respond to the
request that the amendments should be "as neutral as possible from the point of competition,
socially equitable and sustainable".
Impact of options with regard to utility parameter
For cars, the analysis shows a small cost benefit of shifting from mass to footprint since lightweighting is under-incentivised with mass as the parameter. Mass gives a more even
distribution over vehicle segments but as a result the relative price increase for smaller cars is
higher. If footprint is used as the utility parameter, perverse incentives to change the design of
the car are more limited provided that the limit function is not too steep. Footprint would

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allow greater use of light-weighting as a compliance option, especially for potential future
targets beyond 2020. A change of utility parameter would not meet the objective of planning
certainty since it is highly probable that manufacturers have planned their compliance
pathways to 2020 on the basis of continuation of the current parameter.
For vans, footprint seems a less desirable parameter than mass due to the difficulties for
manufacturers implicit in a change within 3 years, the increased risks of perverse incentives,
and the need to use a non-linear limit function. In addition, manufacturer costs and price
increases are less evenly distributed. Finally, planning certainty is also compromised,
especially in view of the short time gap between the two targets.
With regard to innovation, there is unlikely to be an impact on most routes to meet the 2020
targets for both cars and vans, with the exception of light-weighting. In this respect using
mass as the utility parameter does not treat all options equally. The choice of car or van utility
parameter is considered to be neutral as regards the competitiveness of the EU industry.
Furthermore, it is not expected to have any impact on trade or SMEs.
For environmental impacts, the different utility parameters assessed have no direct impact
provided certain assumptions are met. There are no social impacts other than higher relative
price increases for smaller cars with mass. However, this does not apply to vans.
Impact of options with regard to slope
For cars a slope above 100% is undesirable as it gives a perverse incentive to manufacturers
and average costs increase with increasing slope for both parameters. For mass, a slope below
100% based on 2009 data should avoid a serious risk of perverse incentives. The cost increase
in absolute terms is fairly evenly distributed over the different vehicle segments. However,
relative price increases are greater for small than large cars and a lower slope value reduces
this effect. Lower slope also helps to compensate for the lack of mileage weighting.
For vans, the slope of the limit value curve preferable for a mass-based function is in the
range 80-100% from the cost and distributional perspective. For footprint, the lowest cost
occurs with 110% slope however such a steep slope is likely to give a perverse incentive to
increase footprint, therefore, a slope around 100% seems preferable.
The car and van slopes are not expected to have any significant effect on innovation,
competitiveness, trade or SMEs. Since there was no previous expectation of which slope
would apply for 2020, planning certainty is not affected.
For environmental impacts, policy options affecting the slope were assessed as having a very
minor impact. There are potential secondary and behavioural impacts caused by vehicle-km
being slightly differently distributed across the fleet. Therefore, a lower slope for cars is
desirable on environmental grounds. This effect is considered not relevant for vans. As
regards social impacts, the slope of the car curve has a distributional impact on relative new
car prices. As a result a lower slope is desirable. No such impacts are expected for vans which
are mostly used for business purposes and are purchased based on their utility.
Derogations
It is considered to be desirable to update the reduction effort required from niche
manufacturers to ensure further reductions beyond 2015. This is in line with the competitive
neutrality objective since, due to the upper threshold of 300,000 registrations, manufacturers

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covered by this derogation may hold up to 2.5% of the EU car market before being subject to
the normal CO2 regulatory regime. The niche CO2 requirements would not have any direct
SME impact. The environmental impacts will be positive since the manufacturers will be
required to reduce their emissions.
Impacts of simplification and reduction of administrative burden
The introduction of a de-minimis threshold for small-volume manufacturers, or the exclusion
of SME manufacturers, could be considered. Economic benefits would come from a reduced
administrative burden for the company (estimated at around €25,000 per manufacturer) and
the Commission (around €10,000 per application) linked to avoiding the need for a derogation
procedure. There would be a marginal environmental impact of smaller emission reductions
for both cars and vans. Social impacts are expected to be minor.
Simplification of the administrative procedure in these cases would permit a smoother
assessment process. Simplification is not expected to have any significant environmental and
social effects. Other than the benefits for the companies directly affected, the de minimis
threshold is not expected to have any impact on competitiveness, trade, SMEs or innovation.
6.

COMPARISON OF OPTIONS

The 2020 target of 147g/km for vans is confirmed as feasible.
Table 1 and 2 below summarise the assessment of the economic, environmental and social
impacts of the different modalities.
Based on the analysis it is concluded that the following options should be preferred:
•

Utility parameter should continue to be mass for both cars and vans.

•

The limit value curve should continue to be linear.

•

The slope of the curve should be around 60% for cars and 100% for vans.

•

Derogation schemes may be adjusted to exclude the very smallest manufacturers.
Furthermore the procedure should be simplified to reduce the administrative burden.

•

The reduction effort for niche manufacturers should be updated to reflect the average
effort required from the industry.

•

Excess Emissions Premia should be maintained at €95/g/vehicle.

7.

MONITORING AND EVALUATION

The core indicators of progress are linked to the evolution of the average new car and van
fleets. They cover data relating to specific CO2 emissions and utility. The latter is recorded in
case a shift in utility requires future adaptation of the utility curve. Other utility parameters
such as footprint or payload are monitored to assess their appropriateness.
In addition, the Commission will collect information regarding the number of derogation
applications and the reduction targets proposed by the manufacturers, as well as information
on the number of eco-innovation applications and granted eco-innovation credits.

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Table 1 Comparison of impacts of different options for modalities – cars

Utility parameter

Mass

Slope<100%

Derogations

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Options

Slope of the limit value
curve

Modalities

Footprint

Advantages

Disadvantages

Regulatory certainty- no change from current Regulation.
More even cost distribution between segments.

Greater risk of perverse incentives than for footprint.
Not fully technology neutral since light-weighting is
disadvantaged.
Average additional manufacturer cost is about 2% greater than
with use of footprint since light-weighting is not rewarded.
Average additional manufacturer cost is about 2% cheaper than No regulatory certainty- change from current Regulation.
with mass.
Less even cost distribution between segments.
Provides greater incentive for light-weighting.
Adjustment costs linked to shift to another utility parameter.

Actual cost increase per vehicle less even between segments.
Costs slightly lower overall.
Avoides serious risk of perverse incentives.
Compensates for lack of mileage weighting.
Beneficial impact on overall CO2 and pollutant emissions.
More socially equitable (lower relative price increase for
smaller cars).
Actual cost increase per vehicle more even between segments.
Costs slightly higher overall.
Slope>100%
Increased risk of perverse incentives.
Less socially equitable (higher relative price increase for smaller
cars).
Reduced administrative burden for SMEs and for the Marginal reduction of emissions savings.
De minimis
Commission.
threshold

Update
Niche
Derogation

More competitively neutral.
Slightly higher CO2 savings.

Higher cost for manufacturers benefitting from niche derogation.

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Table 2 Comparison of impacts of different modalities - vans
Modalities

Policy
options

Derogations

Slope of the limit
value curve

Utility parameter

Mass

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Footprint

Slope<100%

Slope>100%

De minimis
threshold

Advantages

Disadvantages

Regulatory certainty- no change from current Regulation.
More even cost distribution between segments.
Limited perverse incentives to increase mass.

Average additional manufacturer cost slightly higher than
footprint, especially for slopes above 100%.
Not fully technology neutral since light-weighting is
disadvantaged.
Average additional manufacturer cost slightly lower for No regulatory certainty- change from current Regulation;
footprint for slopes above 80%.
adjustment costs can be expected to be higher due to 3-year gap
Provides greater incentive for light-weighting.
between the targets.
Requires a non-linear limit value function.
Less even cost distribution between segments.
The cost increase of changing to footprint especially high for
some manufacturers.
Easier to manipulate than mass but it can be limited by a shape
and slope of the limit value curve.
Slopes 60-80% highest costs for footprint-based function.
Minimises risk of perverse incentive for both functions.
Slopes below 80% lead to uneven distribution of costs between
Slopes 80-100% lowest costs for mass-based function.
Costs lowest and most evenly distributed around 100% slope segments.
for mass-based function.
Lower costs for footprint-based function above 100%.
Increased risk of perverse incentives for both parameters.
More even distribution for footprint-based function between Highest costs and less even distribution between segments for
segments above 110% slope.
mass-based function above 110% slope.
Reduced administrative burden for SMEs and for the Marginal reduction of emissions savings.
Commission.

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