Agreement on 2020 CO2 Emissions Reductions For Cars

An agreement has been reached between the European Parliament and the European Council that will give effect to the year 2020 CO2 emissions target for new passenger cars by defining the “modalities” within which the car industry must operate to achieve this target.

The new regulation will govern the means by which car manufacturers are allowed to meet the year 2020 target for CO2 emissions (95g/CO2/Km). These modalities of implementation impact on how the target is to be achieved, such as adapting vehicle specifications and altering incentives so as to affect car manufacturer’s average emissions. Of particular note in the agreement are the following.

The agreement provides for the continued use of “Supercredits”. Supercredits are incentives to encourage car manufacturers to develop breakthrough technologies and manufacture vehicles with ultra-low emissions.

In addition, this agreement calls for a post 2020 target to ensure that the car industry is given a clear signal of the expected level of ambition in 2025 and afforded sufficient time to design, develop, test and produce new passenger cars that will comply with any new target.

In response to growing evidence that the CO2 performance of new passenger cars under real world driving conditions is increasingly divergent from the testing procedures, the agreement calls for the transition from the current test cycle New European Driving Cycle (NEDC) to a new Worldwide Harmonized Light-duty Test Procedures (WLTP) at the earliest opportunity.

The main benefits of the agreement are:

* Reduced CO2 Emissions – The introduction of the 95gCO2/km CO2 emission target for new passenger cars represents a significant reduction in CO2 tailpipe emissions per vehicle km relative to doing nothing by 2020.

* Net savings for consumer – Each new passenger car will produce substantial savings in fuel costs over the car’s lifetime, as compared with the 2015 target.

* Spurring innovation and competitiveness – The 2020 target offers a clear and stable legal environment for investment, and will further stimulate innovation by vehicle producers and component suppliers, further strengthening the EU industry’s competitive advantage. The introduction of similar CO2 or fuel efficiency standards in third countries would increase demand for CO2-reducing technologies and more efficient cars made in Europe.

* Keeping and creating jobs – The need for new technologies and improvements in fuel efficiency will have positive impacts on demand for components. Fuel efficiency is expected to have a beneficial effect on employment as fuel efficiency increases the value of cars manufactured and leads to proportionally higher labour demand since vehicle manufacturing is labour-intensive.

In welcoming the agreement, Phil Hogan TD, the Irish Minister for Environment, Community and Local Government, comments: “The agreement strikes an appropriate balance between environmental ambition and economic considerations. This agreement will not only protect climate but will save consumers money and will boost innovation and competitiveness in the European car industry, creating much needed jobs in the process. This agreement clearly represents a win-win for climate, consumers, innovation and jobs and provides another important step towards a competitive, low-carbon economy.”

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