MEPs approve new limits on CO2 emissions from cars

Tougher limits on carbon dioxide (CO2) emissions from cars are on the way after MEPs on the European Parliament Environment Committee (ENVI) voted through new rules last week (24 April). The measure, which is expected to be formally approved by July, will see the legal limit on CO2 emissions from new cars cut from 130 grams per kilometre in 2015, to 95 grams per kilometre by 2020.

The proposed new limits did not go down well with the industry group, the European Automobile Manufacturers' Association (ACEA), with Ivan Hodac, secretary general calling into question both the long-term CO2 targets and changes to the way emissions are measured. “As well as the fact that an impact assessment has not yet been conducted, there are also presently a number of legal and market uncertainties - in terms of what will be the lead technology in the long-term, the future regulatory regime, as well as the planned new test cycle and procedure," Hodac said.

The first quarter of 2013 was the worst on record for car sales across the EU, Hodac noted. “In this difficult economic context - and given the fact that the regulatory pressure in Europe is already far higher than in our major competitor regions - the outcome of the ENVI Committee vote sends a worrying signal for the future of the industry in Europe.

The risk is of increased manufacturing costs in Europe, creating a competitive disadvantage for the region. In effect, the ENVI proposals would jeopardise the industry’s ability to retain its technological and environmental lead,” said Hodac.

Future targets to drive innovation

This step towards reducing CO2 emissions from transport came as the central plank of the Commission’s policy for reducing emissions from heavy industry fell apart, when its plans to shore up Europe’s CO2 Emissions Trading Scheme were rejected by MEPs (see below).

The EU’s overall target is to cut emissions of CO2 by 80 - 95 per cent by 2050 compared to 1990. But while levels of CO2 from most other sectors are falling, emissions from road transport rose by 26 per cent between 1990 and 2008. Currently, one fifth of all CO2 emissions in Europe come from motor vehicles.

Since 2006, car emissions have been limited to 160 grams per kilometre across a manufacturer’s range of vehicles. This limit is due to be cut to 130g/km from 2015.  ENVI has also pencilled in targets for further cuts after 2020 and said that by 2050 emissions from road transport should be halved.  Setting long-term targets will enable the automotive industry to focus on long-term investments and innovation, the committee says.

Thomas Ulmer, German MEP and Rapporteur for the proposal says it will, “Bring about a further significant – but economically and environmentally defensible – reduction in CO2 emissions from new vehicles."

The emission limits are the average maximum allowed for car makers registered in the EU. In order to assess if the target has been met, all cars in a manufacturer’s range will be considered. Car firms will need to manufacture enough clean cars to compensate for any more polluting models in order to achieve an overall figure of 95 grams per kilometre by 2020, or else face penalties.

Super credits

Here comes the fudge: manufacturers will be able to use "super credits", which assign a favourable weighting to cars that emit less than 50 grams per kilometre of CO2, with each clean car counting as 3.5 cars in 2013, 1.5 from 2016, and 1 from 2024. The super credit scheme was devised in response to calls from manufacturers for greater flexibility in how they reach the target.

The scheme was welcomed by the Fédération Internationale de l’Automobile (FIA), representing automobile clubs and their members, with Jacob Bangsgaard, Director General saying, “On super-credits, the Committee has backed a sensible compromise which will ensure that the overall target for 2020 and beyond is not unduly weakened.

Closing loopholes in testing procedures

The Committee also made moves to close loopholes in the existing legislation that manufacturers have exploited to massage their emissions figures. As a result of this, a gap has emerged between the official emission figures and those achieved in everyday driving. The current test procedure takes place under laboratory conditions, and does not account for factors such as the ‘cold starting’ of an engine, mileage covered on motorways, use of air conditioning, and so on, which increase CO2 emissions.

The Committee decided that the new UN-defined World Light Duty Test Procedure (WLTP) should replace today's procedure in EU law "as a matter of urgency", and if possible by 2017. The WLTP is a global harmonised standard for determining the levels of pollutants and CO2 emissions, fuel or energy consumption, and electric range from light-duty vehicles.

This is something the FIA has been pushing for, Bangsgaard noted. "We need to act now to close the growing gap between the measurement of emissions during type approval and the level of real emissions,” he said.

Low carbon cars are good for jobs

Despite car manufacturer’s negative response, the environmental lobbying group, Transport & Environment maintains that low carbon cars are good for jobs, good for the economy and good for the environment. “The latest scientific study on the subject estimates that 350,000 jobs will be created through the need to design and deploy new technology, and [through] consumer spending [of] the money drivers save in lower fuel bills," said Cecile Toubeau, clean vehicles policy officer.

Transport and Environment’s latest study on the progress made by Europe’s carmakers in reducing CO2 emissions of new cars shows that they are better positioned than most of their Asian counterparts to meet the target of 95 g/km average CO2 emissions by 2020. “This is a win-win-win situation Europe can’t afford to miss,” Toubeau said.

One policy passes, another fails

While the deal on cleaner cars passed in Committee, plans to rescue the EU's flailing scheme for reducing CO2 emissions from heavy industry, the Emissions Trading System (ETS), fell apart when MEPs voted against a proposal to protect the price of carbon.

The ETS places a cap on the overall emissions from factories and power plants, which is gradually reduced over time so that total emissions fall. 

Companies buy allowances from their national governments, which they can use to cover their own emissions, or sell to more polluting counterparts. The limit on the total number of allowances protects their value and provides an incentive for low-carbon operations.

The financial crisis has depressed industrial activities and emissions, leading to a surplus of allowances and a crash in the price of permits. The proposed reform – known as "backloading" – aimed to freeze the auctioning of a portion of allowances in order to boost the value of the market.

MEPs voted against the reform, with many fearing that interfering with the supply of credits would undermine investors' confidence in the scheme and that a rise in carbon prices would erode the competitiveness of European industry.

"I deeply regret today's vote. It is the beginning of the repatriation of climate policy," said Rapporteur Matthias Groote. "This kind of politics plays into the hands of climate skeptics. The rejection of the backloading proposal weakens the EU emissions trading system and puts our climate goals at risk," he said.