Making car CO2 standards fit for the electric age

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

As electric car sales go up, there might be unintended consequences. [Photo: AlivePhoto / Shutterstock]

Under the current fleet standard regulation, the allowed emissions of combustion-powered cars are getting out of control as more and more zero-emission vehicles enter the fleet, writes Günter Hörmandinger.

Dr Günter Hörmandinger is the deputy director of Agora Verkehrswende.

When the European Commission tabled its proposal for the first CO2 emission standards for passenger cars in 2007, the idea of electrifying the car fleet seemed far away. That is why the proposal was drafted with a combustion-powered car fleet in mind.

The resulting legislation puts a limit on the amount of CO2 on the exhaust emissions of cars, which are zero for electric vehicles. Now that the electrification of the fleet is getting under way in earnest, this is beginning to have unintended consequences.

The legislation limits the average emissions of all cars taken together, both combustion cars and zero-emission vehicles (ZEVs). This gives a lot of slack to the combustion cars. For example, a share of 10% of ZEVs allows the other 90% of combustion cars to emit 11% more on average than the target.

The more ZEVs, the bigger this effect.

As the share of ZEVs approaches 100%, the permitted emission level for combustion cars goes through the roof. The actual emissions may not be so extreme. But they will be allowed to, so in practice combustion cars will no longer be constrained in their emissions. That is the opposite of what the legislation intended.

Let us see what this could look like. By considering the real-world emissions of cars and assuming that manufacturers will meet their obligations, we can plot a simplified path for the expected average emissions of newly registered cars in the EU over time.

The dark line in the graph shows such a compliance curve, with an important addition that is not yet in the legislation. As a consequence of the Paris climate agreement, the industrialised countries will have to become climate neutral by 2050 at the latest.

Commission President von der Leyen placed this objective at the heart of the European Green Deal and it was endorsed by the EU heads of state and government in December 2019.

Consequently, by 2050 the entire fleet of cars on the road will have to be emission-free. Considering vehicle lifetimes, the last car running on fossil fuel will therefore have to be sold sometime around 2035.

ZEVs will play an increasingly important role on this way to zero, thus raising the permitted emission level for combustion cars as described. The graph shows how this would play out for three different speeds of ZEV market penetration.

In each case, the permitted average emissions of the combustion cars turn out to be substantially higher than the compliance curve, yet in all cases the legislation is respected.

This implies that the coming years may not see much reduction at all in the CO2 emission levels of new combustion-driven cars. In other words, as the share of electric cars rises the legislation turns into a licence to build gas guzzlers.

On top of that, the legislation seeks to support the market introduction of zero and low-emitting vehicles (ZLEVs, defined to emit no more than 50g/km) by means of a so-called ZLEV factor that can relax a manufacturer’s emissions target even further, by a maximum of 5%.

And during the first three years from 2020 so-called super-credits allow a manufacturer to count each ZLEV as if it was more than one vehicle, again relaxing the target for combustion cars.

To be very clear: this is not an argument against the market introduction of electric vehicles. On the contrary – we need zero emission vehicles, the more and the earlier the better. But the analysis shows the need to counter this side-effect of the electrification that nobody ever wanted.

Some may argue that it does not matter, since the policy has always deliberately allowed cars with very different emission levels in order to ensure that all manufacturers could comply, and because only the fleet average is relevant for the climate.

But what kind of a signal would that send to the public? To an outsider, the falling limit value curve would suggest that cars are getting more efficient and lower-emitting over time, and there can be no doubt that this is what people will expect to see as a result.

It was most certainly the understanding of the lawmakers who adopted the legislation. Instead, there is a risk that we may see the opposite as described.

Remember what happened with nitrogen oxide emissions from diesel cars. They stubbornly refused to go down even as the limit values were tightened in several steps.

While this is not really a fair comparison since there was also criminal misconduct involved in the diesel scandal, the scandal also highlighted that a lot of the discrepancy between the laboratory tests and the emissions in the real world was legal.

This was because of an obscure and complicated test procedure with lots of flexibilities and loopholes. It undermined trust in the ability of legislators to regulate the environmental performance of big companies. While it may have been good for the balance sheets of those companies in the short term, it also cost them a lot of public trust.

Rising emissions as described raise the spectre of another public backlash at a time when the industry is still reeling from the diesel scandal and in need of rebuilding its credibility. It would send a very strange signal if the legislation continued to allow the car sector to emit more in order to emit less.

It doesn’t have to be that way. One approach could be to add supplementary standards in addition to the existing limit value that applies to all newly registered cars together. Those vehicles that actually emit CO2 would be subject to some form of supplementary CO2 limit value.

This approach would maintain the functioning of the established system of regulating emissions and preserve the manufacturers’ flexibility to sell a wide range of different vehicles, while preventing the emissions of combustion cars from getting out of hand. Zero emission vehicles, for their part, could be subjected to efficiency rules with a stringency similar to that implied in the CO2 limits for the combustion vehicles, as I have argued earlier.

To sum up: excessive emissions by combustion cars can be avoided. The revision of the car standards, now advanced to June 2021, provides the perfect opportunity to do so.

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