Introduction

The European Union is committed under the Kyoto Protocol to reduce greenhouse gas emissions by 8 per cent by 2008-2012 compared to the 1990 level. In March 2007 EU leaders committed to a 20-30% reduction in greenhouse gas emissions overall by 2020. In December 2008 the European Commission agreed the 'climate and energy' package of proposals to legally implement these targets.

Transport is the worst performing sector under Kyoto and seriously jeopardises the achievement of the targets. Transport CO2 emissions in the EU grew by 35.6% between 1990 and 2007. Other sectors reduced their emissions by 8.9% over the same period. The share of transport in CO2 emissions was 21% in 1990, but by 2007 this had grown to 28%. The European Environment Agency estimates that cars are responsible for 14% of CO2 emissions.

Transport is also critical to the debate on Europe’s energy dependence. Europe currently imports approximately €1 billion of oil every day. Cars are the single biggest consumer in the EU, using around 4.4 million barrels a day, and responsible for 40 per cent of imports.

Oil imports for cars now amount to €140 billion a year, more than the value to the economy the entire European car industry creates each year. According to figures from Eurostat, the 'value added' of the European automotive industry, including vans and trucks as well as suppliers, was €132 billion in 2005.

In this context, the European Union agreed legally binding CO2 emissions standards for new cars at the end of 2008. The law came into force in June 2009.

EU Cars and CO2 legislation: how did 120g by 2005 become 140g by 2015?

The EU target to reduce average new car emissions to 120 g/km was first proposed by Angela Merkel, then German environment minister, at a meeting of European environment ministers in October 1994. It was presented as the ambition to lower fuel consumption of new petrol cars to 5 litres per 100 km and new diesel cars to 4.5 litres per 100 km. The target was formally announced in a European Commission communication in 1995 and represents a 35% reduction over 1995 levels.

Originally the target date was set for 2005. The target was then postponed or weakened four times.

The first postponement occurred in 1996 when the Environment Council introduced the term ‘by 2005, or 2010 at the latest’.

The second postponement took place in 1998 when the European Automobile Manufacturers Association (ACEA) committed to the EU to reduce the average CO2 emissions from new cars sold in the EU to 140 g/km by 2008. The Commission agreed to postpone the deadline for delivery of the ‘120’ target to 2012.

The third weakening was in December 2007 when the European Commission proposed to move the target for 2012 from 120 to 130 g/km. The Commission said that the missing 10 g/km should be taken up by non-car-related measures such as the use of biofuels.

The final compromise on legally-binding CO2 standards represents the fourth and final weaking of the original target proposed in 1995.

Representatives of national governments and MEPs agreed that the 130 grams of CO2 per kilometre limit should apply to only 65% of new cars from 2012, 75% from 2013, 80% from 2014 and all by 2015. But with various 'loopholes', the target for new cars for 2015 is in effect around 140 g/km.

The agreed deal also includes reduced penalties for non-compliance and a reviewable target for 2020.

The Commission had proposed penalties starting at €20 for every g/km above the limits, rising to €95. Following severe pressure from the Italian government, the starting level was been reduced to €5. A target of 95 g/km was set for 2020, but this is dependent on an impact assessment and review by 2013.

Car makers will also be allowed to count certain 'eco-innovations' as part of their emissions reduction, something environmental groups were strongly opposed to.