How governments plan to weaken car CO2 targets via the backdoor

MEPs and EU governments resume negotiations today on new car CO2 reduction targets, but two changes to the proposal sought by the Council threaten to drastically weaken the ambition of the crucial climate law.

Governments now want plug-in hybrids to count more towards the sales benchmark for zero and low-emission vehicles (ZLEVs) expected from all carmakers for 2025 and 2030. Despite many current hybrids having real-world emissions above 100 grams of CO2 per km on the road, this amendment would fail to incentivise improvement of their efficiency or electric range. It would result in fewer cars with higher emissions being required to reach the benchmark.

Countries are also calling for sales of zero and low emission vehicles – ZLEVs – to be double counted towards the benchmark in EU member states where the ZLEV share is below 60% of the EU average in 2021. That means at least 15 member states would qualify based on today’s sales – including Italy and Spain, but excluding Hungary. While originally designed to aid sales in lower-GDP countries, the amendment will undermine its own goal.

The double-counting amendment also goes against the principle of the EU internal market and is an open invitation for carmakers to game the system. Manufacturers can easily register a ZLEV sale in one of the 15 countries where it would be double counted towards the benchmark – and quickly re-register the vehicle in a major market shortly afterwards. So, while the actual owner of the ZLEV could be in Germany, carmakers get credit for 'selling' the ZLEV in Poland and benefit from Polish national EV incentives. This is already happening: for example Hyundai-Kia are registering sub-50g/km EVs in Germany and Sweden, but these are then resold in Norway. The tax breaks being provided by the German and Swedish governments are also benefiting drivers in Norway – not at home.

If accepted by the Parliament and Commission, the two amendments will seriously weaken the car CO2 regulation. Carmakers could choose to sell the minimum share of ZLEVs required to meet the 2025/2030 sales benchmarks, which would result in millions of fewer plug-in cars being sold across Europe annually. Or manufacturers could choose to sell the same number of ZLEVs that they would under the Commission’s proposed counting rules. In this case the Council amendments would allow carmakers to easily overshoot the sales benchmarks and benefit from the bonus, which would be a less stringent CO2 reduction target for their whole fleet.

T&E said the proposed changes would lower the Council’s proposed 35% reduction target for new cars in 2030 to an effective 31.8% target – a significant weakening of the law through accounting tricks.

As the accounting tricks could lower the CO2 reduction target from 35% to 31.8% in 2030, there could be an additional 6.8 Mt of additional CO2 emissions in Europe – compared to under the Commission and Parliament’s preferred approach.

Julia Poliscanova, clean vehicles manager at T&E, said: ‘The two amendments were sneaked by the Council into the cars regulation at the last minute agreement without proper scrutiny. If left untouched, these would in effect turn the on-paper 35% reduction for cars into a mere 31.8%, not far from the Commission’s inadequate proposal. Worse still, they are open to abuse by manufacturers who can register vehicles in the double-counted countries such as Poland and then sell them on to major market such as Germany shortly afterwards. The only Polish road those EVs will see is the one leading to Germany.’

T&E said the Parliament and Commission today must stand firm over the methodology they proposed and defend the internal market rules. That means there should be no multiplier for plug-in hybrids – the Commission already rewards them in accordance with their real-world performance. There should also be no double counting of ZLEV sales in member states based on a subjective, averaged sales criteria. T&E said more tailored measures are needed to kickstart markets in some poorer member states, rather than arbitrary double-counting that encourages gaming of the regulation.