In 2014 the EU set legally-binding targets for new vans to emit on average no more than 175g CO2/km in 2017 and 147g CO2/km in 2021.
The use of vans has exploded since Europe set up its internal market in the 1990s. For example, between 2000 and 2010, the number of vans on German roads doubled. This is not because Europe has suddenly needed a lot more plumbers and electricians; it is because vans are increasingly used for goods transport. This has something to do with internet shopping, but more to do with van transport being made artificially attractive by the absence of proper European legislation (compared to their direct alternative, trucks). From an environmental perspective, this is bad news. Vans spew out NOx at levels that are seven times the legal limit and the useless van CO2 standard makes this vehicle segment a technology graveyard.
Vans are truly the neglected outlier of Europe’s freight transport policy. Van drivers don’t require special training or driving licenses, while truck drivers do. Van drivers are not required to rest, unlike their heavy-duty vehicles (HGV) counterparts. Neither do vans face any cabotage restrictions, meaning foreign drivers can stay in another country while still being subject to the national laws of their home country. Light commercial vehicles do not pay the road tolls that trucks pay under ‘Eurovignette’ rules and they have no speed limiter, while trucks (rightly) can only go at a maximum of 90km/h.
How does the EU’s van fuel efficiency law work?
The new legislation sets a target of 147g/km (there is a direct link between CO2 emissions and fuel efficiency) for new vans (goods vehicles under 3.5 tons) sold in Europe in 2021. The rules are an update to the EU’s original legislation on binding CO2 targets agreed in 2010 (Regulation No 510/2009).
The targets are to be achieved on average across all new vans sold in 2021. Individual vans can be above or below the limit but vehicle manufacturers have to ensure that the average of their new sales meets these levels. Each manufacturer gets an individual annual target linked to the size (measured by weight) of all its new vans registered in the EU in a given year.
If manufacturers exceed these limits they are obliged to pay fines of 95 EUR per vehicle per gram of CO2/km over the target.
What are the main benefits of more fuel-efficient vans?
Fuel efficient vans bring enormous benefits. First and foremost they slash fuel cost for businesses using vans. The money saved by van owners in lower costs of vehicle ownership will be used to boost local economies. But fuel efficiency standards also spur high-tech investments, create high-quality jobs in Europe, reduce Europe’s dependence on imported oil and lead to a substantial reduction in greenhouse gas emissions.
Is the 2021 target of 147g/km enough?
No. The original decision was distorted by the flawed evidence and the target should therefore be revised. Since 2010 when the 147g target was first agreed, important new evidence has emerged, indicating costs to cut van CO2 emissions and fuel consumption were grossly overestimated at the time. We now know that average emissions in 2010 were 181 g/km (not 203 g/km) and the most recent estimates put the technology cost for achieving 147g/km at just €545, 4-15 times lower than originally foreseen.
A study by TNO shows that a 2021 vans target equivalent to the 95g legislated for cars would need to be set at 118g/km. Such a target would yield fuel savings of 825 EUR per year and pay back in less than three years, even at lower future oil prices.
What is the link between van fuel consumption and CO2 emissions?
The amount of CO2 a van emits is directly related to the amount of fuel it consumes. A van that emits 175g CO2 per kilometre, as tested on the EU’s standardized test procedure, would consume around 6.7 litres of fuel to travel 100km. This would be reduced to around 5.6 litres/100km with a 147g CO2 target or 4.5 litres/100km if the 118g CO2 target advocated by T&E was implemented.
How much could the average van owner save as a result of more efficient vans?
A large proportion of business budgets is now dedicated to buying fuel; If the average van emitted 147g CO2/km (the EU target for 2021), the average driver in Europe would save around €440 a year, based on today’s pump prices compared to current vehicles excluding VAT. However, the CO2 targets reported by manufacturers are a far cry from what is achieved by the vehicles on the road - for vans, the lab-real world gap currently stands at 30%, meaning one third of fuel savings is lost due to test manipulation and circumvention.
By lowering fuel costs, businesses will have more disposable money to spend, for instance, in expanding their business and hiring new people – thus benefiting the whole EU economy. The European Commission estimates that avoided fuel use through CO2 standards for cars and vans combined will progressively rise to €36 billion per year in the period 2025-30.
Won't more fuel-efficient vans be much more expensive?
No. Future costs of technology are always overestimated but the Commission's consultants estimate that the additional manufacturing cost could be just €545 per vehicle. A target of 118 g/km, equivalent to the 95 g/km agreed for cars, would cost around €1,800. Based on past experience, T&E thinks that the actual figure is likely to be a lot lower than this.
Around half of new vans are bought by fleets. These companies are not only interested in the purchase price but rather in the total cost of ownership. Low carbon vehicles have a lower cost of ownership through lower insurance and mean lower fuel bills. If the costs of technology to improve the efficiency of the vehicle are passed onto the buyer at least a third of this will be passed onto the second owner in a higher resale value. Many leasing companies support a lower vans target.
TNO estimate that lower fuel costs for more fuel efficient vans will provide a payback period of around 2.8 years for the average new van buyer at current oil prices. Typically new van buyers retain the vehicle for around 5 years, fleets for around 3 years. For new van buyers the costs of vehicle ownership will fall as a result of introducing more fuel efficient vehicles. Many van buyers do not buy new vans but purchase second hand vehicles. Second-hand car buyers will get the benefit of substantially cheaper fuel bills but will bear only a small part of the additional purchase cost.
Won't achieving the 147 g/km target require a huge increase in electric vans?
No, but more ambitious targets, including standards for 2025, could provide a significant stimulus to the market. Vans are often used as delivery vehicles in urban areas. This involves frequent start-stops and idling. This makes at least part of the vans segment very well suited for hybridisation and electrification.
CLEPA (the organization representing European automotive suppliers) estimate that in 2020 just 2-5% of vehicles will be electric. Fuel efficiency legislation is the most effective tool to guarantee a market for high tech, low-CO2 technologies and to spur investment in research, development and manufacturing. There is ample technology available to achieve the 147g/km target without electrifying the fleet and even a target as low as 110g/km would not require the deployment of hybrid technologies.
Supercredits that give manufacturers emission allowances for the production of low carbon vans, do not stimulate electrification but merely allow manufacturers to do less on their conventional vehicles. For more information on this please find our paper on ultralow carbon vehicles and supercredits here.
If Europe used less oil, would that have an impact on the oil price itself?
Yes. Every year, at current oil prices, Europe imports approximately €300 billion worth of oil, one third of it for cars, which are the single biggest consumer of oil in the EU. In times of austerity, such a massive oil import every year is a huge waste of money that could be instead invested in R&D and in developing new and more fuel-efficient technology.
The International Energy Agency says that if the world cut its oil use by only 8%, oil prices would come down by 16%. The lower price effect triples the savings compared to lower consumption alone. The European Commission’s Joint Research Centre (JRC) also estimated that the improved energy security derived from lowering oil demand as a result of improving vehicle efficiency would be worth EUR 20Bn between 2020 and 2030.