Binding Fleet Average CO2 Emissions

EU Commission to Propose Legally Binding Fleet Average CO2 Emissions
6 February 2007
by Rafael Seidl

Tomorrow,7 Feb, the EU Commission is expected to propose legally binding fleet average CO2 emissions of 130 g/km from 2012 onward based on the NEDC, for class M1 vehicles (4 wheels, driver plus max. 8 passengers, GVWR <3,500kg or 7,700lbs).

Originally, the EU was planning to require an average of 120 g/km. To make up the remaining 10 g/km, automakers will be have to make their vehicles compatible with more aggressive biofuel blends, and add tire pressure monitors. Soft measures such as training drivers to drive less aggressively will not be counted towards this indirect reduction because at present their success is considered too hard to quantify reliably.

For reference, assuming the currently roughly equal market shares of gasoline and diesel engines continues to hold, 130 g CO2/km implies fleet average fuel consumption of just 5.4L/100km (43.4 mpg US) for gasoline and 4.8L/100km (48.9 mpg US) for diesel vehicles.

While it is true that the NEDC is less demanding than EPA’s updated test procedures, these targets still represent a much tougher standard than CAFE in the US. Moreover, CAFE data is skewed in favor of large SUVs and trucks via the FFV loophole.

On the eve of the EU announcement, it looks as if the fleet average is likely to be based on the sum total of all vehicles initially registered in all EU member states in a given year. In other words, the directive would require the individual manufacturers to sort out among themselves how the goal is to be achieved—essentially a continuation of the model ACEA, JAMA and KAMA chose for their respective current voluntary commitments. There is no word yet on what sanctions would follow if the industry failed to meet the new, legally binding target.

However, note that while the EU Commission is the only body permitted to propose new EU directives, they must also be approved by both the European Parliament and the Council of Ministers. The formal proposal is not expected until the first half of 2008 and, it can take another two years of debate and amendments before it is passed into law.

According to Die Welt, the engineering measures required to meet the proposed target without substantially reducing vehicle performance are expected to add an average of €600-800 to the actual price of a new car. Gasoline prices at the pump average €1.22/L in Germany right now.

Assuming an annual driving distance of 15,000 km (9,300 mi), reducing consumption by 1L/100km (equivalent to 24 g CO2/km) yields annual savings of €183, implying an acceptable amortization period of 3-4 years for the average incremental price of the vehicle. Diesel costs about €1.08/L right now, but such cars tend to average 20,000 km (12,430 mi) annually; therefore, the ROI horizon for 1L/100km saved (equivalent to 27 g CO2/km) is even shorter.

The above calculations assume that fuel prices will rise in line with future inflation. Without high fuel taxes, the ROI horizons would be too long for aggressive CO2 emission/fuel economy measures to have a reasonable chance of winning customer acceptance.

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