The first carbon dioxide emission targets for new passenger cars were set in 1998/99 through voluntary agreements between the European Commission and the automotive industry represented by three manufacturer associations: ACEA (European Automobile Manufacturers Association), JAMA (Japanese Automobile Manufacturers Association) and KAMA (Korean Automobile Manufacturers Association). These agreements targeted fleet-average CO2 emissions of 140 g/km by 2008/09. While significant CO2 emission reductions were achieved in the initial years, since around 2004 the manufacturers could no longer meet their voluntary targets. In response, the Commission developed a mandatory CO2 emission reduction program.
Two separate sets of regulations cover CO2 emissions from passenger cars and light commercial vehicles (LCV):
- Passenger cars:
- 2015 Targets: CO2 emission targets for new passenger cars were adopted in April 2009 . The regulation established a fleet-average CO2 emission target of 130 g/km to be reached by 2015. The regulation also defined a long-term target of 95 g CO2/km to be reached from 2020.
- 2020 Targets: A second set of CO2 emission targets was finalized in March 2014 . The emission target of 95 g/km must be fully met by each manufacturer by 2021.
- Light commercial vehicles (commonly referred to as vans):
- 2017 Targets: CO2 emission targets for vans were adopted in May 2011  and amended in 2012 . The original regulation established a fleet-average CO2 emission target of 175 g/km to be phased-in by 2016, as well as a long-term target of 135 g CO2/km from 2020. The 2012 amendments delayed the full phase-in of the 175 g/km target from 2016 to 2017 and relaxed the long-term CO2 target from 135 to 147 g/km.
- 2020 Targets: A regulation adopted in February 2014  confirmed the 147 g/km CO2 emission target to be reached by 2020.
By the end of 2015, the Commission must review the CO2 targets for cars and for LCVs, and consider another round of CO2 emission targets for beyond 2020/21.
The regulations cover only CO2 emissions, other greenhouse gases are not regulated. Comprehensive information on the reduction of CO2 emissions from transport can be found in the European Commission website .
Emission Targets. Passenger cars (vehicle category M1) must meet the following emission targets:
- 2015: A fleet-average CO2 emission target of 130 g/km must be reached by each vehicle manufacturer by 2015 using vehicle technology . (To meet the EU CO2 emission target of 120 g/km, a further emission reduction of 10 g/km was to be provided by additional measures, such as the use of biofuels.) CO2 emissions are measured over the NEDC test cycle.
- 2020: A fleet-average CO2 emission target of 95 g/km must be met by 95% of each manufacturers’ new passenger cars registered in 2020, and by 100% of cars from 2021 onwards . The new WLTP test procedure should come into force at the “earliest opportunity”. When the test procedure becomes amended, the emission target will be adjusted accordingly.
The specific emissions target for each manufacturer in a calendar year is based on the vehicle mass. It is calculated as the average of the Specific Emissions of CO2 (g/km) of each new passenger car registered in that calendar year, where:
Specific Emissions of CO2 = T + a × (M - M0)
In the above formula:
T - CO2 emission target. T = 130 g/km from 2012 through 2019; and T = 95 g/km from 2020.
a - coefficient. a = 0.0457 from 2012 through 2019; and a = 0.0333 from 2020.
M - mass of the vehicle (kg)
M0 - average vehicle mass. M0 = 1372 kg for calendar years 2012-2015. From 2016, the value of M0 will be adjusted annually to reflect the average mass of passenger cars in the previous three calendar years. Thus, the respective CO2 target (130 or 95 g/km) is directly applicable to vehicles of an average mass, while lighter cars have lower CO2 targets and heavier vehicles have higher CO2 targets.
The 2015 targets are phased-in over the period from 2012 to 2015. Manufacturers must meet their average CO2 emission targets in 65% of their fleets in 2012, 75% in 2013, 80% in 2014 and 100% from 2015 through 2019. The 2020 targets must be met in 95% of manufacturers’ fleets in 2020, and in 100% from 2021.
Additional Incentives. In the initial period, certain types of vehicles receive additional incentives:
- Vehicles of CO2 emissions below 50 g/km receive super-credits. Under the 2015 regulation, each such vehicle is counted as 3.5 cars in 2012 and 2013, as 2.5 cars in 2014, 1.5 cars in 2015, and as 1 car from 2016 through 2019. The 2020 regulation also allows super-credits, capped at 7.5 g/km, to apply from 2020 to 2022. Each car emitting < 50 g/km will count as 2 cars in 2020, 1.67 cars in 2021, 1.33 cars in 2022, and as 1 car from 2023.
- CO2 emissions of vehicles capable of running on a mixture of gasoline with 85% ethanol (E85) are reduced by 5% until the end of 2015. This reduction applies only where at least 30% of the filling stations in a Member State provide E85.
Flexibilities. Certain flexibilities are available for manufacturers, as follows:
- Pooling—Several manufacturers may form a pool to jointly meet their CO2 emission targets.
- Low volume manufacturers—Manufacturers with fewer than 10,000 new cars registered per annum may apply to the European Commission for a derogation from the specific emission targets. Several conditions apply.
- Eco-innovation—Manufacturers may apply for credits for innovative CO2 reducing technologies which are not accounted for in the current test cycle—for example, energy efficient lights. The total contribution of eco-innovation credits is limited to 7 g CO2/km in each manufacturers average specific target.
Excess Emissions Premium. Manufacturers who miss their average CO2 targets are subject to penalties:
- From 2012 to 2018, the penalties are €5 per vehicle for the first g/km of CO2; €15 for the second gram; €25 for the third gram; €95 from the fourth gram onwards.
- From 2019, manufacturers will pay €95 for each g/km exceeding the target.
Light Commercial Vehicles
Emission Targets. The regulation is applicable to vehicles category N1 with a reference mass not exceeding 2610 kg. LCVs must meet the following emission targets:
- 2017: The legislation for vans introduced a fleet-average CO2 emission target of 175 g/km fully phased-in by 2017 . Emissions are measured over the NEDC cycle.
- 2020: The average CO2 emissions of new LCVs registered from 2020 will have to meet 147 g CO2/km . The WLTP test procedure should be used at the “earliest opportunity”.
The structure of the legislation is similar to the passenger cars regulation. The annual specific emission targets for each manufacturer are calculated by averaging the indicative specific emissions obtained from the formula:
Specific Emissions of CO2 = T + a × (M - M0)
T - CO2 emission target. T = 170 g/km from 2014 through 2019; and T = 147 g/km from 2020
a - coefficient. a = 0.093 from 2014 through 2019; and a = 0.096 from 2020.
M - mass of the vehicle (kg)
M0 - average LCV mass. M0 = 1706 kg for calendar years 2014-2017. From 2018, the value of M0 will be adjusted annually to reflect the average mass of new light commercial vehicles in the previous three calendar years.
The 2017 targets are phased-in from 2014 to 2017. Manufacturers must meet their average emission targets in 70% of their LCV vehicle fleet in 2014, 75% in 2015, 80% in 2016, and 100% from 2017.
Super-Credits. Vehicles with extremely low emissions, below 50 g/km, are given additional incentives in the initial period—one low emitting vehicle will be counted as 3.5 vehicles in 2014 and 2015, as 2.5 vehicles in 2016, 1.5 vehicle in 2017, and 1 vehicle from 2018. There are no super-credits under the 2020 regulation.
Excess Emissions Premium. The penalties for manufacturers who fail to meet their average targets are:
- Until 2018 the penalty is €5 per vehicle for the first g/km of exceedance, €15 for the second g/km, €25 for the third g/km, and €120 for each subsequent g/km.
- From 2019, the penalty is €120 for each g/km exceeding the target.
The regulations includes a number of other provisions similar to those legislated for passenger cars. These include credits for eco-innovations  (≤ 7 g/km) and exemptions for low volume manufacturers (< 22,000 LCVs per year for 2017 targets; < 1,000 LCVs per year for 2020).