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:
- 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 defines a long-term target of 95 g CO2/km to be reached from 2020.
- In April 2013, The Environment Committee of the European Parliament adopted a proposal that confirms the CO2 target of 95 g/km by 2020. The proposal also sets indicative targets for post-2020 CO2 emissions in the range of 68-78 g/km from 2025.
- Light commercial vehicles (commonly referred to as vans):
- 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.
- In May 2013, the Environment Committee of the European Parliament approved a proposal  confirming the 147 g/km CO2 emission target to be reached by 2020. The proposal also includes indicative targets for post-2020 CO2 emissions: a range of 105-120 g/km from 2025.
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 .
Passenger Cars (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 is to be provided by additional measures, such as the use of biofuels. The regulation is applicable to passenger cars, vehicle category M1. CO2 emissions are measured over the NEDC test cycle.
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 = 130 + 0.0457 × (M - M0)
In the above formula, M is the mass of the vehicle (kg), and M0 is 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 target of 130 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 regulation is 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.
Additional Incentives. In the initial period, certain types of vehicles receive additional incentives:
- Vehicles of CO2 emissions below 50 g/km receive super-credits. 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.
- 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 (2017)
The legislation for vans introduces a fleet-average CO2 emission target of 175 g/km fully phased-in by 2017 . The regulation is applicable to vehicles category N1 with a reference mass not exceeding 2610 kg. Emissions are measured over the NEDC cycle.
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 following formula:
Specific Emissions of CO2 = 175 + 0.093 × (M - M0)
where M is the mass of the vehicle (kg) and M0 is 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 regulation is 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.
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 regulation includes a number of other provisions similar to those legislated for passenger cars.