Electric vehicles: EU Council agrees on more stringent CO2 2030 targets to create a more likely “EV only” scenario

Electric vehicles: EU Council agrees on more stringent CO2 2030 targets to create a more likely “EV only” scenario

Posted on 11th October 2018 in General News.

EV electric vehicle

After long discussions during the last two years between different EU bodies, the EU Council agreed on October 10th to a 35% CO2 emission reduction by 2030 from the 95g/Km agreed for 2021. The result of this reduction will be a limit of 61.75g/Km of CO2 by 2030. EU CO2 limits in 2017 were 118g/Km.

The EU Council does not pass laws, but rather, it decides on the EU’s overall direction and political priorities, gathering the heads of state or government of EU countries. This agreement is, therefore, a step towards further CO2 reduction that will later be legislated once the EU Parliament and EU Council agree upon amendments.

After the EU Commission proposed a 30% reduction target (2021 to 2030) in November 2017, the EU Parliament backed an ultra-stringent 45% CO2 reduction in September 2018, revising upwards the previous EU Commission proposal. After the review of the EU Parliament, the EU Council agreed this week on the compromise of a 35% reduction. Both institutions will need, however, to agree on the final target before it is passed into law.

Roskill view: 

Some EU members have complained that the EU Council targets are not ambitious enough. There is no ICE (internal combustion engine) for sale in the EU today that can comply with the 2021 or 2030 CO2 targets. Although hybrid cars could comply with EU targets by 2021, only plug-in vehicles, such as BEVs or PHEVs, would be able to comply with today’s 2030 targets. This creates a scenario in which European passenger cars will need to use a battery as part of their powertrain to comply.

Compliance with these limits is likely to worsen, however, due to recent changes in emissions testing procedures. Automotive News Europe reported in September 2018 that Volkswagen, Mercedes and Porsche stopped plug-in hybrid sales due to the implementation of the new WLTP emissions testing rules. The regulations, known as the Worldwide harmonized Light vehicles Test Procedure (WLTP), went into effect in the EU in September 2018. Under WLTP, plug-in hybrids are tested differently than under the previous regulations, known as the New European Driving Cycle or NEDC. As a result, the effect of the fully-charged battery has been reduced. That, in turn, has pushed the crucial CO2 emissions figure above 50 g/Km.

This challenging emissions scenario in Europe is aligned with the recent ruling from the Berlin administrative court ordering Germany’s capital to introduce driving bans for diesel vehicles on eight roads suffering from exceedingly high levels of NO2. This last ruling replicates the diesel bans already implemented in other German regions such as Stuttgart and Hamburg.

EU legislation on transport emissions has historically been used as a proxy for many other countries. China, India or South Korea are examples of countries that have mirrored EU legislation on transport emissions, although these were adopted with a certain time delay. This adoption by third party countries creates expectations in the industry that the latest EU CO2 limits will eventually be replicated.

To discuss the electric vehicle industry with Roskill, contact Jose Lazuen: jose@roskill.com or Nessa Zhang: nessa@roskill.com