EU 15 Emission performance standards new passenger cars (Regulation 443/2009/EC) Title of the measure:

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1 Title of the measure: EU 15 Emission performance standards new passenger cars (Regulation 443/2009/EC) The regulation 443/2009/EC sets CO2 emissions performance requisites for new passenger cars to ensure the adequate functioning of the internal market to accomplish the overall objective of the European Community of 120 g CO2/km as average emissions for new car fleet. This regulation establishes the average CO2 emissions for new passenger cars at 130 g CO2/km by way of improvement in vehicle motor technology, as measured in relation with the regulation 715/2007/EC and its implementing measure and other novel technologies. Scope of the Regulation This regulation is applicable to motor vehicles category M 1 as defined in the directive of 2007/46/EC which are registered in the Community for the first time and have not been registered before outside the Community (new passenger cars) Specific Emissions Targets Each manufacturer of the passenger car has to ensure from 01 January 2012 that its average specific emissions of CO2 exceed its specific emissions target determined in accordance with the Annex I. To determine each manufacturer s average specific emissions of CO2, the following percentages of each manufacturer s new passenger cars registered in the corresponding year should be taken to consideration; 65 % in 2012, 75 % in 2013, 80 % in 2014, 100 % from 2015 onwards. For alternative fuel vehicles, the specific CO2 emissions of each vehicle designed to be operated on a mixture of petrol with 85% ethanol (E85) which complies with relevant Community legislation or European technical Standards, should be reduced by 5% by 2015 in correspondence to greater technological and emissions avoiding capabilities when running on Biofuels. Pooling of the Car Manufacturers Manufacturers may form a pool for the purpose of meeting their obligation in terms of emissions reductions. Pooling is to be based on agreement which may be valid for one or more calendar years however the overall duration of each agreement should not exceed five years. Manufacturers could enter in the pooling engagements provided their agreement are in accordance with EU treaty and that they allow transparent and non-discriminatory inclusion on commercially acceptable terms by any manufacturer requesting the participation in the pool. Data protection has to be ensured among the pooling arrangements except for the data related to CO2 emissions, emissions reduction targets and number of vehicles registered. Monitory and Reporting of Average Emissions Each member state is obliged from 01 January 2010 and then each subsequent year to record information for each new passenger car registered within its territory in relation to Annex II. This information should be made available to the manufacturers and their specified importers in each member state. Commission will then be responsible to keep a central registry of the data reported by the member states and shall tentatively calculate the following variables for each manufacturer; (a) the average specific emissions of CO2 in the preceding calendar year; (b) the specific emissions target in the preceding calendar year; and (c) the difference between its average specific emissions of CO2 in the preceding calendar year and its specific emissions target for that year.

2 Impact evaluation (methods and results) Methods The impact assessment considered three main options according to the policy options: 1. The first option considered was to set the same CO2 emission limit for each manufacturer for the average of their new passenger car fleets in 2012, namely the average emission target of 130 g CO2/km. 2. The second option considered was to define a linear curve giving the CO2 value to be achieved by a given car as a function of its "utility" (mass or footprint) so that the average of the new passenger cars in 2012 would deliver the 130 g CO2/km target. 3. The third and last option was to require manufacturers to deliver a set percentage reduction corresponding to the reduction needed to achieve the 130 g CO2/km target in 2012 compared to the 2006 situation. For all three options, flexibility mechanisms have been considered, including fleet averaging, pooling and trading amongst manufacturers. Different compliance mechanisms have also been investigated. The potential economic, social and environmental impacts have been considered in detail. The detailed evaluation of the options is set out in the impact assessment accompanying the proposal ( Results The cumulated CO2 savings are depicted in the following tables. They show the saving potential for the three different policy options. Depending on the policy measure the CO2 savings are around 630 million t CO2 between 2006 and 2020, which corresponds in average to an annual reduction of 45million t CO2. Compared to the expected emissions in transportation, this measure promises to have a high impact. Source: SEC (2007)1723, Regulation to reduce CO" emissions from passenger cars, Impact Assessment (COM (2007) 856 final) Table 2: CO 2 and energy savings in the sector by the Commitment Ex-post evaluation CO 2 (kt) Energy (TJ) Ex-ante evaluation (cumulative) CO 2 (Mt) Energy (TWh)

3 Measure Impact Level low medium X high Definition of Impact: Low: Impact below 0.1 % of overall energy (fuel/electricity) consumption or energy-related CO 2 Medium: 0.1 to below 0.5 % of overall energy (fuel/electricity) consumption or energy-related CO 2 High: 0.5 % (upwards) of overall energy (fuel/electricity) consumption or energy-related CO 2 Interaction of measures As part of the renewed Community strategy on CO2 from cars, the Commission is revising the Labelling Directive 1999/94/EC,(EU5 measure). Historical data In 1995, the EU set itself an ambitious goal of reducing emissions of carbon dioxide from new cars to 120 grammes per kilometre (g/km) as a measure to combat climate change. The Commission tried to achieve this target through a voluntary agreement with European car manufacturers, who promised to gradually improve the fuel efficiency of their new cars. The 1998 voluntary agreement between ACEA (the EU's Automobile Manufacturers Association) and the Commission included a commitment by the carmakers to achieve a target of 140g/km by Japanese and Korean car producers made a similar commitment for Although significant progress was made, average emissions fell only from 186g/km in 1995 to 163g/km in The Commission therefore decided that the voluntary commitments did not achieve their target and that binding legislation would be necessary. On 7 February 2007, the Commission adopted the Communication (COM(2007) 19) outlining a comprehensive strategy to reduce carbon dioxide emissions from new cars and vans sold in the European Union. The strategy, together with a revision of EU fuel quality standards proposed on 31 January 2007, further underline the Commission's determination to ensure the EU meets its greenhouse gas emission targets under the Kyoto Protocol and beyond. The strategy enables the EU to reach its long-established objective of limiting average CO2 emissions from new cars to 120 grams per km by a reduction of around 25% from current levels. By improving fuel efficiency, the revised strategy delivers substantial fuel savings for drivers. The presentation of the new strategy on 7 February has been preceded by heavy lobbying from both the car industry and green NGOs. As a result of these lobbying efforts, the strategy's presentation was twice postponed because of serious divisions within the Commission's own services. Hence, the Commission proposes legislation to make European carmakers reduce the average CO2 emissions of new vehicles to 130g/km by 2012, after a voluntary agreement with manufacturers did not achieve its targets. The car industry, as well as green NGOs, rejected the new plans. The new strategy promises to set a binding target for new cars of 120g/km by Car producers will bear most of the responsibility for this reduction, as they will have to realise new vehicle-technology improvements which should bring their emissions down to 130g/km by that date. The other 10 grammes will have to be reached through complementary measures such as further use of biofuels, fuel-efficient tyres and air conditioning, traffic and road-safety management and changes in driver behaviour (ecodriving). The Parliament and the Council are consulted on this new strategy. Before presenting this legislation, the Commission planned to consult with stakeholders and undertake a thorough impact assessment. The final adoption of the proposal for the legislation has been in December Deadline for reducing average CO2 emissions to 120g/km is The Commission also proposed: To invest in more research aimed at reducing emissions to an average of 95g CO2/km by 2020;

4 to encourage member states to promote and stimulate the purchase of fuel-efficient vehicles (via labelling and car taxation), and; to demand that car manufacturers sign up to an EU code of good practice on car marketing and advertising to promote more sustainable consumption patterns. An essential aspect often overlooked in the Commission's new strategy is consumer behaviour and how to influence it. One of the reasons for the lack of progress on vehicle fuel efficiency since 1995 is the fact that Europeans continue to buy bigger cars and that there are very few policies to dissuade consumers from doing so. There have been existing provisions in the area of the proposal, which are dated back to 1999: Commission Recommendation 1999/125/EC on the reduction of CO2 emissions from passenger cars Commission Recommendation 2000/303/EC on the reduction of CO2 emissions from passenger cars (KAMA) Commission Recommendation 2000/304/EC on the reduction of CO2 emissions from passenger cars (JAMA) Decision 1753/2000/EC of the European Parliament and of the Council establishing a scheme to monitor average emissions of CO2 from new passenger cars General description COM/2007/0856 After several rejections and lobbying, the European Commission adopted a proposal (COM/2007/0856 final - COD 2007/0297) for legislation to reduce the average CO2 emissions of new passenger cars which account for about 12% of the European Union's carbon emissions, on 19 December The proposed legislation is the cornerstone of the EU's strategy to improve the fuel economy of cars and ensure that average emissions from the new passenger car fleet in the Community do not exceed 120 g CO2/km through an integrated approach. 130g CO2/km is a mandatory reduction of emissions for the average new car fleet by means of improvements in vehicle motor technology. A further reduction of 10g CO2/km could be achieved by other technological improvements, by increased use of biofuels (EC 2003/30) or tyres with low rolling resistance (COM (2006)545). The Commission's proposal will reduce the average emissions of CO2 from new passenger cars in the EU from around 160 grams per kilometre to 130 grams per kilometre in That will translate into a 19% reduction of CO2 emissions and will place the EU among the world leaders of fuel efficient cars. The proposal will also benefit consumers through important fuel savings. It will further improve energy security, promote eco-innovations and high-quality jobs in the EU. The policy objectives are in line with the Renewed Sustainable Development Strategy spelled out in June 2006 by the European Council. In the proposal are three policy options: 1. uniform target: a common CO2 emission limit is set for each manufacture for the average of their new cars sold in utility parameter based limit curve: a linear function provides the CO2 limit as a function of vehicles' utility. 3. % reduction passed targets: a fixed reduction corresponding to the distance between the 2006 (160g CO2/km) level and the 2012 (130g CO2/km) level. The draft legislation defines a limit value curve of permitted emissions of CO2 for new vehicles according to the mass of the vehicle. The curve is set in such a way that a fleet average for all new cars of 130 grams of CO2 per kilometre is achieved. From 2012, a manufacturer will be required to ensure that the average emissions of all new cars which it manufactures and which are registered in the Community are below the average of the permitted emissions for those cars as given by the curve. That curve is set in such a way that heavier cars will have to improve more than lighter cars compared to today, but that manufacturers will still be able to make cars with emissions above the limit value curve provided these are balanced by cars which are below the curve. Manufacturers' progress will be monitored each year by the Member States on the basis of new car registration data.

5 Under the legislation, several manufacturers will be able to group together to form a pool which can act jointly in meeting the specific emissions targets. In forming a pool, manufacturers must respect the rules of competition law and the information that they exchange should be limited to average specific emissions of CO2, their specific emissions targets, and their total number of vehicles registered. In addition, independent manufacturers who sell fewer than 10,000 vehicles per year and who cannot or do not wish to join a pool can instead apply to the Commission for an individual target. The proposal will provide manufacturers with the necessary incentive to reduce the CO2 emissions of their vehicles by imposing an excess emissions premium if their average emission levels are above the limit value curve. This premium will be based on the number of grams per kilometre (g/km) that an average vehicle sold by the manufacturer is above the curve, multiplied by the number of vehicles sold by the manufacturer. A premium of 20 per g/km has been proposed in the first year (2012), gradually rising to 35 in the second year (2013), 60 in the third year (2014) and 95 as of Most manufacturers are expected to meet the target set by the legislation, so significant penalties should be avoided. The proposal COM(2007)856 has been communicated to the Council and to the European Parliament as part of the co-decision legislative procedure. References COM(2007) 856 final, 2007/0297 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL, Setting emission performance standards for new passenger cars as part of the Community's integrated approach to reduce CO2 emissions from light-duty vehicles; SEC (2007)1724, Commission Staff Working Dockument, Proposal from the Commission tot the European Parliament and Council for a regulation to reduce CO" emissions from passenger cars, Executive Summary of the Impact Assessment (COM (2007) 856 final) SEC (2007)1723, Commission Staff Working Document, Proposal from the Commission to the European Parliament and Council for a regulation to reduce CO" emissions from passenger cars, Impact Assessment (COM (2007) 856 final) WEB/dossier/files/download/082dbcc530b1bf490130bc e62.do COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT, COM(2007) 19 final, Results of the review of the Community Strategy to reduce CO2 emissions from passenger cars and light-commercial vehicles REGULATION (EC) No 443/2009 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCILof 23 April 2009 setting emission performance standards for new passenger cars as part of the Community s integrated approach to reduce CO2 emissions from light-duty vehicles