Transport emissions from road, aviation and shipping

Damien Meadows, Alex Paquot and Peter Vis


Transport is proving to be one of the hardest sectors to decarbonise. Today transport accounts for 21.5% of the European Union’s greenhouse gas emissions,1 increasing to more than one-quarter when aviation and maritime emissions are taken into account.2 In Chapter 1, it was indicated that since 1990, emissions from all sectors have been reduced, with the exception of transport, where emissions have significantly increased, by 28% between 1990 and 2017 based on preliminary estimations by the European Environment Agency. The decoupling of emissions from economic growth, which is very apparent for the economy as a whole, has not happened in the road transport sector, and still less for aviation, which has more than doubled its emissions since 1990.

Transport is embedded into our way of life and the backbone of our economy, and there are no signs of mobility demand falling. On the contrary, as standards of living improve, people tend to travel further and more frequently than ever. Economists have known for a long time that the income elasticity of transport demand is higher than one. Yet we will not be able to deliver on the goals of the Paris Agreement if society is unable to develop sustainable transport with much lower emissions of greenhouse gases. That is why much stronger policy intervention seems unavoidable.

The EU’s overall policy towards internalisation of external costs

In 1995, the Commission published a Green Paper, “Towards Fair and Efficient Pricing in Transport: Policy options for internalising the external costs of transport in the European Union.”3 It argued that the most obvious way forward is to make prices for transport cover the costs of all the “externalities” caused by transport. Such externalities include all adverse effects on health and the environment, congestion and the costs of accidents that are not borne directly by the transport user. The thrust was to make cost internalisation “an essential component of a multi-faceted transport strategy.”

However, the emissions from transport continued to increase instead of fall, and the Commission realised that another level of ambition was necessary (see Figure 7.1). In 2011, the Commission proposed a reduction of transport emissions by 60% by 20504 and reconfirmed this in 2016 in its Low-emission Mobility Strategy.3 There are multiple main elements of the strategy, including seeking higher efficiency of the transport system, low- emission alternative energy' for transport and low- to zero-emission vehicles. Highlighted are the use of advanced biofuels, hydrogen and renewable synthetic fuels, removing obstacles to the electrification of transport, modal shift and smart pricing. A variety of actors have important roles to play, not least cities and local authorities.

The complex reality is that today we have an extensive mix of instruments at EU level. Several relate to transport pricing, such as the regulation of airport charges, infrastructure charging for rail, port charges for shipping, minimum excise duties on road transport fuels and road pricing for Heavy Duty Vehicles. Other instruments focus on infrastructure, such as the Alternative Fuel Infrastructure Directive and EU funding programmes, such as the Connecting Europe Facility, make considerable efforts to scale-up investments in the infrastructure needed for low-emission transport. While these instruments are far from sufficient, when taken together they do make a positive difference.

The real test of success, however, is whether emissions and environmental impacts from transport go down in absolute rather than relative terms. So far, this has not happened in a sustained way. Policies inevitably require time to show results, and changes for the better may be underway. This chapter cannot be comprehensive but reviews a number of key policies where the EU has been particularly active, such as on CO, standards for road vehicles and on international modes of transport, namely aviation and shipping.

Evolution of EU greenhouse gas emissions from transport, 1990—2017

FIGURE 7.1 Evolution of EU greenhouse gas emissions from transport, 1990—2017

Source Europaw Environment Agency (EEA): TERM Briefing, 20186

Emissions from road transport

Road transport represents approximately three quarters of the emissions from transport, which is roughly one-fifth of total greenhouse gas emissions in the EU.7 Obviously, that is a primary target for climate action. In addition, air quality is also a major concern to citizens, as the transport sector emits roughly half of the EU’s NOs emissions,8-9 and road transport has been at the heart of the so-called “dieselgate” scandal around the illegal use of “defeat devices.”

Member States have the primary responsibility for reducing road transport emissions. Despite the fact that no binding target has been set for transport, it constitutes the most important part of the mandatory target of each Member State under the Effort Sharing Regulation.10 Interesting to note is that the power sector falls under the harmonised EU ETS; hence, the electricity consumed by trains, trams or electric vehicles is indirectly covered by this system. If the share of electric propulsion grows in the future, as is expected, regulation will shift from the level of Member States to the EU level under the EU ETS.

Fuel taxation is obviously an important incentive towards an efficient use of energy in cars, vans and lorries, in particular in comparison to other parts of the world. However, the EU only regulates the minimum levels of excise duties of mineral oil products. Product standards for transport fuels or on biofuel sustainability are also relevant for cars, vans and lorries, but their benefits have so far been very modest.

Regulating CO emissions from cars and vans

Following agreement on the Kyoto Protocol, a Voluntary Agreement with car manufacturers was concluded in 1998. It would reduce the average emissions of new passenger cars to 140 grammes of CO, per kilometre (gCO,/ km) by 2008/2009." This Voluntary Agreement failed, and as of 2009, emissions standards have been set in binding legislation.12 All new passenger cars registered in the EU in 2015 and 2021 shall emit on average not more than 130 and 95 gCO,/km respectively. In 2019, new targets were adopted for 2025 and 2030, which are respectively 15% and 37.5% lower than the 2021 target.

Car manufacturers have been meeting their 2015 obligations by the due date and the average emissions level of a new car sold in 2016 was 118.1 gCO,/km. However, in 2017, average emissions increased year-to-year, to 118.5 gCO,/km for the first time.

As shown inTable 7.1, the standards set will require emissions to be reduced further towards 2030, which will require intensive technological changes to the car of tomorrow. In addition to the CO, standards for manufacturers, an informed choice by the consumer needs to be facilitated. A mandatory label already indicates a car’s fuel consumption and CO, emissions13 in the showroom and in advertising material. Consumers stand to benefit from continued reduction in fuel consumption as a result of the CO, Regulation. For example, on average the 2021 CO, standard equates to approximately 4.1 litres/100 km for petrol and 3.6 litres/100 km for diesel. These savings help the consumer finance the higher upfront cost of a low-carbon car.

EU legislation with binding CO, targets is also in place for light commercial vehicles (vans).14 CO, emissions from new vans are limited to a fleet average of 175 gCO,/km by 2017 and 147 gCO,/km by 2020. These targets represent reductions of 3% and 19% respectively, compared with the 2012 average of 180g CO,/km. This corresponds to an average fuel consumption of 5.5 litre/100 km for diesel-fuelled vans by 2020. The new targets adopted in 2019 will require average van emissions in 2025 and 2030 to be 15%, respectively, 31% lower than the 2020 target.

A number of elements facilitate compliance with the legislation. The 95 gCO,/km target in 2021 for cars allows for the use of so-called “super credits,” which incentivise cars with emissions below 50 gCO,/km, such as electric or plug-in hybrid cars. Such low-emitting cars will be counted as two vehicles in 2020, 1.67 in 2021, 1.33 in 2022 and as one vehicle from 2023 onwards. This should encourage the deployment of new technologies that

TABLE 7.1 CO, targets and average emissions for cars and vans (gCO,/km, NEDC)













119.5-Target: 130







156.1 -Target: 175



Target: 147


Target: 95



Target: 80.8 (approx.)

Target: 125 (approx.)


Target: 59.4 (approx.)

Target: 101.4 (approx.)

could help realise future reductions. The contribution of these super credits however cannot contribute more than 7.5g gCO /km for each car manufacturer between 2020 and 2022. A similar facilitative element include eco- mnovations, providing manufacturers a bonus of maximum seven gCO,/km for CO, reductions through the application of innovative technologies not directly related to the engine performance.

Technological neutrality is a key principle, which leaves the choice of technologies to car manufacturers. The legislation defines for each car manufacturer a precise CO, target, differentiated according to the average mass of the fleet of passenger cars produced by the manufacturer. Therefore, heavier cars can emit slightly more than lighter cars, but the average of all new cars sold for each manufacturer must meet the set overall target. Historically, as is the case today, car manufacturers have chosen different technological routes, innovating with a variety of technologies. For example, as diesel engines tend to be more fuel-efficient, many of them switched to this technology' in the 1990s. However, this increase in the share of diesel vehicles led to increasing problems with air quality, in particular in urban areas.

The CO, standards are based on the type-approval process; hence, they can only be as good as the values coming from the underlying test procedure. In recent years, there has been evidence of growing discrepancies between test cycle results and emissions in real driving conditions. There is also increasing media and regulatory interest around the use of “defeat devices” for air pollutants, or engine management systems, that car manufacturer were hiding in their cars. In view of restoring consumer confidence, test procedures have been strengthened both in terms of governance and measurement controls.

The performance of the vehicles is now measured according to a new regulatory test procedure carried out in laboratories. The type approval legislation of 2017 introduces the World Harmonised Light Vehicles Test Procedure (WLTP), developed in the context of the United Nations Economic Committee for Europe (UNECE). This replaces the old procedure known as NEDC (standing for New European Driving Cycle) which had been designed in the 1980s. The new procedure is more representative of real world driving in different conditions and reduces the risk of a creative use of the flexibilities that earlier legislation permitted.

In addition, a new market surveillance mechanism will improve the reliability and trustworthiness of the system.15 Real world fuel consumption data will be collected and made public thanks to a standardised “on-board fuel consumption monitoring device” that will have to be installed in all new vehicles from 2021 on. Moreover, any significant deviations found during the verification of vehicle emissions in-service with the emissions determined in type-approval will be taken into account in the calculation of the average specific emissions of a manufacturer. The verification will also have to investigate the presence of any strategies that would artificially improve the performance of a vehicle during the type approval procedure.

Furthermore, penalties are part of the overall compliance provisions and remain strict. If a manufacturer’s average emissions exceed its specific emissions target, the manufacturer will have to pay an excess-emissions premium equal to €95 for each gCO,/km above its target and for each new vehicle registered in that year.

A final element of the new legislation for the period after 2020 will be a new type of incentives for zero- and low emissions vehicles. Questions were raised about the risk of losing the EU’s competitive advantage in the manufacturing of cars and vans due to insufficient innovation in low-emission automotive technologies. Past CO, standards helped EU manufacturers to have a first mover competitive advantage at global level. However, other countries have progressively implemented their own fuel standards. Major non-EU car markets (e.g., China, California and other US States) have considered or are introducing ambitious policies, in particular to address air pollution.

It is notable that despite these “unilateral” policies developing independently from each other, today 75% of global car sales are subject to CO, or energy efficiency legislation. The stringency of these policies is increasing over time and converging (Table 7.1). In the US, the Californian “Zero Emission Vehicle” (ZEV) standards to support the market deployment of battery electric, plug-in hybrid, and fuel cell vehicles have been adopted by nine other States, and almost one third of new cars sales in the US take place in these ten States.16 In China, new mandatory “new energy vehicle” (NEV) requirements covering battery electric, plug-in hybrid and fuel cell vehicles apply to car manufacturers from 2019,17 applicable to all manufacturers with an annual production or import volume of 30,000 or more cars.

The new EU legislation to be adopted in 2019 once again includes a crediting system to speed up the uptake of zero- and low-emission vehicles (ZEV and LEV), which are defined as having CO, emissions between zero and 50 g/km. A manufacturer’s specific CO, emissions target will be adjusted in case the share of zero- and low-emission vehicles in its fleet exceeds the benchmarks of 15% in 2025 and 35% (for cars) or 30% (for vans) in 2030. If a manufacturer exceeds the set benchmark by one percentage point, he will benefit from a 1% less stringent CO, target. This is allowed up to 5% of the target. For calculating that share, account is taken of the emissions of the zero- and low-emission vehicles, meaning that zero-emission vehicles are counted more than those with higher emissions.

Average emission standards for new passenger cars (US and Canada values are for light duty vehicles)

FIGURE 7.2 Average emission standards for new passenger cars (US and Canada values are for light duty vehicles)

Source: ICCT

The new crediting system should provide a strong and credible signal for the deployment of the cleanest and most efficient vehicles, while still allowing for the further improvement of the efficiency of the conventional internal combustion engines. This should yield high benefits for consumers, competitiveness and the environment. By not introducing technology specific quotas or mandates, the new legislation remains technology neutral and more cost- effective, allowing manufacturers to decide which technologies they wish to use to meet their specific emissions target.

Conclusion: Passenger cars and vans are subject to C02 emissions performance standards, which are being significantly tightened towards 2030. The approach is technologically neutral: no mandates, or targets, are set for specific types of propulsion technology, such as for electric cars, but strong incentives are nevertheless foreseen. The test-cycle and the enforcement mechanisms have been strengthened significantly in the light of the increasing divergence between test and real-world emissions as well as the "diesel-gate" scandal.

Emissions from heavy­duty vehicles (HDV) such as lorries and buses

As for passenger cars and vans, the emissions from heavy-duty vehicles, which represent a quarter of road transport emissions, continue to rise. In the period 1990—2015, they increased by around 19%18 and another 10% increase is expected between 2010 and 2030.19 Until recently, no specific CO, policy was developed for HDVs. The claim made by road haulage companies was that they already do everything to keep down the fuel consumption of their fleet, as this is a substantial part of their overall operating costs.

However, demand for freight transport follows economic growth. It is therefore not surprising that emissions keep increasing if no mitigation measures are undertaken. Moreover, a number of market barriers have limited the adoption of emission reduction measures. Few transport companies have objective data to evaluate the fuel efficiency of new HDV before purchasing them. Split incentives exist between the owners of the vehicles such as leasing companies and the operators who would benefit from lower operating fuel costs. Furthermore, HDVs are not as standardised as passenger cars and vans, which makes the monitoring of the fleet emissions more complex.

To help overcome these barriers the knowledge of the actual CO, emissions and fuel consumption of new HDVs needs to be improved. The Commission, in close collaboration with stakeholders, developed a simulation software, the Vehicle Energy Consumption Calculation Tool (VECTO),20 to calculate fuel consumption and CO, emissions of new HDVs in a comparable manner across all manufacturers for different vehicle types. Under the type-approval framework, a so-called “certification” regulation was adopted in 2017 amongst different vehicles21 to define the methodology each manufacturer has to use for calculating the CO, emissions and fuel consumption of new HDVs with the use ofVECTO.

These efforts also allow the monitoring and reporting of the CO, emission and fuel consumption of the sector as a whole and the data will be publicly available as of 2020, based on data for 2019. Equally, the certification of HDVs will be of great importance for Member States who want to differentiate their road charging schemes according to the CO, performance, as would be possible through amendment of the “Eurovignette Directive” in 2017,22 which also allows for a widening of the system to encompass all vehicles.

This groundwork made it possible for the Commission to take the next step and propose the first EU CO, emission standards for HDVs in May 2018, adopted in 2019 by the European Parliament and the Council.

The specific CO, emissions of the EU fleet of new HDVs will have to be reduced by 15% in 2025 and 30% in 2030 compared to the emissions in the reference period, which is between 1 July 2019 and 30 June 2020, As a first step, these emission standards cover the largest vehicles accounting for 70% of the total CO, emissions from heavy-duty vehicles.

For manufacturers failing to comply with their specific emission targets, the level of penalties are set at € 4,250 per gramme of CO, per tonne kilometre (gCO,/tkm) in 2025 and € 6,800 per gCO,/tkm in 2030.

The new legislation also includes a crediting system to incentivise the uptake of zero- and low-emission trucks. There are currently hardly any such vehicles on the road. The incentive scheme aims at stimulating investment in all segments of the fleets, including the smaller trucks used for regional delivery purposes that are most likely to be electrified first.

To reward early action, a super-credits scheme applies from 2019 until 2024. The credits gained can be used to comply with the target in 2025. A multiplier of two applies for zero-emission vehicles and a multiplier between one and two applies for low-emission vehicles, depending on their CO, emissions.23 An overall cap of 3% is set on the use of super-credits in order to preserve the environmental integrity of the system. From 2025 onwards, the super-credits system is replaced by a “bonus-only” benchmark- based crediting system, with a benchmark set at 2%. The 2030 benchmark level will have to be set in the context of the 2022 review.

This means that the average specific CO, emissions of a manufacturer are adjusted downwards if the share of zero-emission vehicles in its entire fleet of new HDVs exceeds the 2% benchmark. The CO, emissions decrease is capped at a maximum of 3%.

The legislation also contains flexibilities to ensure a cost-effective implementation of the standards. In particular, a “banking and borrowing” mechanism will allow manufacturers to balance under-achievement in one year by an overachievement in another year.

In order to incentivise early emission reductions, credits can be acquired already from 2019 to 2024. The emission credits acquired in the period from 2019 to 2024 can be used to comply with the 2025 target. From 2025 to 2029, borrowing is possible, but the credits borrowed must be cleared at the latest in 2029.

Several elements reinforce the effectiveness and the robustness of the legislation, such as verification of CO, emissions of vehicles in service and measures to ensure that the certification procedure yields results that are representative of real-world CO, emissions.

Finally, an extensive review is foreseen in 2022. This review will cover, inter alia, the 2030 target and possible targets for 2035 and 2040, with the inclusion of other types of heavy-duty vehicles, in particular buses, coaches and trailers.

Conclusion: As of 2019, heavy-duty vehicles (HDVs) will be subject to certification before being put on the market. A C02 emissions standard has been set for 2025 and 2030 for larger lorries. Legislation will enable Member States to differentiate their road charging schemes according to the C02 performance of HDVs, which they can also extend to passenger cars.

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