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CO2 regulations – Are they strict enough?

08 April 2013

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Fuel economy standards are at the top of the agenda in the US and Europe. However, it seems that most manufacturers have already outperformed 2015 targets, which means that 2020 or 2025 objectives are “easy” targets, especially in view of the fact that automakers have managed to obtain key concessions such as CO2 credits in the US or supercredits and eco innovations in Europe.

According to a report from the US EPA published in March 2013, Toyota and Honda have earned so many credits in the US that their current fleets, unchanged, could meet EPA requirements through to the 2016 model year, said David Friedman, a senior engineer at the Union of Concerned Scientists.

Since the 2009 model year, Toyota earned 86 million credits, 36 million credits for Honda and 25 million credits for GM. Nissan also outperformed the fuel economy standards years in advance.

In Europe, most automakers had already met the 2015 targets in 2011/2012, and are now looking forward to 2020 targets of 95gCO2/km, which NGOs such as Greenpeace or Transport & Environment have deemed weak, especially as the target is watered down by eco-innovation and supercredits, making it easier for automakers to reach them.

What consequences for innovation?

Companies are unlikely to stop their investments in cleaner car technologies, as they need to meet stricter targets in 2020 for Europe and 2025 for US. However, they could very well “slow down near-term investments in clean cars”, according to Friedman.

Each credit represents one more metric ton of CO2 that the automakers’ fleet can emit over their lifetime, than the US regulation normally allows.

In Europe, the supercredits debate is similar to the carbon credits in the US. Automakers are pushing for more supercredits in the 2020 version of the regulation. Under the supercredits system each electric vehicle produced would count for 1,5 to 2,5 cars in the automakers’ fleet, depending on which proposal will be kept in the final regulation.

Zero-emission vehicles – a clearer message?

California requires the biggest automakers to sell increasing numbers of zero-emission vehicles (ZEV), such as pure-electric, plug-in hybrid or hydrogen-powered cars. Companies that fail to meet their quotas have the option of buying ZEV credits from rivals that exceed their targets.

Failure to get enough credits can lead to fines or even limits on their ability to sell cars. Some manufacturers have benefited from the scheme. In 2012, according to The Verge, Tesla earned $40,5 million in carbon credits, which was about 10 percent of their total 2012 revenues.

The ZEV scheme almost certainly helped to spur innovation as many EV models launched in the US since 2012 are sold in California, to comply with the ZEV regulation.



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