Explanatory Memorandum to COM(2022)586 - Type-approval of motor vehicles and engines and of systems, components and separate technical units for such vehicles, regarding emissions and battery durability (Euro 7)

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dossier COM(2022)586 - Type-approval of motor vehicles and engines and of systems, components and separate technical units for such vehicles, ...
source COM(2022)586 EN
date 10-11-2022


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

Free movement of goods, persons, services and capital must be ensured for a correct functioning of the single market. To that end Regulation (EU) No 2018/858 of the European Parliament and of the Council enshrines a comprehensive type-approval and market surveillance system for motor vehicles, trailers, and for systems, components and separate technical units intended for such vehicles. The technical requirements for the type-approval of motor vehicles and engines with regard to emissions are also harmonised to avoid requirements that differ from one Member State to another, and to ensure a high level of environmental and health protection.

Air pollution remains a large environmental and health risk in Europe. While air quality has improved, a significant proportion of the EU’s urban population is still exposed to pollutant concentrations above the limits defined by the Ambient Air Quality Directive 1 . It is estimated that air pollution caused more than 300 000 premature deaths in the EU-28 in 2018 2 . Despite the fact that other sectors also play a role, road transport is still a major contributor to air pollution. It was on average responsible for 39% of the harmful NOx emissions in 2018 (47% in urban areas 3 ) and 11% of total PM10 emissions in 2018 4 .

The European Green Deal 5 is a new growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy. The EU should also promote and invest in the necessary digital transformation and tools as these are essential enablers of the changes. Digital technology can indeed help cut global emissions, enhance quality-of-life and reduce society's environmental footprint, for example by optimising energy usage and monitoring emissions in transport 6 . In order to reach climate neutrality by 2050 and zero-pollution ambition for a toxic-free environment, all sectors need to transform, including road transport. The European Green Deal announced the adoption of a proposal for more stringent air pollutant emissions standards for combustion-engine vehicles (Euro 7).

To accelerate decarbonisation of road transport, the Commission proposed in July 2021 an amendment of the Regulation on CO2 emission performance standards for cars and vans 7 , to ensure a clear pathway towards zero-emission mobility. 8 Moreover, the Commission adopted in December 2020 the Sustainable and Smart Mobility Strategy 9 and in May 2021 the Zero-Pollution Action Plan 10 . According to those strategies, transport should become drastically less polluting, especially in cities and Euro 7 is considered as an essential part of the transition towards clean mobility.

Last but not least, the New Industrial Strategy for Europe 11 offers tools to address the twin challenge of the green and the digital transformation and to support the European industry in making the European Green Deal ambition a reality. New pollutant emission framework will offer legal certainty and first-mover advantage to the EU automotive sector. EU emission standards need to keep ahead of standards under development in key markets like the United States and China, in order to keep a competitive advantage. Access to these markets could be hampered for EU manufacturers as it would become more costly to meet emission requirements in different markets.

Transition towards zero-emission cars/vans fleet will be spread across at least two decades, not least given the average lifetime of cars/vans of more than 11 years. Meanwhile, in order to achieve the above policy objectives, the internal combustion-engine vehicles which will continue to be placed on the market need to be as clean as possible.

At the same time, the automotive industry is faced with other significant transformations —significant supply-chain shortages, impact of the Russian invasion in Ukraine, rising energy and raw material costs.

Despite the proposed 100% CO2 emission reduction targets for cars and vans by 2035, the upcoming proposal to revise the CO2 performance standards for heavy-duty vehicles, the increasing share of zero- and low-emission heavy-duty vehicles and new Euro 6d/VI E vehicles entering the market, a low-pollution level in the short- to medium-term cannot be reached for pollutant emissions from road transport without further action. The proposal is expected to tackle three identified problems why the Euro 6/VI emission standards contribute insufficiently to the necessary reduction of pollutant emissions from road transport. These problems being: (1) complexity of vehicle emission standards, (2) obsolete vehicle pollutant limits; and (3) insufficient control of vehicle real-world emissions.

The general objective of the initiative is twofold: (1) to ensure the proper functioning of the single market by setting more adequate, cost-effective and future-proof rules for vehicle emissions; and (2) to ensure a high level of environmental and health protection in the EU by further reducing air pollutant emissions from road transport.

Contents

1.

This initiative will contribute to achieving the general objective by pursuing the following three specific objectives. It will:


Reduce complexity of the current Euro emission standards.

Provide up-to-date limits for all relevant air pollutants.

Improve control of real-world emissions.

Improving the control of real-world emissions throughout the lifetime of a vehicle is of considerable importance for the second-hand market important to several EU countries, but also to other regions, such as Africa or Middle East. The Euro 7 proposal aims at reducing vehicle emissions during a longer part of a vehicle’s lifetime, thus benefiting also second-hand users. In particular as regards specific objective (3), air quality will continue to be impacted by pre-Euro 7 cars for several years to come. Appropriate incentives could be put in place for older cars to be retrofitted to meet Euro 7 requirements for tailpipe emissions but also for tyre and brake emissions. Additionally, to speed up the reduction of emissions from the existing fleet and to accelerate the transition to zero-emission transport, it is important to encourage the conversion of internal combustion engine vehicles to battery or fuel cell electric drive.

• Consistency with existing policy provisions in the policy area

Regulation (EU) 2018/858 of the European Parliament and of the Council provides for a general framework on the approval and market surveillance of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles.

Euro emission standards for vehicles (Regulations 715/2007 and 595/2009) are part of the above framework 12 . They are interlinked with several existing policy provisions and planned proposals which tackle air pollutants of the road transport as well as with the CO2 emission standards 13 which reduce air pollutants as a co-benefit. This legislative proposal on Euro 7 emission standards for cars, vans, lorries and buses improves consistency of the Euro emission standards with the following measures.

The Ambient Air Quality Directive (AAQD) 14 aims at improving air quality by setting limits for the ambient air concentrations of specific air pollutants from all air pollution sources (e.g. agriculture, energy, manufacturing, etc.). National Emission reduction Commitments Directive (NECD) 15 aims at reducing national air pollutant emissions by setting national reduction commitments for specific air pollutants, with reductions from all sectors, including road transport. On 26 October 2022 the Commission adopted a proposal for the revision of the Ambient Air Quality Directives 16 . The proposed revision will set interim 2030 EU air quality standards, aligned more closely with World Health Organization guidelines, while putting the EU on a trajectory to achieve zero pollution for air at the latest by 2050. The Euro 7 proposal is an important element to deliver on this ambition and to contribute to the objectives of the EU’s clean air policy, including the revision of the AAQD. By ensuring a reduction of all relevant air pollutant emissions from road transport consistent with AAQD/NECD air pollutant coverage and targets, the proposal for Euro 7 standards notably support Member States in meeting their commitments under the AAQD and the NECD.

The CO2 emission standards support the EU’s climate ambition set in European Climate Law 17 , which aims at reducing EU greenhouse gas emissions by at least 55% by 2030, compared to 1990. In July 2021, the Commission proposed to revise and strengthen the CO2 emission standards for cars/vans 18 , while the revision of the standards for heavy-duty vehicles is foreseen by end-2022. Whereas the CO2 emission standards promote zero-emission technologies, such as electric vehicles, the new Euro 7 standards address the emission of harmful air pollutants from combustion engines and non-tailpipe emissions from electric vehicles with the aim to protect human health and the environment. Therefore, the Euro 7 general objectives remain valid insofar as vehicles with internal combustion engines will continue to emit exhaust pollutants, and all vehicles will contribute to non-exhaust emissions. Despite the proposed 100% CO2 reduction target for 2035 for new cars/vans, the number of vehicles placed on the market with combustion engines (including hybrids) will remain important, in particular for lorries/buses. Both CO2 and pollutant emission standards are considered as complementary to reach the climate and zero-pollution ambition of the European Green Deal and contribute to the shift to sustainable mobility.

The Roadworthiness Directives 19 have the objective to increase road safety in the EU and to ensure the environmental performance of vehicles, by means of regularly testing vehicles throughout their operational lifetime. As far as emissions are concerned, they have as objective to contribute to the reduction of air pollutant emissions by detecting more effectively vehicles that are over-emitting due to technical defects, through periodic technical inspections and the roadside inspections. This proposal contains elements to support this objective, including implemented through On-Board Monitoring, that are expected to lead to cost savings. Such mechanisms could gradually become a primary tool in the Roadworthiness Directives, modernise the current inspection procedures and lead to lower administrative costs. The upcoming revision of the Roadworthiness Directives will need to take into account these new mechanisms, including for implementing measures which will need to be developed under the revision of the Roadworthiness package 20 .

In addition, the Eurovignette Directive 21 , which sets common rules on road infrastructure charges, and Clean Vehicles Directive 22 , which promotes clean mobility solutions through public procurement, are consistent with the general objectives of the Euro standards. In particular, they support demand for clean vehicles by allowing Member States to vary road charges based on pollutant emissions of vehicles and through public procurement. The Fuel Quality Directive 23 prescribes the fuel quality characteristics of fuel sold in the market and therefore is important for the Euro standards.

• Consistency with other Union policies

As part of the EU’s digital strategy and following the Communication on a European data strategy 24 the Commission has put forward a Data Act to support business-to-government and business-to-business data sharing. This act offers a horizontal framework for enhancing data access and data sharing across sectors. Specific problems in the automotive sector in the context of access to in-vehicle data justify complementing the Data Act with a a specific initiative. This initiative should ensure that a minimum set of data and functions is available, as well as fair access conditions for all automotive services providers. By ensuring the availability and accessibility of in-vehicle data, this initiative would be complementary to this Euro 7 proposal as it would facilitate the optimal adoption of continuous emission monitoring.

The New Industrial Strategy for Europe 25 takes into account the new circumstances deriving from the crisis, as well as the on-going transformation to a more sustainable, digital, resilient and globally competitive economy. It places priorities and defines new objectives on strengthening the resilience of the Single Market, dealing with strategic dependencies, combining targeted actions in the areas of regulatory framework, innovation support, access to raw materials and decarbonised energy, skills and data spaces, to accelerate the twin transition. This Strategy offers tools to address the twin challenge of the green and the digital transformation and to support the European industry in making the European Green Deal ambition a reality. New pollutant emission framework will offer legal certainty and first-mover advantage to the EU automotive sector, avoiding the risk of falling behind other major jurisdictions setting new pollutant emission standards.

The End-of-Life Vehicle (ELV) Directive 26 contains rules on the collection, treatment and recovery of end-of-life vehicles and their components, as well as restrictions on hazardous substances in new vehicles. Its mirror directive, the 3R type-approval Directive 27 , links the design of new vehicles with their reusability, recyclability and recoverability. These Directives are planned to be reviewed in 2023 in line with the ambitions of the European Green Deal and the Circular Economy Action Plan 28 . While Euro 7 proposal aims at reducing vehicle emissions during a longer part of a vehicle’s lifetime by extending durability requirements, the revision of the ELV Directive complements by looking into the problem of export of defective polluting used vehicles outside the EU.

This initiative is also consistent with the Next Generation EU 29 , more particularly the Recovery and Resilience Facility 30 (RRF) and the flagship “Recharge and Refuel”, which promotes future-proof clean technologies to accelerate the use of sustainable, accessible and smart transport, charging and refuelling stations and extension of public transport. Through this RRF funding but also targeted investment programmes under InvestEU 31 or Horizon Europe 32 , resources will be allocated to raise the economy’s growth potential as well as to accelerate green transformation, notably through the uptake of innovative solutions and future proof low emission technologies.

This initiative also integrates the necessity to ensure a just and fair green transition, supporting in particular vulnerable citizens in the area of transport: it is consistent with the Final Report of the Conference on the Future of Europe (proposal 18.3) especially when it comes for affordability of transport means and of vehicles operating on non-polluting technologies.

In addition, the initiative is coherent with the recent proposal amending European Consumer Law, more particularly the Unfair Commercial Practices Directive 33 and the Consumer Rights Directive 34 , to contribute to a circular, clean and green EU economy by enabling consumers to take informed purchasing decisions and therefore contributing to more sustainable consumption.

Finally, to reinforce consistency across policies, and as announced in its Communication Better regulation: Joining forces to make better laws 35 , the Commission is improving its better regulation guidelines to ensure that all its initiatives comply with the ‘do no significant harm’ principle thus abiding by the obligations set under the European Climate Law.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The legal basis of the proposal is Article 114 of the Treaty on the Functioning of the European Union (TFEU).

• Subsidiarity (for non-exclusive competence)

The legislation concerning the type-approval of motor vehicles contributes to the implementation and functioning of the single market for goods. This proposal aims at rendering the implementation and enforcement of this legislation more effective as part of the overall policy objective to deepen the single market strategy.

The second reason is the transnational nature of air pollution and road transport. Even though the effects of the main toxic air pollutants are most severe close to the source, the effects on air quality are not limited to the local level and cross-border pollution is a serious environmental problem that often challenges national solutions. Atmospheric modelling shows that the pollution emitted in one Member State contributes to pollution in other Member States. In order to solve the problem of air pollution, concerted action at the EU scale is required.

Developing emission standards at EU level and setting up an appropriate governance for it are key to avoid Member States adopting different national measures which are potentially not congruous nor consistent (e.g. to measures limiting access to certain areas). Such measures would create considerable obstacles for industry and pose great risk to the single market. Hence, continued harmonised EU action to further reduce vehicle emission is fully justified.

• Proportionality

The proposal is proportionate as it provides for the necessary legal change and at the same time does not go beyond what it necessary to achieve the objectives of reduction of pollutant emissions from motor vehicles on the one hand and ensuring legal certainty for vehicle manufacturers on the other. It provides for the necessary legal conditions to uphold, to the extent possible, a level playing field among manufacturers.

• Choice of the instrument

The use of a Regulation is considered to be appropriate in that it provides the required assurance for direct and harmonised application and enforcement while not requiring transposition into Member States’ legislation.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations of existing legislation

The Commission decided to follow a back-to-back approach in which the evaluation and impact assessment were conducted in parallel as a single process to meet the roadmap set by the European Green Deal 36 . That way, the findings of the evaluation included in Annex 5 to the Impact Assessment were used to inform further reflection on whether Euro 6/VI emission standards continue to provide high level environmental protection in the EU and to ensure the proper function of the single market for motor vehicles.

The evaluation assessed the regulations’ achievements against the objectives set in the Euro 6/VI legislation. It concluded that the Euro 6/VI objectives to improve air quality by reducing pollutants from road transport and to set harmonised rules on the construction of motor vehicles are still highly relevant. In addition, the regulations were found to be broadly coherent and to have led to partly cleaner vehicles on EU roads with the Euro 6/VI testing procedures being partly effective. Regulatory costs exist, while overall the Euro 6/VI regulations are found to be cost-effective. They also generated significant EU added value that could not have been achieved to the same extent through national measures.

2.

Key conclusions of the evaluation were as follows:


·The Regulations have realised partly cleaner vehicles on EU roads.

·Since the application of Euro VI emission limits in 2013 and Euro 6 emission limits in 2014 up until 2020, NOx emissions on EU roads have decreased by 22% for cars and vans and by 36% for lorries and buses. Exhaust PM emissions on EU roads have known a decrease of 28% for cars and vans, and a decrease of 14% from lorries and buses.

·The Regulations have somewhat curbed negative health impacts by road transport that could cause respiratory and cardiovascular diseases upon inhalation.

·Regulatory costs for automotive industry are estimated at €357-€929 per diesel vehicle and by €80-€181 per petrol vehicle for cars and vans, and up to €3 717-€4 326 per heavy-duty vehicle. While the latter are in line with the expectations, for cars and vans the costs are higher than what was originally anticipated.

·Impacts on competitiveness and innovation appear generally positive with no signs of competitive distortion.

·Recent policy developments such as the European Green Deal support the Euro 6/VI objectives and the relevance of further improving air quality by reducing emissions from road transport in a unified EU approach.

·The Regulations have generated net economic benefits to society.

·While the Regulations are broadly coherent, some coherence issues have been identified both within the Euro 6/VI emission standards and with other EU legislation.

·No simplification was realised in the Regulations.

·The harmonisation of the market is the most crucial aspect of EU added-value and it is unlikely that uncoordinated action would have been as efficient. The Regulations ensure common requirements, thus minimising costs for manufacturers, and provide regulatory certainty.

·Still, some shortcoming are preventing the Regulations from further improving air quality through reducing pollutants emitted by the road transport sector. Hence, some design elements (modalities) of the Regulations are likely to have had an impact on the efficiency of the Regulations. In particular:

·The evaluation shows that over the successive steps of Euro 6/VI standards complexity and consistency issues have become well-rooted in the both the overall legal framework and in its practical implementation.

·The evaluation emphasizes many potential benefits for human health and environment remain overlooked in the current Regulations. Despite the progress made to reduce the gap between vehicle real-world emissions (driving cycles and conditions of use, especially in urban driving conditions) and type-approved emissions, important emissions remain unaccounted under Euro 6/VI emission testing. In addition, emissions are not properly controlled over the entire lifetime of vehicles.

• Stakeholder consultations

In order to collect evidence and ensure great transparency, the Commission sought feedback from stakeholders through multiple consultation activities. More precisely, for the purpose of this proposal, the Commission sought feedback from the following stakeholder groups: Member States and national authorities, automotive industry (including vehicle manufacturers, component suppliers and other industry stakeholders), civil society (including consumer organisations and environmental NGOs) and citizens.

A detailed summary of the extensive consultation process is presented in the synopsis report in Annex 2 to the Impact Assessment for this proposal.

3.

The Commission has gathered feedback through the following activities:


·The initiative was discussed for the first time with stakeholders during a stakeholder conference in October 2018. Subsequently, the Advisory Group on Vehicle Emission Standards (AGVES) was set up by merging relevant expert groups from industry, civil society and Member States, with ten meetings and one ad-hoc workshop on simplification from July 2019 to April 2021.

·The Inception Impact Assessment was launched on 27 March to 3 June 2020. The 18-week Public Consultation on the proposal followed on 6 July 2020 and was open for contributions until 9 November 2020.

·Two 14-week targeted consultations – one for the Evaluation of Euro 6/VI (4 March to 8 June 2020) and one for the Impact Assessment of Euro 7 (3 August to 9 November 2020) – were performed focussing more on the detailed and technical aspects of to the initiative.

Information, views and data through all consultation activities were taken into consideration for the evaluation of the Euro 6/VI and for the preparation of the Euro 7 impact assessment. The collected stakeholder evidence made it possible to supplement, cross-check and confirm the evidence already gathered through other research in the Impact Assessment and the supporting studies.

4.

The main outcomes of the stakeholder consultations can be summarised as follows:


Stakeholders from all groups agreed that there are ongoing air pollution and health issues associated with road transport and that there is need for action. While the majority of respondents from component suppliers, Member States, civil society and citizens considered new Euro standards to be appropriate to further reduce vehicle emission, vehicle manufacturers were less convinced. In several activities, automotive industry stressed that preserving the Euro 6/VI would be a realistic and balanced option.

The majority from all groups agreed that Euro 6/VI is complex. The responses to the public consultation show that complexities lead to significant compliance costs and administrative burden. Additionally, all groups apart from industry indicated that complexity hampers environmental protection, while civil society added that it leads to misinterpretations. Respondents from all groups implied that there is a need to address complexity in the Regulations through varying measures.

Apart from vehicle manufacturers, the majority of all groups including component suppliers showed support for developing stricter limits for regulated pollutants and new limits for non-regulated pollutants. Component suppliers, Member States, civil society and citizens believe that the current pollution control technology leaves room for additional emission reductions.

The majority of stakeholders, believe that in Euro 6/VI real-world emissions are not adequately monitored or limited over the entire lifetime of vehicles. Tampering, vehicle ageing, inadequate technical inspections and the cost of maintenance were indicated as potential causes. All stakeholder groups have shown support for the implementation of continuous emission monitoring of emissions as an action to measure real-world emissions. Still, most manufacturers added that this can only be used for a limited number of pollutants in the near future.

Feedback and differences in stakeholders’ views were carefully analysed and taken into account in the Impact Assessment if credible. In particular, the views from industry and Member States were helpful to analyse the problem of complexity and potential simplification measures. In addition, information provided by industry on the hardware costs for pollution control technologies has been an important source for the assessment of the economic impacts. Feedback and concerns raised by the Member States, industry, civil society and citizens have been taken into account in the design and assessment of the options, particularly with regard to the technological potential for reducing emissions by emission limits, durability, testing conditions and continuous emission monitoring, the potential accelerated shift to electric vehicles and the impacts on competitiveness, where industry stakeholders seem to have different views.

The stakeholders’ views on the introduction of a single Euro emission standard for cars/vans and lorries/buses diverged from the Commission’s views. Initially, stakeholders from industry did not support this simplification measure. Since the arguments of industry, such as proper differentiation as well as international harmonisation, should be achievable also with the basic acts (715/2007 and 595/2009) merged while the specific implementing regulations are kept separate, the Commission has continued this approach. This was confirmed with the stakeholders in the follow-up interviews linked to the targeted consultation on the impact assessment and in the AGVES meeting of 16 November 2020.  

• Collection and use of expertise

The Impact Assessment draws on evidence from several sources including studies by external contractors from the CLOVE consortium, including key experts from the Laboratory of Applied Thermodynamics of the Aristotle University of Thessaloniki (LAT) (GR), Ricardo (UK), EMISIA (GR), TNO (NL), TU Graz (AT), FEV (DE) and VTT (FI).

A first study by CLOVE was launched to review, compare and draw lessons from legislation in other part of the world, evaluate the effectiveness of current EU emission tests and develop and assess new emission tests for regulated and non-regulated pollutants. As a follow-up, a second study covered a thorough review of the cost-effectiveness of measures that were introduced by the first study in addition to a feasibility assessment of new pollutant emission limits for all vehicles and an analysis of the simplification potential of vehicle emission standards. This study also supported the evaluation of the Euro 6/VI framework, while providing the evidence necessary for the Impact Assessment. These studies have been underpinned by analysis and tests performed by the Joint Research Centre of the Commission, in its facilities located in Ispra Italy.

For the quantitative assessment of the economic, social and environmental impacts, the Impact Assessment study and report have relied on the SIBYL and COPERT model. COPERT is used for calculating greenhouse gas and air pollutant emission inventories for road transport based on real-world emissions coordinated by European Environment Agency (EEA) and the JRC. SIBYL is a specialised tool for projecting the impact of detailed vehicle technology on future fleets, energy, emissions and costs designed to support policy making. Both models were updated based on data and evidence collected through the stakeholder consultation, latest emission factors and literature reviews.

5.

In addition, further information was gathered addressing the following issues:


·the available technologies that can be deployed in the relevant time period to reduce pollutant emissions, as well as their effectiveness and cost;

·health and environmental impacts in monetary terms;

·general macro-economic indicators, such as creation of new jobs, skills required, research and innovation, etc.;

·competitiveness of the EU industry and internal market cohesion;

·qualitative impacts on SMEs and consumers (incl. consumer trust).

A list of the studies and sources is provided in Annex 1 of the Impact Assessment.

• Impact assessment

The measures in this proposal are balanced with respect to their health and environmental benefits and burden for the industry. Effectiveness and cost-efficiency of the measures is supported by the accompanying Impact Assessment. The summary sheet and the positive opinion of the Regulatory Scrutiny Board can be accessed through X (link to be added).

Three policy options, with a different mix of measures and ambition levels, were assessed to tackle the identified problems in the current Euro 6/VI Regulations taking into account the green and digital transformation required by the European Green Deal. The transformation provides opportunities for more advanced solutions in terms of pollutant emission reductions, such as the use of low-pollution technology and continuous emission monitoring with advanced sensors and vehicle connectivity. The policy options took also into account the shift to electrified powertrains requiring cost-efficient and adequate solutions for reducing pollutant emissions in the combustion-engine segment.

In line with the specific objectives, policy option 1, 2 (2a and 2b) and 3a aimed at reducing complexity of the current Euro emission standards by introducing simplification measures (such as replacing two regulations with one single regulation, or eliminating obsolete tests). Up-to-date emission limits for all relevant air pollutants were provided in policy option 1 with low ambition, in option 2a and 3a with medium ambition and in option 2b with high ambition. Control of real-world emissions were improved in policy option 1 by low ambitious real-driving testing boundaries, in option 2a by medium ambitious real-driving testing boundaries and durability requirements, in option 2b by high ambitious real-driving testing boundaries and durability requirements and in option 3a by medium ambitious real-driving testing boundaries, durability requirements and continuous emission monitoring.

The Impact Assessment has found the medium-ambitious policy option 3a to be the most proportionate for light- and heavy-duty vehicles. The policy option was found to be the most effective in achieving the identified objectives, while also being cost-efficient by bringing the highest health and environmental benefits for citizens at low regulatory costs for industry. In addition, the option was found coherent with the air quality legislation, CO2 emission standards and the roadworthiness directives. Through introducing continuous emission monitoring, option 3a would also be most in line with the twin green and digital transformation aimed at by the European Green Deal.

6.

The social, economic and environmental impacts of option 3a can be summarised as follows:


Total regulatory costs are estimated €304 per vehicle for light-duty vehicles and at €2 681 per vehicle for heavy-duty vehicles. Over the 25-year period assessed in the Impact Assessment, this would lead to a total regulatory cost of €35.48 billion for light-duty vehicles and €17.53 billion for heavy-duty vehicles.

On the other hand, monetary health and environmental benefits amount up to €55.75 billion and €133.58 billion respectively through the reduction of harmful air pollutant emissions. These benefits are mostly realised through the reduction of NOx and PM2.5 emissions. In addition, this option showed for all vehicles the highest positive impacts in terms of access to international key markets and innovation.

The adjustment costs (covering substantive compliance costs due to equipment costs for emission control technologies and the related R&D and calibration costs including facilities and tooling costs) were assessed in option 3a to be in the order of €67 billion between 2025 and 2050 for light-duty vehicles and €26 billion for heavy-duty vehicles.

Next to these benefits, regulatory cost savings (covering cost savings during testing, witnessing of tests by type-approval authorities and type-approval fees as well as administrative costs savings for reporting and other information obligation as part of the type-approval procedures) are estimated at €4.67 billion for light-duty vehicles and at €0.58 billion for heavy-duty vehicles in the preferred option.

Overall, the impact of option 3a on consumer affordability would be limited. While the total regulatory costs compared to baseline are expected to be passed on to consumers, this would lead to a 0.8% increase in the price of small petrol vehicles and a 2.2% increase in the price of small diesel vehicles for cars and vans.

Battery durability requirements were added following the adoption of a new UN Global Technical Regulation No. 22 on 14 April 2022 on In-vehicle Battery Durability for Electrified Vehicles, setting minimum performance requirements for electric vehicles at a level that will not require change of battery technologies. It is expected that these requirements will not create additional costs but raise consumer awareness and confidence.

In the light of the current geopolitical and economic circumstances, a final review has been made to ensure up-to-date considerations for the automotive industry and consumers. The rise in costs that began in 2021, particularly for energy and raw materials, has accelerated dramatically. At the same time, demand and sales of motor vehicles have dropped while the investment needs for the green transformation are increasing. This puts pressure on the automotive supply chain and raises affordability issues for consumers, in an overall context of high inflation. In order to facilitate a successful green transition of the automotive ecosystem, the above-mentioned option 3a has been readjusted for light-duty vehicles to reduce adjustment costs, while keeping the overall medium environmental and digital ambition.

For cars and vans, the exhaust emission limits are set at the lowest level currently imposed under Euro 6 for cars therefore imposing lower limits for vans than under Euro 6, while durability requirements as well as real-driving testing boundaries are set as in option 3a. The requirements for evaporative emissions, battery durability and non-exhaust emissions are set as in option 3a. It is an intermediate option in terms of tailpipe emission limits between option 1 and 2a/3a. This choice has been made in order to balance the need to improve environmental performance with the need to avoid disproportionate investments for vehicles that will no longer be sold after 2035. Beyond a certain threshold, costs increase significantly faster than environmental benefits. The option chosen improves affordability of cars and vans for consumers and minimises investment costs required for the development of new hardware solutions for emission control systems for cars and vans with internal combustion engine.

The selected measures set technology- and fuel-neutral limits for cars and vans, while allowing for slightly higher limits for underpowered vans, where such allowance is justified based on technical reasons. Testing boundaries are as in option 3a, therefore allowing for gains to be made by capping currently uncontrolled emissions. Methodologies and limits for evaporative emissions, brakes, tyres, as well as battery durability and the use of emission monitoring tools with sensors follow the ones presented in option 3a of the Impact Assessment Report. These measures account for an increasingly important share of the emission reduction potential and of the environmental and health benefits, in particular in urban environments where exposure to those pollutants is more prominent. Emissions from brakes and tyres will soon account for the majority of particle emissions.

For lorries and buses, option 3a is retained. This reflects the significantly slower transition of lorries and buses to zero exhaust emission technologies. Lorries and buses with internal combustion engines are expected to remain much longer on the EU market.

For all motor vehicles, all simplification measures are kept as in option 3a since they reflect the need to modernise the regulation and reduce administrative burden. This option also ensures improvement in total emissions, in particularly during cold start and in urban driving, since vehicles also need to comply with the emission limits during short trips.

In terms of environmental benefits, the selected option brings significant reduction of emissions, only slightly lower than option 3a for cars and vans, since the higher emission limits are accompanied with improvements in testing conditions and compliance measures that were not foreseen in option 1. A NOx reduction from cars/vans of more than 85% compared to 2018 levels and more than 80% from lorries/buses has been estimated with the selected measures by 2035. The total NOx by motor vehicles are estimated to be cut in half by 2035 compared to the baseline.

Regulatory cost savings are expected to be the same as in option 3a. The product development costs for industry are significantly reduced since the new option will not require redesign of vehicles, but compliance can be achieved with currently used technologies for emission controls and recalibration. The regulatory costs are expected to be significantly reduced and be in between those for option 1 and option 3a. In total, the selected measures are expected to bring a net benefit similar or higher than for option 3a, bringing significant emission savings with limited adjustment costs.

• Regulatory fitness and simplification

In line with the Commission commitment to Better Regulation, the proposal has been prepared inclusively, based on transparency and continuous engagement with stakeholders.

SMEs (reference IA): The Impact Assessment found that European automotive industry mostly comprises of large manufacturers active in vehicle assembly and component production. Some SMEs manufacture vehicles or systems that require an EU emission type-approval. 35 SMEs were identified that build specialised vehicles on the basis of powertrains produced by larger manufacturers. Simplified rules are proposed for small volume manufacturers, to take into account the specificities linked with limited production.

Cost savings: The Impact Assessment has also analysed how to possibly simplify the legislation and reduce unnecessary compliance and administrative costs. While the proposal increases regulatory costs for vehicle manufacturers in the form of hardware costs for pollution control technologies and sensors; and R&D and related calibration costs, the proposals also brings compliance cost savings during testing, witnessing of tests by type-approval authorities, type-approval fees as well as administrative costs savings. In particular, administrative burden would decrease through the introduction of simplification measures and the new requirements for continuous emission monitoring. The latter are expected to further simplify the reporting and other information provision obligations for granting type-approval and verification procedures through reduced number of type-approvals. In option 3a, administrative cost savings are estimated at €224 thousand per type-approval (€22 per vehicle) for diesel cars/vans and at €204 thousand per type-approval for petrol cars/vans (€26 per vehicle). For lorries/buses, the administrative cost savings in option 3a amount up to €66 thousand per diesel type-approval (€22 per vehicle) and €67 thousand per petrol type-approval (€47 per vehicle). In the finally selected options, all costs for cars/vans are expected to be lower.

Competitiveness: Despite regulatory costs for industry and cumulative investments with CO2 emission standards, the proposal is expected to have a positive effect on competitiveness. This is due to new market opportunities stemming from the development of new sensors along with communication protocols, cybersecurity and anti-tampering options. The use of advanced digital and clean technologies, will be an asset in gaining access to international key markets, in particular United States and China.

Digital: As aimed high in the Digital Decade initiative 37 , all sectors should undergo digital transformation which will largely contribute to the green transformation, including for the road transport, to reach zero-pollution ambition for a toxic-free environment. The proposal entails additional coherence with the twin transition as it support the reduction of emission over vehicles’ lifetimes by introducing continuous emission monitoring and vehicle connectivity. National Type Approval Authorities should also preferably deliver services digitally (including machine readable information). This contributes to achieving an effective digital society and economy (Digital by default).

The initiative is consistent with the do not significant harm principle, as it contributes to the objectives of the green transition of the European Green Deal (in particular sustainable mobility and zero pollution ambition). It ensures that transport becomes less polluting, especially in cities and is considered as a vital part of the transition towards clean mobility. The Impact Assessment has established that the options are not expected to do significant harm to any of the environmental Sustainable Development Goals (SDGs) 38 .

• Fundamental rights

This proposal has no consequences for the protection of fundamental rights and equality. It has no differential impact due to gender.

4. BUDGETARY IMPLICATIONS

The proposal does not require additional financial resources.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

This proposal makes arrangements to monitor and evaluate the effectiveness of Euro 7 emission standards against operational objectives and to establish causality between the observed outcomes and the legislation. For this purpose, a number of monitoring indicators are proposed for the review of Euro 7 emission standards. These monitoring indicators include:

·number of emission type-approvals under Euro 7 per vehicle type;

·costs during implementation phase and administrative costs per emission type-approval;

·proof of improved control of emissions under all conditions of use for all regulated pollutants;

·enforcement costs, including costs for infringements and penalties in case of non-compliance and monitoring costs;

·evolution of emissions over the lifetime of vehicles as evidenced by appropriate testing campaigns and continuous emission monitoring.

7.

The review of Euro 7 emission standards will also evaluate a set of more general indicators from other EU air pollutant policies for road transport:


·annual pollutant concentration levels in Europe’s urban areas and annual share of road transport to the pollutant emissions as reported by the Member States to the EEA under the National Emission reduction Commitments Directive (NECD) 39 and included in the annual EEA report on air quality in Europe;

·annual number of registered vehicles and share of powertrain technologies on EU roads as reported by the Member States to the European Alternative Fuels Observatory;

·annual development of impacts of air pollution on health (i.e. premature deaths related to exposure of certain pollutants) as included in the annual EEA report on air quality in Europe.

·annual share of road transport to the pollutant emissions of certain pollutants as reported by the Member States to the EEA under the NECD;

·annual number of notifications received from Member States for barriers of internal EU trade of cars, vans, lorries/buses caused by technical prescriptions imposed by national, regional or local authorities (i.e. bans of any kind) under the notification procedure of Directive 2015/1535 40 .

• Detailed explanation of the specific provisions of the proposal

Chapter I sets out general provisions, including the subject matter (Article 1), scope of the Regulation (Article 2) and the definitions of key terms used in the Regulation (Article 3).

Chapter II contains provisions on the obligations of manufacturers for the type-approval of motor vehicles, systems, components and separate technical units, with regard to their pollutant emissions and battery durability. More specifically, it includes the obligation of the manufacturers in regards to the construction and design of such vehicles including cybsersecurity measures (Article 4) and options for manufacturers to declare better performance with lower emission limits and/or improved battery durability as well as geofencing technologies to enable zero exhaust emission mode (Article 5). Manufacturers are required to comply with specific durability requirements for the lifetime of the vehicles but also the traction battery durability minimum performance, to meet the emission limits and other related technical requirements (Article 6). In order to demonstrate compliance with these requirements specific tests should be performed, as well as specific declarations and administrative procedures (Article 7). Article 8 and Article 9 provide with specific rules regarding respectively small volume manufacturers (Article 8) and multistage vehicles (Article 9) as regards tests and responsibilities.

Chapter III provides for Obligations of Member States as regards Type-approval and market surveillance, particularly as regards the role of national approval authorities and dates of entry into force (Article 10) and includes specific provisions for components and separate technical units (Article 11) as well as consumable reagent and pollution controls systems (Article 12).

Chapter IV includes provisions on the Role of the Commission and third parties regarding service conformity and market surveillance checks (Article 13).

Chapter V lays down the specific tests and methodologies to be applied by manufacturers and authorities for each concerned vehicle category to prove compliance against requirements and obligations under this Regulation (Article 14). It also includes specific provisions regarding adaptation to technical progress (Article 15).

Chapter VI provides for general provisions on power conferred on the Commission to adopt delegated acts (Article 16), committee procedure (Article 17) and reporting requirements for Member States (Article 18).

Chapter VII provides for final provisions on repeal of Regulation (EC) 715/2007 and Regulation (EC) 595/2009 (Article 19) and entry into force and application of the Regulation (Article 20).