Abstract:

This paper reviews recent developments in the European passenger car market and assesses the implications for the proposed post-2021 CO2 emissions targets. The regulatory proposal suggests retaining the 2025 reduction target of 15% compared to the 2021 baseline, and CO2 emissions reductions from cars would have to reach 55% in 2030, up from 37.5% in the current regulation. The proposal also suggests a de facto phase-out of internal combustion engine vehicles by suggesting that new cars registered should have zero emissions by 2035. This analysis of 2020 market developments found that new vehicle type approval CO2 emission levels can decrease substantially if the right regulatory framework—including high penalties for non-compliance—is in place. In response to current policies, the average CO2 emission levels in Europe dropped by 21% from 2019 to 2020, illustrating that vehicle manufacturers are promptly able to adapt their product portfolio to ensure compliance with regulatory targets. The decrease in average new car type approval fleet CO2 levels in 2020 was almost entirely due to the strong uptake of electric vehicles, as well as regulatory compliance credits.