New emission standards | In Principle

The new emission standard Euro 6D ISC-FCM has been applicable in the European Union since 1 January 2021. It is not only limited to the issue of cleanliness, but also includes an obligation to monitor combustion levels. Gradual reduction of emission limits is included in the consistently implemented EU policy to reduce greenhouse gas emissions.

Regulation (EU) 2018/842 (known as the Effort-Sharing Regulation) requires member states to meet the European Union target of reducing greenhouse gas emissions by 40% below 2005 baseline levels by 2030. This is applicable to sectors not covered by the EU Emissions Trading System (established by Directive 2003/87/EC).

A significant proportion of emissions from these sectors comes from road transport. Moreover, this is on an upward trend and remains significantly above 1990 benchmarks. As a result, further emissions growth in this area could wipe out reductions achieved by other sectors in the fight against climate change. For this reason, as a matter of priority, the European Commission is taking further steps to reduce pollution produced by cars.

New Euro 6D ISC-FCM emission standard

Entry into force of the new emission standard comes as no surprise. Its introduction was planned much earlier. Suffice it to say that the Euro 6D-TEMP (from the word “temporary”) standard had already been in force in the European Union since 2018, and was slated to come into full force from 1 January 2021 as Euro 6D ISC-FCM. Despite strong opposition from the automotive industry and the raging pandemic, the date was not changed.

What does ISC-FCM stand for? ISC (in-service conformity) is a confirmation that the emission of harmful substances during normal use will comply with results of homologation tests. FCM (fuel consumption monitoring) refers to the obligation to equip every vehicle registered after 1 January 2021 with a device monitoring fuel consumption or electricity use (in electric vehicles). The new standard applies to all passenger car manufacturers. For heavy goods vehicles, the new rules will take effect from 2022.

Individual level of carbon dioxide emissions

Under Regulation (EU) 2019/631 of 17 April 2019 setting CO₂ emission performance standards for new passenger cars and for new light commercial vehicles, the European Commission will publish through implementing acts a list containing a specific emission target and an average specific emissions level of CO₂ in the preceding calendar year for each manufacturer. The list also includes the difference between the manufacturer’s average specific emissions of CO₂ in the preceding calendar year and its specific emissions target for that year, and indicates whether the manufacturer has complied with the specific emissions target for the preceding calendar year.

Reductions of CO₂ emissions

In 2020, the average carbon dioxide emissions for vehicles sold by specific brands had to be below 120 g/km. Since 1 January 2021, this limit has been reduced to 95 g/km. This amount is also slightly different for each manufacturer. Among other things, this depends on the average weight of the vehicles they produce. For example, for Daimler, producing larger and heavier cars, the CO₂ limit is 103 g/km. Manufacturers offering more smaller cars, such as Peugeot and FCA (Fiat Chrysler Automobiles), will have to achieve an emissions score below 91 g/km. To put it simply, the heavier the vehicles a company produces, the higher the carbon dioxide emission limit in practice.

The 95 g/km limit on average CO₂ emissions is the most rigorous in the world. By comparison, in 2021 this limit is set at 125 g/km in the United States, 122 g/km in Japan and 117 g/km in China.

For nitric oxides (NOx), the allowed emission limit in laboratory tests is the same for the new and previous standard, at 80 mg/km for diesel and 60 mg/km for petrol engines. However, a difference arises when measuring in road tests. The Euro 6D TEMP standard allowed the emission limits to be exceeded by a factor of 2.1. From 1 January 2021, this factor is 1.43, and is to be reduced in subsequent years until the laboratory results equal road results.

The table below shows the difference in maximum nitric oxides emissions limits between the discussed standards.

Premiums

According to Art. 8 of Regulation 2019/631, the European Commission will impose an excess emissions premium on a manufacturer if its average specific emissions of CO₂ exceed its specific emissions target. Manufacturers who do not meet the CO₂ emission standards run the risk of having to pay high premiums imposed by the Commission. They amount to EUR 95 per gram of carbon dioxide emitted over the limit and are charged for every car sold. The proceeds from premiums are treated as revenue for the general budget of the European Union.

Recently, the effects of violating the CO₂ emissions limit have been felt acutely by Volkswagen, whose limit for 2020 was 99.3 g/km. VW failed to meet this target and closed the year at an emission level of 99.8 g/km. Half a gram may seem a small difference, but given the volume of sales of this brand’s vehicles, the premium imposed by the Commission was more than EUR 100 million.

Options for the industry

The EU regulations reward the production of low-emission vehicles (below 50 g of CO₂/km). This allows for a reduction of the results of a manufacturer’s entire fleet and, consequently, avoidance of charges for exceeding the CO₂ emission standards. Regulation 2019/631 provides that in 2021, each new low-carbon passenger car counts as 1.67 cars. This ratio was 2.00 in 2020 and will drop to 1.33 in 2022. This has a significant impact on the sales of electric and hybrid cars.

In turn, Art. 10 of Regulation 2019/631 provides for the possibility to derogate from the specific emissions targets. According to this provision, a manufacturer producing fewer than 10,000 new passenger cars or 22,000 new light commercial vehicles registered in the European Union per calendar year may apply for a derogation from the limits (for a maximum of 5 years). The condition is that the manufacturer:

• Is not part of a group of connected manufacturers
• Is part of a group of connected manufacturers that is responsible in total for fewer than 10,000 new passenger cars or 22,000 new light commercial vehicles registered in the European Union in a calendar year, or
• Is part of a group of connected manufacturers but operates its own production facilities and design centre.

Regulation 2019/631 allows the formation of groups by manufacturers who have not benefited from the above derogation. In practice, they are a cost-effective way to meet specific emission targets. In this case, the average limits are calculated collectively for the whole group, as it is treated as a single manufacturer. This is a solution especially beneficial for manufacturers not offering electric or hybrid vehicles. The merger of FCA fleets with Tesla, through which Fiat/Chrysler has successfully reduced the allowable CO₂ emissions in its vehicles to a level within the targeted norm, is an example.

Exemptions

The new emissions standards do not apply to all vehicles. There is a small group of exceptions that do not have to meet the exacting standards. These include armoured cars and vehicles for transporting disabled persons. Manufacturers of vehicles with less than 1,000 registrations per year are completely exempt from the obligation to apply specific emissions limits and the excess CO₂ emissions premium.

What’s next?

The European Commission assumes that in 2050 only zero-emission vehicles will be driving in the EU. But there are already plans to introduce another standard: Euro 7. The date of its entry into force is not yet known, but work is already underway and it is anticipated that it may be introduced by the end of 2025. Commission specialists are analysing data on emissions and combustion, and their conclusions are expected to be issued in June 2021. Then work will begin on setting appropriate standards.

Michał Nowak, adwokat, Employment practice, Wardyński & Partners

Dr Dominik Wałkowski, adwokat, Environment practice, Wardyński & Partners

Dr Szymon Kubiak, attorney-at-law, Employment practice, Wardyński & Partners