ACEA outlines 7 actions to reach CO2 targets for light-duty vehicles

Negotiators recently concluded the review of the EU’s CO2 regulation for light-duty vehicles, fixing CO2 reduction targets for 2030 and a 100% target for 2035.

Passenger cars and vans are respectively responsible for around 12% and 2.5% of total EU emissions of carbon dioxide (CO2), which is the main greenhouse gas.

On 19 April 2023, the European Parliament and the Council adopted Regulation (EU) 2023/851, amending Regulation (EU) 2019/631, to strengthen the CO2 emission performance standards for new passenger cars and new light commercial vehicles in line with the European Union’s increased climate ambition.

In particular, the amendment strengthens the emission targets applying from 2030 and sets a 100% reduction target from 2035 onwards.

The European Automobile Manufacturers Association (ACEA) stated that while it is committed to achieving these targets—having already invested a massive EUR250 billion (USD274 billion) in electrification—industry alone cannot achieve these ambitious targets.

“That’s why policy makers must get the enabling conditions right—and before the European Commission’s current mandate ends,” ACEA said in a statement.

To further accelerate the decarbonisation of light-duty vehicles, the organisation which unites Europe’s 14 major car, truck, van and bus makers, outlined seven actions for realising the 2025 and 2030 CO2 reduction targets.

1. Establish an ambitious and competitive industrial policy

The EU lacks a robust response to the U.S. Inflation Reduction Act (IRA), which provides vast incentives for clean technology investments. ACEA urges the European Commission to initiate a structured dialogue with other global players to prevent investment leakage and retain employment in Europe. 

While the Critical Raw Materials (CRMA) and Net-Zero Industry Acts (NZIA) are part of the response, ACEA believes that a sufficient supply of materials and batteries will be critical to ensuring the industry can meet the CO2 targets, especially the 100% target in 2035. As such, the European Commission should present a roadmap for critical raw materials as part of its trade diplomacy, ACEA said

2. Fast-track recharging and refuelling infrastructure 

Member states should swiftly implement the Alternative Fuels Infrastructure Regulation (AFIR). At the same time, the European Alternative Fuels Observatory (EAFO) must ensure a robust monitoring system that incentivises member states to deploy infrastructure faster. The Energy Performance of Buildings Directive (EPBD) negotiation’s outcomes should be ambitious and boost private charging infrastructure, ACEA said. The Commission should provide clear guidance on funding opportunities currently underexploited by member states and the industry.

3. Boost the greening of corporate fleets

Corporate fleets are also a crucial segment of the e-mobility transition and could create a second-hand electric vehicle market more rapidly. The greening of corporate fleets should not replace the CO2 regulation’s targets but instead stimulate market development. Accordingly, the Commission should:

1. Carefully assess the impact of any regulatory initiative affecting the new and second-hand markets, and vehicle affordability/availability e..,g limitations on battery availability. Moreover, any impact assessment should give guidance on the reasonable scope and size of the targeted fleets;
2. Ensure that any possible additional regulatory initiatives follow the basic framework and timelines agreed in the CO2 fleet regulation. The shift to e-mobility will be driven across all segments and will heavily depend on member states’ implementation of AFIR. The initiative should neither cause market distortions nor exceed the CO2 regulation’s ambition levels;
3. Respect differences between passenger cars and vans, e,g, their specific uses, and decarbonisation progress;
4. Focus on large corporate fleets only, excluding micro-enterprises and vehicles for individual use eg private leases; and
5. Link any new initiative on the greening of corporate fleets with supportive financial and non-financial instruments at the member-state level.

4. Boost demand for public fleets

Public authorities should be leaders in decarbonising their vehicles, especially as public fleets represent a significant portion of new registrations. The Clean Vehicles Directive is a unique tool to accelerate the greening of public fleets and boost market development. ACEA urges the Commission to:

1. Deliver an implementation report on the Clean Vehicles Directive to demonstrate the actual extent of implementation in member states;
2. Based on the implementation report, conduct a review of the Clean Vehicles Directive to boost the e-mobility of public fleets; and
3. Consider whether a Regulation (instead of a Directive) is needed to address diverging implementation levels across the EU.

5. Prolong national support schemes

The Commission should develop a blueprint for taxation schemes to ramp up electrification in line with the agreed CO2 and corporate fleet targets. Together with member states, they should also organise a high-level event to compare best practices from national schemes, including different implementation timelines.

6. Speed up the upskilling and reskilling agenda

Skill shortages and labour market transformation can undermine the transition to low- and zero-emission mobility. The Commission should develop a dedicated upskilling and reskilling agenda for the auto sector, which is coherent with other policy initiatives e.g., the Pact for Skills, the European Battery Alliance (EBA) Academies, the recently proposed Net-Zero Academies, etc.

The EU should also provide dedicated funding for partnerships, such as the Automotive Skills Alliance (ASA), to facilitate upskilling and reskilling initiatives. Funding for the ASA could support training courses in member states and regions in the most need. The Commission should also provide a simple overview of all EU funding opportunities that support skills transformation.

7. Reinforce the better regulation agenda

The Commission should revisit the smart and better regulation agenda, which was downgraded under the current mandate. There is a lack of coherence between EU regulatory initiatives eg the CO2 regulation’s decarbonisation pathways, Euro 7, AFIR’s objectives, and corporate fleet targets. The better regulation agenda’s basic rules, such as sufficient lead times, thorough impact assessments, and competitiveness checks, should be respected.

Finally, the Commission should also present a clear overview of the outcomes of the Fit for 55 package and assess the coherence of the whole package with its individual proposals.

The main obstacle holding the industry back in the European Union is the lack of enabling conditions, ACEA said.

“ACEA believes that getting the enabling conditions right would unleash massive additional investments in zero-emission technologies and fast-track the sector towards achieving the CO2 targets for light-duty vehicles.”