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Background

This report addresses the regulation of CO2 emissions of passenger cars and light commercial vehicles (LCV) after 2020. Current targets are set at 95 g/km for passenger cars and 147 g/km for LCVs in 2020. It has been proposed by the European Parliament, that the targets should be set to 68-78 g/km in 2025 for passenger cars. However, concern has been raised that such targets would not be technology neutral and that the cost of producing cars that satisfy the standards would exceed the consumers’ willingness to pay for the fuel efficiency improvement (IKA, 2014; NFF, 2014). Moreover, it is unlikely, that the standards alone would be sufficient to achieve the long term targets for emission reduction in road transport. This report addresses inclusion of the road transport sector in the EU Emissions Trading System (ETS) as an alternative or a complementary policy measure.