Summary of Consultation Responses - Consultation on European

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					Consultation on European regulation on new
van CO2 emissions - summary of
consultation responses


Introduction
Since the 1990s, the European Commission has had a strategy to reduce carbon dioxide
(CO2) emissions from road vehicles. This first took legislative form as a Regulation setting
targets for g/km average CO2 emissions from new cars, which came into force in April 2009
and will require manufacturers to meet targets from 2012. In October 2009 the Commission
published a regulation in draft seeking to make similar arrangements for vans.

The UK published its consultation paper "European regulation on new van CO2 emissions" in
March 2010 (with a closing date for responses of 10th June 2010). It asked for views in the
form of 331 questions, on the regulation as drafted by the European Commission, possible
amendments to it and the Government's Impact Assessment. Responses received are
summarised under the heading ‘Consultation responses’. ‘Government response’ in turn sets
out the Government’s view in the light of these responses and the next steps for this dossier.

Consultation responses

Overview

10 responses were received, although it should be noted that one respondent did not directly
address the consultation questions focussing instead on the issue of speed limiters.
Respondents (by name and type) are listed at Annex A. Individual responses can be made
available on request. Caution is necessary in interpreting the balance of responses, both
because of the relatively small number of responses and because respondents varied in their
approaches to addressing the issues as posed in the questions. For these reasons, and the fact
that responses tended to not to represent a broad spread of opinion, this analysis is necessarily
qualitative rather than quantitative.

There is substantial agreement from respondents concerning many of the views put forward
in the consultation paper. However, on the key issue of target levels respondents fall into two
main groups; those that support the ambition of the Commission proposal (or argue for it to
be more ambitious), primarily made up of the environmental interest groups, and those that
feel the Commission’s proposal is too ambitious to be realistic, primarily made up of the
vehicle manufacturers.

Responses to each question are only reflected here where they provide a concrete answer—
so, for example, “don’t know” and “no comment” responses are not included.



1
 There were 34 numbered questions, but number 8 was a duplicate of number 3. For simplicity, number 8 has
been removed from this analysis without renumbering the subsequent questions (ie number 9 follows number 7).


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Individual questions

1	 Are there any assumptions used in the IA that you disagree with? Is there any
   evidence to suggest these assumptions should be different?

There were four responses to this question, all disagreeing with at least some of the
assumptions. SMMT and GM believed that assumptions of the effects of penalties and
vehicle price increases on manufacturers were "not up to scrutiny" and that the analysis of
impacts on 'niche' manufacturers was "incomplete"; GM adding that Government did not
understand how the car and van markets differ from each other.

By contrast, Greenpeace and EPUK-FoE claimed that there was more substantial scope to
'carry over' technologies from cars than the consultation or its supporting documents
recognised (referencing in particular a study by the environmental group Transport &
Environment to this effect), and that there were "low-cost measures [eg. start-stop] that have
not been taken into account".

2	 Do you agree with the assumption that manufacturers will pass through 100% of the
   costs to consumers? (see page 26 of the IA)

There were four responses loosely addressing this question, two broadly agreeing and two
disagreeing. SEPA believed that it was likely, but that this effect should be set against
expected fuel savings by the vehicle buyer. FTA did not address the question directly, but
other aspects of its response suggested that it also believed cost pass-through would happen.

By contrast, SMMT and GM said that purchasers were already very price-sensitive
(particularly when the price rise was for a technology that the purchaser could not 'see'), and
previous legislative requirements that had increased the cost of producing vehicles (notably
meeting air quality requirements) had not been accompanied by price rises. These
respondents also argued that some manufacturers (ie. those with a wider range of vehicles)
would be able to 'cross-subsidise' improvements across their ranges more easily than others—
so potentially distorting competition. Also, they argued that there was a risk of distortion of
demand, as past experience showed demand peaked before new standards came into force
and slumped after. In addition, GM said that any price rises as a result of the regulation
would make cheaper imports from outside the EU more attractive.2

3	 Are there any factors likely to influence the ability of manufacturers to meet the
   target that we have not taken into account?

Four responses addressed this issue, again split between environmental and manufacturer
interests. Greenpeace and EPUK-FoE, believed that the potential role of stop-start and
hybridisation had not been sufficiently taken into account (this answer relating to their
response to question 1).

SMMT and GM mentioned air quality targets—all other things being equal, a tightening of
air quality standards will raise g/km CO2—and the possible revision of manufacturer targets
in the light of the future review of the standard vehicle test-cycle.

2
 This could be a factor in a manufacturer's total costs, but it should be noted that the requirement to meet targets
for vehicles registered in the EU does not depend on where the vehicle was made.


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4	 Do you have any evidence on how we could monetise some of the second order
   benefits (innovation, security of supply)?

SMMT and GM replied to this question. While neither could supply evidence, they said that
Government should be challenging academia and economists for this information. Their
responses also noted that innovation depended on there being an attractive environment for
research & development. GM supported the Automotive Council’s working to look at the
UK investment landscape for R&D.

5	 Should the scope of this regulation be extended to M2 and N2 vehicles? If not should
   they be regulated by some other means for g/km CO2? Please explain your
   reasoning. If you believe that they should be regulated separately, please suggest
   how this could be done.

There were five responses that addressed this issue in some form. Two supported the
regulation of M2 and N2 vehicles’ emissions, in the case of MTP by a simple affirmative
answer to the question. SEPA's view was that these sub-sectors should be regulated in some
way as it was important to tackle emissions across road transport—although it could not
comment on how this should be done.

SMMT and GM believed that the scope should not be extended. The first data for these
vehicles would not be available until late 2013, making it impossible for vehicle
manufacturers to prepare for targets as little as a year later. It was also thought that it could
cause a shift to using greater numbers of smaller vehicles (ie resulting in higher overall CO2
emissions)

FTA did not directly address whether the scope should be extended but observed that
reflecting payload capability in the utility structure would become even more important if the
scope was extended as proposed.

6	 Do you agree with our assessment that the 175g/km target will not be met in 2016?

Nine responses addressed this issue. There was general agreement with the question (one
respondent thought the slippage was merely possible), but different reasons given for why
this was. EST, EPUK-FoE and FTA believed that the level of penalties was the critical
factor, while SMMT, GM and Toyota put it down to the length of the van product cycle.
Greenpeace said that a 160g/km average target by 2015 was possible.

7	 Do you believe that it is technically feasible to meet the 175g/km target phased in
   from 2014-16?

There were seven responses to this question, largely expanding on what had been said under
question 6, three from an environmental and four from a general industrial perspective. The
environmental interests (EST, Greenpeace and EPUK-FoE) argued that the target was
technically feasible, highlighting the possible use of car technologies, less powerful engines,
lower rolling-resistance tyres, start-stop technology, hybridisation, aerodynamics and smaller




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vans3; and that there had been recent g/km decreases within van models. Indeed, one
respondent claimed that the target could be met from 2014.

The responses from FTA and Toyota said or implied, that the target was not technically
feasible in the timespan proposed. SMMT and GM outlined their reasons for sharing that
view: vans had to be more durable than cars, and mid-cycle engineering was expensive. In
addition, GM pointed out that the targets would represent greater annual reductions in
emissions than cars were being required to make under the existing new car CO2 Regulation,
while not being given the same lead time (especially significant given that the product cycle
is longer for vans).

8 .

[Removed as duplicate.]

9 Do you agree that a target in 2016 without phase-in would be preferable?

There were six responses to or around this question, which again followed a similar pattern to
question 7. EST and Greenpeace preferred more stringent targets: either 160g/km by 2015
(the original 2nd-stage target proposed by the Commission in 2007) or the 175g/km target in
2014 without phase-in.

MTP, SEPA and FTA broadly supported a 2016 target without phase-in. While SMMT saw
this alternative target as an improvement on the current draft regulation, it saw it as still too
costly and preferred a phased 2015-18 target—a view shared by one of the vehicle
manufacturers.

10 How much of a constraint will the impacts of the [current] economic circumstances
   be on manufacturers' ability to invest in emissions reductions technologies?

There were three responses to this question. The response from EST implied that it need not
be much, as manufacturers could implement non-technological changes such as
"downgrading" engines and downsizing of vehicles. By contrast, SMMT and GM pointed
out the steep drop in demand during 2009 (a 36% and 30% decrease in the UK and EU
respectively), which would make it harder to fund improvements; in addition, it had become
more difficult to borrow money in general as an industry. GM added that too onerous a target
in the long term might ultimately limit the choice of offerings from smaller manufacturers.

11 Do you agree that the proposal should contain a long-term target?

Nine responses addressed this question, and all relevant responses were broadly supportive of
the principle. The need for certainty was mentioned across respondents. Elaborating,
SMMT and GM highlighted the need for a proper impact assessment and scrutiny, possibly a
new regulation. SEPA suggested the possibility of setting targets beyond 2020, and EPUK-
FoE believed that a long-term target could also help to address air quality and noise
problems.


3
  However, it should be noted that this could mean that not every manufacturer meets its utility-based target, if
the decreased size reduced emissions but the vehicle remained 'above the line' in terms of its emissions-for-
mass.


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12 Does the Commission’s proposed long term target of 135g/km in 2020 set the
   appropriate balance between environmental ambition and deliverability? If not,
   what do you think is a more appropriate target level and date combination?

There were eight responses to this question. EST and Greenpeace preferred 125g/km for
2020 (so that percentage emission reductions would be similar to cars) and EPUK-FoE
believed the proposed target to be right. SEPA expressed the need to balance the factors
mentioned in the question, plus technological innovation, without giving a target level. MTP
saw the 2013 review as an important opportunity to counteract the effect of rising van traffic
when setting the target.

SMMT and the vehicle manufacturers did not agree with the target, seeing it as unrealistic
especially taking into account product cycles. Toyota believed that there should be a major
review incorporated for any 2020 target below 160g/km. The other two respondents in this
cluster pointed out that the proposed target represented a 23% decrease in g/km emissions in
less than four years (a higher absolute decrease than for cars); that manufacturers would be
required to use risky untried technologies; and that large vans could be made unviable. They
preferred targets of 160g/km in 2020 and 145g/km in 2025, including phase-ins and reviews.

13 Given the longer product cycles for vans should the regulation also include a very
   long term target in say 2030 or 2040?

Six respondents answered this question. There was an even split in responses, although this
did not depend closely on respondent type. EST thought that such targets would be useful for
aiming towards 0g/km by 2050, and SEPA thought that they could complement commitments
under the UK Climate Change Act. MTP believed that only to 2030 was the market certain
enough (and was there a reasonable necessity) to consider a target at this stage.

EPUK-FoE said that the market for this timescale was too uncertain—although an intention
to legislate should be included in the regulation so that technology investment could be
encouraged. SMMT and GM also believed that it was too early.

14 Should the long term target in the regulation be subject to review?

There were six responses to this question. Only one, EST, said that it should only be
reviewable in favour of greater stringency (ie not delayed or made easier), if emerging
technological or climate change evidence warranted it. EPUK-FoE believed that a review
would be too risky for manufacturer uncertainty, and MTP stated that for this reason it might
be better to review penalties [not clear whether alone or in conjunction with review of the
target].

SMMT and the vehicle manufacturers supported a review, in case of external factors
affecting target viability, linking this question to question 12 and the level of the long-term
target.

15 Do you agree that on balance reference mass4 is an appropriate parameter?



4
    Unladen mass of vehicle, allowing for mass of driver


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There were six responses to this question. Most agreed, at least somewhat, highlighting the
correlation with emissions. FTA said that payload capability (mass and/or volume) should be
factored in [though it was not clear whether as an alternative to RM or additional to it].
SMMT and GM did not agree with the 'autonomous mass increase' (AMI) provision.

16 Do you think that in the longer term GVW5 or payload mass might prove to be a
   more attractive parameter? How do you view the future possibility of changing to a
   footprint-based system?

There were three responses addressing this issue, one of which is described under question
15. SMMT and GM did "not see this as a priority at present", and were wary of the impact
on manufacturers if there was insufficient lead-in to a change of parameter. GM additionally
believed that footprint could disadvantage front-wheel-drive vehicles, could decrease product
diversity, and might interact with the greater push to pedestrian protection on vehicles [not
specified how].

17 Do you have any evidence that a 100% slope is likely to lead to perverse effects such
   as adding mass to vans, running extra vehicles, or shifting to HGVs?

There were three responses to this question, all simply agreeing with a 100% slope.

18 Do you believe that the lack of certainty on the overall target parameter could be a
   problem under the utility approach? How could it be mitigated?

There were two responses, from SMMT and GM. These actually related to AMI (from
question 15) and its effects on certainty for manufacturers. They saw the provision as
unnecessary, as they argued there was unlikely to be any mass increase (diesel prevalence
could not get any higher, and manufacturers would in fact be lightweighting their vehicles so
as to meet targets). Moreover, AMI did not take account of individual manufacturer efforts
on mass, so would be unfair to manufacturers that decreased their vehicle masses if the
market as a whole got heavier.

19 Do you agree with the UK analysis on the margin by which the near-term target is
   expected to be missed? If not, please provide evidence to suggest otherwise.

There were four responses to this question. EST and FTA agreed—the latter stressing that
increased vehicle costs due to covering penalties would be unfavourable to buyers as the
additional cost would not be fully compensated for by owning 'better' vehicles. The other
two—SMMT and GM—believed that manufacturers would make improvements rather than
pay penalties (this was expanded on under question 20).

20 Do you agree with our assumption that manufacturers will pay the penalty rather
   than improving fuel efficiency if it is cheaper to pay the penalty?

Six responses addressed this issue. Four agreed to at least some extent, although MTP and
SEPA believed that potential damage to a manufacturer’s reputation from being seen not to
comply with legislative targets and the possible impact of this on consumer choices could
play a role in ensuring manufacturers comply even when it would be cheaper not to. These

5
    Gross vehicle weight—maximum permissible mass of vehicle inclusive of load


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'soft' factors were also highlighted by those who disagreed with the assumption—SMMT and
GM—who added the 'culture of compliance' of the automotive sector and a long-term loss of
competitiveness that would result if improvements were not invested in.

21 Do you agree with our assessment that the penalty regime in the draft regulation will
   decrease the chance of the target being met in the proposed timescale?

There were six responses covering this issue. Three agreed expressly or impliedly, in one
case expressly linking it back to question six. Another suggested further analysis to help
arrive at an ideal combination of penalty level and other factors. The two disagreeing
(SMMT and GM) linked their answers to their responses to question 20.

22 Do you agree with the modulation of the penalties? Do you agree that modulation to
   only 1g/km provides a better balance between ensuring compliance and avoiding
   punitive penalties?

There were five responses to this question. Three agreed with the UK approach. SMMT and
GM, by contrast, said that while the modulation provision was "complex", they were content
that it was "known and workable".

23 Do you agree with the inclusion of a derogation for small volume manufacturers?

There were five responses to this question. All agreed, although MTP wanted to ensure
transparency on the targets agreed under the derogation. SMMT and GM stressed how
necessary it was and its expected limited environmental impact. However, they also said that
the derogation's usefulness would depend on the practical details of its operation being
resolved quickly after the regulation was agreed.

24 Do you agree that the level of 22,000 vehicles is appropriate? If not, please state
   whether the level should be higher or lower and why.

There were five responses to this question. Two agreed with the proposed limit, with another
(EST) accepting it but only as a definite maximum. SMMT and GM thought that it could
possibly be increased to 30,000: this would make the threshold comparable with the
derogation threshold in the new car CO2 Regulation and would allow manufacturers more
room to grow, while only adding one manufacturer to eligibility for the derogation.

25 Do you agree that multi-stage vehicles should be included within this regulation?

There were six responses to this question, all but one agreeing at least in principle. The
exception (Toyota) pointed out that this sub-sector had not been included in the
Commission's Impact Assessment, no appropriate approach for including such vehicles yet
existed, and manufacturer responsibility for emissions had not yet been made clear.

GM and SMMT believed MSVs should be included "if a fair solution could be found",
pointing to their significance in the market (11-18% prevalence in the UK, 15-16% in the EU
as a whole). MTP agreed that their treatment would need careful thought. SEPA and EST
stressed the importance of every segment playing its part in carbon dioxide reductions, the
latter particularly picking up on the potential for a loophole if MSVs were not included.



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26 Which party do you believe should be held 'responsible' for the emissions from a
   MSV?

There were five responses that touched on this issue in some way. SMMT and the vehicle
manufacturers saw it more as a question of the base manufacturer not being held responsible
for the completed vehicle, and that industry was working on a solution.

MTP believed that while the base manufacturer should bear responsibility, this should only
be for the chassis-cab vehicle, and that such vehicles should have a separate mass-emissions
target line from complete vehicles. EST had different priorities: both elements of the vehicle
should be designed efficiently, and it favoured the manufacturer having the choice of either
following the Commission's original proposal, ie to use a complete vehicle CO2 value as
proxy6, or testing the completed vehicle.

27 Do you agree that the Commission’s approach7 risks unfairly penalising this sector
   of the market? If so, what do you think is the most appropriate alternative approach
   to address multistage vehicles in this regulation?

There were three responses broadly covering this question, from SMMT and the vehicle
manufacturers. These agreed that some manufacturers could be affected more than others,
and that it would be necessary to take account of situations where the end-vehicle represented
a modification beyond the scope of what the base manufacturer had intended. While the
solution was ultimately up to the Commission, several criteria were important:
responsibilities should be in line with the Type Approval regime, the solution should be
simple to monitor and final-vehicle information sufficiently available for the base
manufacturer. As manufacturers would not receive information on vehicles until 2015,
completed vehicles should not be treated as in scope until 2016 (two respondents). The
implication of the third respondent (Toyota) was that while this matter "needed addressing",
the sub-sector should not be included in the Regulation for now.

28 Given that reference mass is an important feature of this regulation, which mass
   figure do you believe should be recorded for a MSV for the purposes of assessing its
   CO2 emissions?

Three responses touched on this issue. The one from MTP linked back to its answer to
question 26: the chassis-cab mass should be used, with a target line for this purpose. The
ones from SMMT and GM reiterated the importance of access to data and that industry was
working towards a solution.

29 Do you believe that 'pooling' represents a useful flexibility?




6
  The Commission has since supported a different parameter as an interim measure—the mass and emissions of
the chassis-cab vehicle—in the face of opposition from many Member States and manufacturers to the proxy
complete vehicle approach.
7
  As noted above, the original proposal—current at the time the consultation was launched, and therefore the one
which is the "approach" referred to—was to use the highest or second-highest CO2 value of complete vehicles
upon whose chassis the completed, multi-stage vehicle was based. The chassis-cab interim approach started to
be proposed in late March.


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There were four responses to this question, none especially positive. SMMT and GM
believed that it could, but only between connected manufacturers. They were concerned that
the existence of the provision could be used as an 'excuse' to set unworkable targets.

Conversely, EST and SEPA saw the provision as possibly working too well, in terms of
undermining the penalty regime as a compliance mechanism and reducing the impetus to
develop new technology.

30 Do you believe in principle that eco-innovations should be included in the proposal?
   If so, should the provision be as currently proposed?

There were six responses to this question. Four respondents (SMMT, the vehicle
manufacturers and MTP) supported the provision as proposed, Toyota being keen that the
process to get an eco-innovation agreed should be integrated with the one [then under
discussion] for cars. SEPA agreed with the provision, so long as actual emissions savings
were realised and "environmental objectives were not compromised". EST believed that
there should be an incentive of some kind, but the targets themselves should reflect the test-
cycle only, the eco-innovation provision being liable to water them down.

31 Do you agree with the principle of super-credits? If so, what should be their
   parameters (threshold g/km, amount of multiple, number of years the provision is
   available)? Please explain your reasoning.

There were seven responses on this issue. All but one saw some kind of incentive as
desirable. The exception (Greenpeace) said that super-credits should be "scrapped" entirely,
on the basis that there had been no proper analysis of their environmental effect. According
to this response, the provision also risked manufacturers not making improvements to their
mainstream vehicles: the response included graphs showing this effect (and referenced a
study with the same conclusions by CE Delft). Greenpeace argued that the 'headline' targets
(particularly the 2020 one) would play the more significant role in developing electric/very
low-emitting vehicles.

EST, SEPA and MTP shared some of this wariness, being concerned at the effect on
improvements to mainstream vehicles and highlighting a need for better evidence before
more generous terms (extension and/or credit multiple) were sought. Toyota supported the
principle but believed that the credit threshold should be relative to the specific emissions of
the vehicle in question rather than a standard sub-50g/km for all vehicles. GM and SMMT
favoured an extension to 2025, with a flat multiple of two, with the threshold of eligibility for
super-credits being again relative to each vehicle's specific emissions target. These
respondents cited the long timescale for developing genuinely new technologies plus
ensuring smooth demand, and the need for a worthwhile credit multiple given that the
technologies would still be risky and/or expensive.

32 Do you agree with the competition and small firms impact assessments?

There were no responses to this question.

33 Do you agree with the gender, race equality and disability assessments? Do you have
   any evidence to show the potential impact of the regulation on these groups?



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There were no responses to this question.

34 In addition to the questions asked in relation to specific topics, do you have any
   further/general comments that you would like to make regarding the proposed
   regulation?

Remarks covering points not addressed in the first 33 questions were made by all
respondents, either generally or expressly in answer to this question. Since they were very
wide-ranging, they have been grouped as follows:

GENERAL APPROACH: EPUK-FoE objected to the lack of consideration of more stringent
targets in the consultation, while SEPA welcomed the proposal. FTA generally welcomed
the UK view, and would welcome a regulation if decreased fuel use benefited its members;
however, it was wary of relying too heavily on applying car principles to vans in the
regulation. One vehicle manufacturer supported the regulation in principle, but definitely not
the 2020 target (and this latter sentiment was also reflected by SMMT). There was also
reiteration of the importance of sufficient power and load capacity for the van-buyer.

ANALYSIS: Greenpeace and EPUK-FoE believed this should have been carried out on
possible more stringent targets and supercredits, and EST that more diverse fuel prices should
have been included (which would possibly have shown a shorter payback time for vehicle
improvements).

POOLING: Toyota proposed that joint compliance between the van and car CO2 regulation
should be possible via a "credit transfer" mechanism.

PENALTIES: Toyota said that the unit level of the penalty should be "in line with other
sectors, for example the car CO2 regulation" [ie €95].

WIDER VEHICLE ISSUES: FTA believed that more account should be taken of how
loading affects emissions (given that vehicles are CO2-tested unladen), especially if the scope
was extended to M2/N2.

SPEED LIMITERS: These have been proposed in the European Parliament since the
consultation paper was published. A respondent of unknown type (PWR Ltd) believed that
they should be brought in as mandatory alongside the CO2 regulation in some way.
Greenpeace saw their CO2 benefit as a double-effect: not only were emissions lower at lower
speeds, but the reduction in engine power as speed capability was less designed-for would
also reduce g/km emissions. Speed limiters would also give air quality, safety and reduced
maintenance cost benefits. Against this, SMMT and GM saw few benefits (rather, a negative
effect on traffic flow) and pointed out that an Impact Assessment would be needed. They
believed that mandating speed limiters would encourage van users to keep their old vehicles,
with worse environmental and safety effects than if they had been replaced, and a knock-on
effect on manufacturers and their funding of improvements. They were also wary of 'mission
creep', in what was actually a measure aimed at safety being introduced via environmental
legislation

OTHER VEHICLES, INTEGRATED APPROACH: SEPA believed that similar legislation
for buses and/or HGVs would be a step forward. SMMT and the vehicle manufacturers saw



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                                        responses
important emissions gains to be made from improved infrastructure, eco-driving, taxation,
labelling and including "the efforts of…fuel companies".

EFFECT ON OTHER POLICIES: SEPA stressed that CO2 targets should not result in a delay
to air quality improvements or worsen the emissions record of other greenhouse gases.


Government response
In the months after this consultation was held, the European institutions approached this
dossier with renewed urgency to achieve a resolution. This was necessary and desirable from
the twin perspectives of planning certainty (and therefore better cost-effectiveness) for
industry and greater certainty of meeting environmental targets if compliance can be planned
soon.

The UK contributed to these negotiations based on our priorities, informed by the responses
set out in the consultation response. Agreement in principle on the dossier was reached in
December 2010. Although this is still subject to ratification by the European Parliament and
the Council in early 2011, it is anticipated that the regulation will come into force during
2011.

The most important factor in the consultation responses and European discussions has been
the long-term target: the support across all respondent types in the consultation for including
this in the regulation echoes our own prioritisation of it. However, there was considerable
variation in what respondents deemed an appropriate target. In the light of these and the
Impact Assessment, our view was that 135g/km in 2022 would achieve the right balance
between ambition and achievability. Although this is our preference, European negotiations
are based on consensus and a majority of Member States preferred retaining a target in 2020.
On this basis we could accept a target of around 145g/km in 2020 as this would put emissions
reductions on a similar trajectory to our preferred target. It appears likely that the final long-
term target will be 147g/km in 2020, which is acceptable as the emissions reduction
trajectory is sufficiently close to our preferred option.

As the diversity of opinions on the near-term target reflected, this was also an issue
requiring a careful balancing of factors (environmental, technical and economic). This led to
our preference for a target of 175g/km in 2016, without a phase-in—in order to best fit van
development cycles while retaining environmental ambition. However, it appears likely now
that the agreed near-term target will be 175g/km phased in from 2014 to 2017.

On penalties and compliance, our analysis suggested that a headline penalty level of less
than €120, especially in combination with the 3g/km 'modulation corridor' proposed, might
not reliably deliver the emissions savings being sought. Responses were divided between
those that agreed with this view and those who felt the proposed penalties were punitive.
Based on this we favoured the more cautious approach of supporting penalties of €120 but
with only a 1g/km ‘modulation corridor’. However, it appears likely that the final regulation
will retain the modulation corridor and have a headline penalty level of €95.

Responses on the small-volume derogation confirmed our view that this is an important
element of the Regulation. Our belief has been that the 22,000-vehicle threshold was about
the right one, and the final regulation appears likely to include this provision. An aspect


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                                        responses
highlighted in one consultation response was that timely practical implementation of the
derogation, once agreed, would be very important to enable manufacturers to begin to plan
their compliance. We agree with this, and believe that the Commission should look to apply
as much of the recently agreed process for the small volume derogation from the new car CO2
derogation as possible to vans to expedite the agreement of the detailed process.

While opinions on multi-stage vehicles are divergent according to responses received on this
topic, it can be generally agreed that ensuring they are treated appropriately is important.
Crucial in our view to this approach was that this sub-sector should not be discriminated
against, nor conversely treated too leniently, nor for it to become a loophole that would
undermine compliance with the Regulation as a whole. We have also been mindful that the
solution should not entail an administrative burden. The final regulation looks likely to set
time limits and parameters for a substantive solution to be found, and we will continue to
work with the Commission and other Member States to this end.

On super-credits, we have been mindful of the possible distortions that some consultation
respondents raised. However, during negotiations we have been supportive of including a
super-credit provision in the regulation, believing the effect it will have on recorded (versus
actual) emissions for its duration to be small and easily outweighed by the advance of low-
emitting technologies the provision will encourage—potentially allowing more significant
CO2 reductions over the medium-long term than would otherwise be the case. We are happy
to see that the final agreement looks likely to include a super-credit provision that offers an
appropriate incentive to manufacturers in terms of duration and degree of multiple.

Speed limiters were raised by a number of respondents (and subsequently proposed by the
European Parliament). However, our view was that an environmental regulation would not
be the correct place to legislate on what is principally an issue of safety. In the event, it does
not look as though this will be taken forward in the final regulation.

Another issue mentioned in a consultation response and subsequently proposed in the
European Parliament was 'credit transfer' between this Regulation and the new car CO2
Regulation. This would have allowed a given manufacturer to offset its performance on the
latter against the former. Again, this issue is unlikely to be included in the final regulation.

The balance of responses around utility topics tended to confirm our inclination that this was
an area that the Commission's draft of the regulation had broadly right. The provisions on
utility in the final regulation appear likely to remain substantively unchanged.

Finally, we were concerned about the possible extension of scope outside N1 vehicles
proposed in the draft regulation—to M2 and N2 vehicles—due to a lack of data and
consideration of impacts on these sub-sectors. We welcome the fact that the final regulation
appears likely to mean that such an inclusion would require a formal regulatory proposal, and
would be for target compliance from 2020 rather than the earliest phase of the targets.




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 Consultation on European regulation on new van CO2 emissions - summary of consultation
                                        responses


Annex A: details of respondents

Name                                           Type
PWR Ltd                                        Unknown
Energy Saving Trust (EST)                      Environmental interest
Merseyside Transport Partnership (MTP)         Transport partnership
Scottish Environment Protection Agency         Environmental interest
(SEPA)
Freight Transport Association (FTA)            Non-vehicle industry association
Toyota                                         Vehicle manufacturer
Greenpeace                                     Environmental interest
Environmental Protection UK and Friends of     Environmental interest
the Earth (EPUK-FoE)
Society of Motor Manufacturers and Traders     Motor industry association
(SMMT)
General Motors (GM)                            Vehicle manufacturer




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