CO2 regulation in Europe

A compendium – Version 3.5

Thomas Puls

CO2 regulation in Europe

Chapter overview

Megatrends

CO2 emissions

(Slides 5–12)

Fuels

(Slides 13–17)

Globalisation

(Slides 18–22)

Political framework

Climate policy

(Slides 24–31)

Regulation density and conflicting goals

(Slides 32–38)

Transportation sector

Transportation today

(Slides 40–47)

CO2 emissions on the road

(Slides 48–54)

Efficiency on the road

(Slides 55–63)

Regulation on the road

(Slides 64–71)

Other sectors

Electricity

(Slides 72–78)

Industry

(Slides 79–82)

Households

(Slides 83–86)

Outlook

Limits of the system

(Slides 88–93)

Alternatives

(Slides 94–98)

Fourteen core theses

(Slides 99–133)

CO2 Regulation in Europe

Page 2

The core theses: Brief overview

Climate protection

1. Europe’s share of the worldwide CO2 emissions is low and continuously decreasing. (100)

2. No solution without China: Europe’s reduction of emissions is being eaten up by growth in emerging economies. (103)

3. Motor vehicles account for approximately one-seventh of the CO2 emissions in the EU. Their share in transportation emissions is declining. (106)

CO2 regulation for motor vehicles

4. New vehicles in Europe have become considerably more efficient in recent years. (108)

6. Europe has once again tightened the reins on the CO2 limit values for motor vehicles and is requiring a further reduction of CO2 within an even shorter span of time. (112)

5. CO2 legislation in Europe shows the most stringent target values in an international comparison. (110)

8. Vehicle fleet limit values under 95 grams cannot be achieved with conventional engine types, and the market success of alternative engine types is still uncertain. (116)

7. Even without a further tightening of the CO2 limit values after 2020, the motor vehicle industry is still on track to meet the EU’s climate policy targets by 2030. (114)

9. EU environmental legislation is not coherent and, for a long time, had other priorities than CO2 reduction. This had various consequences, including an increase of CO2 emissions. (119)

10. Today’s CO2 laws regulate only new vehicles, completely disregarding the remaining vehicle fleet. (122)

11. An effective reduction of CO2 emissions cannot address new vehicles alone but must take a much broader approach. (124)

Balance between climate protection and industrial policy

12. The EU is targeting a 20% industry share of GDP for the year 2020. This goal is presently a long way away, since industrial and climate protection policy are not yet aligned. (126)

13. The CO2 abatement costs vary greatly between sectors and are most pronounced in the automotive sector. (129)

14. Emissions trading as the most economically efficient form of CO2

regulation can easily be applied to road traffic. (131)

Page 3


Megatrends »

Political framework »

Transportation sector »

Other sectors »

Outlook »

Megatrends

CO2 emissions GlobalisationFuels


Page 4

Megatrends

CO2 emissions Fuels Globalisation Political framework Transportation sector Other sectors Outlook

The carbon cycle

Atmosphere 750

Soil 1,580

Surface water 1,020

Sediments 150

Deep sea 38,100

Photosynthesis

and respiration Combustion

Gas exchange

between the ocean

and atmosphere

Dissolved

organic carbon

< 700

Sea organisms 3

Carbon reservoirs,

in billions of tonnes

Vegetation 610Fossil fuels and

cement production 4,000


Page 5 5

Megatrends


CO2 emissions: Europe’s share sharply decreasing

20,623 23,973

Emissions from fuel use, in millions of tonnes

► Compared to the year 1990,

the absolute CO2 emissions

are decreasing in the EU

only. Between 1990 and 2014

the EU decreased the

emissions by 864 Million tons.

► In Asia in particular,

emissions are rapidly

increasing except for Japan.

► The impact of European

regulations on global CO2

emissions continues to

decline.

+

Source: IEA, CO2 Emissions from Fuel Combustion – 2016

32,190

10,3% 14,8%

28,2%

23,4%23,2%

16,0%

19,6%16,1%

9,8%

46,7% 45,9% 46,0%

1990 2001 2014

China USA EU Rest of the world


Page 6

Megatrends


Reduction in Europe, strong increase in Asia

Emissions from fuel use* – Changes between 1990 and 2014, in millions of

tonnes

► While China shows an

increase of 333 per cent

during the years 1990–2012,

the EU shows a decrease of

21,5 per cent.

► The gap is expanding: in 2014

alone, China’s emissions

increased by 110 million

tonnes while the EU’s

decreased by 188 Million tons.

► India increased it’s emissions

in 2014 by 170 million tonnes.

The increase is bigger than in

China..

+


-863,8

+1,489,3

+7,025,7

EU India China

* Corresponding to category 1A according to the UNFCCC classification system


Page 7

EU passenger cars: Relevant, yet not crucial

CO2 emissions, in millions of tonnes

► Relevant: Europe’s total

passenger car traffic for 2014

showed a downwards trend,

emitting about 510 million

tonnes of CO2EQ.

► Crucial? China, on the other

hand, is showing a strong

upwards trend in its use of

fossil fuels – emitting nearly

526 million tonnes of CO2 in

just three weeks.

► Dynamic: Between the years

1990 and 2014, CO2

emissions from China’s road

traffic increased by 912 per

cent.

+

Sources: EEA, 2016; IEA, CO2 Emissions from Fuel Combustion – 2016

450

554

516

63

372

639

121

375

526

1990 2007 2014 1990 2007 2014 1990 2007 2014

EU

Passenger car traffic

China

Road traffic

China

CO2 emissions in 21 days


Page 8 Megatrends


Megatrends


10 countries, two-thirds of the CO2 emissions


507

555

556

568

723

1.189

1.468

2.020

5.176

9.135

Saudi Arabia

Canada

Iran

Korea

Germany

Japan

Russia

India

USA

China

CO2 emissions for the year 2014, in millions of tonnes


Page 9

Megatrends


CO2 emissions in the EU 28

31,4%

21,8%9,4%

13,0%

11,0%

13,5%

* For information only; ** Not including international air and maritime traffic. These are not classified as national emissions in the context of the Kyoto report.

Sources: EEA, 2016

Generation

of heat

and energy

Industry

Passenger

cars

Other

sectors

Agriculture

Figures for 2014, as percentage

Transportation sector by mode of transport

7,2%11,8%

46% 41%

29% 31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990 2014

Commercial vehicles

Cars

Civil aviation (national)

Rail transport

Waterway transport

Other

Int. aviation*

Int. seafaring*

Emissions according to sector

Other modes of

transport**


Page 10

Megatrends


Sector development

Source: EEA, 2016

Greenhouse gas emissions in the EU 28 by sector, in millions of tonnes

► Split development after the fall of the

Iron Curtain

► Traffic emissions increased quickly

after 1990, since Eastern Europe

was integrated into the European

Economic Area. Emissions have

been decreasing since 2007, even in

the transportation sector.

► In the early 1990s, considerable

reductions were visible in the

industry and energy generation

sectors. Their emissions levels

stagnated until around 2007, then

dropped with the economic crisis.

+

1.659 1.6171.246

1.3761.098

866

785987

889

643522

514

523441

378

0

1.000

2.000

3.000

4.000

5.000

6.000

1990 2007 2014

Other

Households

Agriculture

Transportation

Industry andconstruction

Power generation

5,410

4,848

3,974

-10%


Page 11

Summary: CO2 emissions

► Global CO2 emissions are continuously increasing, especially in Asia.

► CO2 emissions are declining only in Europe.

► The reduction of emissions in Europe is hardly significant when viewed

against the increase of emissions in Asia.

► Today, European regulations have relatively little influence on global CO2

emissions, and the influence is continuing to decline.

► From the perspective of climate research, it is the overall volume of

emissions at the global level which is relevant. The country or specific source

of the emissions is essentially insignificant.

Megatrends



12

Fuels: Well-to-wheel emissions are what counts.Comparison of emissions and alternative fuels

Price

in euros

per 100 km

Super E5 (conventional) 4.9 l 1.60 € l 115.72 144.93 7.83 €

Diesel (conventional) 3.9 l 1.43 € l 102.86 128.74 5.57 €

PHEV (petrol) 49.59 100.28 5.18 € (petrol consumption) 4.2 l 1.60 € l 99.19 124.23 6.71 €

(electricity consumption) 12.7 KW/h 0.29 € KW/h 0.00 76.33 3.66 €

LPG (remote) 6.4 l 0.78 € l 104.37 127.93 4.97 €

Natural gas (H gas, EU mix) 3.5 Kg 1.11 € Kg 88.90 109.42 3.88 €

Electricity (D mix 2012) 12.7 KW/h 0.29 € KW/h 0.00 76.33 3.66 €

Hydrogen (EU mix) 0.97 Kg 8.09 € Kg 0.00 134.20 7.85 €

Bioethanol E85 (wood) 5.88 l 1.12 € l 112.31 35.91 6.56 €

Bioethanol E85 (grain) 5.88 l 1.12 € l 112.31 119.69 6.56 €

Biodiesel B100 (rapeseed) 4.29 l 1.50 € l 121.41 85.99 6.44 €

Electricity (regenerative) 12.7 KW/h 0.29 € KW/h 0.00 5.33 3.66 €

Fuel

Consump-

tionper 100 km

(vehicle from

compact class in the

NEDC)

Priceper

TTW CO2

emissions

in g CO2/km

WTW CO2

emissions

in g CO2eq/km

Not re

genera

tive

Regenera

tive

Sources: JRC 2014, own calculations TTW: tank-to-wheel; WTW: well-to-wheel; CO2eq: CO2 equivalents


Megatrends


Page 13

Raw materials: The EU’s high dependence on imports

Source: European Commission

► Scarce reserves: The

EU has only 1–3 per

cent of the reserves of

fossil primary energy

carriers.

► Depletion: European

production of oil and

gas is declining.

► Problem: Even if

consumption is

decreasing, there is a

political dependence on

fuel-producing

countries.

+

European sources cannot cover the EU’s oil and gas consumption needs.

82% 84%

93% 94%

58%62%

76%

83%

2005 2008 2020 2030

Oil Gas


Megatrends


Page 14

Share of imported primary energy carriers

in overall consumption, as percentage

+

Quelle: Bloomberg, Baker Hughes


Seite 15

High oil prices: Incentive for more efficient motor vehicles

► Oil prices have greatly increased from the year 2000 till 2014.

► As a result of fracking in the USA, oil prices started to diverge in 2010.

► The supply side in the US is strongly linked with oil prices. Rising prices lead to an

increase in active oil rigs and vice versa.

Sharp drop in the fourth quarter of 2014

in US dollars

But the supply is already declining

Number of active drilling towers in the USA

Megatrends


0

20

40

60

80

100

120

140

160Brent WTI

0

200

400

600

800

1000

1200

1400

1600

1800

Fossil energy in the USA: Fracking has changed the rules of the game.

Sources: World Bank, Economic Monitor (GEM) Commodities, 2014; IEA, World Energy Statistics

► Fracking has strongly impacted the world market for fossil fuels.

► The USA has greatly increased its domestic production of oil and natural gas.

► Economical: In 2014, the gas price in the USA amounted to only 43.68 per cent of the price in Europe.

► Independency: This greatly reduced the USA’s need to import fuel.

+

0

50

100

150

200

250

300

350

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Natural gas production

Oil production

Natural gas import

Oil import

0

100

200

300

400

500

600

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Europe

USA

Gas price

in US dollar per

1,000m3

US production and import of oil and natural gas

Index, 1990 = 100

+42%

+73%

-42%

-31%


Megatrends


Page 16

Summary: Fuels

► Various fuel types reveal a very different carbon footprint in the well-to-wheel

analysis. Today, electricity and natural gas are the alternatives with the most

favourable ratio of emission reductions to fuel costs.

► The EU has a very high rate of dependence on imported energy carriers. This

leads to cases of political dependence. Avoiding such dependencies is a key

driver for European policy in the field of primary energy supply.

► The development of oil prices creates innovative pressure on motor vehicle

manufacturers, since fuel consumption is a key selling point. Even without

regulation measures, customers would increasingly demand efficient vehicles.

Megatrends



17

The weights are shifting in the world GDP.1991–2014, as percentage

0

5

10

15

20

25

30

35

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

USA

China

Japan

Germany

EU 15 without Germany

0

10

20

30

40

50

60

70

80

90

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

OECD countries

Newly industrialised and emergingeconomies

► The dominance of the industrialised countries is crumbling.

► China’s significance is rapidly growing.

+

* Partly estimates or forecasts by the IMF

Source: International Monetary Fund, World Economic Outlook 95

Share of the world GDP*

as percentage

Share of the world GDP*

as percentage


Megatrends


Page 18

2,0

1,6

1,7

2,3

1,2

6,4

2,6

7,6

5,1

2,3

1,7

1,7

3,0

1,0

6,1

3,0

7,7

5,3

2017 2018

The catching-up process continues.Growth rates by region, as percentage

Source: International Monetary Fund, World Economic Outlook 95

OECD

Euro Zone

Germany

USA

UK

China

South Korea

Indonesia

► Global growth

remains focused

on Asia.

► Growth in OECD

countries

continues to

decline.

+


Megatrends


Page 19

India

Direct investments propel globalisation.

Index for economic relations, 1980 = 100

Source: UNCTAD

► Globalisation means the

establishment of global

production structures

through direct

investments.

► Since 1980, the

inventory of direct

investments has grown

at least five times as

fast as international

trade.

► Approximately one-third

of international trade is

already taking place in

corporate networks.

+

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

Global GDP (nominal) Global direct investment stocks

Global exports

+4481%

+930%

+662%


Megatrends


Page 20

Level and dynamics of location qualityThe location advantage of many OECD countries is shrinking:

Source: IW Consult (2014)

China

Czech RepublicFrance

Germany

Italy

Japan

Korea Sweden

UK

USA

60

70

80

90

100

110

120

130

140

60 70 80 90 100 110 120 130 140

Dynamics index

1995–2013

Level index 2013

Average

Aver-

age

Weak and catching up Strong and progressing

Weak and regressing Strong and regressing

► China is catching

up to the

established

industrialised

countries in

terms of quality.

► Based on the

global average,

many OECD

locations have

rested on their

strong position

since 1995.

+


Megatrends


Page 21

Summary: Globalisation

► The emphasis of the world economy is shifting more and more towards Asia.

► This trend is being fuelled by the establishment of production locations near

the market.

► Already today, the European locations are in strong competition with the

countries in the growth regions, and many European locations are losing

ground.

► The significance of regulation in Europe is declining with the significance of the

European economies.

► If European industrial locations are to survive in terms of global competition,

the EU must provide better local conditions.

Megatrends



22

Megatrends »



Other sectors »

Outlook »

Political framework

Climate policy Regulation density and conflicting goals


Page 23

► Almost all of the

world’s nations

entered into the

Kyoto

agreement.

+

Kyoto Protocol:Only Europe really joined in.

Kyoto signatories


Political framework

Climate policy Transportation sector Other sectors OutlookMegatrends


Page 24

+► Almost all of the

world’s nations

entered into the

Kyoto

agreement.

► Only a few

countries

accepted

emission

targets.


Kyoto signatories

with emission target


Page 25


Political framework


► Almost all of the

world’s nations

entered into the

Kyoto agreement.

► Only a few

countries

accepted

emission targets.

► Soft targets, in

some cases:

countries of the

former Eastern

bloc merely aimed

to not exceed their

figures from 1990.

+


Kyoto signatories

who kept their emission target


Page 26


Political framework


The EU plans to clearly increase its pace.

Stipulated reduction compared to 2005, as percentage

► After 2020, the

non-ETS sector

is expected to

reduce twice as

much in 10 years

as it did during

the previous 15.

► The cost per

reduced tonne of

CO2 will increase

considerably.

+

2020

2030

-21% -10%

-43% -30%

-12%

-34%

ETS*

sector

Non-ETS

sector

EU GHG

target(Base: 2005)

Emissions trading

Establishment

of a market

stabilisation

reserve

Avoidance of

relocation effects

* Emissions trading system

Sources: EU, UNFCCC

How? Incorporating

binding national

targets

Supporting

measures,

e.g. emissions

standards


Page 27


Political framework


The EU moves forward undeterred.

Sources: BMWi, UBA, AGEB

The EU’s long-term targets, as percentage; base year 1990

-20%

20%

-20%

-21%

21%

-17%

-40%

27%

-27%

Target 2020 Forecast 2020 Proposal 2030

► The European

Commission

predicts that the

climate targets for

2020 will largely

be reached.

► Even if the rest of

the world has not

joined in so far,

the EU plans to

increase its

targets

considerably after

2020.

+Reduction of

greenhouse gas

emissions

Market share of renewable

energy on gross final

energy consumption

Efficiency target:

reduction of energy

consumption per unit

of GDP


Page 28


Political framework


Ten years faster: The German federal government exceeds EU targets:

Sources: BMWi, UBA, AGEB

German federal government reduction targets, as percentage; base year 1990

-28%

14%

-8%

-40%

18%

-20%

-55%

30%

Status in 2014 Target 2020 Proposal 2030

► The German

federal govern-

ment is currently

demanding addi-

tional efforts to

reach the target

for 2020.

► For the period

after 2020, the

stipulated pace of

change will

be dramatically

increased.

+Reduction of

greenhouse gas

emissions

Market share of renewable energy

on gross final energy consumption

Reduction of

primary energy

consumption

compared to 2008


Page 29


Political framework


Buildings and traffic

Sources: BMWi, Cologne Institute for Economic Research (IW Köln), KBA, UNFCCC

German federal government reduction targets, as percentage

-20%

2%

-10%

1,000,000

-4%

1%

1%

18.948

Target 2020 Status in 2014

► The target value

for road traffic is

136–141 million

tonnes of CO2;

value in 2014:

153 million

tonnes of CO2.

► The building

sector will likely

miss its target

considerably.

► In January 2016,

25,602 electric

cars were

licensed.

+

Number of electric cars

Final energy

consumption

Rate of renovation p.a.

Energy demand compared to 2008

Bu

ild

ing

sT

raff

icCO2 Regulation in Europe

Page 30


Political framework


Summary: Climate policy

► Global climate policy is currently experiencing a crisis.

► The EU enthusiastically advanced in the Kyoto process, but no one followed.

Outside the EU, only the transition countries met their targets, which were very

soft in the first place.

► The EU will reach its climate targets – even after the economic distortions

following 2008 – and plans to considerably increase its pace in climate

protection in the period after 2020.

► The federal government wants to go further than the EU. While traffic emissions

are essentially on track, areas such as the building sector are far from being

able to reach its targets.

Political framework

Climate policy Regulation density and conflicting goals Transportation sector Other sectors OutlookMegatrends


31

The regulatory density in Europe is very high and is becoming even denser.

Number of EU regulations on health, safety and the environment

940998

1.084997

1.105

1.223

1.386

1.560

1.724

2004 2005 2006 2007 2008 2009 2010 2011 2012

► The already

high regulatory density

in the EU continues to

increase.

► The EU’s various

targets and regulations

have a tendency to

contradict each other.

► Principally, better

regulation is needed in

order to pursue all of

the targets.

+

Source: EU

Political framework



Page 32

The EU industrial sector: Collapse rather than rebirth

► EU target: The

industrial sector is

expected to have a

20 per cent share of

the GDP in 2020.

► Germany is

reaching this target.

The UK, Italy and

France give cause

for concern.

► Countries outside of

Europe are

improving quickly.

Europe must

respond in order to

secure its position.

+The manufacturing industry’s share of the gross value, as percentage

8%

10%

12%

14%

16%

18%

20%

22%

24%

2000 2002 2004 2006 2008 2010 2012 2014

Germany Spain France Italy UK EU 28

EU target

for 2020

Source: Eurostat


Page 33 Political framework


Progress in noise and safety targets

► Since 1990, the EU has shown considerable progress and has set ambitious regulations

concerning noise emissions and safety.

► Additional sound reduction and safety devices bring extra weight and changes to the car

body.

► The further targets result in a measurable overconsumption of new vehicles.

+

Noise targets: Noise emissions are expected to

decline by up to 75 per centEU vehicle noise limit values in dB (A)

Sources: EU, Eurostat

Traffic safety: Ambitious targetsRoad traffic fatalities in the EU 27 countries

75.400

54.000

26.000

15.500

1991 2001 2015 Target 2020

-28%

-52%

-40%

65

70

75

80

85

90

1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

2016

new

measurement process

Trucks > 150 kW

Trucks 75–150 kW

Trucks < 75 kW

Cars

MotorcycleTrucks > 12 t, > 250 kW

Trucks > 12 t, 150–250 kWTrucks > 12 t, < 150 kWTrucks 3.5–12 t, > 135 kW

Trucks 3.5–12 t, < 135 kW

Cars > 200 kW, < 4 seatsCars > 160 kW

Cars 120–160 kW

Cars < 120 kW

A reduction by 3 dB

always represents

a halving of the

measurable

sound.

80 dB88 dB




Road traffic has become cleaner, despite the increase in traffic volume.

► Since the end of the 80s, policies have focused on the reduction of pollutants. Pollutants

are substances that, upon direct contact, are harmful to a person’s health. By this

definition, the greenhouse gas CO2 is not a pollutant.

► Even with the increased road performance of motor vehicles, their exhaust emissions have

significantly declined.

+

Source: EU (TREMOVE)

Exhaust emissions in the EU 27, in tonnes

Nitrogen oxide (NOx) Particulate matter (PM)

0

1.000.000

2.000.000

3.000.000

4.000.000

5.000.000

6.000.000

2000 2010 Forecast 2020

0

50.000

100.000

150.000

200.000

250.000

2000 2010 Forecast 2020

Cars

Trucks > 7.5 t

Other

-42%

-28%

-34%

-54%

-36%

-37%

-62%

-58%

-58%

-41%

-58%

-61%




Real-Driving-Emissions NOx – Fast progress

Quelle: ICCT, 2014; Kraftfahrtbundesamt (KBA), 2016, Deutsche Umwelthilfe (DUH), 2016, Auto Motor Sport (AMS), 2015; Auto Motor Sport (AMS), 2016; Bosch

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1

Euro 3 Euro 4 Euro 5 Euro 6

EU Grenzwert (Labor) ICCT (2014)

KBA (04.2016) DUH (09.2016)

AMS (11.2015) AMS (05.2016)

The gap between RDE and laborotory is closing

Seite 36

The first RDE tests of

passenger cars were

conducted in 2014.

The performance of

the up to date cars in

RDE tests is much

better.

The Values taken

from AMS show the

same model with two

engine generations

The technology to

meet the limit values

is on the market.

+

NO

xin

g/k

m

GA

P

Political framework


But: Progress has come at the expense of fuel consumption.

► The most significant cost factors for truck operators are fuel consumption and the drivers working

hours.

► The mean speed driven in the test increased while emissions of pollutants declined.

► But: This is no scientific comparison. Market demand changed in matters of the Trucks and the traffic

situation on the track changed drasticly over time

+

* 800 km circuit on German roads

Source: Transaktuell 10/2014

Development of consumption of heavy trucks in a road test*, in litres of diesel per 100 km

30

35

40

45

50

55

1966 1975 1981 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

1993Euro I

1996Euro II 2001

Euro III

2005Euro IV 2008

Euro V

2011First Euro VI

truck in a road

test

2010New testing route

with more hills

-31%

1977First truck under 40 l

1988Pull weight

increased

to 40 t

-8%




Quelle: lastauto omnibus, Heft 10/2016

Technische Daten des Tests

Verbrauchsrelevante Faktoren

Kraftstoffverbräuche

Nach Streckenart in Litern pro 100 km

Thema der Präsentation (Bitte eintragen über: Einfügen -> Kopf/Fußzeile)

Seite 38

46,4

35,6

40,842,6

32,4

37,436,7

27,3

31,9

0

5

10

15

20

25

30

35

40

45

50

SchwereStrecke

LeichteStrecke

Durchschnitt imTest

Gut 22 Prozent weniger Verbrauch bei vergleichbaren Lkw

Lkw von 1996: Euro 2

Testgewicht: 39.240 kg

Nennleistung: 435 PS

Ø Geschwindigkeit: 83,7 km/h









Von der DEKRA begleiteter Straßentest von vier Tagen Dauer und einer Fahrleistung auf dem deutschen

Straßennetz von etwa 2.000 km je Testfahrzeug.

Die Test-Lkw repräsentieren drei unterschiedliche Fahrzeuggenerationen des selben Herstellers.

Die getesteten Fahrzeuge entsprechen den heutigen Kaufgewohnheiten.

Der neueste Lkw macht es dem Fahrer sehr viel einfacher im Normalbetrieb sparsam zu fahren, als es bei

den Vorgängermodellen der Fall war, die bewusstes Spritsparen erfordern

+

-22%-23%-21%

Political framework


3.900

4.000

4.100

4.200

4.300

4.400

No targets Higher

energy

efficiency

Rebound

effect

After

measure and

rebound

Rebound effect: A real problem Greater efficiency leads to more consumption – yet the reduction effects prevail.

Source: Nature, 2013, Issue 493

+► The idea of the rebound

effect is that more efficient

vehicles have lower

operational costs and are

thus used more heavily.

► The rebound effect is real

and can be proven, but it

should not be

overemphasised.

► Simulations show that 30

per cent of the reduction

effect is eaten up again as

a result of additional traffic.

► In spite of the rebound

effect, more efficient

technology still pays off.

Decreased petrol

consumption through more

efficient motor vehicles.

-7% +2%

More routes are

travelled by car.

Simulation of the energy consumption of road traffic in the USA

(in TWh), when implementing the targets for 2025




Summary: Regulation density and conflicting goals

► CO2 reduction is only one of the traffic-related targets being pursued by the

EU.

► In the past, traffic-related regulation measures were focused on exhaust

emissions and transportation safety.

► Huge advancements have been made in regard to safety and harmful

emissions of motor vehicles; but this has resulted in a higher consumption of

energy.

► The top priority for the future should be the reduction of CO2 emissions from

motor vehicles.

Political framework



40

Megatrends »



Other sectors »

Outlook »


Transportation today Efficiency on the road Regulation on the roadCO2 emissions on the road


Page 41

Trucks are facilitating the Single European Market

Source: Eurostat, Transport in Figures, 2014

Development of freight transport in the EU

1995 =100

1.289 1.725

388

411237

264

0

500

1.000

1.500

2.000

2.500

80

90

100

110

120

130

140

150

160

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

► The merging of the EU triggered tremendous growth in the area of freight transport.

► The creation of the Single European Market fuelled growth on both road and rail.

► Over 70 per cent of Europe’s freight is transported by truck.

► Since 2007, freight transport in Europe has decreased by 9 per cent.

+

Freight transport in the EU

1995 and 2013, in tkm

1,914

2,400

Road Rail Other Total


Page 42

Political framework Other sectors OutlookMegatrends



High level of dynamics in air transport, but cars are the backbone.

Source: Eurostat, Transport in Figures, 2014

Development of passenger traffic in the EU

1995 =100

3,9375419

422

530348

605

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

90

100

110

120

130

140

150

160

170

119,0015

504 116526126

+ ► Strong growth in air transport since the fall of the government monopoly.

► Considerable growth in rail transport since the EU started promoting national rail transport

markets.

► Over 80 per cent of traffic is attributable to passenger transportation on roads. A stagnation

has been evident since 2004.

Passenger transport in the EU

1995 and 2014, in pkm

5,329

6,554

Cars Rail Air

168

Bus Motorcycle


Page 43




Official forecasts for freight transport in 2030 Trucks will continue to dominate the considerably growing transport market.

Sources: EU, Trends to 2050, 2014; BMVI, Forecast of nationwide transport relations in Germany 2030, 2014

+ ► There is some evidence that the PRIMES Prognosis from 2013 is outdated. It predicts an

increase in goods traffic between 2010 and 2015, while it actually heavily decreased.

In billions of tonne kilometres

Traffic forecast for the EU Traffic forecast for Germany

337 429393

602

1.764

2.399

0

1.000

2.000

3.000

4.000

2010 2030

+36%

+54%

+27%

62 77108

154

437

607

0

200

400

600

800

1.000

2010 2030

Road

Rail

Waterway+39%

+43%

+23%


Page 44




Current forecasts for freight transport in 2030

Quellen: Prognos, World Transport Report 2015//2016

CO2-Regulierung in Europa

Limited increase in road transport in comparison to the official prognosis

► The current prognosis covers 12 EU Countries with up 93 percent of total road transport.

The coverage of rail and inland waterways is less sufficient.

► Die Wachstumsraten nach 2015 weichen kaum von denen der offiziellen Prognose ab.

+

Traffic forecast for GermanyTraffic forecast for the EU

312458

1.658

2.045

0

1.000

2.000

3.000

2010 2030

+23%

+47%

+25%62 72107

160

435

554

0

200

400

600

800

1.000

2010 2030

Road

Rail

InlandWaterway

+27,5%

+49%

+15%

Verkehrssektor

Politischer Rahmen Andere Sektoren AusblickMegatrends Verkehr heute CO2-Emissionen Straße Effizienz Straße Regulierung Straße

In billions of tonne kilometres

Official passenger transport forecasts for 2030Cars will form the backbone of passenger transport for the long term.

Sources: EU, Trends to 2050, 2014; BMVI, Forecast of nationwide transport relations in Germany 2030, 2014

► Over the next 20 years, passenger transport will show a slower rate of growth than freight

transport.

► Rail transport is expected to show substantial growth and to gain market shares.

► But: In passenger kilometres, between now and 2030, motor vehicle transport in the EU

will increase by more than the total rail traffic being transported in 2030.

+

In billions of passenger kilometres

Traffic forecast for the EU Traffic forecast for Germany

53 8784 10078

83

902

992

0

200

400

600

800

1.000

1.200

1.400

2010 2030

Motorisedindividualtransport

Public roadtransportation

Rail

Air

+6%

+19%

+65%

+10%

527 888496

714513602

4.893

5.714

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

2010 2030

+18%

+49%

+69%

+17%


Page 46




Limit values affect only new vehicles. Existing vehicles are not covered by the regulation.

Source: ACEA, 2016; VDA, 2015

► Each year, only about 5 per cent of the vehicle fleet in the EU is replaced.

► Existing vehicles hold huge potential for CO2 reduction.

► That is why measures for replacing the existing vehicle fleet are essential.

+

Approx. 13.8 million

new vehicles were

licensed in the EU in 2015.

Altogether, approx.

253 million cars

are licensed in the EU.


Page 47




The existing vehicle fleet represents the technology from 10 years ago.

Sources: Eurostat 2014; ANFAC 2014

+ ► Licensed cars in Europe are 9.6 years old, on average – and the trend is increasing.

► The average age of cars in several member states is more than 10 years.

► But: The best method for reducing CO2 is to speed up the rate at which existing vehicles are replaced.

Age of passenger cars in Europe

as percentage in 2014

Average age of licensed cars in 2014

in years

9%

15%

29%

47%

< 2 years

2–5 years

5–10 years

> 10 years

17,5

14,5

13,2

12,9

12,3

11,8

11,6

11,4

10,2

9,9

9,0

8,7

8,5

7,9

7,8

PolandCzech Republik

Spain

HungaryGreeceEstonia

Portugal

FinlandSweden

Italy

GermanyFrance

Belgium

AustriaUK


Page 48




In its reduction of CO2, Europe relies on diesel.

Sources: EEA, Monitoring CO2 emissions from new passenger cars, 2015 ACEA, 2014

► Since the mid-90s, Europe’s fleet of new vehicles has a growing share of cars that run on diesel.

► Diesel plays a significant part in Europe’s CO2 reduction progress.

► Diesel motors are primarily used in vehicles that are expected to have high mileage.

+

New car registrations in the EU 28 in 2015 Existing vehicle fleet in the EU

51,8%

45,4%

2,8%

Diesel Petrol Other

138.065

78.278

56.756

103.553

100% = 12 million new car registrations

LPG

CNG

Plug-In

Electric

41,0%

54,1%

4,9%

Diesel Petrol Other

100% = 252 million existing cars


Page 49




Summary: Transportation today

► Road traffic is the indispensible backbone of mobility for passengers and

freight in Europe.

► According to official forecasts, the dominance of roads in Europe will not

change between now and 2030.

► Since 2007, traffic volumes on the road have declined. Today, these volumes

are often below the projected levels; and even the official growth expectations

must be questioned.

► The replacement of Europe’s existing vehicles is an effective measure for

reducing emissions; but it will be another ten years before the more efficient

new vehicles dominate the fleet.

Political framework Other sectors OutlookMegatrends CO2 emissions on the road Efficiency on the road




50

90

95

100

105

110

115

120

125

130

135

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

EU 28 EU 15 Germany

115,7

100,3

124,4

116,7

108,4

128,3

The turnaround came in Germany first.

CO2 emissions of road traffic, 1990 = 100

+ ► Since 1999, emissions in Germany have declined by 24 million tonnes and are now

on the levels of 1990.

► From 2000 on, an increase in emissions could primarily be seen in Eastern and

Southern Europe.

► The turnaround in the EU 28 did not begin until the crisis of 2008.

Source: EEA, 2016


Page 51




Car traffic in the EU: CO2 emissions on the decline since 2007 Absolute CO2 emissions, 1990 = 100

100

105

110

115

120

125

130

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Road Car

128,3

116,7

123,1

112,2

► Car emissions have shown a much lower rate of increase than overall road traffic emissions.

► Car emissions have largely stagnated since 2002 and have been rapidly declining from 2007 till

2012. They increased in 2014.

► The trend will continue to increase as a result of new vehicles that are even more fuel efficient,

and as new vehicles progressively replace the existing ones.

+

Source: EEA, 2016


Page 52




EU: The share of emissions from freight transport has significantly increased.In millions of tonnes of CO2

Source: Odyssee Database, 2014

► Since 2007, the CO2 emissions

of road traffic in the EU have

been declining.

► Between 1990 and 2007,

emissions from truck traffic in

particular saw a rapid increase.

► Since 2007, emissions from

freight transport have been

declining again.

► The increase of emissions from

car traffic was relatively

moderate. Emissions have

stagnated since around 2004

and have been declining from

2007 till 2012.

+0 500 1.000

1990 2007 2014

Total

road traffic

Cars

Heavy and

lighter-weight

trucks

+17%

+12%

+25%

Shift

1990–2014

-9%

Shift

2007–2014

-8%

-10%


Page 53




Emissions from new vehicles decreasing rapidly.

Country

Average CO2 emissions

of newly registered cars

in 2015, in g per km

Change from

2007 to 2015,

as percentage

Netherlands 101,2 -38,6

Portugal 105,7 -26,7

Denmark 106,2 -33,5

Greece 106,4 -35,6

France 111,0 -25,7

Malta 112,9 -23,6

Croatia 112,9 n.i.

Ireland 114,3 -29,3

Spain 115,3 -24,7

Italy 115,4 -21,2

Belgium 117,9 -22,8

Slovenia 119,2 -23,7

UK 121,3 -26,4

Finland 123,0 -30,6

Austria 123,7 -24,1

Romania 125,0 -19,3

Cyprus. 125,8 -26,1

Czech Rep. 126,3 -18,1

Sweden 126,3 -30,4

Luxembourg 127,5 -23,1

Slovakia 127,7 -16,4

Germany 128,4 -24,2

Poland 129,3 -15,9

Hungary 129,6 -16,4

Lithuania 130,0 -26,3

Bulgaria 130,3 -24,1

Latvia 137,1 -25,3

Estonia 137,2 -24,5Sources: ACEA Pocket Guide, 2016

Higheremissions in

the East. Four EU countries

under 110.

< 110 g per km

< 120 g per km

< 130 g per km

≥ 130 g per km

CO2 emissions


Page 54




High-emission cars are being phased out.

CO2 emissions of new vehicles in the EU, as percentage

► Just 26 per cent of today’s

new vehicles emit more

than 130 g CO2/km – with

the trend clearly

continuing in this direction.

► In 1995 more than 80 per

cent emitted more than

160 g CO2/km.

► Vehicles with emissions

under 95 g CO2/km are

now entering the market.

+

97%

75%

26%

3%

25%

63%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995 2008 2015

> 130 g 96 g - 130 g <95 g < 120 g

Source: EEA, 2015


Page 55




Diesel- and petrol-powered vehicles are reducing their emissions.CO2 emissions of new vehicles in the EU by engine type, in g of CO2 per km

+17000%

16810%16490%

16160%

15660%

14770%

14250%

13760%

13370%

12860%12560%

12250%

120

130

140

150

160

170

180

200420052006200720082009201020112012201320142015

Diesel Petrol

Source: EEA, Monitoring CO2 emissions from new passenger cars, 2014

-23.7%-27.9%


Page 56

► Petrol-powered vehicles

are showing great

advancements and are

catching up with diesel

engines.

► But: Diesel engines

dominate more among

larger vehicles, while

petrol engines dominate

among smaller vehicles.

► The advancements among

diesel engines appear

stronger, since diesel

vehicles spend more time

on the road each year.




Summary: CO2 emissions on the road

► The CO2 emissions of road traffic in the EU have been decreasing for years.

► Compared to 1990, the emissions from truck traffic in particular increased

dynamically but have been decreasing again since 2007. Emissions from car

traffic have stagnated since 2004 and have shown a clear decline since 2007.

► The increased distribution of more fuel-efficient new vehicles accounts for the

decline in car emissions.

► The increased use of diesel engines – especially in the case of larger vehicles

– was a key driver in the reduction of emissions.

Political framework Other sectors OutlookMegatrends CO2 emissions on the road Efficiency on the roadTransportation today Efficiency on the road Regulation on the roadCO2 emissions on the road


Transportation sector57

EU: Increased energy efficiency in road traffic

0 250 500 750

2000 2007 2013

-10%

Veränderung

1990 - 2013Veränderung

2007 - 2013

0 100 200 300 400 500

2000 2007 2013

-7%

Lkw

in kWh/1.000tkm

Pkw

in kWh/1.000pkm

-11%-22%

► The use of energy per unit of output has reduced considerably in European road traffic since

2000.

► But: Since 2007, truck traffic in the EU has relinquished a portion of its efficiency gains. Two

new EU standards related to the reduction of pollutants were introduced in this time period,

which likely led to the increased consumption of new vehicles.

► The increased efficiency of cars has accelerated considerably since 2007.

+

Quelle: Odyssee Database, 2016

-1,6%

-4,9%-4,3%

-5,3%


Page 58



Transportation today Regulation on the roadEfficiency on the roadCO2 emissions on the road

EU freight transport between 2000 and 2014 Increases in efficiency are obscured by growth in the quantity of freight transported.


Development of energy consumption by impact, in terawatt hours (TWh)

Overall

impact

+12.2

Modal shift,

Other

+63.7

-207.1

EfficiencyMore traffic

+155.6

More efficient vehicles and

routing help to offset

approximately the

increased consumption

resulting from other factors.

Modal shift effects play a

subordinate role with an

additional consumption of

27 TWh.

+


Page 59



Transportation today Regulation on the roadCO2 emissions on the road Efficiency on the road

Car traffic between 2000 and 2014 More efficient vehicles have a growing impact on energy consumption levels.


In terawatt hours (TWh)

Overall

impact

9.8

Energy

reduction

measures

Other

+178.4

+123.3

-291.9

More traffic

As a result of increasing

traffic volumes, energy

consumption in car traffic

has increased significantly

since the year 2000.

But: The dominant impact

came about through more

efficient vehicles.

The total energy

consumption in the year

2014 was on the same

level as in the base year

2000.

+


Page 60




Car traffic between 2000 and 2014 More efficient vehicles have a growing impact on energy consumption levels.


2000–2007 in terawatt hours (TWh)

Energy

reduction

measures

More traffic

+109.1

+125.5-165.9

Overall

impact

Other

+149.5

Around the turn of the millennium, additional traffic led to an increase in energy

consumption. This effect has changed course in the last seven years.

During the second half of the reported period, the reduction effect became

dominant against the effect of additional traffic.

+

2007–2014 in terawatt hours (TWh)

-130.1


Page 61




Overall

impact

+-99.3

Other

+2.3

Energy

reduction

measures

+29.0

-126.0

More traffic

Diesel ensures lower emissions from large cars.

New car registrations in GermanyMarket shares by segment and engine type, in %

► Diesel is increasingly becoming the preferred engine for large vehicles that spend the most

time on the road, while petrol engines still dominate the smaller car classes.

► Diesel engines have become more powerful as a result of this trend, and petrol engines

have been catching up in terms of standard fuel consumption.

► Fuel efficiency has in fact improved at essentially the same rate for both engine types.

► Diesel remains a key means for reducing CO2 emissions.

+

Sources: KBA 2014; EEA, Monitoring CO2 emissions from new passenger cars, 2015

Ø vehicle mass in kg

100

110

120

130

140

150

160

170

180

190

200

1.000

1.100

1.200

1.300

1.400

1.500

1.600

1.700

1.800

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Ø CO2 emissions in g

Diesel Petrol

Increased efficiency 2004–2014

Emissions per kg of vehicle weight

Diesel -23.98%

Petrol -24.28%

2%

13%

43%

76%

90%

62%

62%

12%

32%

78%

85%

31%

98%

87%

57%

24%

10%

38%

38%

88%

68%

22%

15%

69%

Mini

Small

Compact

Medium

Upper Med.

Luxury

Off-Road

Sports car

Mini Van

Large Van

Utility

Other

Diesel Petrol


Page 62




Where would Germany be without diesel?

CO2 emissions of newly registered cars in 2013By segment and engine type, in g per km

► Diesel emissions are lower than those of petrol in all vehicle segments.

► Diesel engines dominate the larger classes of vehicles.

► The emissions level of new vehicles would be significantly higher without the use

of diesel engines.

+

Source: Own calculations

0 20 40 60 80 100 120 140 160 180 200 220 240

Mini

Small

Compact

Medium

Med.-Large

Large

SUV

Sports car

Minivan

Large van

Utility

Other

Diesel

Petrol

How would emission levels compare if a

portion of the diesel engines were replaced

by petrol engines?CO2 emissions in g per km

135,7

142,6

127,4

1 2 3


Page 63




2

4

6

8

10

12

0 25 50 75 100 125 150 175

1st gear 2nd gear 3rd gear 4th gear 5th gear 6th gear

Speed in km/h

Consumption

in l/100km

The driver determines the fuel consumption.

► Fuel saving training courses: Following the course, participants used approximately

20 per cent less fuel than before. In Germany alone, the reduction potential from

fuel-efficient driving is estimated at 12 million tonnes of CO2.

► Gear shifting support is particularly effective in urban traffic: when driving at a speed

of 50 km per hour, the test vehicle consumes 1.2 litres less in fifth gear than in third.

+

Source: VW

Shifting gears early saves fuel: the fuel consumption curve of a Golf 1.4 TFSI (90 kW) in relation to its speed


Page 64




Extra-long trucks: 15 per cent increase in efficiency, as proven in a road test*

► Extra-long trucks can handle high-volume transports much more efficiently than conventional trucks.

► The efficiency margin remains at a good 15 per cent when the load volume is used to full capacity.

► Heavy freight is more efficiently transported by regular trucks.

► Extra-long trucks have a higher consumption than conventional trucks. Hence, they only pay off

when the carrier needs to transport more freight than today’s conventional trucks can accommodate.

+

* Results from field tests by the federal government; the transported goods had a density of 0.72 kg/dm3 (paper: 0.8 kg/dm3)

Source: BMVI

Extra-long trucks Conventional trucks

Gross vehicle weight: 40t

Load volume: 155 m3

Tested route: 8,900 km

Ø fuel consumption: 33.9 l/100 km

Gross vehicle weight : 36t

Load volume: 100 m3

Tested route: 10,700 km

Ø fuel consumption: 24.1 l/100 km

2,81

0,21

3,37

0,24

Load capacity in l/100 tkm Volume in l/100 m3km

Transport efficiency

+15%


Page 65




Summary: Efficiency on the road

► More fuel efficient vehicles have led to a considerable increase in the overall

efficiency of road traffic since the year 2000.

► Increased traffic volumes have long prevented the more efficient vehicle

technology from actually lowering the overall level of emissions.

► Diesel engines were a major driver of the increasing efficiency. They have led

to considerably lower emissions, particularly in the case of larger vehicles.

► Low-cost possibilities for increasing efficiency are being wasted. Fuel saving

training courses can reduce consumption by 20 per cent.

► The licensing of larger trucks could also save a lot of fuel.





66

2014 2015 2016 2017 2018 2019 2020

130

161

The most stringent CO2 target values for new vehicles

* In Gesetzgebungsprozess

Quelle: ICCT, 2016

80

100

120

140

160

180

200

220

2000 2001 20022003 2004 2005 2006 2007 2008 200920102011 201220132014

US EU Japan China

205

172

187

157

123119

169

In g CO2/km, under the New European Driving Cycle (NEDC)

*

► The EU emission standard for 2021 is the most stringent standard in the world.

► Even in 2025 it is unlikely that any country on earth will have a more stringent limit values

than the one stipulated by the EU for 2021.

► The limit values being discussed in the EU for the year 2025 would be up to 50 per cent

lower than those in the USA.

+

119

95

105

117

213

151

Actual levels for 2002–2013 Adopted for 2014–2021



Transportation today CO2 emissions on the road Efficiency on the road Regulation on the road


Page 67

80

100

120

140

160

180

200

1100 1200 1300 1400 1500 1600 1700

CO2 target values for 2021: High demands on the automotive industryIn g CO2/km

► The manufacturers receive specific targets based on the weight of their new vehicles.

► Independent of vehicle weight, manufacturers of large cars have to show greater reductions than high-volume manufacturers.

► In the nine years from 2006 to 2015, a reduction of the average emissions by 30 g CO2/km was required of new

vehicles – from 160 g CO2/km down to 130 g CO2/km.

► Speeding up the pace: In the six years from 2015 to 2021, average emissions must be reduced by 35 g CO2/km – from 130 g

CO2/km down to 95 g CO2/km.

+Average weight of new passenger cars in kg


Page 68

Quellen: EU, EEA 2016




FiatRenault

Toyota

FordVW

Opel Honda

Hyundai

BMWDaimler

EU: Fleet 2006

EU: Targetcurve

2015

EU: Targetcurve

2021

9 Jahre

6 Jahre

Ist-Werte von 2015

Audi

130

95

160

High CO2 emissions mean high payments:

Source: EU Commission DG Transport

Fuel tax per litre, in euro

0,92

0,87

0,85

0,73

0,72

0,70

0,70

0,69

0,67

0,66

0,66

0,65

0,65

0,65

0,63

0,60

0,59

0,59

0,58

0,58

0,57

0,55

0,55

0,52

0,50

0,50

0,49

0,47

0,0 0,2 0,4 0,6 0,8 1,0

United Kingdom

Sweden

Italy

Finland

Ireland

France

Netherlands

Slovenia

Portugal

Denmark

Belgium

Germany

Malta

Cyprus

Croatia

Romania

Austria

Slovakia

Czech Republic

Hungary

Estonia

Greece

Spain

Latvia

Poland

Lithuania

Bulgaria

Luxembourg

Diesel

1,04

0,99

0,96

0,96

0,93

0,93

0,92

0,91

0,87

0,87

0,86

0,85

0,78

0,78

0,75

0,74

0,69

0,68

0,67

0,66

0,64

0,64

0,63

0,62

0,61

0,60

0,56

0,53

0,0 0,2 0,4 0,6 0,8 1,0 1,2

Netherlands

Italy

Sweden

Greece

Portugal

Finland

United Kingdom

Denmark

Germany

France

Ireland

Belgium

Slovenia

Slovakia

Croatia

Malta

Austria

Cyprus

Spain

Czech Republic

Latvia

Romania

Luxembourg

Lithuania

Hungary

Estonia

Poland

Bulgaria

Petrol


Page 69




CO2 from cars comes at a high cost in the EU.

Sources: EU, UBA, own calculations

► From 2018, full penalty fees will

apply to car manufacturers who do

not reach their specific target.

► If a car drives 200,000 km, a

reduction by 1g/km corresponds to

an emissions reduction of

200 kg over the life of the vehicle.

► Based on this assumption, the

manufacturer will pay a penalty of

475 euros per tonne of CO2.

► This cost is considerably higher

than what others have to pay.

+

A penalty of 95 euros will apply for each gram

that exceeds the target, for each vehicle sold.

This corresponds to approximately 475 euros

per tonne of CO2.

CO2 prices, in euros per tonne

475

205

145

80

30

5Carbon credits

(as at March 2016)

Carbon credits

(target for 2020)

Damage costs 2010

(UBA)

Damage costs 2030

(UBA)

Petrol taxation

(EU average)

Emission standard

for cars


Page 70




The potential for further reduction exists but is becoming harder to achieve.

Source: IKA Aachen

1 HCCI

2 Thermoelectric generator

3 Variable compression

4Lightweight construction

(comprehensive)

5 Improved EGR

6 Direct injection w/ stratified charge

7 Cylinder deactivation

8 Full hybrid

9 Micro-hybrid

10 Dual clutch transmissions

11 Homogeneous direct injection

12 Fully variable valve control system

► Due to the technologies needed for boosting efficiency, new vehicles will cost approximately 2,700 euros

more in 2020.

► This expense will be offset, however, by savings resulting from lower fuel consumption. These savings are

spread across the entire life of the vehicle (17 years on average); so, the first customer will only enjoy part of

this benefit but will carry the full cost of the new technologies when purchasing the vehicle.

+

Petrol engines (compact class) Diesel engines (compact class)

CO2 reduction potential in % CO2 reduction potential in %

Technology costs in € Technology costs in €

Research Pre-development Series development Series

1

2

46

8

910

110

5

10

15

20

25

30

0 1.000 2.000 3.000

23

4

57

8

910

120

5

10

15

20

25

30

0 1.000 2.000 3.000


Page 71




Volume manufacturers

CO2 reduction: More expensive in the future

► The simple and inexpensive options are seized first, making it difficult to accelerate the rate

of CO2 reduction.

► The consumption cannot be reduced arbitrarily. It will not be possible to achieve the limit

values without making the switch to electric engines; manufacturers of large cars need to

make the switch right now.

+

Source: BMW

Electriccars

Full hybrids

Mild hybrids Plug-in

hybrids

Shift point display

Aerodynamics,roll resistor

Optimised trans-mission Brake

forcerecovery

Intelligenthelpsystems

Start/Stopfeature

High-precisioninjectionsystems

Heatmanage-ment

CO2 reduction per euro of manufacturing costs

Dieselengines

Premium manufacturers

130 g CO2/km 95 g CO2/km

95 g CO2/km130 g CO2/km


Page 72




9%

7%

24%

34%

26%

No additional costs Up to 500 €

501–1,000 € 1,001–2,000 €

More than 2,000 €

13%

41%

35%

8%

2% 1%

< 3 litres 3–5 litres

5.1–7 litres 7.1–9 litres

> 9 litres Electric engine

Energy saving popular*Question: What is the fuel economy you

will expect in your new car as an

average range of litres per 100 km?

But: The market run-up is slowing down.

* Survey of 1,500 people interested in buying a new vehicle in Europe’s three largest markets

Source: PwC

E-cars: Only if they do not cost more*Question: How much would you be prepared to pay for a hybrid drive /

electric drive?

Hybrids

46%

12%

15%

23%

Electric cars


Page 73




Summary: Regulation on the road

► The EU has waived the world’s most stringent CO2 emission levels for cars. In

2021, the limit values will be one-third lower than those of the USA.

► CO2 emissions from road traffic are priced higher by the EU than emissions from

other sources.

► The “low-hanging fruits” have already been picked – and it will become more

expensive in the future.

► The manufacturers of large vehicles, in particular, have to gradually focus on the

switch to electric powertrains. But: Today, the market run-up for electric cars and

plug-in hybrids is slowing down. And no one knows how the market for these

vehicles will develop in the future.





74

Megatrends »



Other sectors »

Outlook »

Industry

Other sectors

Electricity Industry Households


Page 75

CO2 in other sectors: Power generation

► In the EU, the emissions from public heat and power generation are

approximately 15 per cent less than the levels in 1990.

• More efficient power plants and a changing power mix help to cover the overconsumption.

► Power generation underlies European emissions trading. Emissions trading

consists of two components:

• A prescribed cap on emission volumes that will continuously decrease up to the year 2020.

• A tool for distributing the burden (trade). The market for carbon credits ensures that the EU will meet the prescribed emission volumes at low costs.

Other sectors

Electricity Industry HouseholdsPolitical framework Transportation sector OutlookMegatrends


76

The reduction can be credited to Eastern Europe in particular.CO2EQ emissions of public heat and power generation, 1990 = 100

Source: UNFCCC Database, 2014


Page 77 Other sectors


60

70

80

90

100

110

120

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

EU 28 EU 15 Eastern european access countries

98,8

75,6

64,1

108,5

81,4

Power generation: Consumption of fossil primary energy declining.

In terawatt hours (TWh) of primary energy use; changes from 2000 to 2014


210.6

-580.6

-453.0

Power

mix

More efficient

fossil power

plants

-83.0

Electricity

consumption

Overall

impact

Electricity consumption

in Europe is persistently

increasing.

Yet fewer fossil primary

energy carriers are

being consumed.

Power generation is not

an end in itself; it

facilitates production

and consumption in the

industrial sector and in

homes.

+




Cap: A government-prescribed reductionVolume of carbon credits in the EU Emissions Trading System (ETS), in millions of tonnes

Sources: EU, DIW

1000

1200

1400

1600

1800

2000

2200

2400

2005 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2030

► Specific: The emissions target of -21 per cent is sure to be met on account of the decreasing cap.

► Apportioned: The initial auctioning of 20 per cent is expected to increase to 60 per cent by 2020.

► Flexible: It is not stipulated which trade participant will bring about the reduction.

+

Target

2030

3rd tradeperiod cap

2nd tradeperiod cap

1st tradeperiod cap

Reduction rate by 2020

-1.74%

Discussed

reduction

rate after

2020

-2.2%

-21%




Trade: Emissions trading ensures an efficient distribution of the reduction burden.

► In the example above, Plant 1 renders the entire reduction but has three-fourths of the

costs reimbursed through emissions trading. The example shows that both plants save

thousands of euros compared to a restriction on emissions.

► The specific distribution of the reduction burden arises from the carbon credit price and the

particular reduction costs.

► Participants with high abatement costs help to finance other participants’ reduction efforts.

+

Case 1:

Emission restrictionsCase 2:

Emissions trading: Carbon credit price at 30 euros per tonne

Total

Plant 2

Exhaust

up to now,

in tonnes

Permiss-

ible

exhaust

in the

future,

in tonnes

Carbon

credits

received,

in tonnes

Reduc-

tion

costs

per

tonne

Achieved

reduction,

in tonnes

Cost for

the

reduction

Trade,

in

tonnes

Trade

in euros

Total

costs by

trade

5,0009,000

total

4,500 20 1,000 20,000 5,000

5,000 4,500 50 0 0 15,000

10,000 9,000 9,000 1,000 20,000 500 15,000 20,000

Exhaust

up to

now,

in tonnes

Permiss-

ible

exhaust

in the

future,

in tonnes

Reduc-

tion

costs

per

tonne

Total

costs

5,000 4,500 20 10,000

5,000 4,500 50 25,000

10,000 9,000 35,000

Plant 1

15,000500




-1

-3

18

36

427

357 356 346

0

50

100

150

200

250

300

350

400

450

-10

-5

0

5

10

15

20

25

30

35

40

1990 2000 2010 2013

Germany’s energy transition: Unexpected resultsThe subsidisation of renewable energies leads to an increasing export of electricity.

Source: Working Group on Energy Balances (Arbeitsgemeinschaft Energiebilanzen), Umweltbundesamt

+

31.1% 25.7% 23.0% 23.8%

3.6% 6.6%16.6%

30.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990 2000 2010 2015

Rest Renewables Natural gas

Hard coal Nuclear energy Lignite

Power mix Power generation and trade in Germany

CO2 emissions in millions of

tonnes

Balance of trade in TWh

► Power generation: CO2 emissions are still on the rise, in spite of the increasing share of renewable energies.

► The reason: Renewable energies are, in particular, replacing natural gas and coal-fired power plants; nuclear

energy use is also declining. Lignite is filling the resulting base load gap.

► The subsidisation of renewable energies has resulted in an increased volatility of supply. This frequently

results in surplus power that has to be exported outside the country at a cheap rate.




CO2 in other sectors: Industry

► The CO2 emissions of the industrial sector have declined by one-fourth in the

last 20 years.

• Increased efficiency: Emissions in the industrial sector decreased by one-third per euro of added value.

► The industrial sector is governed by various regulations:

• Electricity consumption is subject to emissions trading and a high rate of taxation. In the USA, industrial energy costs only about half as much as the EU average.

• The EU Ecodesign Directive sets maximum tolerances for the energy consumption of consumer products such as lamps and household appliances. Products that do not meet the standard have to be removed from the market. The most noticeable target: light bulbs.

Other sectors



82

0

200

400

600

800

1.000

1.200

1.400

1.600

1990 1998 2006 2014

Through powerconsumption*

Other

Steel

Chemicals

Food

Paper

Industry in the EU 28: Decreased emissions, greatly improved efficiency

CO2 emissions in the industrial sector are

declining: -25% since 1995in millions of tonnes of CO2

► Regulation: The largest share of CO2 emissions caused by industrial activities is subject to

emissions trading.

► Increased efficiency: The emissions per unit of gross value have decreased by a good third

since 1995.

► Deindustrialisation: The movement of industrial activities out of many European countries

has resulted in a decrease of CO2 emissions in the EU.

+

* For information only


Improved efficiency: One-third fewer

emissions per euro of added value since 1995in kg CO2/euro2005

0,0

0,1

0,2

0,3

0,4

0,5

0,6

1995 2005 2014

CO2 intensity

CO2 intensity

incl. electricity

-39%

-41%




Industrial energy prices in the first half of 2016: Much less expensive in the USA.In cent pro kWh for companies with a consumption of 20 to 70 gigawatt hours

Industrial energy prices in

Europe are much higher than

those of international

competitors.

The biggest difference is in

comparison to the USA, where

a kWh costs approximately

45 per cent less than in Europe.

The highest prices apply in the

UK and Germany. But for totally

different reasons.

Recoverable taxes – such as

VAT – are viewed as transitory

items for the company.

+

* For information only

Sources: Eurostat, BDI




0 2 4 6 8 10 12 14 16 18

UK

Germany

Italy

Portugal

Hungary

Spain

France

Belgium

Austria

Czech Republik

Poland

Netherlands

Sweden

EU 28

China*

India*

USA*

Product price

Non-recoverable tax

Recoverable tax

The EU Ecodesign Directive: Ban on energy-guzzling products

The energy consumption of household appliances

decreased substantially between 1999 and 2014Decrease in energy consumption

up to … per cent

► The EU Ecodesign Directive specifies requirements for products that consume a significant

amount of energy.

► Products that consume too much energy can no longer be distributed.

► The efficiency of this approach is debated. Electricity is already subject to emissions trading,

and the contribution of more efficient household appliances is low.

► The sale of existing warehouse stock is still permissible. This loophole led to a stockpiling of

light bulbs.

+

Sources: Bosch, Odyssee Database 2016

-80% -60% -40% -20% 0%

Refrigerators

Freezers

Washers

Dish washers

Dryers

Distribution in Europe

number of appliances

per 100 households

The EU Ecodesign Directive is

leading to a ban on energy-guzzlersElectricity consumption of vacuums

in watts

0

500

1000

1500

2000

Average for2013

Threshold for2014

Threshold for2017

-44%

105

64

92

56

34




CO2 in other sectors: Households

► Household CO2 emissions have decreased by 13 per cent since 1990.

• In the same reporting period, the number of households and the living space per person increased substantially.

► The key to future emission reductions is in the area of heating.

• Heating constitutes 70 per cent of a household’s total energy consumption.

• In spite of the EU Ecodesign Directive, consumption has greatly increased through the use of electric appliances, since households contain an increasing number of them.

► The installation of new heating units results in very low CO2 abatement costs,

but it rarely pays off for home owners without subsidisation.

Other sectors

electricity IndustryPolitical framework Transportation sector OutlookMegatrends Households


86

Households: Decreasing CO2 emissions despite higher demands in living spaces

CO2 emissions,in millions of tonnes

► Nearly half of household emissions fall under emissions trading.

► The trend is leaning towards more households and larger apartments, which increases emissions.

► Besides emissions trading, households are impacted by electricity taxes and energy consumption

regulations for buildings.

+


0

100

200

300

400

500

600

700

800

900

1.000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

-15%

-18%

Changes in household energy consumption

between 2000 and 2014in terawatt hours (TWh)

Direct CO2 emissions from households (heating, hot water)

Emissions from household electricity consumption

+167.9More electric appliances

per household

Climatic factor

+474.5

-42.4

More households

Overall impact

Energy

savings

-322.2

Other

-923.8

Larger

living spaces+244.0

-242.4



electricity Industry HouseholdsPolitical framework Transportation sector OutlookMegatrends

Energy consumption: The potential lies in the heating market.

The heating system is the key to

lower emissionsin terawatt hours (TWh)


0

500

1.000

1.500

2.000

2.500

3.000

3.500

1990 2000 2014

Heating Hot water

Cooking Electric appliances

Significant progress per square metre of living space1990 = 100

60

70

80

90

100

110

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Energy consumption for light per m2

Energy consumption for heating per m2

► Heating systems consume about 70 per cent of the final energy in households.

► Advancements in heating efficiency are almost entirely eaten up by increased living space.

► Electric appliances only play a minor role; however, due to the increasing number of

appliances per household, overall energy consumption has risen by 45 per cent since 1990.

+




Strong potential at a relatively low cost

Example

Block of flats

Built in 1972

Area:

62,030 m2

Financing:

Interest rate 4%

over 15 years

Abatements costs are determined on a case-by-case basis.

The principle of declining marginal returns applies: The more a person saves, the more

expensive the next step will be.

Problem: Complete renovations rarely pay off with subsidisation. Even energy-saving

measures often fail in terms of cost savings.

Result: The pace of energy-related renovations is too slow. It would need to be approximately

doubled to achieve the EU policy targets by 2020.

+

Source: Hochtief, 2012

Abatement costs per tonne of CO2

in euros

1337

223

-54%-61%

-74%

Measure Measure Measure

1 1 2 1 2 3+ + +

1 Conversion from

storage heaters

to central heating

2 Central domestic

water heating

3 Complete

building renovation

CO2 reduction




Megatrends »



Other sectors »

Outlook »

13. Core theses

Outlook

Limits of the system Alternatives Core theses


Page 90

Limit values for cars: Only indirect influence on actual CO2 emissions

Today, Europe regulates a car’s emissions potential in grams per kilometre.

However, the actual target is the avoidance of CO2 emissions in tonnes.

There is no direct connection between emissions potential and actual emissions.

The real impact is determined by the user.

Result: Today’s regulation is not precise and does not correspond to the regulation

in other sectors.

!

Assumptions

Under the New European Driving

Cycle (NEDC), a better transmission

will save 4 g CO2/km.

The transmission costs an additional

200 euros.

In Europe, an average car travels

approximately 200,000 kilometres

during its lifetime.

+

CO2 savings, in tonnes:

4 g/km * 200,000 km = 800,000 g = 0.8 tonnes

Investment costs, in euros per tonne:

200 € / 0.8 tonnes = 250 € per tonne


Page 91 Outlook

Limits of the system Alternatives Core thesesPolitical framework Transportation sector Other sectorsMegatrends

CO2 avoidance in cars is expensive and would be cheaper to obtain in other sectors.

The reduction costs differ greatly from sector to sector.

The avoidance of car emissions by means of improved technologies is relatively expensive, and

these costs will continue to increase.

Sector-based reduction targets lead to high additional costs in the economy.

In the EU Emissions Trading System (ETS), permissible emissions are offset by carbon credits.

One credit allows the emission of a tonne of CO2.

The trade with carbon credits ensures that the emission volume stipulated by the EU is

generated where the reductions are least expensive.

Problem: CO2 avoidance in cars is already

comparatively expensive.

Expensive CO2 avoidance leads to excess

burden.

* Extrapolation from published reports ** Calculated based on the average value of the respective line.

Sources: AGFW, Institut für Kraftfahrzeuge Aachen (IKA), EU

0 100 200 300 400

Manuf. figures 2014*

IKA Aachen (2012)

IKA Aachen (2016)

IKA Aachen (2021)

Hydroelectric power

Wind power

Carbon credit price today

Target price for 2020

Cars

Electr

icity

CO2

market

In euros per tonne Assumption: CO2 emissions in Europe are to be reduced by 25 million

tonnes. Comparison of the resulting costs today and in 2020, in millions

of euros**

5.338

150

500

1.250

8.688

750

Cars

Carbon credit

Hydroelectricpower

Wind power

Cars

Carboncredits

Today

2020

+


Page 92 Outlook


Efficient new vehicles impact the vehicle fleet.Based on model calculation. With today’s regulation, an emissions reduction of 30 per cent is achievable between 2005 and 2030. This corresponds to the EU target for non-ETS sectors.

The average consumption of the existing fleet is only gradually reacting to the more efficient new vehicles. That is

why a difference can be seen between the emissions of new vehicles and the entire fleet.

The gap will close once most of the older vehicles with higher emissions are taken off the roads.

Based on a conservative estimate, the ongoing replacement of old vehicles will result in car traffic emissions in

Europe decreasing by approximately 30 per cent by 2030, compared to the year 2005.

Until 2014, the fleet was dominated by vehicles built before 2005. Several million of these vehicles will still be on

the road in 2030.

The advancements of recent years will long continue to have an impact on the vehicle fleet. Even if new vehicles

were to hardly show improvements after 2021, the fleet emissions would continue to decrease.

In regard to cars, the EU target can be achieved with the existing regulation.

+

Source: Daimler

90

110

130

150

170

190

2005 2009 2013 2017 2021 2025 2029

New vehicles

Entire fleet

0

100

200

300

400

500

600

2005 2009 2013 2017 2021 2025 2029

Vehicles built before 2005

Vehicles built since 2005

-32%

40gr

22gr

Relative car emissionsin g CO2/km

Absolute car emissionsin millions of tonnes of CO2


Page 93 Outlook


WLTP: A new test requires new limit values.

A test cycle should facilitate legally compliant comparability.

There are various cycles today. The EU and China use the NEDC, while the USA and Japan have their own tests.

The figures on car emissions depend heavily on the test cycle; they are not simply convertible.

Trials show that higher emissions levels are identified in the WLTP than in the NEDC. With the introduction of the

WLTP, the regulation of limit values will have to start completely afresh.

But: Even WLTP is “only” a test. It facilitates comparability under standardised conditions; hence, it represents an

approximation of global driving behaviour, yet does not determine a value that is achievable in all contexts.

+

NEDC: Introduced in 1996 to calculate exhaust

emissions

Sources: EU, UN

0

20

40

60

80

100

120

140

0 200 400 600 800 1000 1200 1400 1600 1800

WLTP: Depiction of a car ride,

based on worldwide averages

0

20

40

60

80

100

120

140

0 200 400 600 800 1000 1200 1400 1600 1800

The WLTP is intended to apply

globally. Manufacturers’test costs are expected to be reduced through

the implementationof the WLTP.

Low Middle High Extra highSpeed in km/h

Time in seconds


Page 94 Outlook


Summary: Limits of the system

► The system of regulating limit values levels exhibits structural problems.

► Inaccurate: The greatest disadvantage is the lack of precision, since the

regulations affect potential emissions rather than actual emissions.

► Expensive: Technology-driven savings in road traffic represent one of the most

expensive possibilities for reducing CO2 emissions.

► Long-dated: It will still take years before the full impact of already-achieved

improvements is reflected in statistics.

► An acute continuation of the regulation of limit values does not currently appear

very promising. Alternatives to the current system must be sought.

Outlook



95

Integrated approach: Include all areas in the regulation process

Improved regulation: Emissions standards for vehicles fall too short.To reduce emissions, drivers and the government need to be involved in the process.

Vehicle limit values only regulate potential emissions.

The actual emissions are determined just as much by drivers as by the

infrastructure.

+

Optimisation of combustion engine

Alternative fuels

Lightweight construction

Switching to electric powertrains

Use of digitalisation (avoidance of

parking-related traffic)

Route

(how much?)

Driving style

(how?)

Vehicle selection

(with what?)

Infrastructure conditions

Construction site management

Promotion of transmissions

and fuels that produce fewer

emissions

Replacement of existing vehicles

Total emissions in tonnes =

Consumption in litres * Emissions factor in kg CO2/litre * Mileage

DriverAutomotive industry Government


Page 96 Outlook


Integrated approach: Future regulation must cover all areas. Estimate based on road freight traffic

An integrated approach prevents rebound effects and can considerably increase savings.

Various instruments are needed in order to enhance all potential savings.

+

Source: ACEA

Vehicle-related measures

Vehicle Trailer Tyres

Fuels Vehicle operation

Operation Infrastructure Fleet replacement

Efficient

engines

Aero-

dynamics

Assisted

driving

systems

Permissible

size (more

transport

volume)

Aerodynamics

Lightweight

construction

Assisted

driving

systems

Low-

resistance

tyres

Air

pressure

controls

Super

Singles

Second-generation

biofuels

Synthetic fuels

Natural gas (LNG)

Driver

training

Route

planning

Volume

utilisation

Improved

infrastructure

(road closures,

detours)

Telematics

Congestion

control

Replacement of

Euro 0–III vehicles

(approx. 5%

additional fleet

replacement)

CO

2 e

mis

sio

ns

CO

2

em

issio

ns

-6% -2.5% -13%+ + = -21.5%

Alternative fuels


Page 97 Outlook


Emissions trading in road traffic: Is that possible?

One stop towards an integrated approach would be the inclusion of road traffic in emissions trading. Fuel consumption can

be precisely calculated in emissions. Heavy trucks cannot be integrated in the existing system of limit values; this is not a

problem in emissions trading. The question remains as to who should make the carbon credits available:

Midstream: Car manufacturers

When a new vehicle is sold, a volume of carbon

credits must be purchased that corresponds to the

car’s expected emissions in its lifetime.

In the case of 130 g CO2/km and 200,000 km:

carbon credits for 26 tonnes

Little demand from the well-financed

Inaccurate: The purchased amount represents

a theoretical volume.

The manufacturer only determines the

potential emissions, not the actual emissions.

The manufacturer only has an indirect

influence over actual CO2 emissions.

+

–

–

–

Upstream: Filling station operators

The corresponding carbon credits must be purchased for

every litre sold.

1 l petrol = 2.3 kg CO2

1 l diesel = 2.6 kg CO2

Easy to implement technically


Actual emissions are limited.

It only indirectly addresses those who are actually

generating the emissions. The connection to the

driver is the price signal, as in the case of a fuel tax.

+

+

–

Pros

Cons

+


Page 98 Outlook


Emissions trading: A useful supplement

The inclusion of road traffic in emissions trading offers certain benefits.

+ Simple: The necessary amount of carbon

credits per tank filling is easy to calculate. The

required purchase can be paid for with the

fuel.

Inexpensive for the driver: Based on the EU’s

targeted price of 30 euros per carbon credit in

the year 2020, a litre of petrol would cost 7

euro cent more.

Inexpensive for society: The abatement costs

of road traffic are far above 30 euros per

tonne. Emissions are avoided where it is

cheaper to do so.

But: Since the transportation sector would be

purchasing so many carbon credits, other

sectors would have to substantially step up

their reduction efforts. Good judgment will be

necessary in order to avoid an overload in the

other sectors.

Thus: Emissions trading is a useful

supplement to today’s limit values.

ETS Filling Station

Main Street 111, 12345 New Town

Station no.: 000000000xyz

Station tax no.: 13/456/xyzxyz

Company tax no.: 01 234 56789

Receipt no. 1234/005/00001 03.03.2021 9:22

Card payment

*Super 65.13 EUR A #*

*Pump 03 43.45 l 1.499 EUR/l #*

*EU ETS carbon credits 3.04 EUR C* #*

* 43.45 l x 2.33 kg CO2/l = 101.24 kg CO2

* x 30.00 EUR/credit for 1,000 kg CO2

Total 68.17 EUR

Type Net VAT Gross

A: 19.00% 54.73 10.40 65.13

C: 0.00% 3.04 0.00 3.04

Thank you for your visit. Have a safe trip!


Page 99 Outlook


Summary: Alternatives

► The inclusion of road traffic in emissions trading serves as a useful

supplement to the prevailing system of limit values.

• Emissions trading would increase the precision of the regulation, since it factors in the influence of the driver on the emissions that are produced.

• Emissions trading would also apply to freight transport – an area that is difficult to incorporate in the current system of limit values.

• Emissions trading would lead to lower reduction costs for the overall economy, since road traffic would enter the carbon credit market as more of a buyer.

► But: Oil prices continue to create pressure to innovate, but there are several

factors that speak in favour of setting a new limit value for the long term.

Outlook



100

The core theses: Brief overview

Climate protection

1. Europe’s share of the worldwide CO2 emissions is low and continuously decreasing. (100)

2. No solution without China: Europe’s reduction of emissions is being eaten up by growth in emerging economies. (103)

3. Motor vehicles account for approximately one-seventh of the CO2 emissions in the EU. Their share in transportation emissions is declining. (106)

CO2 regulation for motor vehicles

4. New vehicles in Europe have become considerably more efficient in recent years. (108)

6. Europe has once again tightened the reins on the CO2 limit values for motor vehicles and is requiring a further reduction of CO2 within an even shorter span of time. (112)

5. CO2 legislation in Europe shows the most stringent target values in an international comparison. (110)

8. Vehicle fleet limit values under 95 grams cannot be achieved with conventional engine types, and the market success of alternative engine types is still uncertain. (116)

7. Even without a further tightening of the CO2 limit values after 2020, the motor vehicle industry is still on track to meet the EU’s climate policy targets by 2030. (114)

9. EU environmental legislation is not coherent and, for a long time, had other priorities than CO2 reduction. This had various consequences, including an increase of CO2 emissions. (119)

10. Today’s CO2 laws regulate only new vehicles, completely disregarding the remaining vehicle fleet. (122)

11. An effective reduction of CO2 emissions cannot address new vehicles alone but must take a much broader approach. (124)

Balance between climate protection and industrial policy

12. The EU is targeting a 20% industry share of GDP for the year 2020. This goal is presently a long way away, since industrial and climate protection policy are not yet aligned. (126)

13. The CO2 abatement costs vary greatly between sectors and are most pronounced in the automotive sector. (129)

14. Emissions trading as the most economically efficient form of CO2

regulation can easily be applied to road traffic. (131)


Page 101

Core theses: Climate protection

Europe’s share of the worldwide CO2 emissions is low and continuously

decreasing.1

Outlook



102

10,3% 14,8%

28,2%

23,4%23,2%

16,0%

19,6%16,1%

9,8%

46,7% 45,9% 46,0%

1990 2001 2014

China USA EU Rest of the world

CO2 emissions: Europe’s share sharply decreasing

20,502 23,884

Emissions from fuel use, in millions of tonnes

► Compared to the year 1990,

the absolute CO2 emissions

are decreasing in the EU

only. Between 1990 and 2014

the EU decreased the

emissions by 864 Million tons.

► In Asia in particular,

emissions are rapidly

increasing except for Japan.

► The impact of European

regulations on global CO2

emissions continues to

decline.

+


32,381


Page 103 Outlook

Alternatives Core thesesPolitical framework Transportation sector Other sectorsMegatrends Limits of the system

Reduction in Europe, strong increase in Asia

Emissions from fuel use* – Changes between 1990 and 2014, in millions of

tonnes

► While China shows an

increase of 333 per cent

during the years 1990–2012,

the EU shows a decrease of

21,5 per cent.

► The gap is expanding: in 2014

alone, China’s emissions

increased by 110 million

tonnes while the EU’s

decreased by 188 Million tons.

► India increased it’s emissions

in 2014 by 170 million tonnes.

The increase is bigger than in

China..

+


-863,8

+1,489,3

+7,025,7

EU India China

* Corresponding to category 1A according to the UNFCCC classification system


Page 104 Outlook



No solution without China: Europe’s reduction of emissions is being eaten

up by growth in emerging economies. 2

Outlook



105

EU passenger cars: Relevant, yet not crucial

CO2 emissions, in millions of tonnes

► Relevant: Europe’s total

passenger car traffic for 2014

showed a downwards trend,

emitting about 510 million

tonnes of CO2EQ.

► Crucial? China, on the other

hand, is showing a strong

upwards trend in its use of

fossil fuels – emitting nearly

526 million tonnes of CO2 in

just three weeks.

► Dynamic: Between the years

1990 and 2014, CO2

emissions from China’s road

traffic increased by 912 per

cent.

+

Sources: EEA, 2016; IEA, CO2 Emissions from Fuel Combustion – 2016

450

554

516

63

372

639

121

375

526

1990 2007 2014 1990 2007 2014 1990 2007 2014

EU

Passenger car traffic

China

Road traffic

China

CO2 emissions in 21 days


Page 106 Outlook



Motor vehicles account for approximately one-seventh of the CO2

emissions in the EU. Their share in transportation emissions is declining. 3

Outlook



107

CO2 emissions in the EU 28

31,4%

21,8%9,4%

13,0%

11,0%

13,5%

* For information only; ** Not including international air and maritime traffic. These are not classified as national emissions in the context of the Kyoto report.

Sources: EEA, 2016

Generation

of heat

and energy

Industry

Passenger

cars

Other

sectors

Agriculture

Figures for 2014, as percentage

Transportation sector by mode of transport

7,2%11,8%

46% 41%

29% 31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1990 2014

Commercial vehicles

Cars

Civil aviation (national)

Rail transport

Waterway transport

Other

Int. aviation*

Int. seafaring*

Emissions according to sector

Other modes of

transport**


Page 108 Outlook


Car traffic in the EU: CO2 emissions on the decline since 2007 Absolute CO2 emissions, 1990 = 100

100

105

110

115

120

125

130

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Road Car

128,3

116,3

123,1

112,1

► Car emissions have shown a much lower rate of increase than overall road traffic emissions.

► Car emissions have largely stagnated since 2002 and have been rapidly declining from 2007 till

2012. They increased in 2014.

► The trend will continue to increase as a result of new vehicles that are even more fuel efficient,

and as new vehicles progressively replace the existing ones.

+

Source: EEA, 2016


Page 109 Outlook


Core theses: CO2 regulation for motor vehicles

New vehicles in Europe have become considerably more efficient in

recent years. 4

Outlook



110

High-emission cars are being phased out.

CO2 emissions of new vehicles in the EU, as percentage

► Just 26 per cent of today’s

new vehicles emit more

than 130 g CO2/km – with

the trend clearly

continuing in this direction.

► In 1995 more than 80 per

cent emitted more than

160 g CO2/km.

► Vehicles with emissions

under 95 g CO2/km are

now entering the market.

+

97%

75%

26%

3%

25%

63%

12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995 2008 2015

> 130 g 96 - 130 g <95 g < 120 g

Source: EEA, 2015


Page 111 Outlook



CO2 legislation in Europe shows the most stringent target values in an

international comparison.5

Outlook



112

2014 2015 2016 2017 2018 2019 2020

130

161

The most stringent CO2 target values for new vehicles

* In the legislative process

Source: ICCT, 2016

80

100

120

140

160

180

200

220

2000 2001 20022003 2004 2005 2006 2007 2008 200920102011 201220132014

US EU Japan China

205

172

187

157

123119

169

In g CO2/km, under the New European Driving Cycle (NEDC)

*

► The EU emission standard for 2021 is the most stringent standard in the world.

► Even in 2025 it is unlikely that any country on earth will have a more stringent limit values

than the one stipulated by the EU for 2021.

► The limit values being discussed in the EU for the year 2025 would be up to 50 per cent

lower than those in the USA.

+

119

95

122

117

213

151

Actual levels for 2002–2013 Adopted for 2014–2021


Page 113 Outlook



Europe has once again tightened the reins on the CO2 limit value s for

motor vehicles and is requiring a further reduction of CO2 within an even

shorter span of time.

6

Outlook



114

80

100

120

140

160

180

200

1100 1200 1300 1400 1500 1600 1700

CO2 target values for 2021: High demands on the automotive industryIn g CO2/km

► The manufacturers receive specific targets based on the weight of their new vehicles.

► Independent of vehicle weight, manufacturers of large cars have to show greater reductions than high-volume manufacturers.

► In the nine years from 2006 to 2015, a reduction of the average emissions by 30 g CO2/km was required of new

vehicles – from 160 g CO2/km down to 130 g CO2/km.

► Speeding up the pace: In the six years from 2015 to 2021, average emissions must be reduced by 35 g CO2/km – from 130 g

CO2/km down to 95 g CO2/km.

+Average weight of new passenger cars in kg


Page 115

Quellen: EU, EEA 2016

FiatRenault

Toyota

FordVW

Opel Honda

Hyundai

BMWDaimler

EU: Fleet 2006

EU: Targetcurve

2015

EU: Targetcurve

2021

9 Jahre

6 Jahre

Ist-Werte von 2015

Audi

130

95

160

Outlook



Even without a further tightening of the CO2 limit value s after 2020, the

motor vehicle industry is still on track to meet the EU’s climate policy

targets by 2030.

7

Outlook



116

Efficient new vehicles impact the vehicle fleet.Based on model calculation. With today’s regulation, an emissions reduction of 30 per cent is achievable between 2005 and 2030. This corresponds to the EU target for non-ETS sectors.

The average consumption of the existing fleet is only gradually reacting to the more efficient new vehicles. That is why a difference

can be seen between the emissions of new vehicles and the entire fleet.

The gap will close once most of the older vehicles with higher emissions are taken off the roads.

Based on a conservative estimate, the ongoing replacement of old vehicles will result in car traffic emissions in Europe decreasing by

approximately 30 per cent by 2030, compared to the year 2005.

Until 2014, the fleet was dominated by vehicles built before 2005. Several million of these vehicles will still be on the road in 2030.

The advancements of recent years will long continue to have an impact on the vehicle fleet. Even if new vehicles were to hardly show

improvements after 2021, the fleet emissions would continue to decrease.

In regard to cars, the EU target can be achieved with the existing regulation.

+

Source: Daimler

90

110

130

150

170

190

2005 2009 2013 2017 2021 2025 2029

New vehicles

Entire fleet

0

100

200

300

400

500

600

2005 2009 2013 2017 2021 2025 2029

Vehicles built before 2005

Vehicles built since 2005

-32%

40gr

22gr

Relative car emissionsin g CO2/km

Absolute car emissionsin millions of tonnes of CO2


Page 117 Outlook



Vehicle fleet limit values under 95 grams cannot be achieved with

conventional engine types, and the market success of alternative engine

types is still uncertain.

8

Outlook



118

High-volume manufacturers

CO2 reduction: More expensive in the future.

► The simple and inexpensive options are seized first, making it difficult to accelerate the rate

of CO2 reduction.

► The consumption cannot be reduced arbitrarily. It will not be possible to achieve the limit

value s without making the switch to electric engines; manufacturers of large cars need to

make the switch right now.

+

Source: BMW

Electriccars

Full hybrids

Mild hybrids Plug-in

hybrids

Shift point display

Aerodynamics,roll resistor

Optimised trans-mission Brake

forcerecovery

Intelligenthelpsystems

Start/Stopfeature

High-precisioninjectionsystems

Heatmanage-ment

CO2 reduction per euro of manufacturing costs

Dieselengines

Premium manufacturers

130 g CO2/km 95 g CO2/km

95 g CO2/km130 g CO2/km


Page 119 Outlook


9%

7%

24%

34%

26%

No additional costs Up to 500 €

501–1,000 € 1,001–2,000 €

More than 2,000 €

13%

41%

35%

8%

2% 1%

< 3 litres 3–5 litres

5.1–7 litres 7.1–9 litres

> 9 litres Electric engine

The demand for efficiency*Question: What is the fuel economy you

will expect in your new car as an

average range of litres per 100 km?

But: The market run-up is slowing down.

* Survey of 1,500 people interested in buying a new vehicle in Europe’s three largest markets

Source: PwC

E-cars: Only if they do not cost more*Question: How much would you be prepared to pay for a hybrid drive /

electric drive?

Hybrids

46%

12%

15%

23%

Electric cars


Page 120 Outlook



EU environmental legislation is not coherent and, for a long time, had

other priorities than CO2 reduction. This had various consequences,

including an increase of CO2 emissions.

9

Outlook



121

Road traffic has become cleaner, despite the increase in traffic volume.

► Since the end of the 80s, policies have focused on the reduction of pollutants. Pollutants

are substances that, upon direct contact, are harmful to a person’s health. By this

definition, the greenhouse gas CO2 is not a pollutant.

► Even with the increased road performance of motor vehicles, their exhaust emissions have

significantly declined.

+

Source: EU (TREMOVE)

Exhaust emissions in the EU 27, in tonnes

Nitrogen oxide (NOx) Particulate matter (PM)

0

1.000.000

2.000.000

3.000.000

4.000.000

5.000.000

6.000.000

2000 2010 Forecast 2020

0

50.000

100.000

150.000

200.000

250.000

2000 2010 Forecast 2020

Cars

Trucks > 7.5 t

Other

-42%

-28%

-34%

-54%

-36%

-37%

-62%

-58%

-58%

-41%

-58%

-61%


Page 122 Outlook


Real-Driving-Emissions NOx – Fast progress

Quelle: ICCT, 2014; Kraftfahrtbundesamt (KBA), 2016, Deutsche Umwelthilfe (DUH), 2016, Auto Motor Sport (AMS), 2015; Auto Motor Sport (AMS), 2016; Bosch

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1

Euro 3 Euro 4 Euro 5 Euro 6

EU Grenzwert (Labor) ICCT (2014)

KBA (04.2016) DUH (09.2016)

AMS (11.2015) AMS (05.2016)

The gap between RDE and laborotory is closing

Seite 123

The first RDE tests of

passenger cars were

conducted in 2014.

The performance of

the up to date cars in

RDE tests is much

better.

The Values taken

from AMS show the

same model with two

engine generations

The technology to

meet the limit values

is on the market.

+

NO

xin

g/k

m

GA

P

Outlook


But: Progress has come at the expense of fuel consumption.

* 800 km circuit on German roads

Source: Transaktuell 10/2014

+

Development of consumption of heavy trucks in a road test*, in litres of diesel per 100 km

30

35

40

45

50

55

1966 1975 1981 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

1993Euro I

1996Euro II 2001

Euro III

2005Euro IV 2008

Euro V

2011First Euro VI

truck in a road

test

2010New testing route

with more hills

-31%

1977First truck under 40 l

1988Pull weight

increased

to 40 t

-8%


Page 124

► The most significant cost factors for truck operators are fuel consumption and the drivers’ working

hours.

► When the Euro I standard was announced in 1988, the reduction of fuel consumption came to a

standstill. Without this effect, fuel consumption under 30 l/100 km would already be the standard

today.

Outlook


Quelle: lastauto omnibus, Heft 10/2016

Technische Daten des Tests

Verbrauchsrelevante Faktoren

Kraftstoffverbräuche

Nach Streckenart in Litern pro 100 km

Thema der Präsentation (Bitte eintragen über: Einfügen -> Kopf/Fußzeile)

Seite 125

46,4

35,6

40,842,6

32,4

37,436,7

27,3

31,9

0

5

10

15

20

25

30

35

40

45

50

SchwereStrecke

LeichteStrecke

Durchschnitt imTest

Gut 22 Prozent weniger Verbrauch bei vergleichbaren Lkw













Von der DEKRA begleiteter Straßentest von vier Tagen Dauer und einer Fahrleistung auf dem deutschen

Straßennetz von etwa 2.000 km je Testfahrzeug.

Die Test-Lkw repräsentieren drei unterschiedliche Fahrzeuggenerationen des selben Herstellers.

Die getesteten Fahrzeuge entsprechen den heutigen Kaufgewohnheiten.

Der neueste Lkw macht es dem Fahrer sehr viel einfacher im Normalbetrieb sparsam zu fahren, als es bei den

Vorgängermodellen der Fall war, die bewusstes Spritsparen erfordern

+

-22%-23%-21%

Outlook



Today’s CO2 laws regulate only new vehicles, completely disregarding

the remaining vehicle fleet. 10

Outlook



126

Limit values affect only new vehicles. Existing vehicles are not covered by the regulation.

Source: ACEA, 2014; VDA, 2015

► Each year, only about 5 per cent of the vehicle fleet in the EU is replaced.

► Existing vehicles hold huge potential for CO2 reduction.

► That is why measures for replacing the existing vehicle fleet are essential.

+

Approx. 12.5 million

new vehicles are

licensed in the EU each year.

Altogether, approx.

253 million cars

are licensed in the EU.

CO2 emissions on the road


Page 127 Outlook



An effective reduction of CO2 emissions cannot address new vehicles

alone but must take a much broader approach.11

Outlook



128

Integrated approach: Include all areas in the regulation process

Improved regulation: Emissions standards for vehicles fall too short.To reduce emissions, drivers and the government need to be involved in the process.

Vehicle limit values only regulate potential emissions.

The actual emissions are determined just as much by drivers as by the

infrastructure.

+

Optimisation of combustion engine

Alternative fuels

Lightweight construction

Switching to electric powertrains

Use of digitalisation (avoidance of

parking-related traffic)

Route

(how much?)

Driving style

(how?)

Vehicle selection

(with what?)

Infrastructure conditions

Construction site management

Promotion of transmissions

and fuels that produce fewer

emissions

Replacement of existing vehicles

Total emissions in tonnes =

Consumption in litres * Emissions factor in kg CO2/litre * Mileage

DriverAutomotive industry Government


Page 129 Outlook


Core theses: Balance between climate protection and industrial policy

The EU is targeting a 20% industry share of GDP for the year 2020.

This goal is presently a long way away, since industrial and climate

protection policy are not yet aligned.

12

Outlook



130

The EU industrial sector: Collapse rather than rebirth

► EU target: The

industrial sector is

expected to have a

20 per cent share of

the GDP in 2020.

► Germany is

reaching this target.

The UK, Italy and

France give cause

for concern.

► Countries outside of

Europe are

improving quickly.

Europe must

respond in order to

secure its position.

+The manufacturing industry’s share of the gross value,

as percentage

8%

10%

12%

14%

16%

18%

20%

22%

24%

2000 2002 2004 2006 2008 2010 2012 2014

Germany Spain France Italy UK EU 28

EU target

for 2020

Source: Eurostat


Page 131 Outlook


The regulatory density in Europe is very high and is becoming even denser.

Number of EU regulations on health, safety and the environment

940998

1.084997

1.105

1.223

1.386

1.560

1.724

2004 2005 2006 2007 2008 2009 2010 2011 2012

► The already high

regulatory density

in the EU continues to

increase.

► The EU’s various

targets and regulations

have a tendency to

contradict each other.

► Principally, better

regulation is needed in

order to pursue all of

the targets.

+

Source: EU


Page 132 Outlook



The CO2 abatement costs vary greatly between sectors and are most

pronounced in the automotive sector.13

Outlook



133

CO2 avoidance in cars is expensive and would be cheaper to obtain in other sectors.

The reduction costs differ greatly from sector to sector.

The avoidance of car emissions by means of improved technologies is relatively expensive, and

these costs will continue to increase.

Sector-based reduction targets lead to high additional costs in the economy.

In the EU Emissions Trading System (ETS), permissible emissions are offset by carbon credits.

One credit allows the emission of a tonne of CO2.

The trade with carbon credits ensures that the emission volume stipulated by the EU is

generated where the reductions are least expensive.

Problem: CO2 avoidance in cars is already

comparatively expensive

Expensive CO2 avoidance leads to excess

burden

* Extrapolation from published reports ** Calculated based on the average value of the respective line.

Sources: AGFW, Institut für Kraftfahrzeuge Aachen (IKA), EU

0 100 200 300 400

Manuf. figures 2014*

IKA Aachen (2012)

IKA Aachen (2016)

IKA Aachen (2021)

Hydroelectric power

Wind power

Carbon credit price today

Target price for 2020

Cars

Electr

icity

CO2

market

In euros per tonne Assumption: CO2 emissions in Europe are to be reduced by 25 million

tonnes. Comparison of the resulting costs today and in 2020, in millions

of euros**

5.338

150

500

1.250

8.688

750

Cars

Carbon credit

Hydroelectricpower

Wind power

Cars

Carboncredits

Today

2020

+


Page 134 Outlook



Emissions trading as the most economically efficient form of CO2

regulation can easily be applied to road traffic.14

Outlook



135

Emissions trading in road traffic: It that possible?

One stop towards an integrated approach would be the inclusion of road traffic in emissions trading. Fuel

consumption can be precisely calculated in emissions. Heavy trucks cannot be integrated in the existing

system of limit values; this is not a problem in emissions trading. The question remains as to who should

make the carbon credits available:

Midstream: Car manufacturers

When a new vehicle is sold, a volume of carbon

credits must be purchased that corresponds to the

car’s expected emissions in its lifetime.

In the case of 130 g CO2/km and 200,000 km:

carbon credits for 26 tonnes


Inaccurate: The purchased amount represents

a theoretical volume.

The manufacturer only determines the

potential emissions, not the actual emissions.

The manufacturer only has an indirect

influence over actual CO2 emissions.

+

–

–

–

Upstream: Filling station operators

The corresponding carbon credits must be purchased for

every litre sold.

1 l petrol = 2.3 kg CO2

1 l diesel = 2.6 kg CO2

Easy to implement technically


Actual emissions are limited.

It only indirectly addresses those who are actually

generating the emissions. The connection to the

driver is the price signal, as in the case of a fuel tax.

+

+

–

Pros

Cons

+


Page 136 Outlook


Emissions trading: A useful supplement

The inclusion of road traffic in emissions trading offers certain benefits.

+ Simple: The necessary amount of carbon

credits per tank filling is easy to calculate. The

required purchase can be paid for with the

fuel.

Inexpensive for the driver: Based on the EU’s

targeted price of 30 euros per carbon credit in

the year 2020, a litre of petrol would cost 7

euro cent more.

Inexpensive for society: The abatement costs

of road traffic are far above 30 euros per

tonne. Emissions are avoided where it is

cheaper to do so.

But: Since the transportation sector would be

purchasing so many carbon credits, other

sectors would have to substantially step up

their reduction efforts. Good judgment will be

necessary in order to avoid an overload in the

other sectors.

Thus: Emissions trading is a useful

supplement to today’s limit values.

ETS Filling Station

Main Street 111, 12345 New Town

Station no.: 000000000xyz

Station tax no.: 13/456/xyzxyz

Company tax no.: 01 234 56789

Receipt no. 1234/005/00001 03.03.2021 9:22

Card payment

*Super 65.13 EUR A #*

*Pump 03 43.45 l 1.499 EUR/l #*

*EU ETS carbon credits 3.04 EUR C* #*

* 43.45 l x 2.33 kg CO2/l = 101.24 kg CO2

* x 30.00 EUR/credit for 1,000 kg CO2

Total 68.17 EUR

Type Net VAT Gross

A: 19.00% 54.73 10.40 65.13

C: 0.00% 3.04 0.00 3.04

Thank you for your visit. Have a safe trip!


Page 137 Outlook


Economy & Finance

CO2 regulation in Europe