EU proposes hefty fine on automakers on CO2 emissions non-compliance

Automakers failing to meet 2021 fleet CO2 emissions compliance, for passenger vehicles sold in the European Union (EU) could be fined more than €14 billion in 2021, based on new analysis from business information provider IHS Markit. Legislators in the European Union (EU) are imposing a new passenger car fleet CO2 emissions target of 95 g/km, to be phased in during 2020, with 100 percent application in 2021 on Worldwide Harmonised Light Vehicle Test Procedure (WLTP). New passenger car fleets that fail to meet compliance are set for potentially substantial fines in both 2020 and 2021.

The IHS Markit baseline scenario (one of the various scenarios), suggests that the EU28 sales-weighted passenger car phased (best 95 percent) fleet CO2 average in 2020 is likely to reach 102.3 g/km (NEDC). This includes 4 g/km of CO2 reduction derived from super credits and a further 2 g/km of CO2 reduction from forecasted eco-innovation technology deployment. In 2020, fines paid by OEMs could amount to €11 billion.

Furthermore, with a 2021 target set at 114.9g/km (as the 95g/km New European Driving Cycle (NEDC) target is adjusted to an equivalent WLTP value), IHS Markit forecasts that the sales-weighted passenger car fleet CO2 average will reach 122.9 g/km (WLTP). If this level of excess emission is unable to be curtailed, it could lead to a total of €14 billion in excess emission premiums.

“The current expectation considers each OEM we expect to be selling cars in the region during the forecast horizon,” said Vijay Subramanian, associate director for the IHS Markit powertrain and compliance business in EMEA. “As we continue to follow OEM technology developments and any regulatory adjustments, our forecasts may be adjusted accordingly.”

The analysis shows that 25 OEMs are, however, on course to meet targets in 2020 and 2021, given developments and initiatives toward electrification and hybridization of their fleets.

“If they are unable to meet compliance targets in time, IHS Markit forecasts that average fines for those not complying could reach €624 per vehicle at the end of 2020, with a further €190 increase in 2021 as a function of the shift to WLTP,” said Subramanian.

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