Shifting gears: The effects of a future decline in diesel market share on tailpipe CO2 and NOx emissions in Europe

The market share of fuel-efficient new diesel cars in the European Union has remained above 50% since 2010, greatly aiding the EU’s efforts to reduce carbon emissions. But diesel market share is expected to fall significantly. A number of cities are threatening to ban diesel cars from their city centers as air-quality problems related to nitrogen oxide emissions mount, and consumers are turning against them. Meanwhile, improved exhaust aftertreatment technology is making diesel engines more expensive at the same time as some EU member states are cutting tax benefits diesel benefited from in the past, further weakening the competitive market position of diesel cars.

Yet despite the anticipated decline in diesel car sales future carbon dioxide (CO₂) standards in the EU can still be met even if new-car diesel share falls as low as 15% by 2025. In the “exhausting combustion engine technology” scenario, diesel vehicles are replaced by advanced gasoline vehicles (including hybrid vehicles) and (when the diesel share falls below 25%) also partly by electric vehicles. In the “transitioning to electric vehicles earlier” scenario, manufacturers comply with the target by offering more electric, hybrid, and advanced gasoline vehicles in place of diesels. In both cases, the required investment in vehicle efficiency technologies increases but is counterbalanced if taking into account the cost savings when moving away from diesel engines. This is because the production costs of diesel engines are generally greater than their gasoline counterparts, considering the higher temperatures and pressures for the diesel combustion process as well as more complex exhaust aftertreatment systems. As a result, result, the net compliance cost for reaching a 70 g/km (NEDC) target by 2025 would decline by €10–€280 per vehicle, if the diesel market share were to drop to a level as low as 15%.