Working Paper

The EU heavy-duty CO2 standards: Impact of the COVID-19 crisis and market dynamics on baseline emissions

The European Union CO2 emission performance standards for heavy-duty vehicles mandate fleet-wide average emission reductions of 15% in 2025 and 30% in 2030 for new vehicles compared to the values reported by manufacturers in the baselining period, which ran from July 1, 2019 to June 30, 2020. In 2022, a review of the regulation will validate baseline CO2 emissions reported by manufacturers. 

The fleet-average specific CO2 emissions of a manufacturer will strongly depend on its fleet composition. Due to the policy design and to the large proportion of group 5-LH long-haul tractor-trailers in the overall fleet, it is anticipated that manufacturers with higher shares of this subgroup will require less effort to comply with their CO2 emissions reduction targets than those that have higher shares of rigid trucks in their fleets.

The emission baselining period was marked by the COVID-19 pandemic, which had a detrimental impact on the market. The continuous growth in truck sales observed in the previous five years was already slowing down in the first months of 2020, dropping between 5% and 50% compared to the same period in 2018. The COVID-19 crisis added to this trend by introducing further losses in sales in the following months, leading to overall losses between 29% and 57% in the first half of 2020 compared to 2018. 

Although the COVID-19 pandemic did not affect market shares among the largest truck makers, there were significant changes to the fleet composition between the second half of 2019 and 2020, which can be mostly attributed to the crisis. Regulated vehicle groups have been primarily dominated by long-haul tractor-trailers in the past decade. While this was still the case in the baselining period, the share of this vehicle segment seems to have decreased in 2020 with potential impacts on the baseline. Conversely, the number of vehicles in the non-regulated categories have increased in recent years, gaining 4% market shares in the first half of 2020 compared to 2019. An increasingly high share of the fleet—23% during the baselining period—is therefore not covered by CO2 emission standards. As long-haul tractor-trailers have the highest cost-effective CO2 emissions reduction potential, this trend could also make compliance and the accumulation of early credits harder for manufacturers overall.

The market penetration of zero- and low-emissions trucks as a compliance pathway is still very low. While truck manufacturers seem eager to support such technologies, the economic recession brought by the COVID-19 pandemic might present a barrier to market penetration. Further incentives and recovery programs would help manufacturers to introduce larger shares of these technologies in their fleet.