In the last blog post, I already mentioned the increasing gap between the real-world and type-approval emissions which are relevant for compliance with CO2 emission standards. It increased from below 10 percent in the beginning of the 2000s to a gap of approximately 40 percent in 2016 (see Figure 1) and thus explains the less-than-expected GHG mitigation from new passenger cars in Europe. In reaction to this, the EU Commission decided to switch from the test procedure New European Driving Cycle (NEDC) to the Worldwide Harmonized Light Vehicles Test Procedure (WLTP) in order to improve the real-world representativeness of the emission values during the type-approval process. However, switching to the WLTP test procedure does not guarantee an effective regulation and does not impede the potential of real-world gap issues similar to the situation with the NEDC. This blog post will therefore be about the transition from a NEDC to a WLTP-based regulation scheme. Concepts for making the process from a NEDC to a WLTP-based regulation system effective for real-world emission reduction and how to keep the WLTP emission values representative of real-world emissions will then follow in upcoming blog posts.
Figure 1: Real-world versus type-approval emission values of new passenger cars in the EU
Source: ICCT (2017). From Laboratory to Road. A 2017 Update of Official and “Real-World” Fuel Consumption and CO2 Values for Passenger Cars in Europe.
Switching from NEDC to WLTP: how is it done and what could be the impact?
In 2014, the revision of the CO2 regulation (EU/2014/333) established the principle of “comparable stringency” for carmakers. The underlying concept of this principle is to keep the efforts of the carmakers for compliance at a comparable level with respect to the previous NEDC regulation scheme up until 2021. This required the EU Commission to come up with a method to translate NEDC emission targets into higher WLTP target values. As a result, although the “new” WLTP target values of 2021 will be more representative of real-world emissions, the principle of “comparable stringency” has also delayed the introduction of a potentially more effective regulation to the post-2020 period.
Figure 2: Timeline for the transition from a NEDC to a WLTP-based CO2 emissions standard regulation scheme
Source: Oeko-Institute (2017). The changeover from the NEDC to the WLTP and its impact on the effectiveness and the post-2020 update of the CO2 emission standards
In the summer of 2017 the Commission published the regulations for cars (EU/2017/1153 and EU/2017/1502) and vans (EU/2017/1152 and EU/2017/1499) on how to switch from a NEDC into a WLTP-based compliance system (see Figure 2). Even though all vehicles have been tested with the WLTP during the type-approval process since September 2018, target compliance will be monitored by NEDC emission values until 2020. For this purpose, the simulation tool CO2MPAS will transform the WLTP type-approval values into NEDC equivalents in order to check compliance with the regulation. The last step of the transition is the switch to WLTP-based emission targets in 2021, after which the need to translate WLTP emission values into NEDC equivalents disappears. And this last step – the translation of the NEDC targets into a WLTP targets – has a huge potential for making the switch to a WLTP-based emission standard rather ineffective with regard to CO2 emission reduction. Just see the following paragraphs to understand why! The EU Commission proposed changing the regulation scheme from CO2 emission targets in absolute numbers (e.g. 95 g CO2/km in 2020) to a relative reduction requirement with regard to the manufacturer-specific targets in 2021 (e.g. -30% with respect to 2021). The motivation for the change was the unknown WLTP emission level expected by 2021 (see the previous blog post for an explanation of the Commission’s proposal). Thus, the WLTP emission level in 2021 and the translation from NEDC to WLTP target values become very important for the further future emission level of new vehicles: The higher the WLTP emission targets in 2021, the higher the future emission targets will be by 2025 and 2030 (see Figure 3). The Commission has therefore unintentionally created a huge incentive for manufacturers to reach the highest WLTP targets possible in 2021 (see our paper from October 2017 for more details on this topic).
Figure 3: The impact of the WLTP emission target level in 2021 on the 2025 and 2030 emission targets under the current post-2020 CO2 emission standard proposal, for different WLTP to NEDC emission ratios in 2020
Source: Oeko-Institute, own illustration (2018)
Switching from NEDC to WLTP: how could manufacturers address the switch?
The translation of the NEDC to WLTP target values in 2021 is based on the ratio of the average WLTP and NEDC emission values of each manufacturer in 2020 and is calculated by WLTP(2021,target) = WLTP(2020) / NEDC(2020) * NEDC(2020,target).  It follows from this formula that the higher the ratio between the WLTP and NEDC emission values in 2020, the higher the WLTP emission targets in 2021 become. And therefore the question is whether and how carmakers can influence this factor to their advantage. In our opinion there are two ways for carmakers to manipulate this translation factor; a more difficult one involving optimizing the vehicles’ NEDC and WLTP emissions, and a rather easy one exploiting a regulatory loophole in the type-approval process. Let’s start with the explanation of the more difficult of these options. The increasing real-world emission gap over the past years can partially be attributed to carmakers optimizing vehicle components’ settings to minimize NEDC emission values, which does not translate into the same real-world CO2 emission reduction. The carmakers could extend the optimization strategy of vehicle components’ settings (i.e. optimized gear shifting strategies and engine controls) to minimize NEDC and maximize WLTP emission values in 2020. Additionally, the manufacturers could offer special promotions on vehicles with high NEDC to WLTP translation factors in 2020 in order to achieve a high 2021 WLTP target level. These measures combined could lead to inflated WLTP target levels by 2021. Recertification of the same vehicles with optimized component settings for low WLTP emission values beyond 2020 could actually reduce the effectiveness of the switch from a NEDC to a WLTP-based regulation scheme even further. The second option for exploiting the step to WLTP emission targets is easy to address for the manufacturers: they are free to set the WLTP emission values as high as they want to due to a regulation loophole. But how is this possible? Usually it is beneficial (e.g. for compliance with the CO2 emission standards, for qualifying for smaller vehicle taxes, competition) for carmakers to minimize CO2 emission values for their new vehicles. Therefore the regulations defining the WLTP type-approval process and the calculation of the NEDC equivalent emission values during the transformation period include control mechanisms to ensure that the WLTP and NEDC emission values are not too low. However, no control mechanism has been introduced in the correlation regulations to check if the declared WTLP emission values are “too” high, as there has never been cause to do so. Eventually, this allows the manufacturers to reach high WLTP to NEDC emission values ratios in 2020. The readers who do not want to dig too deep into the details of the type-approval process can skip the following paragraph. For the rest, I will go more into detail on this issue as it helps to come up with potential ways to address it. Relevant for compliance with the CO2 emission standards are the ‘declared’ emission values. As part of the type-approval process up until 2020, the manufacturers declare both WLTP and NEDC emission value for each vehicle. Type-approval agencies and certification bodies (e.g. TÜV) then check for the correct declaration of CO2 emission values on selected vehicles. How does this work in detail in the period up until 2020?
- The first step is the declaration of both a WLTP and NEDC CO2 value for the tested vehicle by the manufacturer.
- The second step is running the WLTP procedure on a chassis dynamometer to measure a WLTP CO2 emission value. An output file is produced which includes the measured CO2 emissions and other relevant test data.
- The third step is to verify the declared WLTP emission value. It is verified if the measured CO2 emission value is not significantly higher than the declared value, i.e. the declared WLTP emission value cannot be substantially lower than the measured WLTP value. No upper limit applies for the declared WLTP emission value.
- The fourth step is the translation into a NEDC equivalent emission value. The WLTP test data is used as input into the CO2MPAS tool which simulates NEDC equivalent emission values.
- The last step is the verification of the declared NEDC emission value. It is verified if the NEDC equivalent CO2 emission value of CO2MPAS is not significantly higher than the declared NEDC value, i.e. the declared NEDC emission value cannot be substantially lower than the NEDC equivalent value from CO2MPAS.
And? Have you found the loophole? Here it is: Even though it seems that the declared WLTP and NEDC emission values are directly linked to each other, it is not the case. The WLTP test data – and not the declared WLTP CO2 emission value (which can be far higher than the emission value from the WLTP test) – is used as a link to the NEDC equivalent emission values. Eventually, the manufacturer has an incentive to minimize the NEDC emission value by 2020 (the compliance monitoring is in NEDC CO2 emissions up until 2020) and maximize the WLTP to NEDC emission ratio in 2020 (increasing the WLTP emission target level for 2021). And due to this regulatory loophole, both goals are rather easily achievable for the manufacturers. In the last part of this really long blog post, I would like to add a short comment on how likely it seems to me that carmakers will exploit the possibilities to inflate their 2021 CO2 emission target baseline. I assume that there is an economic incentive for each individual manufacturer to increase the WLTP CO2 emission target as much as possible. The reason is the competitive nature of the vehicle market: the manufacturers which do not exploit this issue will have a competitive disadvantage compared to other carmakers, as their additional manufacturing costs to meet the 2025 and 2030 emission level targets will be higher due to their stricter targets. As a result, I expect most carmakers to take advantage of the switch in the regulation scheme as much as possible. Although the switch of some taxation elements to WLTP-based taxation (e.g. vehicle tax, registration tax) in some EU Member States might have a minor dampening impact on the development, the mid-term perspective of high emission targets will be a strong driving force.
Switching from NEDC to WLTP: the very short version of the issue
At this point, I would like to wrap up this blog post. By switching the emission target design to a relative emission level target, the EU Commission has unintentionally created a huge incentive for manufacturers to inflate their WLTP emission target levels in 2021. Further, the transformation process from a NEDC to a WLTP-based regulation offers carmakers opportunities to exploit this switch to achieve unjustifiably high WLTP emission target levels in 2021. As a result, the increase in effectiveness of the changeover to a WLTP-based system (which was the reason for switching to the WLTP as a type-approval procedure in the first place) could strongly be reduced. But in my opinion there are potential ways to combat this issue. I will address these in the upcoming post, so stay tuned.
 WLTP(2021,target): WLTP CO2 emission target in 2021; NEDC(2020,target): NEDC CO2 emission target in 2020; WLTP(2020): Average WLTP CO2 emissions in 2020; NEDC(2020): Average NEDC CO2 emissions in 2020
Peter Kasten is a senior researcher in the Resources and Transport division. He has joined the Institute in 2010 and is leading the work on the interactions between the transport and the electricity sector and is advising the German Ministry of the Environment on light-duty vehicle CO2 emission targets.