As part of the 2015 Paris agreement, EU member states have committed to reducing their CO₂ emissions. For the transport sector in Germany, a 40-42% reduction is envisaged by 2030, compared to 1990 levels.

With that in mind, the European Commission has been tasked with putting in place measures to reduce road transport sector emissions effectively and efficiently. One important measure is amending the EU Regulations of CO₂ emission performance standards for new vehicles (fleet targets).

The EU fleet target regulation that is applicable to all new road vehicles in the EU does not differentiate between fossil fuels and synthetic and advanced alternative fuels (SAAF), despite the latter having a much lower or often no adverse effects on the climate. That is, any vehicle with combustion engine is treated within the fleet targets as polluting, even when it is in fact running on carbon neutral fuel. Being aware of this shortcoming of the current regulation, the fleet regulation already includes a provision to consider alternative fuels in future revisions.

Frontier was asked by The Federal Ministry of Economics and Energy (BMWi) to produce a report detailing options on how to account for CO₂ reductions from SAAF in the context of EU fleet targets. Our report proposes a SAAF-crediting system that creates a level playing field among wide-ranging emission-reduction technologies to reduce road transport sector emissions effectively and efficiently. This design could serve as a template for a future revision of the fleet targets.

Our design proposal is based on the following principles:

1. Building on the existing sustainability certification scheme for transport fuels under RED/RED II – a certification system ensures sustainability criteria are met and no double counting occurs.
2. Providing equal opportunity in emission-reduction options for road transport by broadening the scope for car manufacturers (OEMs), with the SAAF-crediting system.
3. Ensuring the transport sector contributes to climate change efforts by reducing CO₂ emissions – the SAAF crediting model gives OEMs an alternative way to reduce their emissions, which prevents them from exceeding their fleet target and paying a penalty.
4. Maintaining affordable individual mobility through reducing costs to achieve fleet targets, resulting in lower-priced vehicles.

We used these four principles to put together the basis for our proposed crediting system, which includes the following features:

For full details of our analysis, click below to download our report.