21 July 2020

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Getting to grips with the most important regulatory emission and testing changes facing diesel and petrol fleets.

The adverse publicity surrounding diesel engines and their emissions has resulted in a number of new, more stringent tests and tighter regulations for all powertrains. As a result, new petrol and diesel cars are cleaner and more efficient than ever. But what do each of these new requirements mean, how do they link together, and how do they affect your fleet?

Underlying all new vehicle production is the Fleet-Wide CO2 Average, the targets of which manufacturers must hit. WLTP and RDE are testing procedures for various emissions and fuel economy and Euro 6 is the standard for powertrain. Together they combine so that your business can run a more efficient fleet.

We’ve compiled the first of our Jargon Busting series to explain them in more detail, allowing you can make informed choices about your fleet:

Fleet-Wide CO2 Average

What is it? Progressively tightening fuel economy and CO2 emission targets for the vehicles manufacturers build have been set by the European Union, averaged across all car and van makers’ sales in the region. The 2020/21 target is 95g/km for passenger cars and 147g/km for commercial vehicles, though manufacturers have individual goals based tailored to the weight of their product range.

Why is it a challenge? European Environment Agency figures show passenger cars and commercial vehicles registered last year averaged 122.4gkm and 158.4g/km respectively. Fines for non-compliance by manufacturers are severe, at €95 per g/km over the target per vehicle registered, though there is an advantage for plug-in models. Vehicles emitting 50g/km or less are counted twice in 2020 and 1.67 times in 2021, which can help bring the average down, though this offsetting is capped at 7.5g/km.

How does this affect fleets? The UK is mirroring the European CO2 targets post-Brexit. This makes low-CO2 vehicles a priority, particularly as manufacturers face waning demand for diesel engines. Some high-CO2 models have already been withdrawn from sale, or had volumes limited, while relatively low-cost electrification such as ‘mild hybrid’ systems are being adopted for mainstream models. In the first half of 2020, 15.5% of diesel and 7.2% of petrol vehicles were equipped with this technology, according to SMMT data.

Further reading:

Cars: https://ec.europa.eu/clima/policies/transport/vehicles/cars_en

Vans: https://ec.europa.eu/clima/policies/transport/vehicles/vans_en

WLTP

What is it? The Worldwide harmonised Light vehicles Test Procedure – a tougher laboratory test of vehicles’ fuel economy and CO2 emissions, addressing criticisms that the previous New European Drive Cycle (NEDC) produced unrealistic data. A 2016 study by the International Council on Clean Transportation showed average fuel consumption was 42% higher on the road than published figures.

Why is it a challenge? Until recently, the biggest challenges have been at a manufacturer level. WLTP was introduced for passenger cars in September 2017, with a deadline of September 2019 for entire model ranges to be re-tested – including individual trim levels and option packs for the first time. Commercial vehicle deadlines are 12 months later.

The new test is longer than the NEDC, at higher speeds and has four phases replicating urban, suburban, rural and highway conditions, with a calculated ‘combined’ average. A 2018 EU report covering 4.4 million cars showed this had resulted in an average 20% increase in CO2 emissions for equivalent models. That’s often despite no mechanical changes to the vehicle itself.

How does this affect fleets? WLTP became the standard for published fuel consumption in the UK from January 2020, enabling more accurate modelling of whole-life costs for new vehicles, which is good news. The corresponding CO2 figures were adopted as the basis for vehicle tax on the 6th April, and that’s more problematic.

HM Treasury recognised early on that the latter would leave fleets particularly exposed to increased tax liability. Company car tax bands for vehicles registered before 6th April 2020 are frozen for three financial years. Vehicles on or after this date receive a 2%-point reduction to account for the higher CO2 figures produced by the WLTP process. This drops to 1% in 2021/22 and aligns with the NEDC bands the following year.

However, this may not be enough to shield businesses and drivers from additional costs. Some vehicles are jumping by four or six company car tax bands, and CO2 emissions also affect capital allowances – the 18% write down allowance pool is currently limited at 110g/km. It could also be worth re-visiting CO2-capped choice lists to ensure job-need drivers, in particular, can still choose appropriate vehicles. 

Further Reading:

https://www.wltpfacts.eu/about-us/

RDE

What is it? An acronym of ‘Real Driving Emissions’; the first on-road test of harmful exhaust emissions, ensuring vehicles comply with Euro 6 limits in use as well as in the laboratory. It’s an additional process test on a set route comprising urban, rural and motorway conditions, using a portable device to analyse exhaust emissions.

Why is it a challenge? RDE is being introduced in stages, giving time for the industry to validate the process and the equipment used, and each includes a tightening ‘conformity factor’. An RDE1-certified vehicle can emit 2.1 times more nitrogen oxides (NOx) on the road than the laboratory limit, while RDE2 brings this down to 1.43 times. RDE3, expected in 2023, is expected to remove the conformity factor altogether. Non-compliant vehicles cannot be sold in Europe.

How does this affect fleets? With little warning, RDE2 became part of the UK’s vehicle tax regime from April 2018. Excluding hybrids, all diesel cars which are not RDE2 certified are liable for a 4%-point company car tax levy and one-band increase in vehicle excise duty.

As more compliant vehicles come to market, this means fleets are being incentivised to adopt the cleanest diesel engines available. Independent on-road testing by Emissions Analytics suggests it’s proved effective, with many RDE-compliant diesels emitting 75% less NOx than the legal limit.

Further Reading:

https://ec.europa.eu/commission/presscorner/detail/en/QANDA_19_2850

Euro 6

What is it? The latest stage of the European pollutant emissions standards. Phased in since September 2014, it’s particularly notable for setting much stricter limits for nitrogen oxide (NOx) for diesel, and particulate matter for petrol models.

Why is it a challenge? Euro 6 is being introduced in phases, with big differences between the earliest models and their newest counterparts. It’s required costly after-treatment systems, such as petrol particulate filters and selective catalytic reduction, the latter also requiring regular AdBlue refills. This has also further reduced the availability of diesel superminis, where the on-cost of this technology is harder to absorb within the vehicle price.

How does it affect fleets? Understanding the various Euro 6 phases can help differentiate between a vehicle’s emission levels. WLTP testing came in with Euro 6c, while Euro 6d Temp (also known as Euro 6.2) vehicles are certified to RDE1 – this became mandatory from last September. The current gold standard is Euro 6d (or Euro 6.3), which indicates compliance with RDE2 and the associated company car tax relief for non-hybrid diesel models.This becomes mandatory from January 2021.

Euro 6 has also become a yardstick for many clean air zones, but the vast majority of fleet vehicles, including vans, will already comply.

Further Reading:

https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32007R0715

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