January 19, 2023

Increasingly Ambitious Legislations to Encourage Rapid Transition in Fuel and Automotive Industries of EU Member States

Stratas Advisors

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The European Union’s (EU) drive to promote environmental and energy policies and contain the effects of climate change, is at its peak. Key policies and legislation are due to be implemented to reach the EU’s goals to achieve a 55% CO2 emissions reduction target by 2030, relative to 1990 levels (also known as the ‘Fit for 55’ Package), and to become the first net zero carbon continent by 2050.

Ambitious environmental and energy targets have undoubtedly affected fuel quality, vehicle emission standards and energy efficiency, with increasingly ambitious legislation adopted or being prepared at EU and national levels. During the previous years, Stratas Advisors has observed numerous major developments such as a shift from diesel to less polluting gasoline fuels, promotion of ‘clean fuels’ with high blends of biofuels and synthetic fuels playing an ever-increasing role, but also a growing share of alternative fuels. EU is set to adopt Euro 7, further tightening vehicle emission requirements from 2025, as well as increasingly demanding overall emission reduction goals leading to a de facto ban on the sale of light-duty vehicles (LDVs) with internal combustion engines (ICE) from Jan. 1, 2035. This is a double challenge to automotive manufacturers, which are required to implement significant adjustments.

2021 and 2022 have been eventful years with regard to EU legislative and regulatory developments related to fuel quality, overall emissions reduction, vehicle emission requirements and energy efficiency. On July 11, 2021, the European Commission (EC) proposed the ‘Fit for 55’ Package, a legislative bundle affecting 12 EU directives and regulations pertaining to energy and transport and aiming to deliver massive decarbonization of the European energy and transport sector within the next 15 years. Most of the proposed legislation started its legislative procedure in 2022, undergoing review and debate within the European Parliament (EP) and the Council of the EU, which are both to adopt their proposed amendments and positions and then participate in Trilogue negotiations to agree on a final version of the legislation. 

Furthermore, Directive 98/70/EC (also known as the Fuel Quality Directive or FQD) is under review at EU level and is expected to be approved in 2023. An increase in the maximum allowed FAME content in conventional diesel from B7 to B10 is among the main expected changes of the FQD.

Since the last report (see Insights, Jan. 29, 2021), there have been new developments related to fuel quality and vehicle emissions in seven EU MS: Croatia, Czech Republic, Finland, France, Lithuania, Slovenia and Spain. Among these, Croatia, Czech Republic, Finland and Spain revised their national fuel quality legislations. Across Europe, E10 has been progressively rolled out since 2009. So far, 15 EU MS have officially adopted E10, whereas the share of E10 in total gasoline sales is higher than 90% in seven MS. More EU MS, such as Poland, Ireland and Austria, are planning to introduce E10 in the near future. The U.K. introduced E10 in September 2021 in Great Britain, and in October 2022 in Northern Ireland.

All diesel fuel sold in the EU contains biocomponents. In 2020, 86.2% of the diesel fuel sold in the EU is B7, whereas B7+ had a market share of 13.8% (see figure below). This was a significant change compared to 2019 and 2018, when B7 had a market share of 99.2%, with B7+ accounting for the remaining 0.8%. 

Diesel Blend Shares in the EU (2018-2020)

Source: EU Fuel Quality Monitoring Report (2018-2020), January 2023

The full report examines key developments and significant changes that have occurred regarding key aspects of the EU regulatory framework on conventional and alternative fuels, the implementation of legislation in the MS, vehicle emission and fuel efficiency (CO2) requirements and future developments affecting the transportation sector.

The report covers the following topics:

  • Relevant EU policy and legislation changes in energy and transport;
  • Developments in relation to the FQD and its upcoming revision;
  • MS implementation of the FQD and its deviations; 
  • Gasoline and diesel grades available in the MS, and their biofuel blending levels; 
  • Specifications of CNG, LPG and other alternative fuels; 
  • Non-road diesel specifications; 
  • Fuel additives; 
  • Energy taxation;  
  • Vehicle emissions and fuel efficiency; and
  • Restrictions on diesel vehicles and potential future bans on ICE vehicles. 

Subscribers can access the full report from our Global Fuel Specifications service. 
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