There is a new report out on the true CO2 efficiency of passenger cars from the International Council on Clean Transportation (ICCT).

The problem:
“Comparison of official and “real-world” fuel consumption and CO2 emission values for passenger cars in Europe and the United States, which shows that the average discrepancy between them rose from less than 10% in 2001 to 25% in 2011.”

Here is a graph for Germany:

User-reported vs. type-approval CO2 emissions (chart)


The reason:
“Fuel consumption and carbon dioxide emission values for new cars in Europe are determined via the so-called type-approval process, which involves testing vehicles under laboratory conditions using the new european driving cycle (NEDC).”
The observed increase of the gap is most likely due to a combination of factors:

  • increasing application of technologies that show a higher benefit in type-approval tests than under real-world driving conditions (for example, start-stop technology)
  • increasing use of ‘flexibilities’ (permitted variances) in the type-approval procedure (for example, during coast-down testing)
  • external factors changing over time (for example, increased use of air conditioning)

The implication:
“The growing gap between reported efficiencies and actual driving experience halves the expected benefits of Europe’s passenger vehicle CO2 regulations. It creates a risk that consumers will lose faith in type-approval fuel consumption values, which in turn may undermine government efforts to encourage the purchase of fuel-efficient vehicles through labeling and tax policy. For tax authorities, the gap between type-approval and real-world CO2 values translates into a gap between actual and potential revenues from vehicle taxes. And increasing discrepancies between type-approval and on-road CO2 emissions can result in a competitive disadvantage for some vehicle manufacturers, as it tilts the playing field.”

Now, the report discussed potential solutions, like integrating more realistic driving behavior, more realistic driving conditions, changing the road slope, etc. BUT – it is quite evident that the moral hazard problem will stay. It is unlikely that the average discrepancy between real and producer-stated emissions is going to decrease substantially. And a difference of 25%, with a significant increase after the CO2 emission regulations have been put in place, is simply too much to not be due to moral hazard. Or, if one prefers a more subtle wording, due to producers making use of the liberties that the regulations for vehicle testing provide. For the average car owner with a car that consumes 8 litres per 100 km and 20000 km a year, this implies (at a petrol price of 1.50€) roughly additional annual costs of 600 euros. That’s not very nice…

So here are some suggestions:

1. Give the task of vehicle emission testing to an independent authority. This will take away any moral hazard problems

2. Institutionalize the following law: if the ICCT finds that a vehicle type has higher emissions in the actual driving experience, then the manufacturer has to compensate each vehicle owner of that vehicle type with an amount equal to (kilometres driven) multiplied by (litre petrol price). That should teach them!