Crediting system for renewable fuels in EU emission standards for Road Transport

Frontier Economics and Flick Gocke Schaumburg have explored in a report for the German Federal Ministry for Econ comic Affairs how a crediting system for renewable fuels in EU emission standards could work.

From the executive summary:
The EU legislative framework on fleet targets for new road vehicles focuses on tailpipe emissions in a so-called “tank-to-wheel” approach, which does not differentiate between fossil fuels and synthetic and advanced alternative fuels (SAAF). For SAAF, the CO2 tailpipe emissions are bound during the production of the fuels – in an extended “well-to-wheel” cycle view, this fuel would therefore be climate-neutral.
The European Commission (EC) is therefore asked in Article 15 to review scope to credit the climate-neutrality of SAAF in EU emissions performance standards for new vehicles. The study targets an SAAF-crediting system capable of serving as a template for the EC. This proposal is based on an economic evaluation of potential alternatives, aiming to establish a level playing field among wide-ranging emission-reduction technologies to reduce road transport sector emissions effectively and efficiently.

The proposed crediting system is based on the following main principles:

• Building on the existing sustainability certification scheme for transport fuels under RED/RED II
• Level playing field among emission-reduction options for road transport
• Effective climate change contribution in the transport sector
• Maintain ing affordable individual mobility

The General design features of the system are:

• Voluntarily participation of OEMs
• Europe-wide harmonized credtyingh system and SAAF standardsVolumetric scope could be capped (upper limit for SAAF credit)
• Wide range of admissible fuels
• Tradability of credits
• Banking of credits admissible
• Borrowing of credits inadmissible.