Governments, businesses and consumers are working together to reduce the environmental impact of human activity on global warming. The European Union has created the “Green Deal for Europe” initiative, to achieve climate neutrality by 2050. The first step of this action plan is to reduce net greenhouse gas emissions by at least 55% by 2030, compared with 1990 levels.
The road freight industry accounts for a significant proportion of greenhouse gas (GHG) emissions in Europe. To meet this challenge, environmental regulations have been introduced to limit CO2 emissions in this industry. Incentives have also been created to encourage carriers to reduce their carbon footprint. This article will help you understand the environmental regulations and obligations that apply to the road transport industry.
Key figures
- 1/5 of total GHG emissions in the European Union (EU) are attributable to road transport
- 99% of heavy-duty vehicles in the EU are powered by combustion engines
- 94% of new light utility vehicles registered are diesel-powered
- 77% of total goods transported by land in the EU are delivered by heavy-duty vehicles
- 25% of GHG emissions from road transport in the EU are generated by heavy-duty vehicles
1. European environmental regulations
In recent years, a number of regulations have been introduced by European authorities. Carriers need to keep a close eye on environmental regulations, which are becoming increasingly stringent and affecting a growing number of companies.
The Corporate Sustainability Reporting Directive (CSRD)
In late 2022, the Corporate Sustainability Reporting Directive (CSRD) was adopted by the European Commission and will be gradually implemented from January 1, 2024. It replaces the European NFRD (Non Financial Reporting Directive), which regulated extra-financial performance reports by European companies.
Aimed at improving the transparency and comparable nature of sustainability information provided by companies, the CSRD extends the reporting obligation to all large companies and all companies listed on regulated markets, except for small businesses. The directive also applies to non-European companies with European sales over €150 million and a subsidiary or branch based in the European Union. Large transport companies are therefore affected by this new regulation.
The CSRD requires companies to provide detailed information on their sustainability policies, objectives and performance, including greenhouse gas emissions, energy consumption, waste management, resource use, environmental footprint, diversity and inclusion, and other social and governance aspects.
For transport companies, this means that they will have to implement robust data collection systems to measure and monitor their environmental and social performance. They will also need to develop policies and strategies to reduce their carbon footprint, adopt sustainable practices in their operations and promote corporate social accountability.
Find out more about Corporate sustainability reporting directive
Euro standards
In 1992, the European Union introduced emission standards for heavy goods vehicles (trucks), known as Euro standards. These standards set specific emission limits that vehicles must meet before they can be registered and sold on the European market. These limits relate to CO2 (carbon dioxide), NOx (nitrogen oxides), PM (particulate matter) and other atmospheric pollutants. Euro standards are updated regularly, with emission limits becoming increasingly stringent. Currently, the Euro 6/VI standard is applied to new vehicles in Europe, with very strict emission limits for exhaust gases.
Find out more about Euro 7 standards
Latest news
From July 1, 2025 for light-duty vehicles, and from July 1, 2027 for heavy-duty vehicles, the new Euro 7 standards should be appplied if they are approved by EU member states. Unlike Euro 6/VI standards, Euro 7 standards aim to unify and simplify emission rules for motor vehicles. They group emission limits for all types of vehicle, whether cars, vans, buses or trucks, into a single set of rules.
These new rules are independent of the fuels and technologies used; setting the same limits whether the vehicle runs on petrol, diesel, electricity or alternative fuels. The new regulations set emission limits for previously unregulated pollutants, notably nitrous oxide emissions from heavy-duty vehicles. Euro 7 standards also regulate the durability of electric vehicle batteries, and provide for real-time monitoring of emissions data by EU authorities.
Thanks to these new regulations, the European Commissioner for the Internal Market, Thierry Breton, promises significant reductions: -35% in NOx emissions for light commercial vehicles and -56% for heavy-duty vehicles. However, costs will also increase for consumers and businesses: an additional 90-150 euros for light commercial vehicles and 2,700 euros for heavy commercial vehicles, according to Thierry Breton.
The EU cap-and-trade system for transport emissions (ETS)
Created in 2005, the ETS is a CO2 cap-and-trade system for greenhouse gas emitting companies in the European Union. This measure provides a financial incentive for the largest emitters to reduce their emissions, by setting a system of fixed annual emissions quotas, enabling them to offset their emissions or face heavy fines. If a company exceeds this threshold, it must buy carbon credits to offset its excess emissions. On the other hand, if it emits less CO2 than its cap, it can sell its extra carbon credits to other companies that need to offset their emissions.
The industries covered by the regulations include:
- electricity and heat generation,
- energy-intensive industries (including oil and the production of a range of materials),
- air transport,
- shipping.
Find out more about the EU’s cap-and-trade system for transport emissions (ETS)
Latest news
In December 2022, the European Parliament adopted a new emissions trading scheme for buildings and road transport (ETS II) that will start in 2027 (a sharp increase in energy prices could push it back to 2028). CO2 taxes will be collected by fuel suppliers, which means that transport companies can expect higher fuel prices: Belgian industrial group TLV estimates that this will translate into an ETS cost of 12 cents per liter of diesel.
European regulations on vehicle CO2 emissions
Regulation (EU) 2019/1242 for heavy-duty vehicles
In 2019, the Council of the EU and the European Parliament adopted the very first legislation targeting the CO2 emissions of new heavy-duty vehicles in the EU: Regulation (EU) 2019/1242. Initially, only emission standards were set for large heavy-duty vehicles (>16 tons), which account for around 65-70% of total CO2 emissions from heavy-duty vehicles. From 2025, new registrations of heavy-duty vehicles in the EU will have to show an average reduction of 15% in CO2 emissions compared with the reference period (01/07/2019-30/06/2020). Then, from 2030, this reduction will have to reach 30%. The regulation also provides for mandatory monitoring and reporting of CO2 emissions and fuel consumption of new heavy-duty vehicles, to ensure compliance with CO2 reduction targets.
Latest news
These standards have been extended to other types of heavy vehicles, such as small trucks (<16 tons), buses and coaches, in a 2022 review. In a regulation drafted on February 14, 2023, the European Commission suggests new, more ambitious EU targets with CO2 emission reductions of:
- 15% from January 1, 2025,
- 45% from January 1, 2030,
- 65% from January 1, 2035,
- 90% from January 1, 2040.
The introduction of these new CO2 emission standards for heavy-duty vehicles is expected to reduce demand for fossil fuels, mainly diesel, by around 2 billion barrels of oil in the EU by 2031-2050, compared with 2019. According to the Commission, these standards will reduce fuel costs and vehicle ownership costs, which is good news for transport carriers. Savings for early adopters of new heavy-duty vehicles could reach around €9,000 by 2030 and €41,000 by 2040.
Find out more about the 2023 regulation project
Regulation (EU) 2019/1631 for light commercial vehicles
The EU Regulation 2019/1631, adopted in 2019, sets CO2 emission performance standards for new passenger cars and light commercial vehicles (LCVs, i.e. vans). The law sets a reduction in LCV emissions of 15% by 2025 and 37.5% by 2030, compared with 2021 levels. Emissions thresholds per LCV have also been set (147 g of CO₂/km), and a carbon tax for companies exceeding emissions thresholds (95 euros per g/km exceeded, multiplied by fleet headcount).
Latest news
On March 28, 2023, the regulation was updated with stricter CO2 emission reduction targets: 50% for new LCVs by 2030 and 100% by 2035, which means that the end of internal combustion vehicles is now a certainty.
The European Clean Vehicle Directive for the public sector players
Public companies, such as postal operators, have additional obligations: adopted in June 2019, the revised European directive on clean vehicles requires, by vehicle type and member state, a minimum proportion of clean vehicles from public bodies. For example, in calls for tender, the proportion of clean vehicles must be at least:
- 38.5% for light vehicles (cars and vans) in Germany, the UK, the Netherlands, Austria, Italy, Spain and Denmark (37.4% in France) from 2021.
10% for trucks in the same countries from 2021, then 15% from 2026.
Find out more about the revised European directive on clean vehicles
2. Incentive measures to limit CO2 emissions from road transport
In addition to European regulations, individual countries are introducing measures to encourage carriers to reduce their CO2 emissions and electrify their vehicle fleets.
Low-emission zones (LEZ)
Low Emission Zones for mobility (LEZ or LEZ-m) are geographical areas in cities or metropolitan areas that aim to reduce air pollution by restricting access to the most polluting vehicles. In a ZFE, restrictions are introduced for vehicles based on their pollution rate. The cleanest vehicles, such as electric or low-emission vehicles, can generally travel freely in the area. On the other hand, older, more polluting vehicles, particularly diesel-powered ones, may be subject to bans or access restrictions. This measure is a major challenge for transport operators, since 99% of heavy-duty vehicles in the EU are powered by internal combustion engines. Restriction criteria may vary from one LEZ to another, but are generally based on the Euro emission standards of the vehicles. Carriers may be subject to fines if they operate in these areas with vehicles that do not meet the required emission standards.
LEZs are being introduced in an increasing number of European countries: their number has jumped from 228 in 2019 to 320 in 2022, a 40% increase in just 3 years. Currently, eleven French cities have introduced LEZs (Paris, Lyon, Aix-Marseille, Toulouse, Nice, Montpellier, Strasbourg, Grenoble, Rouen, Reims and Saint-Étienne). By 2025, 32 additional LEZs will have been introduced in cities with more than 150,000 inhabitants. The cities of Barcelona and Milan also have LEZs, with the latter noting a 76% reduction in nitrogen oxides and a 38.5% reduction in the number of average daily journeys thanks to such measures.
City tolls
City tolls for heavy-duty vehicles are introduced in certain cities to reduce traffic and pollutant emissions. These tolls mean that additional charges apply to heavy-duty vehicles entering certain urban areas. They can differ depending on various criteria, such as the weight and environmental class of the vehicle, as well as the duration and frequency of its use.
One of the aims of these tolls is to encourage carriers to invest in less polluting vehicles, by offering them toll exemptions or rate reductions. In Germany, for example, trucks complying with Euro 6 emission standards can benefit from a 3.5% reduction in toll rates. In some countries, the reduction can be as much as 50%, a significant saving given the average annual cost of road tolls, which can be as much as €25,000 per truck.
Latest news
The Eurovignette directive, revised in 2022, marks the end of time-based user charges (vignettes) for heavy-duty vehicles over 3.5 tonnes, which were the only ones impacted until now.
By 2030, all heavy and light vehicles will be subject to a new vignette system based on user charges calculated on the basis of distance traveled and charges that will be proportional to vehicle use and energy performance. Vans will be subject to specific charges based on their CO2 emissions from 2026.
The directive also gives member states the option of introducing other optional measures, including a fee to cover the costs of air and noise pollution, or extra tolls on regularly congested roads.
Find out more about the Eurovignette directive
Tax incentives
The aim of the different regulations and measures mentioned above is to encourage transport companies to invest in less-polluting vehicles, especially electric ones. However, even today, an electric truck can cost three to four times its diesel equivalent, representing a substantial cost for transport companies. A recent study by mobility specialists Bridgestone and Webfleet claims that more than three-quarters of fleet decision-makers are postponing their electrification plans, and 76% of them say this is due to high costs (71% for vans and 80% for trucks). This is why many countries offer tax reductions or financial incentives to purchase electric or low-emission vehicles.
In France, for example, electric and plug-in hybrid vehicles benefit from an exemption from company vehicle tax (TVS) and a reduction in registration tax. An environmental bonus has also been introduced for the purchase or leasing of clean vehicles. Until the end of 2022, carriers could receive up to 5,000 euros for an electric van and 50,000 euros for a new electric and/or hydrogen-powered heavy-duty vehicle. This aid can be combined with the amortization scheme for clean energy vehicles, available until December 31, 2030. This scheme grants a tax deduction of:
- 20% for vehicles with an authorized load weight ≥ 2.6 tons and < 3.5 tons.
40% for vehicles with an authorized load weight ≥ 3.5 tonnes.
- 60% for vehicles with an authorized load weight ≥ 3.5 tonnes and ≤ 16 tonnes.
In Germany, the highest subsidy granted to electric vehicles reaches 360,000 euros per vehicle, with a cap of 80% of the additional investment compared with an equivalent diesel vehicle. Some countries offer different subsidies depending on company size:
- For small businesses or independent contractors, Spain grants 190,000 euros; the Netherlands, 131,900 euros.
- For large companies, Spain grants 130,000 euros; the Netherlands 72,700 euros.
Regulations and financial incentives may vary from country to country, and may be subject to specific conditions. Carriers are advised to check with the relevant authorities or business support organizations for specific information on tax reductions or financial incentives available in their country.
Environmental regulations applicable to road transport therefore play a key role in reducing greenhouse gas emissions. They encourage transport companies to adopt sustainable practices, promote technological innovation and contribute to the transition towards cleaner vehicle fleets. Route optimization and conversion to electric fleets are key measures for achieving emission reduction targets and promoting more environmentally-friendly mobility. Thanks to these joint efforts, the road transport industry can significantly contribute to achieving climate neutrality by 2050.
Do you want to electrify your vehicle fleet and assess the impact of such a change on your business? Contact us now!