UK & EU Emissions: What's Changing?

The automotive industry is in a constant state of evolution, driven by both technological advancements and an increasing global focus on environmental sustainability. Recent regulatory developments in both the European Union (EU) and the United Kingdom (UK) signal significant shifts in how vehicle emissions are managed and how manufacturers will be expected to comply. These changes, particularly those proposed for 2025, are of considerable interest to manufacturers, fleet operators, and indeed, every motorist concerned about the future of motoring.

EU's Proposed CO2 Flexibility for 2025-2027

In a move designed to provide manufacturers with much-needed breathing room during a critical transition period, the European Commission put forward a significant amendment to Regulation (EU) 2019/631 on April 1, 2025. This proposal, unveiled as part of the Commission's broader Industrial Action Plan for the European automotive sector, aims to introduce additional flexibility in the calculation of compliance with CO2 emissions performance standards for new passenger cars and light commercial vehicles. This is particularly relevant for the calendar years 2025 through 2027.

The rationale behind this proposal stems from direct feedback from stakeholders who highlighted the challenges of meeting stringent CO2 targets year-on-year during this transitional phase. The automotive industry is investing heavily in electrification and other low-emission technologies, and this flexibility acknowledges the practicalities of this large-scale shift.

Averaging Emissions Over Three Years

The core of the EU's proposed amendment lies in allowing manufacturers to average their emissions performance across the entire three-year period from 2025 to 2027. Instead of facing penalties if they exceed their CO2 targets in any single year, manufacturers will be evaluated on their overall performance across these three years. This means that if a manufacturer overshoots its target in one year, it can compensate by achieving better-than-target emissions in the subsequent years. This 'offsetting' mechanism is intended to smooth out the compliance process and reduce the immediate financial pressure on manufacturers.

Under the current framework, penalties are levied on a per-gram-per-kilometre (g/km) basis, with a rate of 95 euros. The proposed amendment stipulates that these penalties will only apply if a manufacturer exceeds its specific emissions target over the cumulative 2025-2027 period. This represents a substantial shift from a potentially punitive annual assessment to a more forgiving, averaged approach.

Why the Flexibility?

The period between 2025 and 2027 is pivotal for the automotive industry as it navigates the transition away from internal combustion engines (ICE) towards zero-emission vehicles (ZEVs). Manufacturers are investing billions in research, development, and manufacturing capacity for electric vehicles (EVs). This flexibility is seen as a pragmatic way to support these investments while ensuring that the EU's overarching climate commitments are still met. It provides a crucial buffer as the market share of ZEVs grows and the production of ICE vehicles gradually declines.

UK's Continued Commitment to ZEVs

Across the Channel, the UK has also been actively shaping its approach to vehicle emissions and the transition to zero-emission transport. On April 7, 2025, the UK's Department for Transport released its government response to a crucial consultation on phasing out the sale of new petrol and diesel cars from 2030 and supporting the broader ZEV transition. This response reaffirms the UK's commitment to its ambitious environmental targets.

Phase-Out of Internal Combustion Engine Vehicles: What's Staying and What's Changing?

The UK government has confirmed its unwavering commitment to the phase-out of sales for new internal combustion engine (ICE) cars by 2030. This means that from January 1, 2030, all new cars sold in the UK will need to be either fully zero-emission (like battery electric vehicles) or at least hybridized. This policy aims to accelerate the adoption of cleaner technologies and reduce transport-related emissions significantly.

However, the government has introduced some adjustments regarding hybrid vehicles. The sale of new hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) will now be permitted until 2035. Similarly, the sale of new ICE, HEV, and PHEV vans will also be allowed to continue until 2035. The ultimate goal remains that all new cars and vans sold in the UK must be fully zero-emission by 2035. This phased approach for hybrids provides a more gradual transition for certain vehicle types and sectors.

The ZEV Mandate: Enhanced Flexibility for Manufacturers

A key element of the UK's strategy is the Zero Emission Vehicle (ZEV) Mandate, which requires manufacturers to meet specific annual targets for ZEV sales through vehicle emissions trading schemes. In its recent response, the government has outlined a series of flexibilities designed to support manufacturers in achieving these targets and to accommodate a variety of pathways towards decarbonisation. The intention is to ensure that these changes are impactful yet sustainable for the industry.

These amendments are largely technical but are designed to provide manufacturers with greater adaptability. The new flexibilities include:

• Extended Borrowing of Allowances: Manufacturers will be permitted to borrow allowances from future years, offering short-term relief if they fall short of their ZEV targets in a given year.
• Transfer of CO2 Savings: The ability to transfer CO2 savings from non-ZEV sales to ZEV sales will be extended up to 2029. This allows manufacturers to leverage emissions improvements made in other parts of their fleet to meet ZEV mandate requirements.
• Revised Caps: New caps are proposed for 2027 to 2029, providing a clearer framework for compliance. Crucially, the caps for 2025 and 2026 will also be increased, offering additional short-term flexibility to help manufacturers navigate the initial years of the mandate.

The government has committed to bringing forward regulations to implement these policy changes promptly and will engage with relevant stakeholders on the draft regulations. While specific timeframes for these new regulations have not yet been provided, the direction of travel is clear: a commitment to facilitating the ZEV transition through adaptable regulatory measures.

Key Takeaways and Comparisons

Both the EU and the UK are responding to the complexities of the automotive transition with strategic regulatory adjustments. While the EU is focusing on financial flexibility for CO2 compliance, the UK is refining its ZEV mandate to offer more operational adaptability for manufacturers.

Frequently Asked Questions

Will the UK adopt the new EU Mot rules?

The provided information does not directly address the adoption of new EU MOT (Ministry of Transport) rules by the UK. The focus is on emissions standards and ZEV mandates, not vehicle inspection regulations. However, given the UK's departure from the EU, it is unlikely to directly adopt EU MOT rules unless specifically chosen to do so for alignment or other strategic reasons.

How will EU emissions standards change in 2025?

The EU is proposing to introduce flexibility in how manufacturers comply with CO2 emissions standards for new passenger cars and light commercial vehicles. Manufacturers will be able to average their CO2 emissions performance over the period 2025-2027, rather than being assessed on a year-by-year basis. Penalties will only apply if the cumulative target for the three years is exceeded.

What is the UK's stance on phasing out petrol and diesel cars?

The UK government remains committed to phasing out the sale of new petrol and diesel cars by 2030. From 2030, all new cars sold must be hybridized or zero-emission. The sale of new hybrid and plug-in hybrid cars, as well as vans (ICE, hybrid, and PHEV), will be permitted until 2035.

What flexibilities are being introduced for the UK's ZEV Mandate?

The UK is introducing flexibilities such as extending the borrowing of allowances, allowing the transfer of CO2 savings from non-ZEVs to ZEVs until 2029, and increasing the caps for 2025 and 2026 to provide additional short-term support. New caps are also proposed for 2027 to 2029.

When will all new cars and vans be zero-emission in the UK?

The UK aims for all new cars and vans to be fully zero-emission by 2035.

The Road Ahead

The regulatory landscape for vehicle emissions is dynamic, and these recent developments underscore the commitment of both the EU and the UK to a cleaner automotive future. While the specific measures differ, the underlying goal of reducing emissions and facilitating the transition to ZEVs is shared. Manufacturers will need to carefully navigate these evolving requirements, leveraging the introduced flexibilities to adapt their product strategies and manufacturing processes effectively. For consumers, these changes signal a continued push towards more sustainable transportation options, with a clear trajectory towards electric and zero-emission mobility.