Global Daily Tax News, EU To Ramp Up Carbon Taxes On Heavy-Duty Vehicles, (Jan 24, 2024)

The European Parliament and the EU Council have reached a provisional political agreement strengthening CO2 emissions standards for new heavy-duty vehicles (HDVs) entering the EU market from 2030.

The agreement sets CO2 emissions reduction targets for HDVs of 45 percent for 2030-2034, 65 percent for 2035-2039 and 90 percent as of 2040, compared to 2019 levels.

The scope of the Regulation is expanded, with the standards now applying to almost all trucks (including vocational vehicles, such as garbage lorries, tippers, or concrete mixers as of 2035), urban buses, long-distance buses, and trailers.

To accelerate the transition to zero-emission public transport across Europe, new urban buses must reduce emissions by 90 percent as of 2030. All new urban buses will have to be zero-emissions by 2035.

Under the provisional deal, the Commission will review the effectiveness and impact of the regulation by 2027. This review will cover the expansion of the scope to small lorries, a methodology for registering HDVs exclusively running on CO2 neutral fuels, in conformity with EU law and climate neutrality objectives, the role of a carbon correction factor in the transition towards zero-emission HDVs and a methodology for the determination of full lifecycle CO2 emissions of new heavy-duty vehicles.

The Commission has said the proposal will involve ongoing revision of the Renewable Energy Directive as well as the EU emissions trading and the Energy Taxation Directives, to promote the use of renewable and low-carbon fuels.

It said: "A combination of energy taxation, investment in charging and refuelling infrastructure, new carbon pricing and updated CO2 standards [will lead] to a balanced and cost-effective approach for the reduction of emissions from road transport, addressing market barriers and failures as well as providing investors certainty to invest in zero-emission technologies."

The European Parliament and Council now need to formally approve the agreement. Once this process is completed, the new legislation will be published in the Official Journal of the Union and enter into force.