The proposed cap on the carbon

correction factor has a negligible impact in

the HDV CO2 standards
Berlin, November 16, 2023

Summary: A carbon correction factor would artificially reduce the CO 2 emissions of diesel and
natural gas trucks by the share of their respective alternative fuels each year if adopted. A
proposal to cap its contribution to 12.5% between 2025-2034, 25% between 2035-2039, and
40% after 2040 would have very little impact as until 2040, we project the CCF would almost
never reach these limits. A type approval system defining all alternative fuels eligible under
the Renewable Energy Directive as carbon neutral would allow a truck or bus running on
biofuel produced from palm or soy oil throughout its lifetime to count as zero emission.

Europe’s policymakers have so far decided against the inclusion of fuels provisions, i.e. a carbon
correction factor (CCF) or a type approval system, in the CO2 standards for trucks and buses.
Last month, both the Council of the European Union and the ENVI committee both voted
against type approval and CCF. In the proposals put forward in both of these cases, the CCF
would have artificially reduced the emissions of every diesel and natural gas truck based on the
share of their respective alternatives in the EU fuel mix. The share of alternative fuels is already
set to rise under the obligations laid out in the Renewable Energy Directive (RED III) and
ReFuelEU Aviation, effectively reducing the stringency of the truck and bus CO 2 standards
without incentivizing further production of alternative fuels.

Contact: Eamonn Mulholland, e.mulholland@theicct.org; Chelsea Baldino, chelsea.baldino@theicct.org

ICCT - International Council on Clean Transportation Europe gemeinnuetzige GmbH

Managing Director: Dr. Peter Mock, Amtsgericht Charlottenburg HRB 143557, VAT-IdNr. DE284186076
EU / German Transparency Register identification number: 06250094777-73 / R005590
In advance of the plenary vote on the CO2 standards file next week, fuels provisions through a
CCF as well as type approval of vehicles running on CO2 neutral fuels, have been proposed to be
included as amendments. Several forms of the CCF are being proposed, one of which features a
cap. We demonstrate the impact this cap would have on truck and bus CO2 emissions, and then
we discuss the risk a type approval system would pose, by allowing biofuels produced from
vegetable oils like palm and soy to count unlimitedly towards the CO2 standards.

Carbon Correction Factor

In the proposed Amendment (AM) 87, all biofuels and synthetic fuels that comply with the RED
would count towards the CO2 standards. The maximum value a CCF could achieve would be
12.5% between 2025-2034, 25% between 2035-2039, and 40% after 2040. Based on our
projections of how the CCF will evolve under obligations from RED III and ReFuelEU Aviation, 1
this cap will only ever be exceeded in two years for diesel and four years for natural gas
between now and 2040 (see Figure 1).

1
Chelsea Baldino, Eamonn Mulholland, and Nikita Pavlenko, “Assessing the Risks of Crediting Alternative Fuels in Europe’s CO2
Standards for Trucks and Buses” (Washington, D.C.: International Council on Clean Transportation, October 2, 2023),
https://theicct.org/publication/crediting-alternative-fuels-europe-co2-standards-trucks-buses-oct23/.

2
Under a CCF that has no cap, emissions would be 200 million tons of CO2 higher than the
proposal by the European Commission. Under a CCF which is capped (following the projections
highlighted by the dotted lines in Figure 1), cumulative emissions would be 1 million tons of CO2
lower than an uncapped CCF between 2020 and 2050, roughly equivalent to 0.5% of emissions
from the CO2 sector in 2021. Table 1 shows these cumulative CO2 emissions under a range of
scenarios between 2025 and 2050, and Figure 2 presents the annual emissions as a time series.

Table 1. Cumulative CO2 emissions 2020-2050. The CCF scenarios assume all alternative fuels that are RED eligible are counted.

Cumulative CO2 between 2025 and

Scenario Change relative to COM proposal
2050 (million tons CO2)

Current standards 4,521 +45%

COM proposal 3,125 -

COM proposal + uncapped CCF 3,330 +7%

COM proposal + capped CCF 3,329 +7%

ENVI proposal 3,008 -4%

3
Type Approval

AM 92 would introduce a type approval system into the heavy-duty vehicle CO2 standards
which would allow vehicles operating on 100% alternative fuels to be labelled as zero-emission
under the CO2 standards. Assuming the “carbon neutral” fuels referenced in AM 92 are those
defined in AM 87, then all alternative fuel types eligible to count towards the RED III would be
included in the type approval system. This means biofuels like hydroprocessed vegetable oil
(HVO) produced from vegetable oils such as palm and soy oil could fuel a truck or bus
throughout its lifetime, and this vehicle would be labelled as zero-emission under the CO2
standards. At present, vegetable oils represent the majority of feedstock used to produce HVO.

Biofuels produced from vegetable oils can have higher life-cycle emissions than conventional
fossil fuels. We illustrated the lifecycle GHG emissions (gCO2e/MJ) of HVO in a recent study
which we show here again, in Figure 3.2 The figure includes indirect land use change emissions
from a European Commission-funded report,3 compared to the RED’s fossil comparator. Palm
oil became a “high indirect land use change” feedstock under a RED delegated regulation,
meaning it will no longer count towards Member States’ transport targets under this Directive
by 2030. However, HVO produced from palm oil would still comply with all the RED’s
sustainability criteria and GHG reduction requirements and could therefore be included in this
type approval system. HVO is an attractive alternative fuel because it is the only commercially
available alternative drop-in liquid fuel for the HDV sector.

2
Chelsea Baldino, Eamonn Mulholland, and Nikita Pavlenko, “Assessing the Risks of Crediting Alternative Fuels in Europe’s CO2
Standards for Trucks and Buses” (Washington, D.C.: International Council on Clean Transportation, October 2, 2023),
https://theicct.org/publication/crediting-alternative-fuels-europe-co2-standards-trucks-buses-oct23/.
3
Hugo Valin, Daan Peters, Maarten van den Berg, Stefan Frank, Petr Havlik, Nicklas Forsell,…, Fullvio di Fulvio, „The land use
change impact of biofuels consumed in the EU: quantification of area and greenhouse gas impacts,” (Ultrecht, Netherlands: Ecofys,
IIASA, E4tech, August 27th, 2015), https://energy.ec.europa.eu/publications/land-use-change-impact-biofuels-consumed-eu_en

4
Note: Direct emissions are the typical value for each pathway from the RED III. Indirect land use change emissions
are from the 2015 European Commission GLOBIOM report, including error bars from their uncertainty analysis.
The dashed red line represents RED’s fossil comparator.