1.In September 2015 the automotive sector was plunged into a global regulatory crisis. Volkswagen Group (VW) admitted that it had installed ‘defeat device’ software in 11 million cars worldwide. Škoda and Audi cars, which are part of the VW Group, were also implicated. VW’s deception was identified by the International Council for Clean Transportation, an NGO, which reported its findings to the United States’ Environmental Protection Agency. National motoring authorities were criticised for their failure to independently identify the defeat device. The scandal was not just the result of corporate deception; it was also the result of regulatory failure. The EU’s vehicle type-approval system has been under scrutiny as a result and this report aims to contribute to the public debate on how it should be reformed as well as consider the implications of the VW scandal.
2.Type approval is the confirmation that the production sample of a design meets specified performance standards. Increasingly standards are set at a global level, which leads to welcome efficiencies in the vehicle design and development process. A system of Whole Vehicle Type Approval has been in existence for over twenty years in the EU. European Community Whole Vehicle Type Approval (ECWVTA) draws on two sets of legislative requirements. One is based on EU regulations and directives and provides for the approval of whole vehicles, vehicle systems, and separate components. The other is based around UNECE regulations which provide for the approval of vehicle systems and separate components but not whole vehicles. Manufactures can choose which set of requirement they comply with and the system allows for a mixture of both EU and UNECE compliance. The Vehicle Certification Agency (VCA) is the UK’s approval authority. Manufacturers can seek approval in any member state and certification is then accepted throughout the EU without the need for further testing until a standard is updated or the design of a vehicle changes.
3.Our inquiry took place prior to the referendum on UK membership of the European Union. We do not believe there is any prospect of the UK removing itself from the international automotive regulatory system as a result of the vote to leave the EU. A global system for homologation see the UK accept treaty obligations, which will need to be given legislative force. It is desirable that a level playing field is maintained and the UK will have to find ways of influencing the development of UN and EU regulations. We cannot imagine a situation in which the UK will not wish to recognise type approvals granted by EU member states or in which approvals by the VCA are not recognised in other parts of the world. It is important that the UK continues to play an influential role in the negotiations of vehicle standards at a global level, just as it did before it was a member of the EU and even before the EU existed. It will take a significant amount of time before the UK completes its exit negotiations. The conclusions and recommendations in this report are directed to the Department for Transport but inevitably, if those recommendations are to be adopted, the Department will need to work with its European counterparts.
4.Critics believe that the EU’s regulatory framework for limiting emissions is too lenient on the automotive sector and that motoring authorities have turned a blind eye to its flaws because of the sector’s importance to the EU economy. The automotive industry’s contribution to the EU economy is significant. It directly employs over 2 million people and indirectly a further 12 million. The sector is the EU’s largest private research and development investor spending more than €41.5 billion a year. The industry’s turnover accounts for 6.3% of EU GDP.
5.The automotive industry is also a large part of the UK’s manufacturing sector. It accounts for nearly £7 billion turnover and £15.5 billion value added. 160,000 people are employed directly in manufacturing and more than 799,000 across the wider automotive industry. It accounts for nearly 12% of total UK export of goods and it invests £2.4 billion each year in automotive research and development. More than 30 manufacturers build more than 70 models of vehicle in the UK supported by around 2,500 component providers and some of the world’s most skilled engineers.
6.Regulators have known for years that the test used to measure emissions is unfit for purpose but there has been little meaningful action. The test, the New European Drive Cycle (NEDC), was introduced in the early 1990s but has become unrepresentative of modern vehicle technology and real-world driving. Emissions detected on the road are now many times higher than those detected in the laboratory which severely undermines the purpose of having limits on emissions.
7.While the specific conduct of VW only accounted for a fractional increase in the level of expected pollutants, the cumulative real-world emissions of all manufacturers is a serious concern and closing the emissions gap between laboratory and road needs to be a public health priority. A growing body of evidence shows that Nitrogen Oxides (NOx) are a significant hazard to human health. Nitrogen dioxides (NO2) can cause or exacerbate a number of health conditions such as inflammation of the lungs, increased risk of heart attacks, increased risks of strokes and lower birth weight and smaller head circumference in babies. NOx contributes to 23,500 deaths annually in the UK according to a December 2015 report by the Department for Environment, Food and Rural Affairs. Many of the sources of NOx are also sources of particulate matter. Exposure to particulate matter is estimated to contribute to nearly 29,000 deaths annually in the UK. Diesel engines are a significant source of NOx and particulate matter and are the main focus of this report.
8.The VW emissions scandal added impetus to existing plans for improving emissions tests. The European Commission (‘the Commission’) published proposals to introduce a real-world element to NOx testing known as Real Driving Emissions (RDE) testing. There will also be a stricter laboratory test for measuring CO2 and fuel economy called the Worldwide Light-vehicle Test Procedures (WLTP). The Commission also intends to reform the structure of the type-approval system; the reform aims to sever the financial link between the auto industry and the testing and certification services to remove conflicts of interest. There will be more robust audit and oversight of the certification process by the Commission.
9.We believe consumers should be able to make more informed choices. The reforms to emissions tests must be used as an opportunity to give consumers a better understanding of vehicle standards and to improve the mechanism for reducing dangerous pollutants from vehicles while setting achievable targets for manufacturers. Emissions limits should be gradually tightened in a way that gives manufacturers sufficient time to align their vehicle design and investment strategies. Successive revelations from across the world revealing that manufacturers had broken both the spirit and letter of the law understandably shook consumer confidence in vehicle standards; those infractions by manufacturers would not have been detected under the current framework. Confidence can be best restored by making the certification process more transparent so that it can be subject to both independent scrutiny and to oversight from regulatory authorities.
10.Following an evidence session on the VW emissions scandal on 12 October 2015, we launched an inquiry into vehicle type approval and called for evidence in November 2015. We asked for submissions on:
We received 30 submissions of written evidence and held seven oral evidence sessions; five on type approval and two on the VW emissions scandal. Evidence taken in the course of each of those inquiries overlapped and was interdependent. We are grateful to all those who gave evidence and we would like to give special thanks to Edward Foreman who served as a Specialist Advisor. We would also like to thank Emissions Analytics who gave us a live demonstration of the latest generation of emissions testing equipment.
11.Vehicle type approval is highly regulated and complex. This report focuses on the effectiveness of the emissions testing process and the Commission’s proposals for improving it. Our inquiry did not examine other aspects of type approval such as vehicle safety or security.
1 See paragraph 19
2 United Nations Economic Commission for Europe. UNECE’s aim is to promote pan-European economic integration
5 SMMT (), para 1
6 World Health Organization, , 2013
7 Department for Environment, Food and Rural Affairs, , December 2015
12 July 2016