New Zealand: LDV: GHG Emissions

Overview

New light-duty vehicles imported into New Zealand are subject to annual greenhouse gas emission standards measured in grams of CO2 emissions per kilometer. In 2023, light passenger vehicles must meet a standard of 145g CO2e/km, while light commercial vehicles must not emit more than 218g CO2e/km. These standards increase stringency to 63.3g CO2e/km and 87.2g CO2e/km in 2027 for light-duty passenger and light commercial vehicles, respectively.

Standard type
Greenhouse gas (CO2) emissions standard

Regulating Body
Te Manatū Waka – Ministry of Transport
Waka Kotahi NZ Transport Agency

Current Standard
Clean Vehicle Standard and Clean Vehicle Discount Scheme (2022)

Applicability
Imported light-duty passenger and commercial vehicles with a tare weight ≤ 3,500 kg
Contents

 

Categories

Asia, New Zealand Light-duty vehicles Efficiency and GHG standards

History

New regulations for on-road vehicles in New Zealand are passed as amendments to two pieces of legislation administered by the nation’s Ministry of Transportation: The Land Transport Act 1998 and the Land Transport Management Act 2003. All New Zealand’s light-duty vehicles (LDVs) are imported. Accordingly, most LDVs sold have their emissions tested using cycles other than New Zealand’s approved 3P-WLTP (Three-Phase Worldwide Harmonized Light-Duty Vehicles Test Procedure) cycle. New Zealand requires importers to convert these results to the 3P-WLTP cycle before their vehicles can be certified.

New Zealand passed its first-ever greenhouse gas emissions standards for light-duty vehicles in 2022 with the Clean Vehicle standard found in Part 13 of the Clean Vehicles Act Amendment. Starting in 2023, the Act sets annual CO2 emissions targets for vehicle importers. The Clean Vehicles Act also expanded on a 2021 program that provided rebates for battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). “The Clean Car Discount” now encompasses all new and used light vehicles and introduces an entire bonus-malus scheme designed to increase consumer demand for zero- and low-emission vehicles using taxes and rebates. The program imposes taxes on the purchase of high CO2 emitting vehicles and uses the revenue from those taxes to give rebates to purchasers of low-emitting vehicles. Vehicles deemed to have neither very low nor high emissions are not subject to rebates nor charges.

 

Technical Standards

Vehicle and importer definitions: Part 13 of the Land Transport (Clean Vehicles) Amendment Act establishes two classes of light motor vehicles: “Type A” vehicles are designed to carry passengers, have fewer than nine seats, and typically consist of cars and SUVs. “Type B” vehicles, typically vans and utility vehicles (utes), are designed to carry passengers or goods and have more than nine seats. The Clean Vehicles Act also distinguishes between two different types of vehicle importers. Category 1 importers are in the business of importing light vehicles on a commercial scale, while Category 2 importers typically import one or a few vehicles for personal reasons. The Ministry of Transportation designates importers either Category 1 or 2 on a case-by-case basis.

Clean Vehicle Standard: The Clean Vehicles Amendment Act sets weight-based fleet-wide CO2 emissions standards for Category 1 importers (in grams of carbon dioxide per kilometer) for type A and type B vehicles. The measures shown in table 1 have not been adjusted for fleet-wide average vehicle tare weight, which must be calculated by the importer using the equations below. is the weight in kilograms of the vehicle when it is empty of passengers and or cargo. A vehicle importer must calculate their fleet-wide compliance for each vehicle type separately. According to the second set of equations, category 2 importers must comply with the same standards outlined in table 1 but on a per-vehicle basis.

For fleets (Category 1 importers):

Supplier’s Type A fleet CO2 target = annual Type A fleet target + a * (M – M0)

Supplier’s Type B fleet CO2 target = annual Type B fleet target + a * (M – M0)

Where:

  • a: The slope of the emissions limit line, which is derived through the correlation of vehicle tare weights and CO2
  • M: The weighted average tare weight in kilograms of all light-duty vehicles of a given type imported by the supplier.
  • M0: The weighted average tare weight in kilograms of all light vehicles imported (Type A or Type B depending on the target vehicle type)

 

For individual vehicles (Category 2 importers):

Type A CO2 target = annual Type A vehicle target + a * (V – V0)

Type B CO2 target = annual Type B vehicle target + a * (V – V0)

Where:

  • a: The slope of the emissions limit line, which is derived through the correlation of vehicle tare weights and CO2 emissions of the vehicles that entered New Zealand in the past year.
  • V: The tare weight in kilograms of the vehicle
  • V0: The weighted average tare weight in kilograms of all light vehicles imported (Type A or Type B depending on the target vehicle type).
Table 1: Annual fleet targets
Vehicle Type 2023 2024 2025 2026 2027
Type A 145g CO2e/km 133.9g CO2e/km 112.6g CO2e/km 84.5g CO2e/km 63.3g CO2e/km
Type B 218.3g CO2e/km 201.9g CO2e/km 155g CO2e/km 116.3g CO2e/km 87.2g CO2e/km

Testing

Part 13 of the Clean Vehicles Act specifies the three-phase variant of the Worldwide Harmonized Light Vehicles Test Procedure cycle (WLTP) as its approved test cycle for imported vehicles. New Zealand omits the cycle’s fourth, “extra high speed” phase (up to 131.3 km/h) since vehicles cannot legally achieve such speeds on NZ roads. More information about the WLTP cycle can be found on the WLTP page. As such, CO2 emissions from these vehicles must be measured in grams per kilometer. If an imported vehicle’s emissions have been calculated using a different test cycle, the Ministry of Transport may estimate emissions that would have been expected if the vehicle had been tested with WLTP and use these figures to calculate compliance.

Compliance

Light vehicle importers that exceed CO2 targets and do not have enough CO2 emissions credits in their account to offset their deficit are subject to fines. From January 1, 2023, Category 1 importers out of compliance must pay NZ$22.50 per gram of CO2 above the target multiplied by the number of used vehicles in their fleet and NZ$45/gCO2 above the target multiplied by the number of new vehicles in their fleet. From January 1, 2025, these rates increase to NZ$33.75/gCO2 per used vehicle and NZ$67.50/gCO2 per new vehicle. Category 2 importers face lower fines; NZ$18.00/gCO2 for used vehicles and NZ$36.00 g/CO2 for new vehicles in 2023, which changes to NZ$27.00/NZ$54.00 per gCO2 in 2025.

Table 2: Penalties for non-compliance
Year Category 1 Category 2
New Used New Used
NZ$/gCO2e
2023 $22.50 $45.00 $18.00 $36.00
2025 $33.75 $67.50 $27.00 $54.00

Under the Clean Vehicle Standard, when an importer’s fleet-wide average emissions are below the applicable fleet target, they may bank the excess reductions in the form of credits and carry them forward to the following year. Unused banked credits expire three years after they are earned. Importers with these unused credits may transfer them to other importers. Credits generated from the certification of new vehicles may not be used to meet obligations for used vehicles and vice-versa.

For obligation years 2023-2025, Category 1 light-vehicle importers can apply to defer their fleet-wide target obligations to the following year. At the end of that year, the importer must ensure that they have met or bettered their fleet-wide standard in both that year and the deferral year.

Clean Car Discount Scheme

New Zealand’s bonus-malus or “feebate” program imposes taxes on the purchase of high CO2 emitting vehicles while using tax revenue to give rebates to purchasers of low-emitting vehicles. The magnitude of rebates and taxes on used vehicles are lower than those that apply to new vehicles. For new vehicles, the maximum rebate is NZ$8,625 (€5,112) for emissions of 0 g CO2/km and NZ$3,450 (€2,045) if official CO2 emissions range between 1 and 56 g/km. For new vehicles with CO2 emissions between 56 and 146 g/km, the rebate decreases linearly to a (€651). The fee for high-emitting new vehicles starts at 192 g CO2/km at NZ$345 (€204) and increases linearly to a maximum of NZ$5,175 (€3,067) for cars emitting All subsidy and rebate amounts include GST (Goods and Services Tax), a 15% tax added to the price of most goods and services in New Zealand, including imports. Price conversions are based on the average NZ$ to Euro exchange rate, which was 0.593 in July 2022. Figure 1 displays the bonus and malus curves under the program in Euros, while Table 2 shows calculations for rebate and fee magnitudes.

 

Table 3: Fees and rebates payable under the Clean Car Discount Scheme
Vehicle carbon emissions
(g CO2 e/km)		 Used vehicles New vehicles
rebates
0 (zero emissions vehicle) $3,000 $7,500
1 ≤ emissions < 57 $2,000 $5,000
57 ≤ emissions < 146 $3,000 – (emissions × $20 × 130/145) $7,500 – (emissions × $50 × 130/145)
146 ≤ emissions < 192 $0 $0
fees
192 ≤ emissions (emissions – 186) × $37.50
Capped at $2,500		 (emissions – 186) × $50
Capped at $4,500
Note:
All figures are exclusive of Goods and Services Tax (GST). Final amount of rebate paid will however include GST, except for public authorities, which cannot claim the GST. All figures shown are in NZ$

Peru: Fuels: Diesel and Gasoline

Overview

In Supreme Decree 014-2021-EM, Peru’s Ministry of Energy and Mines set maximum fuel sulfur standards of less than 50 ppm for diesel fuels by July 1, 2021, and 50 ppm in gasoline and gasohols by July 1, 2022. The Decree also establishes a schedule for the commercialization of fuels with less than 10 ppm sulfur content no later than March 31st, 2024.

Standard type
Fuel quality

Regulating Body
Ministry of Energy and Mines (MINEM)

Current Standard
50-ppm sulfur content for Diesel and Gasoline

Future Standard
10-ppm sulfur content for Diesel and Gasoline

Applicability
All gasoline and diesel fuel sold for motor vehicles nationwide, except for the departments of Loreto and Ucayali.

Contents

 

Categories

Peru Fuels

History

The Ministry of Energy and Mines regulates fuel quality standards in Peru for transport and non-transport fuels. MINEM was first given the authority to regulate diesel fuel sulfur content through Supreme Decree No. 042-2005-EM. The passage of Law No. 28694 in March 2006 established limits of 50 ppm sulfur content for diesel fuels by 2016 and 50 ppm in gasoline by 2017. The full implementation of this law was subject to delays in enforcement due to limitations in refining capacity. As a result, sulfur levels remained as high as 1,500 ppm in certain parts of the country. Despite this, Ministerial decree No. 139-2012-MEM-DM made the sale of diesel fuels with a sulfur level above 50ppm illegal in Lima, Arequipa, Cusco, Puno y Madre de Dios (Callao) 120 days after its signing into law in March 2012. In the following years, the diesel 50 ppm limit was implemented in various other regions, but not nationally. Supreme Decree 025-2017-EM enumerated the ≥ 50 ppm sulfur cap for high octane (95, 97, and 98) fuels in 2018.

The passage of Supreme Decree 041-2021-EM on May 20th, 2021, put in place a timeline for the complete nationwide adoption of both ≤50 ppm sulfur diesel and gasoline fuels. The Decree requires diesel fuels to meet the 50-ppm limit on July 1st, 2021, and gasoline and gasohol fuels to meet the limit the following year. The Departments of Loreto and Ucayali are excluded from this requirement due to their remoteness and the logistical difficulties of supplying them with the necessary fuels. Supreme Decree 041-2021-EM also standardizes the marketing of fuels, creating four categories: gasoline, premium gasoline, gasohol, and premium gasohol.

Technical Standards

Under Supreme Decree 041-2021-EM, all fuels sold in Peru, including diesel, gasoline, and gasohols, must not exceed 50-ppm sulfur content. The Decree also standardizes the marketing of fuels, creating four categories: gasoline, and gasohol, which have an Octane number of 91, and premium gasoline and gasohol, which have an Octane number of 97, but temporarily allows for the sale of 84-octane gasolines in the departments of Amazonas, Loreto, Madre de Dios, and San Martin through June 30, 2023. The Departments of Loreto and Ucayali are exempt from the 50-ppm requirements for diesel fuels, low octane (Regular) gasoline, and gasohol.

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Colombia: ZEV

Overview

In 2019, Colombia published Law 1964, establishing public sector heavy-duty vehicle electrification targets, electric vehicle (EV) charging infrastructure targets in 15 cities, and various fiscal incentives targeted toward EV owners. In some cities, the law establishes minimum electric vehicle purchase quotas of 30% for public service fleets by 2025. In cities with Mass Transportation Systems, it gradually sets annual electric bus acquisition targets, with the goal of achieving a fully electric urban bus fleet by 2035.

Standard type
Electrification targets and fiscal incentives

Regulating Body
Ministry of Environment and Sustainable Development; Ministry of Transportation

Current Standard
Law 1964 of 2019

Applicability
Battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs)

Contents

 

Categories

Colombia, South America Heavy-duty vehicles, Light-duty vehicles Zero-emission vehicles

History

In July 2019, Colombia approved its first-ever national electric vehicle EV policy, Law 1964, which cites vehicle electrification as a pathway to achieving sustainable mobility and greenhouse gas reductions in line with the 2015 Paris Accords. The law’s measures encourage light- and heavy-duty EV uptake but only set adoption targets for heavy-duty fleets. Notably, Law 1964 established Latin America’s first minimum purchase goals for public transportation systems.

 

Technical Standards

Passenger vehicles: As a part of its 2021 Voluntary National Review, which seeks to align national policy with 2030 UN Sustainable Development Goals, Colombia aims to register 6,600 electric vehicles by the end of 2022 and 600,000 vehicles by 2030. While these targets have not yet been written into law, Law 1964 creates numerous measures to encourage the uptake of passenger EVs. Among these measures is an amendment to Colombian Law 488 of 1998 which establishes tax rates on private vehicles. Under the new regulation, EVs may not be taxed at a rate above 1% of their commercial value. In comparison, taxes on internal combustion engine (ICE) private vehicles range from 1.5-3.5%, depending on their value, under Law 488. Other purchase incentives include:

  • A discount on the price of their vehicle emissions test, considering that electric vehicles emit fewer harmful pollutants
  • A discount of 10% on Mandatory Traffic Accident Third-Party Liability Insurance rates
  • The creation of preferential parking spaces for electric vehicles. Public entities and commercial establishments that offer public parking spaces will be required to allocate a minimum of 2% of their spaces for the preferential use of EVs
  • An exemption from any local policies that restrict vehicle traffic, including pico y placa programs, which limit traffic to vehicles with license plate numbers ending in certain digits during certain hours of the day, and any other restrictions imposed due to environmental concerns

The Law also grants local governments the authority to create incentive schemes for EV adoption, ranging from discounted vehicle registration fees and reduced parking rates to other types of tax exemptions. All of the above purchase incentives apply to both BEVs and PHEVs.

Heavy-duty vehicles: Starting in 2025, cities with Mass Transportation Systems must ensure that a certain percentage of their new vehicle purchases for public transit use are EVs. These percentages increase biannually until a target of 100% electric for new vehicles purchased is met in 2035. Beyond public transit, government agencies in category 1 and special category municipalities must also meet a minimum EV purchase quota of 30% for their fleets by 2025.

Charging Infrastructure: Law 1964 sets minimum EV charging infrastructure requirements, mandating that all Special Category municipalities, excluding Buenaventura and Tumaco, provide at least five fast charging stations and that Bogotá, the nation’s capital, provides twenty by July 2022. Municipalities were allowed to construct charging stations to meet the infrastructure targets through public-private partnerships. Operations may be delegated to the private company as long as the charger is publicly accessible. The law also charges the Ministry of Housing, City, and Territory in coordination with planning authorities in category 1, 2, and 3 municipalities, to develop regulations that mandate the inclusion of charging infrastructure in new residential and commercial buildings.

 

Colombia: HDV: Emissions

Overview

In 2022, Colombia’s Ministry of Environment and Sustainable Development (MoE) passed Resolution 0762, which mandates that all newly produced or imported heavy-duty vehicles with diesel-cycle, liquid natural gas, or liquid petroleum gas engines must, at minimum, comply with Euro VI or equivalent emission standards for heavy-duty vehicles by 2023. Law 1972 of 2019 mandates compliance with Euro VI-equivalent standards for all heavy-duty diesel vehicles circulating within the country by 2035.

Standard type
Conventional pollutant emission limits

Regulating Body
The Ministry of Mines and Energy (MME), responsible for the provision of Euro VI complying fuels, and The Ministry of Environment and Sustainable Development (MoE), responsible for standard implementation, compliance, and onboard self-diagnostics (OBD) inspection

Current Standard
Euro IV for diesel, natural gas, and liquid petroleum gas engines (Resolution 1111 of 2013). U.S. EPA 1998 standards for gasoline-powered engines (Resolution 0910 of 2008).

Future Standard
Euro VI for diesel, natural gas, and liquid petroleum gas engines in 2023 (Resolution 0762 of 2022)

Applicability
Applies to new heavy-duty vehicles with gross vehicle weight (GVW) ≥ 3.5 tons produced after 2023 and for all such vehicles in circulation in 2035

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Categories

Colombia, South America Heavy-duty vehicles Emissions standards

History

In 2008, Colombia passed Resolution 0910, which regulated emissions from all heavy-duty vehicles produced in 2010 and later. The regulation set separate pollutant limits for diesel and gasoline engines, with the former requiring manufacturers to comply with either U.S. EPA 1996 standards or Euro II standards and the latter mandating compliance with U.S. EPA 1998 standards. Resolution 1111 of 2013 modified the 2008 Resolution by introducing Euro IV and U.S. EPA Tier 2 standards for diesel and gasoline engines and imposing new limits for natural gas and liquid petroleum gas engines, equivalent to U.S. EPA 2005 or Euro IV limits. In July 2019, Colombia passed Law 1972, which implements Euro VI standards for new diesel heavy-duty vehicles (HDVs) with diesel engines starting in 2023. The law also sets a 100% compliance target for all heavy-duty diesel vehicles in circulation by 2035, effectively banning all HDVs that do not meet Euro VI requirements by that year. In July 2022, the MoE passed Resolution 0762, which amends Law 1972, introducing Euro VI emissions limits for liquid petroleum gas (LPG) and liquid natural gas (LNG) HDVs.

 

Table 1. Timeline of emission requirements for heavy-duty vehicles in Colombia
Regulation Applicability Date Application Limits
Resolution 910 of 2008 01/2010 Gasoline heavy duty engines U.S. EPA 1998
Diesel heavy-duty engines U.S. EPA 1996 or Euro II
Resolution 1111 of 2013 01/2015 CNG and LPG heavy-duty engines U.S. EPA 2005 or Euro IV
Diesel heavy-duty engines Euro IV/Euro V with OBD/U.S. EPA 2010 with HD OBD
Resolution 0762 of 2022 01/2023 Diesel heavy-duty engines Euro VI or equivalent
CNG and LPG Heavy-duty engines Euro VI or equivalent

Technical Standards

Resolution 0762 requires that all newly manufactured, assembled, or imported heavy-duty vehicles with either a compression (diesel) or spark ignition (LGP or LNG) engine comply with Euro VI standards by January 2023 and that all HDVs within circulation comply with the standards by January 2035. U.S.-based engines are tested on the respective EU or U.S. test cycles. Euro VI standard specifications used in Colombia for Diesel HDVs can be seen in Table 2 below, while Table 3 covers heavy-duty vehicles with other engine types.

 

Table 2. Applicable Euro emission standards for diesel cycle engines
Reference Standard Effective Date Test CO HC NMHC NOx PM PN
g/kWh 1/kWh
Euro II 01/2010 ECE R-49 4 1.1 – 7 0.15 –
Euro IV(a) 01/2015 ETC/ESC 1.5 4(b) 0.46(b) –
Euro VI(e) 01/2023 World Harmonized Test Cycle (WHTC)(e) 4 – 0.16(c) 0.46 0.01 6×1011
World Harmonized Stationary Cycle (WHSC) 1.5 0.13 – 0.4 0.01 8×1011
Notes:
a. Under Resolution 1111, Colombia did not adopt Euro IV NOx limits, which remain unchanged from their Euro II limits. Under Resolution 1111, NOx emissions are measured using the ETC cycle while PM is measured using ESC.
b. As a substitute for measuring NMHC, the laboratory may choose to measure HC using the ETC test in which case the limit is still 0.46 g/kwh.
c. Measured as THC for diesel (compression-ignition) engines.
d. Resolution 0762 adds the WHSC as a requirement for compliance.
e. The WHTC also includes a 10-ppm NH3 limit.

 

Table 3. Applicable U.S./Euro emission standards for gasoline, natural gas, and liquid petroleum gas heavy-duty engines
Engine type Reference Standard Effective Date Test CO HC CH4 NMHC NOx PM Unit
Gasoline U.S. EPA
1998		 01/2010 US HDTC LHDGE(a) 14.4 1.1 – – 4 – g/BHP-h
US HDTC HHDGE(a) 37.1 1.9 –
Liquid natural gas (LNG) and liquid petroleum gas (LPG) Euro IV 01/2015 ETC/ESC 4 – 1.1 0.55 3.5   g/kW-h
U.S. EPA
2005		 US HDTC LHDGE(a) 14.4 – – 1(b) – g/BHP-h
US HDTC HHDGE(a) 37.1 –
Euro VI(c) 01/2023 World Harmonized Test Cycle (WHTC) 4 – 0.5 0.16 0.46 0.01 g/kW-h
Notes
a. U.S. EPA regulations set separate carbon monoxide limits for light heavy-duty gas engines (LHDGE) and heavy heavy-duty gas engines (HHDGE).
b. Under U.S. EPA 2005 standards, for NG and LPG-powered vehicles, NMHC and NOx are regulated as one limit.
c. Euro VI emissions standards also establish a 10-ppm NH3 limit.

In 2013, Resolution 1111 established a 50-ppm limit on diesel fuel sulfur concentration to satisfy Euro IV engine requirements. Similarly, Law 1972 of 2019 mandates diesel sulfur content not to exceed 15 ppm starting in January 2023 and 10 ppm by January 2025. Article 11 of this Law gives the MoE the authority to increase future emissions control limits more stringent than Euro VI.

Testing and Compliance

Under Law 1972, Colombia’s Ministry of Environment and Sustainable Development is charged with establishing compliance verification measures and a system for regulating and inspecting onboard self-diagnostics systems (OBD) within two years of the law’s passing. The MoE is still drafting these regulations but plans to publish them before Euro VI standards are enacted in 2023. Law 1972 also requires using the World Harmonized Test Cycle (WHTC) to verify compliance.

 

China: Light-Duty: NEV

Overview

The second phase of China’s Parallel Management Regulation for Corporate Average Fuel Consumption and New Energy Vehicle Credits regulation took effect on January 1st, 2021. It establishes a technology credit-based system that sets minimum sales share requirements for new domestic and imported electric vehicles (NEVs).

Standard type
New electric vehicle credit system

Regulating Body
Ministry of Industry and Information Technology (MIIT)

Current Standard
Parallel Management Regulation for Corporate Average Fuel Consumption and New Energy Vehicle Credits

Applicability
Passenger cars – battery electric vehicles, plug-in hybrid electric vehicles, fuel cell vehicles, and internal combustion engine (ICE) passenger vehicles

Contents

 

Categories

Asia, China Light-duty vehicles Electric vehicle policies, Zero-emission vehicles

History

China’s first Parallel Management Regulation for Corporate Average Fuel Consumption and New Energy Vehicle (NEV) Credits or NEV mandate, for light-duty vehicles was finalized in September 2017 and took effect on April 1st, 2018. In China, NEVs include battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs). The regulation seeks to promote new energy vehicle production and provide additional compliance flexibility to the nation’s existing fuel consumption regulation through a technology-based credit system. The regulation is partially modeled after California’s Zero Emissions Vehicle (ZEV) program but adds a parallel management component that connects manufacturers’ corporate average fuel consumption (CAFC) performance with their NEV credit performance. On January 1, 2021, the policy entered its second phase. The general structure remains unchanged from the first phase but increases in stringency.

 

Technical Standards

Under the NEV mandate, each NEV sold generates some number of credits, depending on characteristics such as electric range, energy efficiency, and rated power of fuel cell systems. The final NEV market share achieved in China under the influence of the credit targets will therefore depend on the final fleet mix. Under phase 1 of the ZEV mandate (2019-2020) annual NEV credit percentage targets for car manufacturers were 10% in 2019 and 12% in 2020. Under the second phase (2021-2023), percentage targets are 14%, 16%, and 18%, to be achieved in 2021, 2022, and 2023, respectively.

Credit allocations: Per-vehicle credits are a function of the base credit assigned to each vehicle class and various performance-based multipliers. A comparison of credit targets and allowances under phase 1 and phase 2 of the dual-credit system can be seen in the table below. The expressions for calculating BEV, PHEV, and FCV credits under phase 2 are shown below:

 

per-BEV credit = base credit x ER x BD x EC

per-PHEV credit = base credit x EC

per-FCV credit = base credit x RP

Where:

  • ER: electric range multiplier.
  • BD: battery energy density multiplier.
  • EC: electric energy consumption multiplier.
  • RP: rated power multiplier.

 

Table 1: Comparison of Phases 1 and 2 of the NEV Mandate Policy
  2017 policy 2020 policy
Annual percentage NEV credit target

2019: 10%

2020: 12%

2021: 14%

2022: 16%

2023: 18%
Per-vehicle credit

BEV:

Base credit (BC) = (0.012 x electric range + 0.8)

Final credit = BC x EC

Capped at 2

BEV:

Base credit (BC) = (0.0056 x electric range + 0.4)

Final credit = BC x ER x BD x EC

Capped at 5.1

PHEV:

Base credit (BC) = 2

Final credit = BC x EC

Capped at 2

PHEV:

Base credit (BC) = 1.6

Final credit = BC x EC

Capped at 1.6

FCV:

Base credit (BC) = 0.16 x rated power

Final credit = BC x RP

Capped at 5

FCV:

Base credit (BC) = 0.08 x rated power

Final credit = BC x RP

Capped at 6

The electric range multiplier increases from 0 to 3.4 as the vehicle’s electric range (in km) increases.  Since the electric range is also used to calculate the base credit for BEVs, it plays a double role in calculating BEV per-vehicle credit. Similarly, the battery energy density multiplier increases from 0 to 1 as battery density (in Wh/kg) increases. Thus, the BD multiplier is a penalty for BEVs with low-density batteries rather than a bonus. The energy consumption multiplier is determined as a function of the vehicle’s energy consumption in kWh/100 km and its curb weight in kg ranging between 0.5 and 1.5.

 

Compliance

NEV and CAFC Credit Interaction: Manufacturers are required by CAFC credit requirements to make fuel-efficient vehicles, and to meet NEV credit requirements, they must produce NEVs. If manufacturers exceed the set targets, they are left with extra credits. Non-compliance, meanwhile, results in deficits. Importantly, and as detailed in Table 1, there is a one-way street via which NEV credits can be used to offset a CAFC deficit, but manufacturers with extra CAFC credits cannot use those to offset a NEV deficit.

NEV Mandate Compliance Methods
Deficit Type Compliance Strategy

NEV deficit

(Actual NEV credits < NEV targets)
  • Purchase NEV credits from other companies.
  • Use banked NEV credits from own company.

CAFC deficit

(Actual CAFC credits < CAFC targets)
  • Use banked CAFC credits from own company.
  • Transfer CAFC credits from affiliated companies.
  • Use banked or current year NEV credits from own company.
  • Purchase NEV credits from other companies.

Fuel efficient passenger vehicle multiplier: Phase 2 of the dual-credit policy creates a new category, fuel-efficient vehicles (FEVs), assigning special multipliers to manufacturers’ NEV credit compliance accounting. FEVs are conventional fuel vehicles that meet or outperform China’s weight-based fuel consumption standard per vehicle. The FEV multipliers offer manufacturers greater flexibility in meeting the NEV credit targets. Under phase 2, in 2021, each FEV is counted as 0.5 fuel passenger cars when calculating a manufacturer’s total vehicle production volume upon which the NEV credit percentage targets apply. This multiplier reduces to 0.3 in 2022 and 0.2 in 2023.

NEV credit carry-forward provisions: Under the 2017 policy, excess NEV credits earned in 2019 could be carried forward for a maximum of one year. NEV credits earned in 2020 can be carried forward at a discounted ratio of 0.5 for up to 3 years. 2021 and 2022 NEV credits can be carried forward, also at a discount only if (1) the corporate average fuel consumption (CAFC) of the company’s conventional fuel vehicles is no higher than 123% of the CAFC target; or (2) a company only produces or imports NEVs. An announcement in February 2021 also allowed NEV credits generated in 2021 to be carried back to satisfy 2020 requirements.

Credit transfers among affiliated companies: In phase 1 and phase 2 policies, CAFC credits can be transferred among affiliated companies as additional compliance flexibility. Affiliated companies include:

  • A domestic original equipment manufacturer (OEM) and a domestic group holding ≥ 25% of its shares
  • Two domestic OEMs with the same domestic shareholder holding ≥ 25% of each of their shares
  • An import agent of a foreign OEM and the OEM’s domestic joint venture with ≥25% of its shares held by the OEM.
  • In phase 2, the definition of an affiliated company was broadened to include an import agent of a foreign OEM, and the OEM’s domestic shareholder holding ≥ 25% of its shares.

Benefits for manufacturers producing less than 2,000 vehicles a year: The dual credit policy also includes compliance benefits for smaller manufacturers.  If the manufacturer’s CAFC drops by 2-4% compared to the previous year, the CAFC standard is relaxed by 30%, and if CAFC decreases by 4% or more, the CAFC standard is relaxed by 60%.

 

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