Explanatory Memorandum to COM(2023)451 - Circularity requirements for vehicle design and on management of end-of-life vehicles - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2023)451 - Circularity requirements for vehicle design and on management of end-of-life vehicles. |
|---|---|
| source | COM(2023)451 |
| date | 13-07-2023 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The European Green Deal is Europe’s growth strategy, which aims to ensure by 2050 a climate neutral, clean and circular economy, where the management of resources is optimised and pollution minimised. The circular economy action plan1 and the new industrial strategy for Europe2 lay out the roadmap for the European industry to meet the objectives of the Green Deal. The action plan contains a commitment to review the legislation on end-of-life vehicles (ELVs) with the aim to promote more circular business models by linking design issues to end-of-life treatment, consider rules on mandatory recycled content for certain materials, and improve recycling efficiency. The EU action plan Towards Zero Pollution for Air, Water and Soil3 also stressed the need for the Commission to propose new measures to address the EU’s external environmental footprint linked to the export of ELVs and used vehicles.
The European Council4 and Parliament5 have both recognised the importance of this initiative. The communication accompanying the proposal on the European Critical Raw Materials Act6 also stressed the importance of the automotive sector in ensuring a sustainable supply of critical raw materials and increasing the EU's strategic autonomy.
The production of vehicles is one of the most resource-intensive industries. Europe’s automotive sector is responsible for 19% of demand for the EU’s steel industry (over 7 million tonnes/year), 10% of overall consumption of plastics (6 million tonnes/year), a significant share of the demand for aluminium (42% for all transport equipment, around 2 million tonnes/year), copper (6% for automotive parts), rubber (65% of the production of general rubber goods) and glass (1.5 million tonnes of flat glass produced in the EU).
As the automotive sector shifts to zero-emission mobility, and vehicles increasingly integrate electronics, there will be an increase in demand for copper and critical raw materials. They include the rare earth used in permanent magnets of e-drive motors, of which the automotive sector is one the biggest users. The automotive sector is also using more advanced and lightweight materials such as composite plastics, high-grade steel and aluminium alloys.
The result is that vehicle production can have a high environmental footprint. This is primarily due to the greenhouse gas emissions of the energy required to extract and process primary materials such as coal and iron ore (for steel), bauxite (for aluminium), copper and oil (for plastics). In addition, the increasing use of sophisticated and composite materials poses particular challenges for dismantling, reusing and recycling end-of-life vehicles.
In this light, the aim of this proposal is to facilitate the transition of the automotive sector to the circular economy, at all stages of the vehicle - from design to final treatment at end-of-life. The proposal is based on an evaluation of current legislation, which consists of two directives (Directive 2000/53/EC on end-of-life vehicles ('ELV Directive'))7 and Directive 2005/64/EC on the type-approval of motor vehicles with regard to their reusability, recyclability and recoverability ('3R type-approval Directive')8).
The ELV Directive was adopted in 2000 and it was the first harmonised EU framework designed to ensure that vehicles reaching the end of their life and considered as waste are treated in an environmentally sound manner. The Directive sets out provisions on the collection and depollution of ELVs, it restricts hazardous substances in new vehicles and sets targets on reuse and recycling (85%) and on reuse and recovery (95%), based on the average weight of ELVs per vehicle and year. Since its adoption, the legislation has not been substantially amended.
During the revision of the Waste Framework Directive in 2018, the co-legislators agreed9 that the Commission “shall review [the ELV] Directive, by 31 December 2020, and to this end, shall submit a report to the European Parliament and the Council, accompanied, if appropriate, by a legislative proposal”. It indicated that the process to revise the ELV Directive should focus on the feasibility of setting recycling targets for specific materials and the problem of ‘unknown whereabouts’ of end-of-life vehicles.
The 3R type-approval Directive, adopted in 2005, establishes a very close link between the provisions of the ELV Directive and the design provisions on reusability, recyclability and recoverability of the type-approval process for vehicle types. In particular, the 3R type-approval Directive states that vehicles should be constructed so as to be 85% recyclable/reusable and 95% reusable/recoverable and the ELV Directive contains the same targets for Member States when it comes to the reusability, recoverability and recyclability of vehicles. The 3R type-approval Directive is part of the type-approval framework10, under which new vehicle types are tested and granted type-approval before being placed on the EU market, provided they meet a set of technical requirements.
The proposed regulation repeals both the 3R type-approval and ELV Directives and replaces them with a single legal instrument. Its overall objective is to modernise the EU existing legislation and to improve the functioning of the EU single market while reducing the negative environmental impacts linked to the design, production, service life and end-of-life treatment of vehicles and contributing to the sustainability of the automotive and recycling sectors.
Contents
- This is an initiative within the Regulatory Fitness Programme (REFIT).
- The impact assessment identified four problem areas to tackle at EU level:
- To address each of these problems, specific policy options have been designed and analysed for the each of the following areas:
- M2 - Empowerment for the Commission to develop a refined methodology to determine compliance with 3R-requirements
- M3 - Provision of basic dismantling information to ELV treatment operators
- M4a - Declaration on substances of concern verified by 3R type-approval authorities
- M5a - Restrictions of substances under the revised ELV Directive
- Yes
- Yes
- No
- No
- M4b - Mandatory declaration on recycled content of plastics, steel, aluminium
- M5b - Restrictions of substances under REACH and other existing legislation
- M6 - Obligation for vehicle manufacturers to develop circularity strategies
- M7 - Design requirements for new vehicles to facilitate the removal of components
- Yes
- No
- Yes
- Yes
- M4c - Mandatory declaration on recycled content for materials, other than plastics, including CRMs, steel, aluminium
- M8 - Establishment of a digital Circularity Vehicle Passport
- Yes
- Yes
- Yes
- Yes
- No
- M11 - Empower the Commission to set mandatory recycled content targets for other materials (aluminium alloys, CRMs), feasibility study, target levels calculation and verification rules
- No
- Yes
- M16a - Ban on the landfilling of automotive waste residues from shredding operations
- Yes
- Yes
- Yes
- M14b - Market support for the use of spare parts
- M16b - Ban on mixed shredding of ELVs with WEEE and packaging waste
- Yes
- Yes
- Yes
- Yes
- M16c - Setting requirements on post shredder technologies to improve the quantity and quality of metal scrap recovered from ELVs
- No
- No
- No
- M18 - Obligations for dismantlers, recyclers to check and report on ELVs, certificates of destruction
- Yes
- Yes
- M19b - Clearer definition of ELVs to ensure that there is a better distinction between used vehicles and ELVs (binding CG9)
- M20 - Improving the information contained in national vehicle registries and making them interoperable
- Yes
- Yes
- M21 - Export requirements for used vehicles linked to roadworthiness
- Yes
- M23 - Reporting obligations for producers
- Yes
- M24 - Harmonised modulation of EPR fees
- M25 - Transfer of the EPR fees/ guarantees (cross-border EPR)
- Yes
- Yes
- M27 - Harmonised Green Public Procurement criteria (voluntary)
- No
- No
- M30a - Mandatory treatment of end-of-life L3e-L7e-category vehicles, lorries (N2, N3) and buses (M2, M3) and trailers (O) at authorised treatment facilities
- Yes
- Yes
- Yes
- Yes
- No
- No
- The Commission will require additional staff to carry out these technical tasks as follows:
• Consistency with existing policy provisions in the policy area
In the first place, the proposed regulation is anchored in the overall EU legislation on type-approval of motor vehicles, which aims at facilitating the free movement of automotive products in the single market by laying down common requirements designed to achieve environmental, energy performance and safety objectives. Regulation (EU) 2018/85811 sets the central procedural framework for the requirements for the approval and market surveillance of motor vehicles. It lays down the rules on conformity of vehicle types with the requirements of several pieces of legislation, which are listed in the Annexes to that Regulation. The proposed regulation sets out requirements both on the circular design and on production of motor vehicles and will be included in those Annexes, so that these requirements are checked and enforced through the type-approval process12.
The proposed regulation complements and is consistent with recent Commission legislative proposals aimed at improving the ecodesign of products and ensure the sustainable management of waste.
This is the case of the proposal for a new regulation on batteries13, which covers automotive batteries and contains a comprehensive new legal regime covering their whole life cycle, designed to address their environmental footprint. The proposed regulation on 3R type-approval and ELV does not contain provisions regulating the design, production and end-of-life of batteries. It covers vehicles as a whole as well as their parts and components (except for batteries), in a way which complements the proposal for a batteries regulation and would ensure that the overall environmental footprint of vehicles is addressed. It also contains provisions designed to facilitate the removal of batteries from ELVs, to ensure that they are being re-used or recycled as per the batteries regulation.
Besides batteries, the Commission tabled proposals to address the environmental footprint of other resources intensive sectors (like construction products14 and textile15) and the proposed regulation on 3R type-approval and ELV complements this initiative by covering the automotive sector, to ensure that common rules apply for manufacturers to construct vehicles that will be placed on the Union market, to facilitate the transition of this sector to a circular economy and strengthen its sustainability.
The proposed regulation is also consistent with the proposal for a regulation on Ecodesign for Sustainable Products16, which aims to enable the setting of sustainability performance and information requirements for a wide range of physical products. Unlike other products, as indicated above, the requirements on the circular design and production of motor vehicles are currently based on a specific legal framework applying to vehicles, which are set out and enforced through the ‘type-approval’ process. This is therefore a separate legal framework than the one set out under the upcoming regulation on Ecodesign for Sustainable Products. In addition, the regulation on Ecodesign for Sustainable Products also does not deal with the end-of-life phase of the vehicle, which is subject to the proposed regulation on 3R type-approval and ELV.
Finally, the proposed regulation does not address the shipments of end-of-life vehicles, which are regulated by the waste shipment regulation17. ELVs are considered as hazardous waste and, as per the waste shipment regulation, their export from the EU to third countries which are not Members of the OECD is banned. The other provisions of the waste shipment regulation also apply to other shipments of ELVs, including between EU Member States.
• Consistency with other Union policies
There are also synergies between this proposal for a regulation and other EU policies, in particular climate policy. The transition of the automotive sector to circularity is essential for the EU to reach the 2050 targets on climate neutrality set out in the ‘European Climate Law’18, complementing several other initiatives under the Fit for 55 package19. In addition, the initiative complements other recent legislative developments designed to transform the automotive industry, such as the recently revised CO2 standards for cars and vans20, the proposed Euro 7 standard on emissions from new motor vehicles21 and the ongoing revision of the three directives in the roadworthiness package22. In addition, the regulation complements the Critical Raw Materials Act23, in that it introduces measures specifically designed to achieve a higher degree of circularity of the critical raw materials used in vehicles, especially through the removal, re-use and recycling of parts, components and materials containing such CRMs.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The legislative proposal is based on Article 114 of the Treaty on the Functioning of the European Union (TFEU), which aims to ensure the functioning of the single market1. This is essential as the proposal lays down clear and uniform requirements governing both the placing on the EU market of vehicles and their collection and treatment at end-of-life, which are required to facilitate the transition of the sector to a circular economy. Article 114 TFEU is the legal basis of the overall regulatory framework on type-approval of motor vehicles, including the 3R type-approval Directive, whereas the ELV Directive has an environmental legal basis (Article 192 TFEU).
The proposal tackles a number of key problems related to the single market. These include: i) an uneven implementation of the 3RTA and ELV Directives, since their provisions are subject to interpretation, leading to different situations for operators depending on where they place vehicles on the market and treating ELVs, ii) underdeveloped EU market for secondary materials destined to the automotive sector, iii) barriers to the functioning of recycling markets and to the improvement in economies of scale, iv) the persistent problem of ‘missing vehicles’ and lack of clarity to distinguish ELVs from used vehicles in the case of export and v) the need for a stable and fully harmonised regulatory framework to enable improving the performance, including the necessary investments, of all economic operators involved in the production and end-of-life treatment of vehicles.
At the same time, the main objective of the proposal is to establish a closer link between the design requirements for vehicles and the provisions concerning ELV management, thus enabling the smooth functioning of the single market. Therefore, the vehicle design requirements are formulated so that they are effectively prerequisites for proper execution of the provisions on ELV management. Examples of such twinning of requirements include the rates of reusability, recyclability and recoverability rates vs. targets for reuse, recovery and recycling, the requirements regarding substances present in vehicles vs. the obligation to remove parts and components containing such substances before shredding of ELVs, the recycled content requirements vs. plastic recycling target and the design for removal of parts vs. the obligation to remove parts prior to shredding of ELVs.
Article 114 of the TFEU is thus the appropriate legal basis for this proposal as it enable environmental-related requirements to form the core elements of conditions governing type-approval and thereby the placing on the EU market of vehicles, as well as to harmonise requirements on end-of-life treatment of vehicles. The rationale or centre of gravity of the proposal is to uniform the requirements for placing on the market (to be more precise – requirements for the type-approval of vehicles) and, consequently to ensure that when vehicles reach the end-of-life stage, they are treated in an environmentally sound manner, and quality secondary raw materials can effectively be retrieved from them. Therefore, in the case of this proposal, the environmental objective is not independent, but rather the driver for harmonisation of the design requirements concerning reusability, recyclability and recoverability or vehicles.
• Subsidiarity (for non-exclusive competence)
To achieve a harmonised and well-functioning EU single market and enable a smooth transition of the automotive sector to the circular economy, in line with the goal set out in the European Green Deal, it is essential to put in place a common set of rules at EU level with clear requirements and obligations for Member States and businesses. The objectives of the work to revise the EU rules on end-of-life vehicles cannot be sufficiently achieved by individual action by the Member States; given the scale and effects of the measures, they are best achieved by action taken at EU level.
Harmonising the requirements would tackle the implementation problems caused by different interpretations of existing legislation. Without EU-wide action, there is a risk of fragmenting the EU market and the risk that progress on circular economy depend on voluntary action by businesses or individual Member States.
• Proportionality
The principle of proportionality is reflected in the design of all measures contained in the proposed regulation. For example, it extends the scope of the existing legislation to new vehicles progressively, with transition periods for all new requirements to give economic operators time to adapt to the new rules.
A more detailed description of assessment of proportionality against each of the policy option is provided in Annex 8 to the impact assessment report.
• Choice of the instrument
The choice of a regulation is to create a harmonised framework applying to the design, production and end-of-life stages of vehicles. This will provide the legal certainty that operators and Member State authorities need. It will simplify the current regulatory landscape by consolidating all requirements into a single act and contribute to a stronger integration of the EU single market. Compared with a directive, the choice of a regulation also reduces the administrative costs linked to transposing the law into national legislation and allows new EU requirements to apply earlier. The choice of a regulation is consistent with the type-approval regulatory framework, under which directives are transformed into regulations as part of the measures adopted at EU level in the aftermath of the Dieselgate emissions scandal.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
The evaluations of the ELV Directive1 and of the 3R type-approval Directive2 identified the generic nature of their provisions as one of their main shortcomings preventing the transition of the overall automotive supply chain to a circular economy. These shortcomings were discussed in the Fit for Future Platform (F4F) opinion3. As a result, the following problems were identified as hampering the functioning of the EU single market and falling short of the level of protection of the environment the EU aims to achieve:
- The design and production of new vehicles do not sufficiently contribute to the ambitions of the European Green Deal for a climate-neutral, clean and circular economy;
- The treatment of vehicles at the end of their life is suboptimal compared to its potential to contribute to a climate-neutral, clean and circular economy;
- An important share of vehicles subject to the ELV Directive are not collected to be treated under sound environmental conditions in the EU, potentially contributing to pollution in third countries;
- There is no EU level harmonised approach for the design, production and end-of-life treatment of vehicles currently outside the scope of the ELV Directive, resulting in unexploited potential to the circular economy objectives of the European Green Deal.
To address these problems, the proposed regulation focuses on three main aspects: circularity requirements for the type-approval of vehicles, management of end-of-life vehicles and the export of used vehicles.
• Stakeholder consultations
Stakeholders were consulted on several occasions throughout the evaluation and impact assessment processes. These consultations formed the basis for the proposed regulation, especially the open public consultations, targeted consultations, stakeholder workshops4 and bilateral meetings.
Stakeholders and Member States generally agreed with the main findings of the evaluation of ELV Directive and with the need to revise the EU rules on end-of-life vehicles to address these findings.
Many stakeholders from the automotive manufacturing sector stressed that they had already begun integrating circularity principles into their business practices and that only minimal amendments were needed to improve implementation of the current legislation. Therefore, they did not see the need to merge the ELV Directive and the 3R type-approval Directive. Other manufacturers were in favour of action to adapt the design for recycling in the new legislation to ensure a level playing field and improve transparency. The dismantling and recycling sectors, mostly consisting of SMEs, called for more ambitious legislation on design for dismantling/recycling and on sharing of information from manufacturers. Environmental NGOs, waste management authorities and public authorities unanimously supported a comprehensive lifecycle approach and design for circularity measures.
Although there was strong support for setting targets on recycled content in new vehicles from the recycling and dismantling sectors and from civil society organisations, the automotive sector had mixed opinions on setting targets for plastics. They raised concerns around the possible lack of the necessary supply and advocated for chemical recycling (like the plastics industry). The steel industry did not support a target on recycled content for steel in new vehicles.
On the end-of-life vehicle treatment, stakeholders favoured measures aiming to improve and increase the quality of materials from ELVs to favour the reuse of spare parts and components, as well as high-quality recycling of materials from ELV. However, the waste management sector raised concerns on the increase of costs that could be triggered by new measures governing the treatment of end-of-life vehicles and their waste.
Overall, stakeholders strongly supported the adoption of ambitious measures to tackle the continuing problem of missing vehicles. There was also support for stricter requirements on the export of used vehicles, to avoid that used vehicles which are not roadworthy, generate air pollution and present road safety risks are exported from the EU to third countries.
Vehicle manufacturers were of the position that the dismantling sector is already self-sustaining and there is no need to provide compensation for the cost of treatment by setting up extended producer responsibility schemes. If such schemes are established, they stressed the importance that vehicle manufacturers have the right to exercise their responsibility individually. The dismantling, shredding and recycling sectors called for improved financial responsibility from the automotive industry to cover additional costs related to quality improvements, with safeguards to protect their independence in the schemes.
A majority of stakeholders, including environmental NGOs, public authorities and waste management operators (mainly SMEs), were in favour of extending the regulatory scope of the ELV Directive to additional vehicle categories. Automotive producers and suppliers expressed diverse views, highlighting that it would not be desirable to fully extend the scope to new vehicle categories in the short term due to their differences.
• Collection and use of expertise
To underpin the analysis of different regulatory options, the Commission engaged external consultants under a support contract5.
Evidence was compiled from the evaluation reports of the ELV Directive6 and the targeted evaluation of the 3R type-approval Directive, which was carried out in parallel to the impact assessment and presented in Annex 11 to the impact assessment report.
The Joint Research Centre (JRC), the European Commission’s science and knowledge service, produced a technical report on targets for recycled plastic content in new passenger cars7 and a report on critical raw materials in the automotive sector8. The results of these reports fed into the impact assessment underpinning the proposal for a regulation.
The proposal also takes account of the suggestions provided in the Fit for Future Platform (F4F) opinion9.
Additional supporting evidence fed into the process via specific desk studies and data collection, also integrated in the overall impact assessment work.
• Impact assessment
The proposal is based on an impact assessment, which is published together with the proposal. In line with the Commission better regulation guidelines, the Regulatory Scrutiny Board issued two opinions on draft versions of the impact assessment report, which focused on the justification for the measures on the export of used vehicles, the description of the impacts of the preferred option, the choices of some measures on recycled content and extended producer responsibility schemes as well as issues linked to the methodology followed in the report. These opinions were taken into consideration in the final report of the impact assessment.
1. There is a lack of integration of circularity in vehicle design and production leading to high dependencies for primary raw materials;
2. The quality of treatment of vehicles at the end of their life is suboptimal compared to the potential to retain more environmental and economic value;
3. An important share of ‘missing vehicles’ subject to the ELV Directive are not collected to be treated under proper environmental conditions and a large volume of non-roadworthy and polluting used vehicles are exported from the EU every year;
4. There is unexploited circularity potential of vehicles currently outside the scope of the ELV Directive to contribute to the objectives of the European Green Deal.
To address each of these problems, specific policy options have been designed and analysed for the each of the following areas:
1. ‘Design circular’: make design and production circular;
2. ‘Use recycled content’: increase the recycled content in new vehicles;
3. ‘Treat better’: improve the treatment of ELVs;
4. ‘Collect more’: collect more ELVs in the EU and improve quality of exported used vehicles;
5. ‘EPR: provide the right incentives to increase the collection of ELVs and improve waste treatment through extended producer responsibility schemes;
6. ‘Cover more vehicles’: extend the scope of the legislation to additional vehicle categories.
The measures contained in each option are presented in the following table. The last column indicates the measures selected as the preferred option following the impact assessment.
The impacts of each policy option were analysed comprehensively, as were the joint impacts and synergies between the options. The impacts on small and medium-sized enterprises (SMEs) were taken into account and summarised in a dedicated SME test. The environmental, economic and social impacts were calculated until 2040 and compared with the baseline scenario. The main year for comparison is 2035 with all long-term measures due to have taken effect by that date.
The preferred policy package contains a combination of the following options.
Design circular. The preferred option contains short-term obligations for vehicle manufacturers to make available detailed and user-friendly dismantling and recycling information, including the use and location of CRMs in vehicles and information on the share of recycled content in new vehicles. Actions for the medium term include revising the methodology to calculate recyclability and reusability of new vehicles at type-approval stage and developing a circularity vehicle passport. Overall, this anchors circularity requirements into the type-approval of new vehicle types.
Recycled content. The preferred option is to set a medium level of ambition with target for recycled plastics content of 25% by 2030, of which 25% from closed loop ELV treatment. For steel, this option empowers the Commission to set a target for recycled steel content in newly approved vehicles within three years after the regulation enters into force, based on a feasibility study. The option to set recycled content targets for other materials such as aluminium and CRMs will be assessed in the future, based on changes to automotive designs and the availability of recycling capacity.
Treat better. The preferred option includes a stricter definition of recycling, a ban on landfill for automotive shredder residue fractions and a medium level of ambition on removal obligations to improve the recovery of key components from ELVs without disproportionate costs on treatment operators. It will increase the recovery of (critical) raw materials and improve the quality of plastics, steel and aluminium fractions.
Collect more. The preferred option is the most ambitious policy option. Measures such as clearer responsibility allocation for certificates of destruction, binding criteria for distinguishing used vehicles and ELVs, and new enforcement provisions will significantly increase the number of ELVs treated legally in the EU. It will also ban the export of vehicles that are no longer roadworthy, in accordance with the ’do no significant harm’ principle.
Provide incentives to increase the collection of ELVs and improve waste treatment. The preferred option includes financial and organisation incentives by setting EPR requirements to increase the collection of ELVs and to offset the costs of improved treatment quality that cannot be offset by the value of materials and components recovered.
Cover more vehicles. The preferred option is a phased-in approach to gradually cover more vehicles under the new EU rules by requiring manufacturers to provide information on the composition of their vehicles. It also brings in a set of minimum treatment requirements for end-of-life L3e-L7e category vehicles, lorries, buses and trailers. The preferred option is expected to have a positive impact on the environment by reducing the environmental footprint linked to the production and end-of-life requirements of vehicles.
The overall environmental benefits are assessed as an annual reduction of 12.3 million tons of CO2-eq in 2035 (10.8 million tons in 2030 to 14.0 million tonnes in 2040), key to decarbonising the automotive industry. These CO2 savings represent EUR 2.8 billion when monetised. This is linked to a better valorisation of 5.4 million tons of materials (plastics, steel, aluminium, copper, CRMs) which would be either recycled at higher quality or reused, and to the fact that up to 3.8 million additional ELVs would be collected and treated in the EU. 350 tonnes of rare earths in permanent magnet materials would be separately collected for reuse and recycling in 2035 (and 1 500 tonnes in 2040), which would contribute greatly to the EU's goal to achieve strategic autonomy for critical raw materials. The preferred option contributes mostly to the sustainable development goals of sustainable innovations (SDG9), responsible consumption and production (SDG12) and climate action (SDG13).
The total annual revenue for the preferred option is EUR 5.2 billion in 2035, including EUR 2.8 billion of CO2 savings when monetised, against a cost of EUR 3.3 billion yielding to a EUR 1.8 billion in net revenue.
The cost of the preferred option is estimated to reach EUR 66 per vehicle put on the market in 2035. It is estimated to create 22 100 additional jobs, of which 14 200 in SMEs, mostly dismantlers and recyclers.
While there will be some short-term costs for the EU automotive industry, the preferred option will also generate energy savings, reduce the EU's dependency on materials sourced from third countries and ensure that the transition to vehicle electrification is made based on sustainable and circular business models, all contributing to the long-term competitiveness of the sector.
The preferred option will generate both costs (linked to investment in new technologies) and revenue (linked to higher values of spare parts and recycled materials) for the waste management sector. While the situation will vary between different Member States and operators due to differences in technologies used and labour costs, the planned changes will significantly strengthen and modernise the EU dismantling, shredding and recycling industry.
Member State authorities are expected to face limited costs associated with monitoring and enforcing compliance with the new legislation. The costs will primarily be due to inspections, checks on the export of ELVs and used vehicles and the need to adapt registration systems. In return, increased digitalisation (for reporting on the certificate of destruction, for exchange of information from national vehicle registration registries on export of ELVs and used vehicles and with interoperability with single windows system) will increase efficiency for both enforcement authorities and businesses and will also reduce their burden. The estimated overall cost for public authorities to supervise the EPR schemes, carry out enforcement work and adapt national vehicle registration systems is around EUR 24 million, less than EUR 2 per vehicle.
Consumers may face an increase in new vehicle prices of approximately EUR 39 per vehicle, and lower prices (by EUR 12 per vehicle) when selling second-hand cars due to the fall in exports. Conversely, measures to support the recovery and sale of used spare parts are expected to result in lower purchase prices and cheaper repair and maintenance for consumers, which is a benefit.
The advanced requirements for end-of-life vehicle treatment may pose challenges for SMEs in terms of higher short- and medium-term implementation costs and adaptation to new treatment technologies. At the same time, more investment in the automotive recycling sector, support for the reuse market of secondary parts and easier access to dismantling information of a vehicle will boost innovation, unlock new opportunities for SMEs and help create new jobs in the sector. To further mitigate the impacts on SMEs, stronger EPR requirements enable the costs to be offset by higher collection rates and treatment quality.
The recurrent costs related to the ‘one-in, one-out’ approach per vehicle are assessed at 81.8 million EUR or EUR 5.45 per new vehicle for the preferred option package. The preferred option makes a maximum use of the digitalisation potential to ensure efficient enforcement of new requirements in accordance with the ‘digital by default’ principle. Without digitalisation, the impacts are estimated to be 32.2 million EUR or 40% higher.
• Regulatory fitness and simplification
The proposed regulation is expected to improve efficiency and harmonisation. It takes into account the majority of the suggestions made in the Fit for Future Platform (F4F) opinion10. Specifications of vehicle type-approval procedures on setting clear circularity requirements will streamline the single market procedures for manufacturers. Further simplification will be achieved through centralising restrictions on chemical substances under REACH, the EU's main piece of legislation governing chemicals. For the management of end-of-life vehicles, aligning recycling definitions with the Waste Framework Directive will harmonise and facilitate legal interpretation and make reporting data more comparable. Setting ELV-specific extended producer responsibility schemes will prevent uneven approaches among Member States. This will improve transparency and the fair allocation of financial responsibilities between companies involved in treating end-of-life vehicles.
Digitalisation will also help improve the collection of ELVs and tackle the issue of missing vehicles by bringing in digital reporting in authorised treatment facilities and sharing vehicle registration information among Member States. Interconnection with the EU Single Window Environment for Customs will enable customs authorities to enforce new conditions on the export of used vehicles. Tapping the potential of digitalisation will be essential to empower SMEs, in particular smaller and often family-run companies, to reach new markets by enabling them to connect to online platforms and distant markets at both local and international levels. In addition, the pull effect from setting a mandatory target on the recycled content of plastics is expected to boost the competitiveness of dismantlers, as they would become the primary source of supply of high-demand, high-quality secondary materials. Particular attention was paid to limit reporting obligations to what is strictly necessary to assess and monitor the implementation of the legislation, privileging digital solutions and leaving discretion on how operators should report to national authorities.
• Fundamental rights
The proposal does not have consequences on the protection of fundamental rights.
4. BUDGETARY IMPLICATIONS
Implementing the proposal will require staff and financial resources to purchase services. Some of the requirements in terms of staffing are expected to be met under the existing allocations for the Commission, albeit some needs for additional external staff are presented in the accompanying legislative financial statement. A need for limited extra resources is expected at the European Chemicals Agency, which will be provided for in a subsequent legislative proposal covering Chemicals legislation.
The proposal includes several articles detailing further work streams that will need to be carried out to complement the regulation. This work will entail adopting implementing/delegated acts over the course of the following 1-8 years.
The main technical tasks include:
- improving the methodology for the calculation of the rates on recyclability, reusability and recoverability (3R rates);
- improving the risk assessment of the remaining hazardous substance exemptions (ECHA support);
- calculating and verifying the rules for the recycled content of plastics, a feasibility study for setting recycled content targets for steel in automotive applications and a wider feasibility study, including an economic assessment for setting recycled content targets for other materials and declaration formats (building on JRC expertise and methodology although not necessarily carried out by the JRC););
- specifying removability requirements for EV batteries and e-drive motors, general removal information for other relevant components and aligning the requirements for the CRM Act with the Batteries Regulation (as above, building on JRC expertise);
- updating the type-approval formats and the information folder to be provided to type-approval authorities;
- developing criteria for the vehicle circularity passport;
- establishing cross-border EPR mechanisms;
- amending the calculation and verification rules for quality in vehicle treatment performance (as above, building on JRC expertise);
- digitalisation: creating interoperable vehicle registers and real-time export controls via the EU Single Window Environment for Customs, based on valid roadworthiness requirements first and risk-based assessment as a second step (close cooperation between DG ENV, DG MOVE and DG TAXUD);
- taking a phased-in approach to extending the scope of vehicle categories and preparing for review 8 years after entry into force.
- 0.5 full-time equivalent (FTE) contractual agents in 2024;
- 3.0 FTE contractual agents in 2025;
- 4.0 FTE contractual agents in 2026 and 2027, plus 1 FTE seconded national expert.
Overall, the total implementation costs, including the costs for Commission staff, is estimated at EUR 4.346 million, based on the latest salary scales.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
Implementing the proposed regulation will be monitored by several indicators tracking information such as the volume of recycled materials used in new vehicles, recycling rates for specific materials from ELVs, materials/components/parts removed prior to shredding, the market share of used spare parts, the number of ELVs collected and processed in line with ELV requirements and the volume of used vehicles exported. More information on these indicators can be found in the impact assessment report.
A general review of a regulation is planned 8 years after it enters into force.
• Detailed explanation of the specific provisions of the proposal
Chapter I sets out the general provisions.
Article 1 lays down the subject matter of this regulation and Article 2 indicates its scope. The majority of its provisions apply to vehicles of categories M1 and N1 (cars and vans). Certain provisions on the management of end-of-life vehicles and on export requirements also apply to certain L-category vehicles (vehicles of categories L3e, L4e, L5e, L6e and L7e), to lorries, buses and to trailers (vehicles of categories M2, M3, N2, N3 and O).
Article 3 lays down the definitions needed for the purposes of this regulation. Several definitions are carried over from the repealed Directives 2000/53/EC and 2005/64/EC or from existing EU legislation, such as Directives 1999/37/EC, 2008/98/EC and 2014/45/EU or Regulation (EU) 2018/858.
Chapter II contains circularity requirements concerning vehicle design, to be verified in a type-approval process.
Article 4 lays down minimum requirements on the reusability, recyclability and recoverability of vehicle types, specifying the rates to be achieved by each type. It empowers the Commission to adopt implementing acts setting out the methodology for calculating and verifying these rates.
Article 5 restricts the use of lead, cadmium, mercury and hexavalent chromium in vehicles and Annex III provide exemptions from this restriction. The Commission will adopt delegated acts amending this Annex adjusting it to technical and scientific progress.
Article 6 requires that each vehicle type contains at least 25% of plastic recycled from post-consumer plastic waste, and that 25% of such material should come from recycled end-of-life vehicles. It also empowers the Commission to adopt delegated acts setting recycled content targets for other materials. Setting such potential targets must be underpinned by a detailed assessment.
Article 7 lays down a general obligation that the design of new vehicles must not hinder the removal of parts and components that have an important potential for reuse when vehicles become waste. It also lays down a requirement to design vehicles in a manner that enables the removal and replacement of electric vehicle batteries and e-drive motors from the vehicle type during both the use phase and the waste phase.
Chapter III lays down information and labelling requirements for manufacturers.
Article 8 sets out the manner in which the manufacturers must prove compliance of their vehicle types with the requirements laid down in this regulation during the type-approval process.
Article 9 establishes the obligation to prepare a circularity strategy for each new vehicle type, containing the aspects listed in Annex IV. Manufacturers should update the strategies every 5 years, summarising the outcome of the actions taken to meet their undertakings.
Article 10 obliges manufacturers to declare in type-approval documentation the share of recycled content of indicated materials present in vehicles.
Article 11 obliges manufacturers to provide information on the safe removal and replacement of parts, components and materials contained in vehicles. This information must be accessible free of charge to waste management operators and repair and maintenance operators.
Article 12 covers the labelling of parts, components and materials present in vehicles in line with material coding standards. Detailed rules on labelling e-drive motors containing permanent magnets are laid down in Annex VI.
Article 13 establishes a circularity vehicle passport, a digital tool used to improve the provision of information on the safe removal and replacement of vehicle parts and components in a manner that is consistent with other digital information tools and platforms that already exist or are in further development in the automotive sector.
Chapter IV sets out rules on the management of end-of-life vehicles.
Section 1 contains provisions requiring Member States to designate the authorities responsible for implementing and enforcing Chapter IV and V (Article 14) and for setting the general conditions for issuing permits for authorised treatment facilities (Article 15).
Section 2 lays down requirements for extended producer responsibility.
Article 16 establishes a general obligation of producers on responsibility and indicates its scope. Article 17 requires Member States to create a register that will monitor compliance of producers with these requirements. Producers who are not registered shall not make available vehicles on the market within a territory of a Member State. Article 18 concerns producer responsibility organisations. Article 19 lays down conditions for the authorisation of producers, in case of individual fulfillment of extended producer responsibility obligations, and producer responsibility organisations. Article 20 indicates the costs related to managing end-of-life vehicles that should be covered by financial contributions of producers. Article 21 lays down harmonised criteria for modulating these fees. Article 22 sets out rules on the cost allocation mechanism for vehicles becoming end-of-life vehicles in another Member State. It empowers the Commission to adopt delegated acts concerning detailed rules on the application of fee modulation criteria and on the cost allocation mechanism of cross-border extended producer responsibility.
Section 3 covers the collection of end-of-life vehicles.
Article 23 sets out an obligation for producers to set up and participate in collection systems for end-of-life vehicles and sets out the requirements of these systems. It also obliges the Member States to ensure that these systems function properly.
Article 24 establishes an obligation to deliver all end-of-life vehicles to authorised treatment facilities.
Article 25 specifies obligation of authorised treatment facilities to issue certificates of destruction for all treated end-of-life vehicles.
Article 26 lists the obligations of vehicle owners to deliver their vehicles to an authorised treatment facility when it reaches the end-of-life stage and to present the subsequent certificate of destruction for the vehicle’s deregistration.
Section 4 covers the treatment of end-of-life vehicles.
Article 27 sets outs obligations of authorised treatment facilities on the specific action needed to treat vehicles properly.
Article 28 sets out the general requirements applicable to the shredding of end-of life vehicles. It also bans the mixing of end-of-life vehicles, their parts, components and materials with packaging waste and waste electrical and electronic equipment.
Article 29 establishes requirements for the depollution of end-of-life vehicles, indicating that removed fluids and liquids must be separately stored, similarly as parts, components and materials containing lead, cadmium, mercury and hexavalent chromium. It also underlines, that removed electric vehicles batteries need to be stored and treated in line with Regulation (EU) 2023/[Batteries].
Article 30 obliges authorised treatment facilities to remove the parts and components listed in Annex VII Part C before shredding and sets out the conditions authorising an exemption from this requirement.
Article 31 sets out the obligations concerning removed parts and components to assess their fitness for reuse, remanufacturing, refurbishment, recycling, or other treatment operations and how they should be labelled. It also provides a list of parts that should not be reused, remanufactured or refurbished.
Article 32 lays down requirements governing the trading of used, remanufactured and refurbished parts and components. These parts and components must be properly labelled and covered by a warranty.
Article 33 states that Member States must adopt incentives to promote the reuse, remanufacturing and refurbishment of parts and components.
Article 34 sets out three targets: on the reuse and recycling of end-of-life vehicles, on their reuse and recovery and on plastic recycling.
Article 35 introduces a ban for landfilling of non-inert waste that are not processed through post shredder technology.
Article 36 lays down rules to calculate re-use, recycling and recovery targets in situations when end-of-life vehicles are shipped to another country for treatment.
Chapter V provides rules on used vehicles and their export.
Section 1 concerns the status of used vehicles. Article 37 obliges the vehicle owner transferring the ownership of the vehicle to be able to demonstrate that the vehicle subject to the transfer is not an end-of-life vehicle.
Section 2 contains several provisions governing the export of used vehicles.
Article 38 lays down conditions for exporting used vehicles: they should not be end-of-life vehicles according to criteria set out in Annex I and they must be roadworthy. It also explains how the customs authorities will verify if and how vehicles comply with these requirements.
Article 39 obliges customs authorities to automatically and electronically verify the compliance of vehicles to be exported with export requirements.
Article 40 sets out when customs authorities should carry out checks on used vehicles to be exported.
Article 41 indicates when customs authorities should suspend the export of a used vehicle from releasing for export, Article 42 concerns situations when a used vehicle should be released for export and Article 43 provides for grounds for refusal to release the vehicle for export.
Article 44 covers cooperation between the authorities and exchange of customs-related information and Article 45 indicates the electronic system to be used for this purpose.
Chapter VI contain provisions on the enforcement of the rules contained in the regulation.
Article 46 obliges Member States to carry out regular inspections of authorised treatment facilities, repair and maintenance operators and other facilities and economic operators who may treat end-of-life vehicles.
Article 47 obliges Member States to establish effective cooperation mechanisms at national and international level, enabling the exchange of the data needed under this regulation.
Article 48 requires Member States to establish effective, proportionate and dissuasive penalties for infringing this Regulation.
Article 49 lays down rules on reporting from Member States to the Commission on data concerning the collection and treatment of end-of-life vehicles, as well as on implementing the extended producer responsibility obligations.
Chapter VII is a standard chapter with articles on delegated acts (Article 50) and on implementing acts (Article 51).
Chapter VIII sets out amendments to Regulation (EU) 2019/1020 and Regulation (EU) 2018/858.
Chapter IX is a standard chapter on final provisions, with articles covering the requirement to evaluate the regulation 8 years after adoption (Article 55), on repeal and transitional provisions (Article 56) and entry into force (Article 57).