In July 1998 the European Commission and the European Automobile Manufacturers Association (ACEA) came to an agreement that committed ACEA to reduce the CO₂ emissions from new passenger cars by over 25% .

In the UK, a number of steps have been taken to promote the purchase and use of more fuel efficient vehicles:

Since March 2001, a system of Graduated VED (vehicle excise duty) has been applied to new cars, based primarily on their level of CO₂ emissions. Since April 2002, company car tax has been based on the CO₂ emissions of the vehicle provided to an employee for their private use. In 2006 a new zero rate for cars with the lowest carbon emissions and a new top band for the most polluting cars was introduced. This has partially been the result of the failure by car manufactures to significantly reduce CO₂ emissions from vehicles.

A new colour-coded environment label for all new cars began appearing in UK car showrooms from July 2005. The consumer-friendly label has been designed to help car buyers assess the climate change impacts of different cars. It will also emphasise that – increasingly – better environmental performance means lower road tax and lower running costs. The gradations on the label are consistent with the CO₂ bandings used for Vehicle Excise Duty

More information on the labels.

More information on the Excise Duty.

From “Innovation in mobility for sustainable outcomes” case studies by Geoff Browne.