AERIS Air Quality Report: Euro 7 cost-benefit assessment

The key findings are summarised in the AERIS Air Quality Report, published in March 2021.

The second part of the study by AERIS, published in July 2021, is detailed cost-benefit analysis (CBA) of a wide range of Euro 7/VII NOx and PM emission reduction scenarios. These include those that were explored in the AERIS Air Quality report, as well as additional scenarios in response to comments received by various stakeholders since the Air Quality report was published, and three ‘early replacement of pre-Euro 6/VI’ vehicle scenarios.

The methodology behind the CBA is based on the European Commission’s ‘Handbook on the external costs of transport’. It was adopted to ensure alignment with the CBA work which the CLOVE consortium or Commission services are doing on Euro 7/VII. The Handbook and data from the AERIS Air Quality report enable the calculation of avoided external damage costs to be expressed as the equivalent increase in the cost of a single future Euro 7/VII vehicle (ie ‘benefits supported increase’) and adapted using standard discounted cash flow theory.

In other words, if the actual increase in the cost of a new vehicle (conforming to the Euro 7/VII scenario considered) is less than or the same as the corresponding ‘benefits supported increase’ in vehicle cost, then the benefits obtained from that Euro 7/VII scenario would support (justify) the additional vehicle costs. If the actual increase in vehicle cost is higher than the benefit supported increase, then the additional benefits would not support the additional cost.

As an example, and using the Handbook figures, the CBA study calculates that the benefits derived from the introduction of a Euro VII vehicle complying with a NOx emission limit of 230mg/kWh would support an increase in the cost of a new vehicle above the current Euro VI of up to €573. Similar figures for particle emissions (PM) can be added.

The benefits for a diesel passenger car going from Euro 6d to a Euro 7 NOx limit of 35mg/km would support an increase in the new vehicle cost (above Euro 6d) of €126 and the corresponding figure for a petrol passenger car would be €21.

These figures, and many others calculated in the CBA study, can be used to compare against data for assumed Euro 7/VII technology costs (plus all other costs such as R&D that would apply to calculate the additional per vehicle cost for Euro 7/VII scenarios) in order to test if Euro 7/VII scenarios are cost beneficial, or other scenarios or approaches might be more suitable.