Modelling the relaxation of EU CO2 emission standards for cars and vans in Germany with TEMPS

The EU CO₂ emission standards for cars and vans under Regulation (EU) 2019/631 constitute a key European policy instrument for emission reduction in light-duty vehicle transport. Although emission reductions in domestic transport are likely to be insufficient to meet national targets the European Commission proposed a relaxation of the CO₂ standards as part of its automotive package presented in December 2025. This paper analyses the interactions between weakened CO₂ standards, CO₂ pricing, and resulting greenhouse gas emissions in the German transport sector. The analysis is based on the TEMPS model, which projects vehicle fleet development, energy demand, and emissions by combining TCO-based vehicle choice with calibrated logit parameters, fleet turnover, transport-demand responses and an endogenous, revenue-neutral representation of manufacturer price adjustments for compliance with fleet standards. The weakened standards reduce the BEV share in new registrations by up to 13 percentage points and lead to additional cumulative tank-to-wheel emissions of 29.4 Mt CO₂e through 2040. Offsetting this effect by a higher CO₂ price trajectory requires €406 in 2040, compared with €191 in the reference scenario. Weaker standards, combined with higher CO₂ prices, therefore shift mitigation from vehicle electrification towards behavioural responses such as modal shift and reduced transport demand. While this illustrates only one possible compensation scenario, it nevertheless shows that weakening fleet standards shifts a larger mitigation burden towards carbon pricing and demand-side responses. The higher fuel costs implied by the compensation scenario may raise distributional and political concerns, although household-level distributional effects are not quantified in this study.