RIA on proposed new emission limits for off-road engines
Title
Regulatory Impact Assessment on new emissions requirements for new engines to be installed in non-road mobile machinery.
Purpose and intended effect of the measure
These Regulations amend the Non-Road Mobile Machinery (Emission of Gaseous and Particulate Pollutants) Regulations 1999 to implement European Directive 2002/88/EC, amending Directive 97/68/EC on the approximation of the laws of the Member States relating to measures against the emissions of gaseous and particulate pollutants from internal combustion engines to be installed in non-road mobile machinery.
Objective
The objective of the Regulations is to improve air quality through controlling emissions of harmful pollutants from engines to be installed in certain types of non-road mobile machinery (NRMM). These regulations extend the scope of The Non-Road Mobile Machinery (Emission of Gaseous and Particulate Pollutants) Regulations 1999 (SI 1999 No 1053) to include off-road petrol engines up to 19kW in power, introducing emission limits for Hydrocarbons (HC), Carbon Monoxide (CO) and Oxides of Nitrogen (NOx) in two stages. Stage I comes into effect from the entry into force of these Regulations, and Stage II progressively up to 2008.
The requirements broadly align with United States Environmental Protection Agency regulations (CFR40 Part 90) for this type of engine, but with later implementation dates (US Phase 2 is already in force). The alignment of European requirements with existing US standards will permit rapid implementation with consequential environmental benefits while creating a large common market for these products that should minimise costs to industry.
In addition to the inclusion of small petrol engines these Regulations make several other significant changes. In particular they expand the scope to include:
- constant speed diesel engines, applying the existing Stage II diesel NRMM emission limits from the end of 2006,
- imports of used engines, requiring used engines imported from outside the EU to meet the same emissions requirements as new engines,
- secondary engines, i.e. engines mounted on road vehicles that are not used as the main propulsion engine.
Risk Assessment
Small petrol engines:
Small petrol engines are often used in non-road machines such as chainsaws, strimmers and lawnmowers. These engines are not subject to any EU emissions regulations at present but many are known to emit high levels of Hydrocarbons. Other products of combustion include CO and NOx, although levels of NOx are insignificant. Hydrocarbons are the main product of concern and the European Commission has estimated that these engines account for 6.5% of all EU HC emissions. The UK estimate of current HC emissions from small petrol-powered off-road equipment is 46 kilotonnes per year. By way of comparison the UK hydrocarbon emission from road traffic in 2000 was estimated to be 456 kilotonnes (Transport Statistics Great Britain 1999)
Hydrocarbons contribute to ground level ozone formation leading to risk of damage to human respiratory systems. In addition some hydrocarbons are carcinogenic. Carbon monoxide is harmful to human health, interfering with the ability of the blood to supply oxygen to the body's tissues. Airborne CO concentrations are now sufficiently low as not to be a general concern, and the Auto Oil II study concluded that there was no strong environmental need for further controls on CO emissions. CO limits are nevertheless included in this proposal to permit harmonisation with US regulations.
Constant Speed Diesel Engines:
The most significant pollutants from diesel engines are NOx and particulate matter (PM). Nitrogen Dioxide (NO2) may have an adverse effect on human health particularly among those suffering from respiratory problems. High levels of exposure have been linked to increased hospital admissions of people suffering from respiratory illnesses, while long-term exposure to the pollutant may affect lung function. NO2 may also enhance the response to allergens in sensitive populations. In addition NOx contributes to acidification, which can have harmful effects on soils, surface waters, vegetation and buildings and is also a low level ozone precursor.
PM is also damaging to health, most significantly among those suffering from cardio-respiratory complaints. Short-term changes in levels of particles have been associated with increased hospital admissions of people suffering from cardiovascular and respiratory illnesses and deaths brought forward. Long term exposure to particles is also thought to affect mortality.
Options
This is a mandatory Directive which the UK is obliged to implement. Failure to do so would leave the UK open to infraction proceedings and periodic fines from the European Court of Justice that would continue until such time as the Directive is brought into effect in the UK.
There is an optional implementation delay in the Directive that allows Member States to postpone the dates for implementation of both stage I and stage II by 2 years in respect of small petrol engines with a production date prior to the dates specified in the Directive. The intention of this is to allow manufacturers time to clear stockpiles of engines unsold at the implementation dates, meaning that they would not be left with a backlog of engines that they were unable to sell. The UK Regulations incorporate this derogation to minimise costs on business. Given that the total emissions from small petrol engines in the UK is small in comparison to other sources, taking advantage of this derogation will have a negligible impact on air quality in the UK.
Business Sectors Affected
The UK has no manufacturing industry for small petrol engines used in the type of equipment envisaged by the proposal. However, there are UK manufacturers of equipment that use imported petrol engines that would need to comply. For constant-speed diesel engines, the UK has an interest in both diesel engine manufacture and the equipment that use such engines. Engine and equipment manufacturers are expected to pass the cost of compliance with the emissions requirements on to their customers.
The type of engines covered by the proposed amendment are fitted to machines such as lawnmowers, chainsaws, cement mixers, generator sets, pumps, compressors etc. Horticulture and construction industries would therefore be impacted, but much of the machinery is for domestic use.
Benefits
Identifying the benefits
The principal effect of these Regulations will be to reduce HC emissions, reducing the formation of low-level ozone and its associated health risk. US-EPA estimated that the technology required to achieve the second stage of limits will also result in a 15% to 30% reduction (depending on engine type) in fuel consumption and hence CO2 emissions. No CO2 or fuel economy benefits are associated with Stage 1 limits. The inclusion of diesel engines used in generating sets, pumping sets, etc. would also reduce NOx and PM emissions.
In addition these Regulations are a move towards global harmonisation of emissions legislation for these engines enabling easier access to world markets for UK manufactured machines. Non-UK manufacturers would also benefit in being able to sell products designed for the US market in the UK, without being at a competitive disadvantage.
Quantifying the benefits
Small Petrol Engines
These Regulations are predicted to result in an 86% reduction in the UK annual emissions of HC from petrol-powered non-road mobile machinery. This will be achieved when Stage 2 compliant machines have replaced the whole of the current market, (predicted by 2020), although the majority of the benefit will be achieved several years earlier. In absolute terms this represents an annual saving of 39.5kt of HC. This is a significant saving; equivalent to a reduction of HC emission from all UK road transport by 8.7% (2000 base).
The annual saving in CO2 emissions once all machines in use are Stage II compliant is predicted to be 169kt (0.11% of UK anthropogenic CO2 emissions).
Mobile Constant Speed Diesel Engines
These Regulations are also predicted to result in a reduction in annual emissions of 5.63kt of NOx and 1.16kt of PM when Stage II compliant machines have replaced those currently in use (predicted by 2023). This represents a reduction of 27% NOx and 58% PM respectively from this class of machine.
Costs
Total Compliance Costs
Small Petrol Engines
In terms of equipment costs, US-EPA estimated typical cost increases to be around $4 (£2.70) for Phase 1 (EU Stage 1 equivalent) and around an additional $20 (£13.40) for most Phase 2 (EU Stage 2 equivalent) engines, although the largest handheld engines could increase in cost by $56 (£37.50). As a proportion of the total machine cost the Phase 1 costs represent:
- 4.6% for strimmers,
- 1% for professional chainsaws,
- 2.5% for lawnmowers, and
- 0.04% for ride-on lawnmowers.
The Phase 2 cost increases represent:
- 25% for strimmers,
- 13% for professional chainsaws,
- 13% for lawnmowers, and
- 1% for ride-on lawnmowers.
UK prices for this type of equipment tend to be higher than in the US and the percentage cost of emissions compliance would therefore be expected to be lower. This would result in a total cost for Stage 1 and 2 to UK businesses and consumers of £44 million in net present value. This is equivalent to an average annual cost of £3.3million amortised over 18 years, i.e. the time it will take to replace all of the existing population of machinery with Stage 2 compliant machines.
There are, however, two important issues that need to be taken into account that could reduce these cost estimates substantially. Firstly, many manufacturers market these small machines globally and many will already be in compliance with the US standards. For these manufacturers, the development and start-up costs will already be amortised, leaving only the cost of the new technology to be passed on to UK consumers. The actual cost increase of individual products may therefore be lower than quoted above, however this may be offset to some extent by the lack of Averaging, Banking & Trading provisions in the EU legislation. The US regulations have such provisions to give manufacturers the flexibility to certify some engines above the emissions limits provided that these excess emissions are counterbalanced by engines emitting below the emissions limits. Instead a 3-year delay for the implementation of stage II dates for certain hand-held machinery has been incorporated into the Directive and these Regulations to ensure that technology can be developed to allow these engines to meet the standards. In addition to this 2-stroke engines used to power snow-blowers are only required to meet the requirements for equivalent "hand-held" engines.
Secondly, the improved technology required to meet Stage 2 emissions limits is expected to result in a consequential improvement in fuel consumption. Taking this into account, the net cost of compliance to UK businesses and consumers over the useful life of the machine is predicted to be negative, i.e. the legislation would bring about cost savings to users in the long term.
Constant Speed Diesel Engines
The cost to UK consumers of including constant speed diesel engines within the scope of the directive is estimated to be £66 million. This is equivalent to an average annual cost of £6.5million amortised over the 16 years it is assumed it will take to replace all machines currently in use. No fuel consumption impact is assumed or is expected. Typical unit cost increase for a diesel generator set is estimated to be around 2-4% depending on size.
Cost Effectiveness
As a measure to reduce the emissions of hydrocarbons the cost effectiveness ratio of the small petrol engine Stage 1 and 2 limits is estimated to be £82/tonne saved. This is highly cost-effective relative to similar emissions control measures. If the fuel consumption savings predicted by US-EPA are achieved, the cost of the measure will be negative.
If all the costs are allocated to one pollutant, regulation of constant speed diesel engines is estimated to have a cost effectiveness of £856/tonne if allocated to NOx or £3932/tonne if allocated to PM. Again these are very favourable figures in comparison to other similar emissions reduction measures.
Issues of equity and fairness
Mandatory standards, such as this amendment, have proven to be the most effective means for reducing internal combustion engine emissions.
The requirements apply equally to all engine & equipment manufacturers and importers in the UK and EU.
The change of the placing on the market requirement makes grey/parallel importing of non-compliant machinery illegal for all engine types covered by the directive. This will eliminate unfair competition from this sector. However, the new requirement prohibits the sale of any used machinery not meeting the current emissions requirements. This effectively applies higher standards to used imports than used EU machines and prohibits the import of historic machinery.
Consultation with small business: The Small Firms' Impact Test
The Small Business Service have been consulted, as have a number relevant trade associations and industry representatives, and it is clear that this regulation will not impact disproportionately on small firms.
Competition Assessment
A competition assessment has been carried out. The main markets affected have been identified as engine manufacturers and manufacturers of the equipment into which these engines are to be fitted. The results of the assessment are that the proposal is unlikely to have a significant detrimental effect on the market.
The requirement for engines to be approved to emission limits is not expected to have significant implications for competition as it will apply to all manufacturers. Existing as well as new and potential manufacturers will be subject to these requirements.
Enforcement and Sanctions
The introduction of limits for small petrol and constant-speed diesel engines will increase the requirement for enforcement activity since a broader range of machinery will be covered by the Regulations, and there may be greater scope for unapproved machinery of the small petrol-engined type being imported than for large diesel-engined machines. Enforcement is required to take place at point-of-sale of the engine rather than the complete machine. Enforcement action is therefore expected to take place at the machine manufacturer's premises, rather than at consumer outlets. However, enforcement must also be proportionate. With the relatively low total emissions from this class of machinery, action should be limited, for the most part, to responding to specific information received about non-compliant machinery being offered for sale. Enforcement will be carried out by the Vehicle Certification Agency, and in Northern Ireland by local Trading Standards Officers. Costs of enforcing the non-road mobile machinery regulations is currently in the region of £65,000. These Regulations are not expected to increase these costs.
As part of their enforcement programme the have VCA produced a leaflet aimed at manufacturers, importers and distributors of non-road mobile machinery, explaining the scope and impact of the Regulations. They will also be taking a pro-active role in raising awareness of the Regulations to ensure that compliance is maximised by contacting relevant manufacturers, importers and distributors, and by attendance at relevant trade events.
Consultation
The following UK industry and user groups were consulted at all stages and asked to provide comment on and input to this RIA;
Agricultural Engineers Association, Society of Motor Manufacturers & Traders, Association of Manufacturers of Power Generating Systems, Federation of Manufacturers of Construction Equipment & Cranes, Forestry Commission, Arboriculturalist Association, Forestry Contractors Association, and National Farmers Union. The Vehicle Certification Agency and Other Government Departments have also been consulted.
The department also carried out a full 12-week consultation on these regulations. No significant objections were raised to the content of the regulations, and no additional indirect costs or unintended consequences were identified.
Summary
The reduction in emissions that could be achieved by these Regulations is small but significant. As road traffic emissions reduce in future due both to new emissions limits and penetration of current technology into the fleet, the contribution of small off-road petrol engines will become increasingly important. Despite the uncertainty over the cost and the emission savings due to lack of statistical data for this type of machinery (populations, usage etc), at £82/tonne of HC saved, this is highly cost-effective measure. This is even without discounting for the amortisation of development and start-up costs by manufacturers that already have to comply with equivalent US standards. With the predicted reduction in fuel consumption from the use of better engine technology, the HC reductions will be achieved at a net saving to consumers. The inclusion of constant speed diesel engines from 2007 onwards will achieve a useful saving in NOx and particulate matter for this class of machine for relatively favourable cost benefit ratio.
Contact Point
Stephen McFarlane, TET4, Zone 4/19 Great Minster House, 76 Marsham Street, London SW1P 4DR. (Tel 020 7944 2087; Fax 020 7944 2605; email stephen.mcfarlane@dft.gsi.gov.uk).
Declaration
I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify the costs.
David Jamieson
28th July 2004
Parliamentary Under Secretary of State
Department for Transport.
