This study examines the EU car labelling regime for emissions and fuel efficiency under Directive 1999/94/EC (Car Label Directive) from a legal and empirical perspective. The legal comparison of national car labels shows strongly diverging labelling methodologies across the EU: Coloured versus basic labels, relative versus absolute approaches, different units and thresholds, as well as emphasis on emissions versus fuel economy. The very same car will have different ratings in different EU countries. This creates market frictions, undermines the EU’s effort to decarbonise the car sector, and has the potential of misleading consumers. Our empirical analysis of new vehicle registrations from the European Environment Agency offers insights into the fuel efficiency and emissions of cars in the EU as well as national label distributions. All fuel types have ranges of diverging fuel efficiency and (all but electric vehicles) direct tailpipe emissions, which argues in favour of introducing fuel-type dependent car labels for both elements. We further find two opposing trends: On the one hand, consumers opt for more fuel-efficient car models among available options. On the other hand, fuel consumption and emissions slightly increased for fossil-fuel-powered cars in recent years. This finding suggests that consumers care about fuel efficiency, and perhaps reducing emissions, while manufacturers seem less committed to offering more efficient models. We also document heterogeneous national purchasing behaviour as car label distributions in 2024 diverge if the national labelling methodologies were applied to the cars registered in the individual countries and in the entire EU. To solve these discrepancies, we assess options for standardizing car labels at the EU level. A car label review could be inspired by the EU energy efficiency labelling regime for electric appliances under Regulation (EU) 2017/1369 as a labelling role model. We conclude that the future car label would preferably include two distinct coloured scales with absolute labelling thresholds for both emissions and fuel efficiency.
forthcoming in Journal of Consumer Policy
