CO₂ (carbon dioxide) is one of the main gases produced when petrol or diesel is burned in a car engine.
It’s a key contributor to climate change — and it also directly affects fuel costs, road tax, and company car tax in the UK.
Understanding how CO₂ works can help you:
Reduce running costs
Choose a more efficient vehicle
Make better long-term decisions when leasing
What is CO₂?
CO₂ (carbon dioxide) is a greenhouse gas. When fuels like petrol or diesel are burned, they release CO₂ into the atmosphere. This gas traps heat, contributing to global warming.
In simple terms, the more fuel that is burned . . . the more CO₂ is produced; more CO₂ means greater environmental impact.
Why CO₂ matters for drivers
This isn’t just an environmental issue — it directly affects you as a driver.
1. Fuel costs
Cars that emit more CO₂ usually burn more fuel and cost more to run.
2. Vehicle tax (VED)
In the UK, Vehicle Excise Duty (road tax) is linked to emissions. Vehicles with lower emissions have lower tax rates.
3. Company car tax
If you lease through a business, CO₂ plays a major role in Benefit-in-Kind (BiK) rates and overall affordability. Electric vehicles typically have the lowest rates.
4. Environmental impact
Transport is a major contributor to emissions globally. While it’s not the only factor, reducing vehicle emissions is one of the most practical ways individuals can lower their impact. The European Parliament estimated over a quarter of the EU's CO₂ production was from transport in 2019 (72% from road transport).
How much CO₂ do cars produce?
As a rough guide:
Petrol: ~2.3kg CO₂ per litre burned
Diesel: ~2.6kg CO₂ per litre burned
That’s why fuel efficiency and emissions are closely linked. Modern vehicles are designed to reduce this, but differences between models can still be significant.
Petrol vs diesel vs hybrid vs electric
Petrol
Lower upfront cost
Higher CO₂ than electric/hybrid
Better for short journeys
Diesel
More efficient on long journeys
Lower CO₂ per mile than petrol (typically)
Higher NOx emissions (different issue)
Hybrid
Combines engine + electric motor
Lower emissions in town driving
Good middle ground
Electric (EV)
Zero CO₂ emissions
Lower running costs
Increasing range and practicality
From a CO₂ perspective, EVs are currently the lowest-emission option for drivers.
What can you do to reduce CO₂ emissions?
Even without changing your car, driving habits make a difference.
Drive smoothly, avoid harsh acceleration and braking, and use steady speeds
Keep speeds sensible. Driving faster significantly increases fuel use. (e.g. 85mph can use ~25% more fuel than 70mph)
Avoid short trips. Cold engines are less efficient — short journeys increase emissions
Check tyre pressure. Under-inflated tyres increase fuel use (and increase CO₂ output)
Reduce unnecessary weight. Heavier cars use more fuel — even roof racks can increase drag
Use air conditioning wisely. Aircon increases fuel consumption, especially at low speeds
Why leasing can help reduce emissions
Leasing naturally supports lower emissions because:
You drive newer, more efficient cars
You can switch to newer technology more often
You avoid being locked into older, higher-emission vehicles
This is especially relevant as EV technology continues to improve.
So, why does CO₂ matter?
CO₂ affects:
Your fuel costs
Your tax costs
Your environmental impact
Understanding it helps you make smarter, more cost-effective decisions — especially when choosing your next car.
Looking for a lower-emission option?
Whether you’re considering hybrid or fully electric, we can help you find a vehicle that fits your budget and reduces your running costs.
Browse our latest lease deals or speak to our team on 0344 745 1818 for tailored advice.