The eco-innovations mechanism rewards innovative technologies that produce real-world CO2 savings beyond what is measured over the standardized test cycle during vehicle type approval. Because CO2 savings from eco-innovation technologies count toward manufacturers’ CO2 targets, manufacturers have an incentive to develop and deploy cost-effective eco-innovations to meet CO2 standards. In theory, providing credits to manufacturers for technologies that reduce real-world emissions can both reduce the cost of complying with the CO2 standards and increase total real-world reductions. However, if estimated eco-innovations CO2 savings exceed the amount of real-world reductions, or if credits are given that double-count CO2 reductions on the type-approval test, they can become a loophole and erode the benefits of the CO2 standards. Thus, it is critical to properly account for the real-world benefits of eco-innovations.