Rocky Road: EU countries reach deal to ban sales of new fossil fuel cars and vans by 2035
New regulation designed to accelerate decarbonisation of road transport, as EU Council approves latest package of measures to tackle emissions from industry, forestry and land-use
EU member states have approved a law that will ban the sale of carbon-emitting cars and vans from 2035, bringing negotiations around one of the most contentious issues in the bloc’s Green Deal climate package to a close.
The regulation, which will come into force in 20 days’ time, strengthens the interim 2030 emissions reduction target automakers in the EU have to meet, as well as enshrines the 2035 phase-out date into law.
As such, the rules require new cars to emit 55 per cent less emissions and new vans to halve emissions during the period between 2030 and 2034, against a 2021 baseline. Automakers whose fleet of newly registered vehicles exceeds its specific annual emissions target in any calendar year must pay a premium of €95 per gram of CO2 per km.
In addition, from 2035 a ban on the sale of new carbon-emitting vehicles will come into effect, but in a move that has angered environmental campaigners the rules will allow for the sale of internal combustion engine (ICE) vehicles that make use of so-called e-fuels, which advocates maintain can be produced in a way that results in zero emissions.
“The new rules will bring opportunities for cutting-edge technologies and create the momentum for industry to invest in a fossil-free future,” said Romina Pourmokhtari, climate minister for Sweden, which is currently president of the EU Council.
The high-profile negotiations over the ICE phase out date went on longer than expected, amid a standoff with the European Commission led by the German government.
The ban on the sale of new petrol and diesel cars and vans from 2035 had originally been envisaged as a means of driving the shift to electric vehicles (EVs) or potentially hydrogen fuel cell vehicles and as such would ban the sale of all new ICE vehicles. Several European countries, including the UK, already have plans in place to ban the sale of ICE cars and vans with many opting for earlier dates than 2035.
However, following intense lobbying from parts of its auto industry the German government pushed for ICE vehicles to be exempted from the ban as long as they make use of e-fuels. E-fuels, sometimes called synthetic fuels, can be produced with zero emissions using clean energy and captured carbon. However, while the fuels are seen as a more sustainable alternative to biofuels they remain in their infancy and are significantly more expensive than other types of engine fuel.
Moreover, the technology results in more air pollution than EVs or fuel cell vehicles and environmental campaigners are fearful that allowing manufacturers to continue to produce ICE vehicles could leave the door open for the continued use of fossil fuels.
Last week, a group of 47 major European business, including a number of leading auto manufacturers, wrote to the European Commission urging it resist German-led calls to delay the proposed date for ending the sale of new petrol and diesel cars from 2035.
The group, which included Volvo Cars, Ford of Europe, and Vattenfall, warned any delay of the ban would have “a devastating impact on air quality and the environment across the bloc, and would call into question the EU’s ability to reach its climate commitments”.
The group also argued Germany’s call for concessions on the use of e-fuels would serve only to prolong the life of the internal combustion engine and delay the switch to genuinely zero-emission vehicles. “It is deeply concerning that Germany is leading efforts to postpone the EU’s agreed 2035 ban on the sale of new petrol and diesel cars and seek concessions for e-fuels,” said Sandra Roling, director of transport at the Climate Group, which orchestrated the letter. “That six other countries are now rowing in behind Germany risks undermining business trust in the EU itself, not to mention having a detrimental effect on the health of the EU’s people and its climate, along with prolonging the life of the internal combustion engine.
“Legislative certainty is vital for business planning. In seeking to reverse the agreement secured under the French presidency, these seven Member States are undoing almost two years of negotiations and are risking the EU’s ability to meet its agreed 2050 climate goals. Our asks are simple. Stick to the 2035 date, and no concessions for e-fuels. Give businesses the clarity and certainty they need to invest in the switch to electric vehicles.”
Jim Rowan, CEO at Volvo Cars, added: “Now is not the time for backtracking and blocking of science-based climate targets for our industry. Now is not the time to put domestic political interests ahead of the health and welfare of our planet and EU citizens, and indeed of future generations. Now is the time for strong, decisive and progressive policy and leadership.”
However, in the end the European Council and Commission brokered a compromise, which maintained the 2035 phase out date but acquiesced to Germany’s request for an exemption for e-fuels.
As such, the regulation contains a reference to e-fuels with the Commission promising to now put forward a proposal for registering vehicles running exclusively on fuels deemed “CO2 neutral” after running a consultation.
Last week, think tank Transport & Environment warned the e-fuel exemption could create a loophole whereby drivers might be able to buy fossil petrol for their new cars. And it noted that only wealthy drivers would be able to stomach the cost of the low-carbon fuels, which in 2030 are still expected to be 50 per cent more expensive than fossil petrol today.
The breakthrough deal also saw the EU Council approve plans for the Commission to review progress towards the 2035 phase-out date in 2026, providing an opportunity to assess whether targets need to be reviewed in light of new technological developments.
Other provisions set out by the regulation include a measure to gradually reduce the cap of ’emission credits’ that manufacturers can claim for eco-innovations that reduce vehicles’ CO2 emissions on the road to maximum 4g per km per year from 2030 until the end of 2034, down from the current 7g per km a year.
It also sets out a plan to establish a common EU methodology, to be developed by the Commission by 2025, for assessing the full life cycle of CO2 emissions of cars and vans placed on the EU market, as well as for the fuels and energy consumed by these vehicles.
The deal, and the intense negotiations that led up to it, further underscore the influence of fossil fuel industry lobbying in diluting ambitious decarbonisation policies. It also acts as a forerunner to the lobbying the Commission’s new flagship Net Zero Industry Act is likely to face, as the bloc pushes forward with its response to the competitive threat posed by the US Inflation Reduction Act. But at the same time the compromise agreement demonstrates how, regardless of the occasional loophole, regulators are pushing forward with ever more ambitious decarbonisation policies and standards that mean the days of the petrol and diesel car are numbered. The final package could have been more ambitious, but the new rules should still serve to move the transition towards zero emission vehicles into the fast lane.
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