Pressure from Germany, home of Europe’s largest car industry, has forced the brakes to be applied to the EV transition, allowing an ongoing role for gasoline and diesel engines. The Automotive Package, which was published right at the end of last year, and still has to be approved, sets out the detail. The tailpipe emissions reduction target has been relaxed from 100% to 90%, so plug-in hybrids (PHEV), range extenders, mild hybrids, and internal combustion engine vehicles can remain on the market. Emissions caused by the petrol and diesel engines will be ‘compensated for’ using biofuels, e-fuels and low-carbon steel produced in the EU. There will also be mandatory targets for the share of zero or low emission vehicles in new corporate cars and vans.
A number of factors are responsible for the U turn. The popularity of Chinese EVs, US tariffs and overall stagnation in the car market have all contributed. The old rules had introduced a pronounced technology bias by ensuring that only pure battery electric vehicles could comply. And with a complete ban on internal combustion engines looming in 2035, the future of Europe’s car industry looked precarious. Something had to give.
By focussing solely on tailpipe emissions, regulators had ignored the overall effect of transport on the climate. The proposed new rules go some way to correct this error. Emissions caused by the manufacturing process were not considered, nor was the type of fuel that generated the tailpipe emissions. Biofuels emit CO2 when burned in an engine, but that CO2 has been absorbed from the atmosphere during the growth of the biomass, meaning that biofuels can save greenhouse gas emissions. Climate neutral fuels can also be created from water and atmospheric CO2, using renewable electricity.
Overall, the Automotive Package is a first step towards technology neutral low carbon transport. Electric vehicles will remain a good option for drivers in urban areas. The battery can be charged at home or at work. If batteries with longer ranges are developed and prices come down, then pure EVs will dominate the market post 2035. But people living in a rural area with inadequate charging infrastructure or those who drive long distances, will have the freedom to choose another option.
Automotive producers were lukewarm in their reactions to the news. Welcoming the move towards technology neutrality they criticised the measures as complex and insufficient to resolve industry concerns. As always, the devil is in the detail. There are limits to the ‘compensation’ for the remaining 10% tailpipe emissions. No more than 3% can be from fuels and no more than 7% from low carbon steel, which must be produced in Europe.
The Automotive Package will incentivise the production of low carbon steel. Ironically, the decarbonisation of aluminium, which is replacing steel in some EVs as a light-weighting measure, is not similarly incentivised, presumably because low carbon aluminium is currently only produced outside the EU.
But is this first step enough to kickstart the production of new fuels? The Working Group on Monitoring Methodologies of CO₂-Neutral Fuels (WGMM) has just published a short report indicating that there can be enough CO₂-Neutral Fuels for all forms of transport (road, aviation and maritime) in Europe, if the investment is there. But these fuels are expensive and existing biofuels plants have already been closing due to lack of demand, or competition from cheap imports. So, the proposed changes announced in the Automotive Package are unlikely to generate much optimism. But it is early days, and industry must be hoping and lobbying for more travel in the same direction.
Published: 17 January 26
