EU Moves Toward Zero-Emissions Cars After German Deal on E-Fuels

John Ainger and Ewa Krukowska
·3 min read
6

(Bloomberg) -- After a month of wrangling, the European Union is set to finally agree on landmark rules that will require new cars to have zero emissions after 2035, marking an effective end to the era of combustion cars.

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Energy ministers are scheduled to sign off on the rules slashing emissions from the auto sector Tuesday, following an agreement between the EU’s executive arm and Germany on provisions that would allow room for cars running solely on so-called e-fuels after 2035.

After the ministers back the deal, the European Commission will put forward rules so that e-fuel cars are permitted on Europe’s roads, according to a statement seen by Bloomberg. It will then propose regulations in the fall that would allow them to contribute toward the bloc’s emissions targets.

If that proposal is rejected by parliament or member states, the commission said it would pursue a different procedure to work toward e-fuels.

Read more: EU, Germany Reach Car Emissions Deal That Makes Room for E-Fuels

The commission “is committed to a technologically neutral climate regulation in particular with respect to the regulation of CO2 emission standards for cars and light-duty vehicles,” the statement, seen by Bloomberg, reads. “Following the consultation of stakeholders, the commission also will propose in line with the legal empowerment in autumn 2023, a Delegated Act specifying how e-fuels-only vehicles would contribute to the CO2 emission reduction target.”

The deal is expected to change little when it comes to carmakers’ long-term plans, aside from the most high-end vehicles. Volkswagen AG, Europe’s biggest carmarker, said the deal will help with special applications such as emergency vehicles and low-volume models like Porsche’s 911 sports car.

Read more: Volkswagen Says EU Accord on E-Fuels a Boon for Porsche’s 911

E-fuels, made using renewable energy and carbon dioxide captured from the air, aren’t seen as a viable solution for the vast majority of cars, given their high cost and current lack of availability. Instead, the bulk of carmakers in the region are expected to remain focused on battery-powered vehicles.

“We see e-fuels as a useful addition to the existing fleet of combustion engines and for special applications such as emergency vehicles or limited series, the Porsche 911 for example,” Volkswagen said in a statement. Europe’s biggest carmaker said that it remained committed to the electrification of its fleet.

The deal, announced on Saturday, was enough for Germany to drop its opposition to the proposal. A push by the country’s pro-business FDP party, the junior member of Chancellor Olaf Scholz’s governing alliance, for the commission to come forward with more assurances on e-fuel cars had delayed a vote earlier this month.

Porsche 911

Italy pushed for the plan to include provisions for biofuels and lobbied to delay proceedings for at least two weeks, according to people familiar with the matter. Poland and Greece also raised concerns around the transparency of the procedure. But approval is likely to be a formality on Tuesday, with a majority of member states supporting the rules.

Germany’s VDA car lobby said it supported a deal that allows several technologies to reduce CO2 emissions with significant challenges that need to be overcome to scale up production.

“Now we have to enable e-fuel output at scale and at competitive prices, which can only happen with large range of strategic decisions,” the lobby group said in a statement. “Brussels and Berlin need a maximum of stable energy partnerships in the many countries that have excellent conditions to produce e-fuels.”

--With assistance from Monica Raymunt.

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