In a further setback for the green transition, the European Union (EU), one of the most ambitious climate action players, has caved into pressure from the car industry.
This month, the European Commission (EC) proposed extending the emission targets for carmakers for cars and vans from one to three years.
As a result, this year’s CO2 emissions caps on European carmakers will be lower, and one-fifth of all car sales by most companies must be electric vehicles (EV) to avoid heavy fines. However, this aligns with the goal of achieving zero emissions by 2035.
The EU caves into industry lobbying
The Commission president, Ursula von der Leyen, made the climb-down after meetings with executives in the car industry, unions, and campaign groups. She said that later this month, the EU would finalise the details allowing for compliance over three years rather than in 2025 alone.
Playing catch-up
Ramping up the sale of EVs is critical to achieving those targets, and the 27th country member-bloc currently lags behind both China and the US.
After von der Leyen’s announcements, shares in the major European carmakers, Volkswagen, Renault, BMW, and Mercedes-Benz, rose.
Not a weakening but a reallignmnet
The EU and von der Leyen wanted to underline that they have not weakened the targets but just created more breathing space for the industry.
She underlined: “The targets stay the same. They have to fulfil them, but it means more breathing space for industry”.
Not a done deal
She further clarified that it is not yet a done deal, as the proposal will still require approval from EU governments and the European Parliament (EP). If approved, compliance would be based on a carmaker’s average emissions from 2025 to 2027.
The EC is the policy body, and the EP is the legislative political body of the EU.
Saving Europe’s car industry
Carmakers based within the EU have struggled with failing demand, factory closures, and looming US tariffs. They have lobbied the EC to grant relief from fines, saying it could amount to €15 billion in 2025.
Some EU member countries have been pushing harder than others.
Italy and the Czech Republic, which had been pushing for an easing of penalties, reacted positively to the proposal. Italian Industry Minister Adolfo Urso went so far as to proclaim that the European car industry had been saved. But Czech Transport Minister Martin Kupka wanted the proposal to go even further, pushing for a five-year extension.
A pragmatic approach
As the CEO of the biggest carmaker in Europe, Volkswagen’s Oliver Blumer was also pleased with the EC’s approach, labelling it pragmatic and explaining that it gave carmakers the flexibility to accelerate demand with affordable new models.
A gift to the car industry
But not everyone welcomed the move. The Transport Research and Campaign Group (T&E) said it was an unprecedented gift to the car industry that would further drive Europe behind China in the competitive race.
Its Executive Director, William Todts, stated: “The key to competitiveness is producing electric vehicles at a price consumers want. That’s what the Chinese have done. Postponing this in Europe does not make you more competitive.”
Nordic countries are bucking the trend
Advocates of stronger EV targets argue that not all European countries have struggled with rapidly scaling up EV uptake.
Data from the Nordic countries shows that in 2024, the EV share of total car sales in Norway, Denmark, Sweden, and Finland was significantly over one in five EV cars, the EU goal for 2025. Strong EV car sales in 2024 were led by Europe’s EV leader, Norway, where 88% of all new car sales were EV, followed by Denmark at 51%, Sweden at 35%, and Finland at 30%.
Automotive action plan
In response to the proposed changes to the transport emissions rules, the EC released its broader automotive action plan, which can be viewed here.
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