Comment: EU 2035 CO2 legislation and the pseudo prohibition

It depends on how you see this last-minute swerve off the legislative Autobahn, which up until a few weeks ago was firmly heading at record tempo in the direction of new passenger cars not being permitted to emit more than a fleet average of 0g/km CO2 by 2035, or in layman's terms a complete phase-out of the humble petrol/diesel internal combustion engine.

Matthias Schmidt

European Automotive Market Analyst @ Schmidt Automotive Research

Following trialogue discussions between all three fundamental pillars of the European Union’s 27-member state community – the Council, Parliament and Commission – and having all but the final hurdle cleared, it was just the rubber stamping effectively waiting.

However, to anyone who has ever lived in Germany, this type of final bureaucracy sees German speed remain at a snail’s pace and far below the legal speed limit German Autobahns are famed for.

So with Germany throwing this last-minute stick into the wheel of the process and from the periphery getting its way, who is the winner here?

Germany and its FDP minority coalition partner that controls the Transport Ministry under Volker Wissing?

Or is the winner the EU and Vice-President of the European Commission, Franz Timmermans, who finally, it appears, has a deal… once again.

Perhaps we can call it a win for both sides…

Wissing, the key protagonist in constructing these last-minute roadblocks, can gleefully take this ‘victory’ back to Berlin, saying he scored an extension to the pride and joy of the German industrial machine, the ICE, fulfilling the FDP’s mantra of a free market, technology-neutral playing field and has avoided a full-blown prohibition of the black stuff.

In reality, this deal appears more like lip service to please both sides.

The price of 100% E-fuel will likely be off the table for 99% of consumers, with ICE technology being at least a decade old by 2035 with little to no more investments, from European OEMs.

ICE models powered exclusively by E-fuel will be the only models permitted from 2035; all others will be banned.

E-fuels are all about helping vehicles in use, known as Parc or units in operation, in the transition to a cleaner future, a message echoed by a large number of auto CEOs over the last weeks.

This won’t be done with 100% pure E-fuel, though, but rather a blend, diluting the limited amount of the fuel shared with the aviation and shipping sectors likely to take priority here due to the difficulty in electrifying these industries.

The diluted E-fuel, mixed with traditional fuel – let’s call it EL20 (20% mix) – will satisfy many vehicles already on the road, rather than the few new ICE new ones and will be priced more competitively while new ICEs will have to fill up with pricey 100% E-fuel limiting its reach to just a handful of Porsche and co-drivers.

Timmermans, who will also claim victory, should have sealed this deal long ago and has caused months of unnecessary delays, playing with a naïve FDP party who were likely manoeuvring for self-political gain, given recent poor regional election results, as well as likely not being fully attuned to the distinctive nature of the Brussels legislative processes.

So let’s call this result which should be confirmed by the EU on Tuesday, a draw.

It will deliver the same result as before, with some added ego-boosting political points on the side.

With this settled, OEMs now have planning security and can get on with their transition to a cleaner future a win for all

More in-depth reporting in the full study published each month. The study now also features an in-depth look at the Chinese OEMs as their European expansion slowly begins. Are Chinese OEMs really a threat to the established European OEMs and what does the outlook look like?


Matthias Schmidt

European Automotive Market Analyst @ Schmidt Automotive Research
Automotive Analyst with 15 years of experience serving the highest-ranking executives and decision-makers in and around the industry Member of @thefactory Berlin Automotive.

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