BRUSSELS/LONDON/STOCKHOLM, Dec 15 (Reuters) – The European Commission is expected on Tuesday to overturn an effective EU ban on sales of new combustion engine cars from 2035, bowing to intense pressure from Germany, Italy and European automakers struggling against Chinese and American ones.
The move, the details of which are still being hashed out by EU officials ahead of its unveiling, could see the effective ban pushed back by five years or softened indefinitely, official and industry sources said.
A possible amendment to a 2023 law requiring all new cars and vans sold in the 27-nation bloc to be CO2 emissions-free from 2035 would be the most significant climb from the European Union’s green policies of the past five years.
“The European Commission will put forward a clear proposal to lift the ban on combustion engines,” Manfred Weber, head of the European Parliament’s largest group, the European People’s Party, said on Friday. “This was a serious industrial policy mistake.”
The region has been divided since the ban was withdrawn. Traditional automakers such as Volkswagen and Fiat-owned Stellar have worked hard to ease targets amid stiff competition from lower-cost Chinese rivals. The EV sector, however, sees it as giving China more ground in the electrification shift.
“The technology is ready, the charging infrastructure is ready, and consumers are ready,” said Michael Lohscheller, CEO of EV maker Polestar. “So what are we waiting for?”
Combustion Engines for the ‘Rest of the Century’
The 2023 law was designed to accelerate the transition from combustion engines to batteries or fuel cells and the best automakers that failed to meet the targets.
Meeting the targets means selling more electric vehicles, with European carmakers outpacing Tesla and Chinese manufacturers such as BYD and Geely.
Europe’s carmakers are building EVs, but say demand is relatively low because consumers are reluctant to buy expensive EVs and charging infrastructure is inadequate. EU tariffs on Chinese-made EVs have only slightly eased the pressure.
“It’s not a sustainable reality in Europe today,” Ford CEO Jim Farley told reporters in France last week, announcing a partnership with Renault to help drive down EV costs. Industry requirements were not “well balanced” with EU CO2 targets, he said.
The EU granted “breathing space” to the sector in March, allowing automakers to meet 2025 targets in three years.
But automakers want to continue selling combustion engine models alongside plug-in hybrid, range extender EVs with ‘CO2-neutral’ fuels – including biofuels made from waste such as agricultural residues and used cooking oil.
Commission President Ursula von der Leyen said in October that she was open to using e-fuels and “advanced biofuels”.
“We recommend a multi-technology approach,” said Todd Anderson, chief technology officer at combustion engine fuel systems maker Finia, adding that the internal combustion engine “will be around for the rest of the century.”
divided opinion
Meanwhile, the EV industry has argued that the move would undermine investment and push the EU further behind China.
“It’s definitely going to have an impact,” said Rick Wilmer, CEO of charging hardware and software provider ChargePoint.
Automakers want a 55% reduction in car emissions by 2030, phased in over several years, and a 50% reduction for vans. Germany wants sustainable practices like using low-carbon steel to reduce CO2 emissions.
The European Commission will also detail plans to increase the share of EVs in corporate fleets, particularly company cars, which make up around 60% of Europe’s new car sales. The auto industry wants incentives, pointing to Belgium as a country where subsidies have worked, rather than mandatory targets.
The commission is likely to propose establishing a new regulatory category for small EVs that would enjoy lower taxes and earn additional credits for meeting CO2 targets.
Environmental campaign groups say the EU should stick to its 2035 target, arguing that biofuels are in short supply, are not truly CO2-neutral and that supplying them would be prohibitively expensive.
“Europe needs to stay the course on electricity,” said William Todds, executive director of clean transport advocacy group T&E. “It’s clear that electricity is the future.”
(Reporting by Philippe Blenkinsop; Additional reporting by Gilles Guillaume in Paris, Marie Mannes in Stockholm and Nick Carey, Tillman Blashofer, Ludwig Berger and Christoph Stitz in London; Editing by Adam Jordan and Susan Fenton)
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