Commission to severely weaken the 2035 combustion engine ban

The European Commission is set to water down the EU’s 2035 de facto combustion engine ban by requiring automakers to lower their emissions by 90 percent instead of the original 100 percent, multiple officials with knowledge of the discussions told POLITICO.

The change effectively marks the end of the ban, giving the center-right political parties and the automotive sector a massive win after months of heavy lobbying.

Under the deal, which is still being negotiated at the time of publication, automakers can sell plug-in hybrids and range extenders after 2035. But those flexibilities will be tied to automakers “offsetting” the 10 percent extra emissions by using green steel and alternative fuels.

How the offsets will work and what percentage of fuels or steel will need to be consumed in production is still being negotiated.

The industry argues the law banning the new sale of CO2-emitting vehicles cuts them off at the knees and makes them less able to compete against Chinese incumbents that are ahead of them on electric vehicles.  Automakers are facing further headwinds courtesy of a trade war launched by U.S. President Donald Trump and sluggish sales at home.

Climate advocates say the Commission needs to stay the course. 

“The EU is playing for time when the next game has already started. Every euro diverted into plug-in hybrids is a euro not spent on EVs while China races further ahead,” said William Todts, executive director of green NGO Transport & Environment.

The deal mirrors one announced by Manfred Weber, head of the European People’s Party, on Dec. 11. He told German media that the combustion engine ban had been overturned, with the 2035 target of 100 percent CO2 reduction cut to only 90 percent.

The Financial Times was the first to report the 10 percent reduction.

New details are emerging, however, about what powertrains will be allowed after 2035. In the current plan, range extenders — small combustion engines that give batteries more range — will count for a further emissions reduction than plug-in hybrids, which have both a combustion engine and an electric motor.

Essentially, the scheme would give automakers more emission credits for range extenders than plug-in hybrids because they emit less CO2 than the hybrids, two officials said.

The 2035 reform is part of a broader automotive package being put forward by the Commission on Tuesday that will include a new regulation on greening corporate fleets — vehicles owned or leased by companies for business purposes — and an automotive omnibus that was obtained by POLITICO.

Essentially, the scheme would give automakers more emission credits for range extenders than plug-in hybrids because they emit less CO2 than the hybrids, two officials said. | Lorenzo Di Cola | Getty Images

For the 2035 legislation, automakers will be allowed to pool, meaning that a brand that doesn’t meet the 90 percent target can buy credits from an automaker that over delivers.

The pooling scheme is a lucrative business for all-electric manufacturers like Tesla.

A separate initiative will focus on boosting small electric vehicles — a demand put forward by Commission President Ursula von der Leyen in her State of the Union address in September. Companies that produce the small cars would get a coefficient of 1.3 in the target calculations. So if a carmaker sold 10 of the small EVs, they would get the emissions credit of 13 cars.

Manufacturers will have to comply with yet-to-be-defined local content requirements when creating the small EVs in order for the automaker to get the emission credit.

France has long demanded that any flexibilities around the ban be tied to local content requirements — a request it put forward in October alongside Spain.

The draft marks the first step in a long, politically fraught journey to becoming law. It will now go to Parliament and the EU capitals, where political groups remain divided over how far the Commission should go to rescue the automotive sector.

The EPP has pushed hard to overturn the ban and the far right has campaigned on the issue, too, which could prompt yet another alliance between the two in Parliament to push to further weaken the law.

EU capitals also have competing ideas. Spain wants the target to remain unchanged, while Germany is balking at France’s push for “Buy European” requirements, over fears it will spark a global trade war with the U.S. and China.