The European Commission has given up on its most symbolic Green Deal policy with a spectacular U-turn, and the road ahead is going to be rough.
Now that the law is back to the drawing board and the taboo of reversing a de facto combustion engine ban has fallen, nothing will stop MEPs, governments, and lobbyists from pushing for further changes as the European Parliament and Council of the EU get to work on the bill.
Reactions have shown that key industries are far from happy, and neither is the strongest biofuel and combustion engines’ sponsor among EU governments: Italy.
A half-hearted capitulation
What’s clear is that the European Commission has bowed to calls from EU carmakers, the German and Italian governments, and the right-leaning majority of the European Parliament by cutting the 2035 CO2 emission reduction target from 100% to 90%.
What’s also clear, however, is that the EU executive tried to save its decarbonisation push. While there is room to continue marketing combustion engine cars, plug-in hybrids and electric models with small auxiliary petrol motors to extend range, their emissions will have to be compensated by using green steel and renewable fuels.
The role for biofuels and synthetic fuels after 2035 will be even more marginal, as it’s capped at just three percentage points of the newly created 10-point gap to reach climate neutrality in the sector. The renewable fuels lobbies are clearly unsatisfied.
Another fact is that electric and, theoretically, hydrogen cars, previously set to corner the entire market, will give way to a share of CO2-emitting vehicles.
Forecasts vary: the EU’s transport commissioner said 30-35%, the NGO Transport and Environment said 25%.
But the debate is far from over and major battles are on the horizon after many called the proposal nothing more than a “first step”.
Not enough
Italy’s enterprises minister Adolfo Urso, a staunch opponent of the 2035 goal, immediately said that the new proposal was “a breach in the wall of ideology” – which now needed to be torn down completely in a more radical revision.
The European Automobile Manufacturers Association – which, alongside biofuel producers, hoped to be the big winner of this match – has already identified its next targets.
These include a proposal to require governments to incentivise the uptake of zero and low-emission vehicles in corporate fleets of large companies, the CO2 compensation rules, and the made-in-Europe clauses that the Commission attached to the incentives on green steel and affordable electric cars.
Whether the Commission proposal will be watered down further will mostly depend, in Parliament, on how far the conservative European People’s Party wants to go after claiming the clear victory of obtaining the scalp of the 2035 goal.
Its lead lawmaker on automotive policy Jens Gieseke has already fired a broadside against the green corporate fleet quotas, and the uncertainties left open on local content requirements.
No consensus
Within the Council of the EU, it will be time for the supporters of electrification led by Spain and France, and those of the combustion engine led by Italy and Germany to cross swords – but only after Berlin has decided what it really wants to achieve.
Paris wants even stronger European preference rules and has promised to remain “extremely vigilant” that the electrification goal won’t be diluted further.
The German carmakers’ association has already said that the EU proposal was “disastrous”, a sign that more waves of Teutonic lobbying are likely to hit Brussels in the coming months.
The Green Deal’s green and socialist supporters in Parliament sided with environmental NGOs – the clear losers in this political game – in warning that the U-turn won’t save the industry and that the technology gap with China will now only increase.
Whether the European automotive industry will become more competitive thanks to the new changes, and those yet to come, remains to be seen. No doubt, the clear signal for an accelerated shift to electromobility has weakened. With the rules still subject to change, it’s unclear how investment will adapt.
What’s beyond doubt is that EU citizens will keep breathing polluted air for longer. Only time will tell if their jobs and the technological prowess of the bloc have been saved.
(rh, aw)
