A law banning petrol and diesel engines in new cars by 2035, supposed to be one of the main planks of Europe’s ambitious green agenda, has become the latest front in a Brussels tug of war between climate and industrial policy.
The law is part of the European Union’s efforts to become climate neutral by the middle of the century, by phasing out polluting cars and encouraging people to switch to greener electric vehicles (EVs).
You will still be able to buy second-hand petrol or diesel cars after 2035, but new vehicles coming off the manufacturing lines will have to be battery-powered.
The combustion engine ban, which was approved by the European Parliament and national governments two years ago, is in the sights of the stalling car industry. Volkswagen, BMW and other big German carmakers, which Berlin has rowed in behind, are looking for leeway on the deadline and specific carveouts.
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The fight cuts across several big questions policymakers are wrestling with: climate targets, the level of regulation from Brussels, Europe’s sluggish economy and the threat of China eating the EU’s lunch.
European Commission president Ursula von der Leyen, whose “green deal” reforms introduced the 2035 engine ban during her first term at the helm of the EU’s powerful executive body, is under pressure to walk it back.
The commission president has promised a review of the ban by the end of this year, which is expected to outline proposed changes.
German chancellor Friedrich Merz is on a mission to strip back EU regulations he views as a burden on European industry. The plan to stop any new carbon dioxide-emitting cars being produced in 10 years is at the top of his list.
There, he has a friend in Manfred Weber, the conservative German MEP who leads the European People’s Party (EPP), the centre-right grouping that dominates the European Parliament.
Merz, Weber and von der Leyen all belong to the same political family in German politics, a home constituency the commission president can’t be seen to ignore. Definitely not when Germany’s industrial engine – the auto sector – is feeling the financial pinch and laying off workers.
The review of the combustion engine ban will have to be a tidy piece of politics. Von der Leyen needs to give something to the car industry, but still hang on to the broad ambition of her legislation.
That something might be scope for the car industry to keep producing hybrids, with both electric and combustion engines, beyond 2035, or a delay in the cut-off. Promising more help to car manufacturers developing their EV battery supply in Europe could be another sweetener.
Giorgia Meloni’s hard-right Italian government has lined up beside Germany in opposition to the 2035 ban. The French and Spanish governments have been fighting a rearguard action in defence of the EU pivot to electric vehicles.
A paper authored by France and Spain, circulated to diplomats in Brussels last week, said Europe didn’t stand a chance of hitting its climate targets if it failed to gradually get people to shift away from petrol and diesel cars.
The paper, seen by The Irish Times, called for the review to “preserve the 2035 cap” and the environmental ambition behind it. The two big countries said that did not mean the auto industry could not be allowed some “flexibilities” to smooth its transition to EV production, but any leeway needed to be contingent on companies manufacturing their cars in Europe, not abroad.
Ban or no ban, Europe is up against the clock to produce affordable electric vehicles. China is making moves to take over as much of the market as it can.
Beijing has pumped huge amounts of state resources into industries it thinks will dominate the coming decades, from renewable energy to artificial intelligence and electric and self-driving vehicles.
Trade hawks in the European Commission are concerned that China is halfway around the track and Europe is still lacing up its runners.
The danger is that Chinese-made EVs, manufactured by say BYD, can seriously undercut European competitors on price, over time snuffing out domestic EV production here and leaving Europe reliant on China for its cars.
Last year, the EU slapped defensive tariffs on imports of EVs from China to compensate for what the commission deemed to be an unfair leg-up Beijing gives its industry, which was allowing Chinese manufacturers to flood the European market.
Pushing out the 2035 cut-off point for petrol and diesel engines might give European car manufacturers a break in the short term, but it won’t help them catch up to their Chinese rivals in the electric vehicle race.
