The EU's Green Policy U-Turn: A Blow for Climate Ambition?
The European Commission is facing a backlash over its decision to backtrack on the planned ban on combustion engines by 2035. This U-turn comes under pressure from Germany, Italy, and Europe's carmakers, who argue that the reduction in CO2 emissions should be scaled back from 100% to 90% by 2035. This move has sparked controversy, with some fearing it will undermine the EU's climate goals and hand China an advantage in the electric vehicle (EV) race.
The EU's new proposal, which requires approval from governments and the European Parliament, marks a significant retreat from its previous green policies. This shift comes as Ford Motor, a major US carmaker, announces a massive $19.5 billion writedown and plans to kill several EV models due to Trump administration policies and weakening EV demand. European carmakers, including Volkswagen and Stellantis, have also called for relaxed targets and reduced fines, citing weak EV demand.
The automotive lobby group ACEA warns of a critical juncture for the sector, urging the Commission to ease intermediate 2030 targets. German carmakers, in particular, are struggling with market share losses in China and face competition from Chinese EVs at home. Despite EU tariffs, the pressure remains high.
However, the electric vehicle industry warns that easing emissions targets will undermine investment and hand China an even greater advantage in the EV market. Michael Lohscheller, CEO of Swedish EV manufacturer Polestar, emphasizes the potential harm to Europe's competitive edge and the climate if the EU backtracks on its ambitious goals.
The Commission's response includes plans to boost EV sales in corporate fleets, especially company cars, which account for a significant portion of Europe's new car sales. They may also introduce a new regulatory category for small EVs with lower taxes and extra credits towards CO2 targets. However, the industry prefers incentives over mandatory targets, and the precise measures remain unclear.
The debate rages on, with some arguing that the EU's flexibility is necessary to support the industry, while others fear it will weaken the bloc's climate leadership. The outcome will shape the future of the EU's green policies and its ability to compete in the global EV market.
