Newly approved loopholes give synthetic fuels a shot, but only until 2050.
The European Parliament has approved a new law that effectively bans the sale in the 27-member bloc of new gasoline and diesel-engined cars by 2035 because they produce carbon emissions. Automakers will be required to cut 100% CO2 emissions from their new vehicles by that time. In other words, it will be impossible for automakers to sell new vehicles that produce carbon emissions. The new law further sets a 55% reduction in CO2 emissions for new cars sold from 2030 compared to 2021 levels.
It's very important to understand that the new legislation provides a big opportunity for hydrogen combustion and eFuels, aka synthetic fuels developed by Porsche.
Prior to the law's approval, car companies were required to cut emissions by 37.5% by 2035. The updated law will also apply to new vans. This segment must also achieve a 100% CO2 cut by 2035 and a 50% reduction by 2030.
"These targets create clarity for the car industry and stimulate innovation and investments for car manufacturers," said Jan Huitema, the European Parliament's lead negotiator on these rules. "Purchasing and driving zero-emission cars will become cheaper for consumers and a second-hand market will emerge more quickly. It makes sustainable driving accessible to everyone."
Of course, there are some exceptions to the law following objections from some companies and countries like Italy, Portugal, Slovakia, and Romania. Small automakers that produce less than 10,000 vehicles per year will be allowed to negotiate less stringent targets until 2036. The passage of this EU law should not come as a major surprise. It was first proposed back in 2021 and a deal was ultimately agreed upon in October 2022.
What happened now is that the European Parliament has approved the new law. The only thing that remains before final approval happens next month is for the European Council to sign off, which it's fully expected to do.
Once that happens, the law will be formally published in the EU Office Journal. Today's news does not come as a surprise to automakers. Volkswagen, for example, has already committed to building EV-only vehicles in Europe beginning in 2033. The ID.3 and ID.4 BEVs are already on sale. Now that the EU has committed itself to an EV-only car future, the question is whether other countries, specifically the US, will do the same.
The Biden Administration has already passed major legislation to reduce greenhouse gas emissions but has stopped short of requiring automakers to end carbon emissions. The administration and future ones may not need to. California, for example, has already done just that.
It's now a global economy and automakers will eventually phase out all ICE vehicles simply because it will no longer make business sense.
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