Loosened EU Climate Rules for Auto Industry: A Breathing Space for Carmakers
EU Extends Deadline for Automakers to Adhere to Climate Regulations - Automobile Manufacturers Secure Additional Time to Achieve EU Climate Goals
In the face of potential fines, the EU automotive sector gets some breathing room to meet climate targets. The European Parliament has voiced approval for a relaxation in Strasbourg.
In essence, EU member countries still need to approve the decision, yet they've already advocated for a delay, aligning with the EU Commission's proposal. The proposal allows companies to postpone annual limit compliance, instead offering a three-year timeframe.
If carmakers such as VW, Mercedes, BMW, among others, surpass the targets this year, they won't face automatic fines. They can dodge fines entirely if they comply with EU regulations in the next two years.
The German Association of the Automotive Industry (VDA) regards this delay as a flagship move. VDA President Hildegard Müller stated that political action involves not just setting goals but also setting the stage for their achievement. Müller highlighted issues such as the expansion of charging infrastructure, electricity prices, semiconductor supply, and battery production as areas warranting further attention to maintain the international competitiveness of the sector.
The cause for the impending fines lies in fleet limits, which set an average value for CO2 emissions per vehicle. Since January, legal requirements have tightened. For 2024, the limit was set at 115.1 grams of CO2 per kilometer per vehicle, which goes down to 49.5 grams by 2030. The average of all vehicles registered in the EU annually must not exceed the limit, and companies are subject to fines for emitted CO2 beyond the limit. Given the discrepancy between projected and actual e-car sales, carmakers risk surpassing the limits.
The industry, integral to the German economy, is under duress. Competitors from China and the US have excelled in the e-mobility transition. Moreover, the car manufacturers are grappling with the trade conflict with the US, which imposed 25% tariffs on cars and automotive parts in April.
The US is one of the most significant trading partners for the German automotive industry, accounting for 13.1% of exports in 2024. Almost every third Porsche and every sixth BMW was sold in North America during that year, with VW, Audi, and Mercedes-Benz each holding a share of 12-15%.
However, the domestic market in Germany isn't in a better shape. According to the Federal Motor Transport Authority, about 2.8 million new cars were registered in Germany last year, marking a 1% decrease compared to the previous year and around a quarter decline compared to 2019, pre-pandemic levels.
The transport sector, when compared to other sectors, has made less progress in climate protection. While the German transport sector saw a 2 million ton reduction in emissions from the previous year, according to the think tank Agora Energiewende, this reduction is largely due to reduced truck traffic resulting from the economic downturn.
Despite criticism from the Greens and Greenpeace, members of the European Parliament from CDU/CSU, SPD, and FDP view the relaxation as necessary aid for the industry. However, they warn that this decision may widen the chasm between European car manufacturers and the electric vehicle market.
- EU
- Auto
- Europe
- European Parliament
- Strasbourg
- Mercedes-Benz
- VW
- BMW
- Hildegard Müller
- Vehicle
- USA
- German Association of the Automotive Industry
- VDA
- German Press Agency
Enrichment Data:
Key Points for EU Climate Targets (2025-2030):- From January 1, 2025, new cars must emit 15% less CO₂ compared to 2021 targets (93.6 g CO₂/km for cars).- By 2030, emissions must be 55% lower for cars (49.5 g CO₂/km).- From January 1, 2035, all new cars must have zero emissions.
Fines for Non-compliance:- If a manufacturer’s average fleet emissions exceed the target, they must pay a penalty of €95 per gram per kilometer of target exceedance for each new vehicle registered in the given year.- With the introduction of a three-year averaging period, carmakers won't face immediate fines for exceeding targets in a single year. However, they must still meet the average emissions targets over the three-year period to avoid penalties. If they exceed the limit in one year, they must compensate by reducing emissions in subsequent years to meet the overall average target by 2027.
- The European Parliament, gathering in Strasbourg, has agreed to ease EU climate rules for automakers, with approval from EU member countries needed for the decision.
- If carmakers like VW, Mercedes-Benz, and BMW meet their climate targets this year, they can avoid immediate fines with the proposed delay, allowing a three-year timeframe for compliance.
- Hildegard Müller, President of the German Association of the Automotive Industry (VDA), considers this delay a crucial step, emphasizing the need for attention to expansions in charging infrastructure, electricity prices, semiconductor supply, and battery production to maintain the sector's international competitiveness.
