The decision by EU countries in the early hours of Wednesday (29 June) to ban the sale of polluting vehicles by 2035 was widely seen as a death sentence for the internal combustion engine in the EU.
But a clause inserted into the deal during late-night negotiations among ministers in the EU’s Environment Council is being viewed by some in the fuels industry as a partial reprieve.
Tabled by Germany and backed by EU member states reluctant to accept the 2035 cut-off date, the clause obliges the European Commission to prepare a report by 2026 that looks into technologies such as “plug-in hybrids” and “CO2 neutral fuels”.
This report must “[take] into account technological developments, including as regards plug-in hybrid technologies,” says the text of the agreement, which was made public on Thursday (30 June).
Additional language inserted in the preamble of the draft regulation provides further leeway for e-fuels: “Following consultation with stakeholders, the Commission will make a proposal for registering after 2035 vehicles running exclusively on CO2 neutral fuels in conformity with EU law, outside the scope of the fleet standards, and in conformity with the Union’s climate neutrality objective,” says a newly inserted paragraph (9a).
The phrase “outside the scope of the fleet standards” is being interpreted by commentators as an allowance for specialty vehicles to use CO2 neutral fuels, such as ambulances and fire engines.
The agreement between EU member states is only provisional and will need backing by the European Parliament before it becomes law. Talks to finalise the text are scheduled to take place in the second half of the year, after the summer break.
Refiners ‘welcome’ the deal
FuelsEurope, a lobby group representing the oil refining industry, said it “welcomes the outcome” of the vote in the Environment Council as well as “the constructive discussion” over vehicle CO2 standards among EU ministers.
“The outcome recognises the critical role of electrification but also the potential for hybrid ICE vehicles with renewable fuels to give an additional route for citizens to access climate neutral transport,” it said in a statement.
Members of FuelsEurope include big oil companies like Shell, TotalEnergies, BP and ENI as well as global chemical company Ineos and other brands like Repsol, PK Orlen and Tamoil.
“Opening the regulation to recognise climate neutral fuels simply makes sense” because 90% of car buyers today are still buying vehicles with an internal combustion engine, FuelsEurope said in a statement. “It also accelerates the transition of liquid fuels, which are still essential to resilience and security of Europe’s economy and society.”
FuelsEurope director general John Cooper pushed back on suggestions that the low supply of e-fuels – which is currently unavailable for purchase on the market – makes it an unrealistic option for road passengers.
“Can we meet the standard of climate neutral fuels at scale, exclusively supplied to new vehicles? We have already done our homework to show decisively that we can. The potential to scale up production of sustainable advanced biofuels and synthetic fuels is very significant,” he said.
FuelsEurope vowed to “redouble” its work to make renewable fuels part of meeting the EU’s Green Deal target.
CLEPA, the European Association of Automotive Suppliers, had strongly campaigned against a ban on the internal combustion engine. While hoping for a clearer decision, the trade association said it is “glad to see support from Council for vehicles running on renewable fuels”.
“We take note of the decision which confirms in principle the de facto ban on the internal combustion engine as of 2035 but does not fully close the door to considering emission reduction using renewable fuels,” said CLEPA’s Secretary General Sigrid de Vries.
“We have long argued in favour of a technology open approach, with a smart and sensible technology mix of electric vehicles and a measured use of alternative solutions involving advanced internal combustion engine technology,” de Vries added.
Defining CO2 neutral fuels
While much of the discussion in the lead up to the vote centred around e-fuels, the current wording of the Council’s general agreement does not specify what qualifies as a CO2 neutral fuel.
Chelsea Baldino, a researcher with the International Council on Clean Transportation (ICCT), said this lack of precision is concerning.
“Without a strict definition of these fuels in line with the renewable energy directive, there is a risk the fuels could be produced with electricity that is diverted from more efficient uses decarbonising the power sector,” Baldino told EURACTIV.
“Allowing ‘CO2 neutral’ fuels to count towards the CO2 standards would likely undermine the ambition of these standards, possibly considerably,” she added.
E-fuels, also known as synthetic fuels, are derived from the combination of hydrogen, electricity, and CO2 captured from industrial processes. If renewable energy is used, the fuel is considered carbon neutral.
But the absence of a definition could potentially open the door for the use of biofuels, said Baldino, citing recent texts put forward in the European Parliament.
“While the intention might be to have zero greenhouse gas e-fuels, the amendments I’ve seen coming out of the European Parliament have me concerned that the definition policymakers are considering might be much wider. In the European Parliament’s renewable energy directive amendments, I’ve even seen biofuels called ‘zero emission’,” she said.
A Council spokesperson did not immediately respond to EURACTIV’s request for clarification on whether biofuels would qualify as a CO2 neutral.
Clean mobility NGO Transport & Environment (T&E) was similarly critical of proposals surrounding CO2 neutral fuels, calling them a “diversion”.
“Let’s not waste any more time on e-fuels for cars and vans and instead focus on rolling out charging, re-skilling workers for the electric transition and responsibly sourcing material for batteries,” said Julia Poliscanova, senior director for vehicles and e-mobility at T&E.
Asked about the potential for hybrid vehicles and renewable fuels to play a role in cars and vans beyond 2035, EU climate chief Frans Timmermans was unconvinced. While the European Commission would keep an “open mind”, he said that hybrids did not presently deliver sufficient emissions cuts and alternative fuels were prohibitively expensive.
“At the moment, e-fuels do not seem a realistic solution, but if manufacturers can prove otherwise in the future, we will be open,” he said in a public exchange with EU ministers earlier this week.
A signal for investors
EU member states’ decision to ban the sale of all polluting vehicles by 2035 was criticised by the Advanced Biofuels Coalition LSB, a trade association, which said it sends a negative signal for investments in green technologies.
“We regret that the Council has totally abandoned focus on technology neutrality and thrown away fast-track options to defossilise the legacy fleet on EU roads which will be tens of millions of cars for decades to come,” said Marko Janhunen of UPM Biofuels, the chair of the Advanced Biofuels Coalition.
“Advanced biofuels, made from residues, wastes and sustainable biomass, reduce emissions up to over 90% – such fuels should have been given room also within the CO2 standards regulation alongside innovative synthetic fuels,” he added.
The Council will now move forward to trialogue negotiations with the European Parliament, after which the regulation will enter into law.