Europe Steps Back from 2035 ICE Ban

A compromise in the EU’s high-stakes EV mandate throws automakers an internal-combustion lifeline.

Comparatively low-volume European manufacturers such as Porsche and Ferrari see e-fuels as a possible path to retaining the internal-combustion attributes on which their brands built a following. (Porsche)

In a surprising move that paves the way for the European Union’s adoption of a mandate to eliminate vehicle CO2 emissions, on March 25 the EU reached an agreement with Germany to step back from a complete ban of combustion-engine vehicles starting in 2035. The EU agreed to permit sales and registration of internal-combustion engine (ICE) models after the 2035 deadline — provided those vehicles operate only on carbon-neutral fuels, often generically referred to as ‘e-fuels.’

The European Commission’s Frans Timmermans said an agreement with Germany will allow the EU’s CO2-eliminating regulations to proceed. (European Commission)

With a significant portion of its economy related to the historically ICE-based automotive industry, Germany had resisted the EU’s total ban of ICE, although its Parliament’s Green Party supported the forced sunsetting of ICE passenger vehicles. Reuters reported German Transport Minister Volker Wissing as tweeting, “We secure opportunities for Europe by preserving important options for climate-neutral and affordable mobility.” In another Twitter post, Wissing reportedly added, “Vehicles with internal combustion engines can still be newly registered after 2035 if they fill up exclusively with CO2-neutral fuels.”

The e-fuels compromise also has implications for the pending Euro 7 vehicle-emissions regulations expected to come into effect by 2025 and that affect both passenger and commercial vehicles. Reuters reported Frans Timmermans, European Commission Vice President in charge of the European Green Deal, as saying that after the deal with Germany was reached, “we will work now on getting the CO2 standards for cars regulation adopted as soon as possible.” Italy and other EU entities also had supported an approach that provided for alternatives to EVs.

Critics of the compromise said the arrangement undermines environmental efforts in general and has potential to harm EU initiatives in other areas. "This rotten compromise undermines climate protection in transport, and it harms Europe," the German news agency dpa reported Greenpeace mobility expert Benjamin Stephan as saying in Berlin on March 25.

Zero-emissions standard remains unchanged

Wire reports said that the deal between the EU and Germany means that the October 2022 agreement of EU member states and the European Parliament that ostensibly mandated EVs will be adopted. German approval of the regulation means that other EU members opposing the ICE ban would not be able to coalesce a sufficient number of votes to veto the legislation. The EU next must create language on the provision for e-fuels in ICE vehicles to satisfy the zero-emissions stipulation.

At present, only a handful of pilot-manufacturing efforts are producing e-fuels, but proponents say that there will be larger-scale production long before the EU’s 2035 requirement for the fuel that will allow ICE vehicles to continue for sale in Europe. It remains to be seen if other entities that have banned or are seeking to ban ICE vehicles — such as several European cities and the state of California — will consider exemptions for e-fueled ICE vehicles.

Germany's automaker association, the VDA, stressed that it supported options for how CO2 neutrality is achieved by passenger vehicles. But the VDA conceded that production of carbon-neutral fuels needs to advance. "Now we have to enable e-fuel output at scale and at competitive prices,” Reuters quoted the VDA as saying, “which can only happen with large range of strategic decisions. Brussels and Berlin need a maximum of stable energy partnerships in the many countries that have excellent conditions to produce e-fuels."