EU Eases CO2 Rules, Giving Carmakers Three More Years

The European Commission has given car manufacturers three years to comply with CO2 emission standards.

The announcement, which came at the end of the second meeting of the Strategic Dialogue on the Future of the Automotive Industry in Europe, represents a sign of flexibility for the automotive sector and its suppliers, which in the second half of 2024 had suffered from a drop in demand for electric cars, resulting in a reduction in profits and which is now facing the consequences of US tariffs.

The stock market reacted immediately, with a rise in the shares of Volkswagen, Stellantis, Renault, BMW, Mercedes-Benz and Porsche.

With the concession of three years to reach the standards, the objective remains to allow companies to have unchanged targets from 2025 to 2027, but with the new mechanism it will guarantee “more breathing space for the industry”, without penalizing those who have already invested in transition plans.

The original reform, approved in February 2023 by the European Parliament, envisaged an average level of CO2 emissions, to be respected from January 1st, 2025, of 93.6 grams for each car sold. Failure to reach the average level envisaged fines of 95 euros for each additional gram of CO2, multiplied by the items sold.

To avoid the huge fines of the plan, which in 2024 had established an average level of 115 grams, manufacturers were encouraged to sell battery-powered cars , using alternative forms of energy to achieve the results.

CO2: Priorities of the Action Plan

In addition to granting more time, the Commission has identified new strategic priorities for the future of the automotive sector in Europe, which will be consolidated in the Action Plan, based on the creation of an industrial alliance to accelerate the development of autonomous driving in a single market regulatory framework, based on investments in chips and artificial intelligence for vehicles already equipped with software.

Along with the technical investment, there is also the strengthening of the battery supply chain , with funds of 362 million euros by 2027 and a harmonization of incentive programs for the purchase of low or zero-emission cars.

Comments and criticisms

The decision was welcomed by the sector, favoring innovations, but with accompanying criticisms linked to the consequences of too much flexibility on CO2 emissions, which on the one hand lead to greater competitiveness in the electric vehicle market, but on the other hand it remains an important challenge, which in order to achieve results requires effective commitment.

Among the member states in favor of the decisions, Italy and the Czech Republic were among the first to have asked for a relaxation of the sanctions, with the favor of Adolfo Urso, Minister of Enterprise and Made in Italy, who defined the European automotive industry as “saved.”

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(Featured image by Caniceus via Pixabay)

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First published in ESG NEWS. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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