If the EU gives in to calls from carmakers to delay its 2025 CO2 emissions limits, because of the poor state of the automotive industry, it will risk setting a precedent that could undermine the heart of its climate policy.
European carmakers are undeniably facing tough times. The sector never recovered from COVID-19 and the subsequent supply chain, energy, and inflation crises, resulting in 27% fewer cars produced in 2023 than in 2018, with multiple firms cutting jobs or considering doing so.
The industry has reacted by taking aim at EU rules, forcing it to reduce average emissions of new cars by 15%, compared to 2021, already as of next year.
If carmakers do not comply with the targets, they have to pay a fine of €95 for every excess gram of CO2, which the industry fears could add up to “multi-billion-euro fines”.
Meanwhile, carmakers do not feel responsible for the sluggish uptake of electric cars, blaming insufficient charging points and a lack of consumer demand.
Politicians have heard the call. “Made in Italy” Minister Adolfo Ursu wants a quick revision of the law, and even Germany’s Green Economics Minister, Robert Habeck, said that changed market conditions should be “factored in”. Which can only mean a change or delay, even though he did not say it explicitly.
The Commission has so far resisted the pressure, arguing that carmakers have had enough time. But pressure is mounting on the EU executive, which holds the exclusive right of initiative.
If, however, the EU were to water down laws for industries that are not doing well, to relieve them from potential payments, its whole climate agenda could be in danger.
While the 2025 targets for carmakers are just among the first to kick in, the years after will see other climate targets starting to bite.
After 2026, ‘free allowances’ will start to be phased out in the Emissions Trading System (ETS) – the heart of the EU’s climate policy – for sectors in international competition, such as steel, aluminium and cement.
Take steel. The industry is also at an “existential risk”, under massive price competition from China and India, with many plants not yet prepared for decarbonisation.
It is not difficult to imagine if the EU were to give in to carmakers’ demands, the steel industry would be the next to ask for a delay.
Similar calls seem likely for the second ETS for buildings and road transport (ETS2), which will directly affect petrol prices for consumers as of 2027, and the EU’s targets for cleaner flights – since airlines are not yet able to buy sufficient amounts of synthetic jet fuels needed to reach their 2030 targets.
While the CO2 targets for carmakers could be seen as of limited effect – regulating only newly sold cars, which take time to replace all the old cars on the streets – what matters most is the symbolic value of a potential delay.
If the car industry is not ready to do its part, why expect steelmakers? If steelmakers do not, why should airlines? And if carmakers, airlines, and steelmakers will not, how could you possibly expect regular consumers?
Truth be told, the transition will be painful for all.
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Source: euractiv.com
