In win for Germany, EU agrees to exempt e-fuels from 2035 ban on new sales of combustion-engine cars

The European Union has brought over the finish one of its most ambitious and far-reaching elements of its Green Deal: a ban on new sales of combustion-engine cars as of 2035.

The regulation imposes a 100% reduction in CO2 emissions by the cut-off date, effectively prohibiting the purchase of new passenger cars and vans powered by fossil fuels, such as diesel and petrol, across the single market.

The deal was made official during a meeting of energy and transports ministers in Brussels on Tuesday morning, where the regulation was given the very final approval.

But following a last-minute campaign by Germany, the 2035 ban will exempt vehicles that run exclusively on e-fuels, a nascent technology that combines hydrogen and carbon dioxide to produce synthetic fuels.

E-fuels are burnt in a traditional engine and therefore release emissions into the atmosphere, but proponents argue their production process can be climate-neutral and offset the pollution.

By contrast, detractors say e-fuels are expensive, energy inefficient and a waste of resources.

The current production of e-fuels is very limited and is seen as a niche, luxury market. It is therefore still unclear how big of an alternative e-fuels can represent to electric vehicles, which are already manufactured at scale.

Germany’s demand to spare e-fuels from the CO2 regulation was highly unusual and had brought the whole legislative process to a halt.

The hold-out lasted for almost one month and triggered intense talks between the European Commission and Germany’s Federal Ministry of Transport, currently controlled by the liberal branch of the three-party ruling coalition.

The talks bore fruit over a weekend in the form of a side deal that will open the door for new sales of vehicles that run exclusively on climate-neutral e-fuels to be sold after the 2035 deadline.

Climate-neutral e-fuels involve the use of renewable hydrogen, carbon dioxide directly captured from the air and 100% renewable electricity across the value chain, standards barely met today.

“The way is clear: Europe remains technology neutral,” Volker Wissing, Germany’s transport minister, said in reaction to the news.

The deal offers an additional legal interpretation but does not entail any amendments to the CO2 regulation, which had been thoroughly negotiated between member states and the European Parliament.

The Commission intends to translate the e-fuels exemption into a delegated act, which will have to be approved by MEPs. If lawmakers reject the act, the executive will propose a full-scale revision of the legislation, a risky move that could open the door for new requests.

The exemption will force manufacturers to develop a device that will distinguish e-fuels from existing oil fuels when drivers fill up their tanks.

Although a political win for Berlin, the blocking strategy was widely criticised by other member states and MEPs for disregarding well-established rules of procedure.

“As a matter of principle, we don’t like this approach. We think it’s not fair,” said Teresa Ribera, Spain’s minister for the ecological transition, ahead of Tuesday’s meeting.

“This is not a good and nice movement coming from Germany. I hope we learn that we cannot take this as a precedent to be used whenever because this could mean difficult times for Europe.”

Italy, Poland, Bulgaria and Romania were among those who had previously expressed reservations about the 2035 ban. But after Germany won the concession from Brussels and lifted its resistance, the four countries were unable to form a so-called blocking minority.

In the end, Poland was the only member state that voted against the proposed law, while Italy, Bulgaria and Romania chose to abstain.

Italy’s demand to exempt biofuels, whose carbon footprint stems from their land use, was not accepted.

The CO2 regulation approved on Tuesday will become law after its publication in the EU’s official journal.