LONDON: The European Union on Wednesday proposed an effective ban on the sale of new petrol and diesel cars from 2035, aiming to speed up the switch to zero-emission electric vehicles (EVs) as part of a broad package of measures to combat global warming.
The EU executive, the European Commission, proposed a 55% cut in CO2 emissions from cars by 2030 versus 2021 levels, much higher than the existing target of a 37.5% reduction by then.
It also proposed a 100% cut in CO2 emissions by 2035, which would make it impossible to sell new fossil fuel-powered vehicles in the 27-country bloc.
“This is the sort of ambition we’ve been waiting to see from the EU, where it’s been lacking in recent years,” said Helen Clarkson, chief executive of the Climate Group, a non-profit group that works with business and government to tackle climate change.
* Expanded carbon market: European companies buy and sell allowances for greenhouse gas emissions that they are assigned on the EU Emissions Trading System or ETS.
The legislative package would see the ETS expanded to cover maritime transport, while creating a second parallel market for road transport and domestic heating.
This could have a direct impact on consumer prices for ordinary households and private motorists and will prove politically controversial.
Brussels plans a social fund to cushion the blow on consumers - or voters.
But average expenses of the poorest households could increase by 44 percent for transport and by 50 percent for residential heating, according to the think-tank ERCST.
The idea faces opposition from NGOs and MEPs from across the political spectrum and divides the European Commission itself. “I’m not sure it will survive,” warned one EU diplomat.
* Carbon allowances: The bulk of the pollution permits or carbon quotas now traded on the ETS originate as free allowances given to European firms to help them compete with imports from less regulated markets.
Under the proposal, the EU would charge importers the market rate for carbon permits, while phasing out free allowances granted to EU-based suppliers of steel, aluminium, cement, fertiliser and electricity.
By treating imports and local production equally, Brussels believes it will respect World Trade Organisation (WTO) rules and counter accusations of “protectionism”.
The number of permits in circulation will also be reduced over time to mechanically force up the price of carbon emissions, encouraging investment in greener production.
This idea might antagonise Europe’s trade partners but if it survives the Brussels horse-trading it will be phased in slowly - too slowly for green activists.
The end of the internal combustion engine: The commission’s draft would reduce permitted emissions from new passenger cars and light commercial vehicles to zero from 2035 - effecting obliging the industry to move on to battery-electric models.
Brussels promises to help build one million charging points along European roads by 2025, 3.5 million by 2030 and 16.3 million by 2050.
* Air transport: The drafts introduce a levy on jet fuel for flights within the EU. Private business jets and cargo planes will be exempt, due to international legal constraints.
In a separate directive, the commission would raise the - still modest - target for the use in aviation of “sustainable fuels”, those containing a share of biofuels.
In addition, airlines would gradually lose the free emissions allowances they receive for their intra-EU flights.
* Energy efficiency: The EU’s energy efficiency target would be increased. Energy consumption would have to fall by at least 36 to 37 percent by 2030 compared to the current target of 32.5 percent.
Forests and ‘carbon sinks’: Brussels plans to introduce a target for carbon absorption via natural “carbon sinks” such as forests, grasslands, and peat bogs, set at 310 million tonnes of CO2 equivalent by 2030 for the EU as a whole, with binding targets for each member state from 2026.
* Social Fund: To counter the effects of regulations on the poorest households and to fight fuel-linked poverty or social inequalities in transport, Brussels will propose the establishment of a “social climate action mechanism”, a fund fed by revenues from the new planned parallel carbon market.
“The science tells us we need to halve emissions by 2030, so for road transport it’s simple “ get rid of the internal combustion engine.” European car industry association ACEA, however, said banning a specific technology was not a rational way forward, adding that internal combustion engines, hybrids, battery electric and hydrogen vehicles needed to play a role in the transition.
To boost sales EV sales, Brussels also proposed legislation that would require countries to install public charging points no more than 60 kilometres (37.3 miles) apart on major roads by 2025.
It foresees 3.5 million public charging stations for cars and vans by 2030, rising to 16.3 million by 2050.
“The transition to electric vehicles is going much faster than anybody had ever anticipated, but then we are under an obligation to create the right incentives for that,” said Frans Timmermans, the EU’s head of climate change policy. “So the charging infrastructure should be there.” Even when buyers have been able to afford the price premium for a part- or all-electric vehicle, many have been deterred by “range anxiety” because of a lack of public charging stations.
Carmakers had signalled they would only accept tougher emissions targets in return for massive public investment in chargers.
The Commission estimates 80-120 billion euros ($95-$142 billion) will need to be spent on public and private chargers across the EU by 2040.
IHS Markit said in a report on Tuesday that if the EU raised its CO2 emission reduction targets to 50% by 2030, it would bring new fossil-fuel car sales across the bloc down to virtually zero by then.
“It is clear that if these stretch goals are implemented as solid proposals to be voted into legislation, that carmakers that have been bolder and invested heavily earlier on in electrification will have a significant advantage,” IHS said.
The Commission’s proposals will need to be negotiated and approved by EU member states and the European Parliament, which could take around two years.
Low-emission car sales surged in Europe last year, even as the COVID-19 pandemic knocked overall vehicle sales, and one in every nine new cars sold was an electric or plug-in hybrid.
Full electrification is a long way off, however.
Many carmakers have announced investments in electrification, partly in anticipation of tougher EU emissions targets.
Last month, Volkswagen AG said it would stop selling cars with combustion engines in Europe by 2035, though later in China and the United States.
And Stellantis said last week it would invest more than 30 billion euros by 2025 on electrifying its line-up.
Consultancy AlixPartners estimates carmakers and suppliers globally will invest $330 billion in electrification from 2021-2025, up 41% from its estimate of $250 billion for 2020-2024.
Brussels also proposed allowing plug-in hybrids to count as low-emission vehicles up to 2030.
That will come as a relief to automakers like BMW and Renault that have invested heavily in these cars - which have both an electric motor and a combustion engine.
With the green credentials of hybrid cars increasingly being challenged, carmakers had feared those investments would be wasted if they were phased out too soon.