The European Union has agreed to give carmakers more flexibility in meeting their CO2 reduction targets for 2025. But this might cause an undesirable knock-on effect.
Every five years, carmakers need to reduce their average fleet emission levels by a certain amount. The point of this exercise is to rein in transport’s CO2 output and make the sector play its part in fighting climate change.
Carmakers achieve this either by selling more efficient cars, selling more electric vehicles or buying pollution credits from rival companies that have met and exceeded their pollution benchmarks.
This year is another target year but the industry claims that motorists do not have enough appetite for electric vehicles to meet the CO2 goals.
Not every carmaker is of this opinion and a lot of the numbers reported so far in 2025 suggest that the market is indeed heating up. In Europe, 35% more EVs were sold in April than in the same month last year.
Nevertheless, the European Commission, Council and Parliament have all agreed that the sector needs a helping hand in order to avoid millions of euros in penalties. So they will have until 2027 to meet their targets instead.
Companies like Volvo, which have already gone big on EVs, feel betrayed by this legislative u-turn, while its German rivals probably feel a sense of relief after they dragged their feet for years.
But this added flexibility is only half the story. The Commission has also agreed to consider bringing forward a policy review of upcoming targets from 2026 to this year.
That means that the EU could decide to dilute the targets for 2030 and, most importantly, 2035, when carmakers are essentially meant to stop selling internal combustion engines and be zero-carbon.
If the review is undertaken this year, then the Commission might use 2024’s numbers to check the sector’s health. That might skew the picture, as 2024 was a lean year for EV rollout as carmakers held back a lot of volumes in order to deploy them in 2025.
It also might mean that certain carmakers push for an old chestnut in EU policymaking circles: “technology neutrality”.
Some auto firms have still not accepted that the future of mobility is electric and continue to insist that internal combustion engines running on carbon neutral fuels or even hydrogen still have a significant role to play.
More pressingly, this entire saga is sending out the message that companies and governments can achieve a lot by lobbying the EU institutions at the eleventh hour by crying wolf about industrial competitiveness.
All of the EU’s most important policies are built on setting targets. This exercise could be rendered completely ineffective if the wrong narrative is established, so maybe the Commission has shot itself in the foot by not simply staying on course.
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