EU lawmakers approve ban on new fossil fuel cars effective as of 2035

Publication date: February 21, 2023

The last Tuesday, the European Parliament formally approved a law to effectively ban the sale of new internal combustion cars, petrol and diesel cars, in the territory of the European Union by 2035. But, it still has to be formally endorsed by the Council. These actions are taken to achieve the landmark of 0% CO2 emissions from new cars sold by 2035 in the 27-country bloc. Furthermore, the law also put a goal cut 55% in CO2 emissions for new cars and 50% for vans sold from 2030 versus 2021 levels. This ban will affect all new cars and vans sold in EU by 2035, not to other types of vehicles.

However, despite the agreement between all EU member states, this new law could meet some resistance from some industry representatives and respective countries. In 2022 Italy, Portugal, Slovakia, Bulgaria and Romania wanted to delay by five years European Commission’s plans at issue to 2040. They thought that light commercial vehicles should meet an 80% CO2 cut by 2035 and 100% by 2040. The reason behind this is that climate policies need to consider economic and social factors such as the purchasing power differences between countries. In addition, some industry groups such as the European Automobile Manufacturers Association have opposed the 2035 target, in spite of the support to the law of big names as Ford, Volvo Cars and Volkswagen. This resistance can be viewed in the voting last 14^th February, it only got 340 votes in favour against 279 and 21 abstentions.

This measure gets its raison d’être in the Paris agreement signed by the EU-bloc to achieve the reduction of greenhouses gas emissions to avoid 2°C temperature increase. The European Union is the third lager contributor of greenhouses gas emissions (4,499,841, Kilotons of CO2 equivalent, 2015) in the world; and around 25.6% of its emissions come from transport, being the domestic transport one of the biggest source.

What is the actual meaning of this new ban in practice?

Perhaps this ban can look straightforward, but it could generate some doubts. To try make it even more clear basically this means that from 2035, all new cars that come on the market cannot emit any CO2. This is to ensure that by 2050, the individual transport sector can become carbon-neutral. However, this does not mean that if you have a car or will buy a petrol or diesel car before 2035 you cannot drive it. The legal measure is made with the idea that the average life span of a car is 15 years, so if the last cars with combustions engines are sold in 2035, EU can achieve the CO2-neutral cars by 2050.

Furthermore, the second-hand market is still going to be available, and the petrol station system, too. However, the total cost of ownership, like the cost of fuel, maintenance or insurance, might increase. Alongside this measure, more legal action and lawmaking from the European Institutions will be taken to ensure the creation of an environment capable of supporting a full electric and CO2-neutral private-vehicles scenario. For example, the Parliament has recently agreed its positions for the alternative fuels infrastructure to provide for more electric charging and hydrogen refueling stations.

Other Key measures foreseen by the regulation:

• The Commission will present a methodology to asses and report data on CO2 emissions throughout the full life-cycle of cars and vans by 2025.
• The Commission will monitor the gap between the emission limit values and the real-world fuel and energy consumption data by 2026.
• Manufactures responsible for small production volumes per year, 1k-10k new cars or 1k-22k new vans, may be granted a derogation until the end of 2035.
• The zero and low emissions vehicles incentive mechanism will be adopted until 2029 with the benchmark of 25% of new cars and 17% of new vans. In 2030 the latter will be removed.
• Since 2025, and every two years, a report to evaluate the progress towards zero-emissions road mobility will be published by the Commission.

A larger EU’s Green Strategy

Actually, this ban is enclosed in a biggest ambitious plan call Fit for 55. The Fit for 55 is a set of proposals to revise and update EU legislation to achieve the 55% reduction of greenhouse gas emissions by 2030, and to become climate neutral later on by 2050. The proposals are first prepared and discussed at technical level before they land on the table of EU politicians. Beside the ban of new non-neutral-emissions, other related proposals are:

• Carbon border adjustment mechanism. The aim is to avoid the use of the international trade and the relocation of production to non-EU countries with less fight climate policies to prevent that the emissions reduction efforts became futile.
• Sustainable aviation fuels and greener fuels in shipping. The objective is to reduce aircrafts and maritime transport emissions by up to 75% by 2050. Despite progress in recent years, both sectors still rely almost entirely on fossil fuels and constitute a significant source of greenhouse gases and other harmful pollutant emissions.
• Alternative fuels infrastructure. The proposal concerns all modes of transport and includes targets for infrastructure deployment. It also tackles interoperability. The legislation’s aiming to accelerate the deployment of infrastructure for recharging or refuelling vehicles with alternative fuels.

Consequences of the banning

The automobile industry is a major driver of the economies of many countries of the EU-27Bloc. The legislative changes that have been made will have a significant impact on the structure and operation in this sector. But this also means the creation of a full range of new economic and business opportunities, specifically here, in Poland. The automotive sector in Poland represents about 2.7% of GDP and slightly above 10% of total industrial production which is one of the lowest dependencies in the region. This can suggest that the banning will cause insignificant problems. This probably means low cost to readjust production chain changes to an electric and no-emissions market, with the possibility of increasing the production and profits.

In the same way, Poland still has to invest a great amount of resources, time and work in the building of its web of infrastructure. Hence, this makes possible the creation of all new green infrastructure (recharging stations for example), from zero evading cost of destroying old infrastructure. This is a great destination to invest in and profit from. Many foreign construction companies and firms may be interested in cross-border operations and legal services (local companies may be too).

Legal Perspective

When the Council finally endorses the proposal of banning new cars and vans by 2035 it is going to become a European Regulation. From that moment it will have legal validity in all the territory of the member states and will have to be applied in all the member states. If it was a European directive, the States have some legislative maneuvering to achieve the objectives of the directive, being able to change certain things and the means of achieving it. But, as the European Regulation it will be directly applied. The new state will promote more increased interest in electric vehicles market and accessories, like electric batteries, chargers, energy storage devices. This will be related to legal requirements within cybersecurity and data protection in IoT infrastructure.