Europe Saves Combustion Engine in Reversal of Controversial Ban

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(Bloomberg) — The European Union pulled back from an effective ban on combustion engines and offered more flexibility for carmakers in the transition to cleaner transport after months of industry pressure.

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The move suggests a slower rollout of electric vehicles in Europe and aligns the region more closely with the US, where President Donald Trump is tearing up efficiency standards for cars put in place by the previous administration. Globally, automakers are struggling to make the shift profitable, with Ford Motor Co. announcing on Monday that it will take $19.5 billion in charges tied to a sweeping overhaul of its EV business.

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Under the new proposals, the EU will ease requirements that would have halted sales of new gasoline and diesel-fueled cars starting in 2035. Tailpipe emissions will have to be cut by 90% by the middle of the next decade compared with the current goal of a 100% reduction.

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The revision will allow automakers to continue selling a number of new cars with internal combustion engines as well as plug-in hybrids and range extenders, the European Commission said on Tuesday. The bloc set a condition that carmakers will need to compensate for the extra pollution by using low-carbon or renewable fuels, or locally produced green steel.

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It’s the latest step in a global pullback from green policies as the economic realities of the shift to low-carbon energy set in. Mounting trade tensions with the US and China are also pushing Europe to further prioritize shoring up its domestic industries, in part by mitigating the cost of the transition. Although the bloc is legally bound to reach climate neutrality by 2050, governments and companies are intensifying calls for more flexibility, warning that rigid targets could jeopardize economic stability.

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“This package will be a lifeline for the European automotive industry,” Stephane Sejourne, executive vice-president of the commission, said in a statement. “We are pulling every lever at our disposal — simplification, flexibility, European preference, targeted support and innovation.”

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The commission also proposed additional leeway for producers to meet their 2030 emissions target for cars and vans, allowing them to average it out over a period of three years. Additional flexibility was offered for vans, where the pollution-reduction target for the end of this decade was cut to 40% from 50%. 

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The proposal adopted by EU commissioners will now be discussed by the European Parliament and by member states in the EU Council. Each institution has the right to propose their own amendments and the final shape of the measure will be negotiated in the so-called trilogue talks, which will involve the parliament, the council and the commission.

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With automakers now gaining more time to go fully electric, environmental groups are concerned the changes create new loopholes that undermine Europe’s climate ambition and leave key car manufacturers further behind China in the race to battery-powered road transport.