EU Combustion Engine Phase-Out: Compromise in E-Fuel Dispute in Sight

In the dispute over the phase-out of combustion engines in 2035 between the German FDP transport minister and the EU Commission, a compromise could be emerging. According to information from Spiegel, Transport State Secretary Hartmut Höppner presented a proposal on Thursday evening stating that no renegotiation of the fleet limits, which have been negotiated for two years, would be necessary to allow vehicles with combustion engines to be registered after 2035, as the FDP demands.

As part of the adoption of the new regulations, the Commission is to make a declaration assuring that the registration of combustion engine models that can only be operated with e-fuels will also be possible after 2035. This has previously been included at the behest of the FDP, albeit as a non-binding recital. Now, this is to be anchored more bindingly as a “delegated act.” Additionally, the EU Commission should implement its previous compromise proposal to create a new category for e-fuel vehicles as quickly as possible.

Delegated Act for E-Fuels

The problem is that even without inclusion in the negotiated legislative proposal, the EU Parliament and the Council of Member States would need to approve it. If the EU Commission and Germany agree on this line, the blockade by countries such as Italy, Poland, Bulgaria, Austria, and the Czech Republic through a blocking minority would at least be removed. The interim proposal by the German Ministry of Transport to continue allowing all vehicles with combustion engines after 2035 with a mix of e-fuels and conventional fuels and to balance this through a compensation system appears to be off the table as well.

Fighting for a Niche Solution?

Critics consider the FDP's fight for e-fuels to be a phantom debate that is relevant at best for an exclusive circle of car owners. A recent forecast by the NGO T&E found that e-fuels would still cost at least €2.80 per liter in 2030 due to the complex production process. On the manufacturing side, Porsche mainly advocates for the solution and recently opened a pilot plant with a wind turbine in Chile. Among the volume manufacturers, BMW also has sympathies, while competitor Mercedes-Benz is quite clear in its rejection. The dominant part of the Volkswagen Group, led by Audi, has also shown itself to be very skeptical and is clearly focusing on battery-electric drives for new cars.

Clear Statements from Ford, Volvo, and Stellantis

Ford and Volvo Cars also called on the EU Commission to stick to the original phase-out plan. The French Stellantis Group, which includes Opel, wants nothing to do with e-fuels. The latter currently relies at most on hydrogen fuel cells for light commercial vehicles. The transition should be fully completed by 2035. The only contradictory message came from the Renault-Nissan alliance, which, together with Saudi oil company Aramco, plans to enter large-scale development of e-fuels and hydrogen and continues to push for petrol-hybrid drives. Not least, French politicians brusquely rejected the German FDP's blockade, pointing out how else to convey the transition to French manufacturers. Economic Minister Bruno Le Maire remarked:

"You cannot tell the domestic automotive industry, which has already made great efforts, that it needs to switch to e-mobility and then explain that we are still holding on a bit to combustion engine technology. You cannot say that there is a climate crisis, which is the case, as we all witness in our cities and metropolises that are still too heavily polluted, and then postpone the goal of switching to electric cars."

Le Maire warned that China is five to ten years ahead in e-cars. Economically, this is contradictory and industrially dangerous.

"This is not in our national interest, it is not in the interest of our national manufacturers, and above all, it is not in the interest of the planet," said the Economic Minister.