EU maintains fleet limits and warns of market distortion - CO2 pools as an option
The EU Commission plans to maintain the potentially high climate penalties for automobile manufacturers despite protests. Climate Commissioner Wopke Hoekstra wrote on behalf of the Commission that major European manufacturers have expressed confidence in their ability to meet the targets and explicitly opposed any changes.
“A change in the regulations would distort the level playing field and disadvantage these manufacturers in the competition,” said Hoekstra.
The Brussels authority intends to review the relevant regulation only in 2026, as originally planned. Previously, the news portal “Table Media” reported on Hoekstra's letter. In response to a parliamentary inquiry in the EU Parliament, he had stated that he was aware of the concerns of some manufacturers about whether they can achieve their emissions targets for 2025 amidst intensifying global competition and a shrinking vehicle market.
Under the current EU law, starting from this year, high fines await auto manufacturers due to stricter limits—known as fleet limits—if they do not reduce their fleet's CO2 emissions by an average of 15 percent compared to 2021. Manufacturers already under pressure have to pay fines for excess CO2 emissions—possibly amounting to billions, as feared by the European Automobile Manufacturers Association (ACEA). The environmental organization Transport & Environment doubts that the penalties will reach such amounts.
CO2 Pools as a Way Out
Furthermore, manufacturers can continue to use the option of forming CO2 pools, whereby lagging manufacturers can purchase CO2 certificates from pure electric vehicle manufacturers. Tesla had particularly benefited from this so far. The Californians are expected to have earned about two billion US dollars from such pool deals in 2024, averaging about 1.7 billion in previous years. According to a recently published document with a preliminary list by the European Commission, manufacturers like Stellantis with its brands such as Opel, Fiat, Peugeot, and Citroen, as well as Mazda, Ford, Toyota, and Subaru could particularly “buy their way out.” A likely pool with the Chinese electric car manufacturer and cooperation partner Geely could be formed by Mercedes-Benz along with their joint electric car subsidiary Smart, which includes the electric car manufacturer Polestar and the largely electrified Swedish provider Volvo. Volvo is said to have generated at least 0.3 percent of its revenue from pool income. The pools are open to other manufacturers until early February. The Volkswagen Group is apparently still hoping to meet the limits on its own or alternatively join a pool or form its own pool.
Scholz against penalties burdening manufacturers
Chancellor Olaf Scholz warned at the end of last year that penalties should not burden the industry. The EU Commission should find a way to ensure that penalties "do not impair the financial liquidity of companies that now have to invest in electromobility, modern products, and vehicles," said Scholz (SPD). Economy Minister Robert Habeck (Greens) suggested a sort of deferral of the fines. Criticism of the impending payments also comes from other EU countries, such as France. The center-right alliance EPP in the EU Parliament - which includes CDU and CSU - wants penalties to be avoided and, for instance, to be compensated through overachievement in the coming years. The FDP Member of the European Parliament Jan-Christoph Oetjen is demanding a decisive word from EU Commission President Ursula von der Leyen. An early revision of the fleet limits is essential to save jobs.
Green Party member Michael Bloss sees it differently. "Our goal should be to build the best e-cars in the world, and for that, clear guidelines are needed." Therefore, the Commission is on the right track.
Anyway, this is an unreliable hope for manufacturers, as EU Commission President Ursula von der Leyen will first explore in a "strategic dialogue" set for the end of January how solutions with the industry could look to prevent national solo efforts.
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