The German government, under Chancellor Friedrich Merz of the Christian Democratic Union (CDU), has welcomed the European Commission’s recent relaxation of CO2 emission targets for new vehicles, effectively signaling a retreat from the previously mandated phase-out of internal combustion engine (ICE) vehicles. Merz lauded the move as a positive response to the “clear signal” from Berlin, arguing it would foster “more technological openness and more flexibility” – vital, he claimed, to reconcile climate goals with market realities, business viability and job preservation.
The Commission’s revised proposal allows automakers to meet a reduced emissions reduction target of 90% from 2035, replacing the prior ambition of zero emissions for new vehicles. The remaining 10% of CO2 emissions can now be offset by utilizing EU-produced low-carbon steel, employing e-fuels, or utilizing biofuels. This shift opens the door for plug-in hybrids (PHEVs), vehicles with range extenders, mild hybrids and traditional combustion engine cars to remain on the market beyond 2035, alongside electric vehicles (EVs) and hydrogen-powered alternatives.
Critics, however, are questioning the efficacy of this offset mechanism given the EU’s existing, comprehensive emissions trading systems already designed to achieve climate neutrality in steel production and the transport sector. Concerns are being raised that, rather than driving significant emissions reductions, these credits essentially provide manufacturers with a loophole, potentially delaying the full transition to zero-emission vehicles.
Merz specifically voiced opposition to mandatory quotas for vehicle types within company car fleets, emphasizing that such mandates would unduly burden Germany’s vital Mittelstand (small and medium-sized businesses) through both quotas and red tape. He promised a rigorous evaluation of the Commission’s “extensive proposals” underlining the need for technological open-mindedness and preventing bureaucratic overload.
Furthermore, the Commission’s plan to reduce the CO2 target for vans to 40% by 2030 – down from an original 50% – and to increase flexibility in emission standards for heavy-duty vehicles is drawing scrutiny. While the proposal introduces national targets for companies to incentivize the adoption of low- and zero-emission vehicles and conditions public funding on adherence to ‘Made in the EU’ standards for low-emission vehicles, the relaxation of targets raises questions about the EU’s long-term commitment to ambitious climate action.
The initiative includes €1.8 billion to expedite the development of an EU-based battery value chain, with €1.5 billion in interest-free loans earmarked for European battery cell manufacturers. This investment highlights a recognition of the strategic importance of battery production within Europe, but also underscores the potential to prioritize domestic industries even as broader environmental goals remain somewhat ambiguous. The move demonstrates a complex balancing act between industrial policy, technological flexibility and the increasingly urgent need to mitigate climate change.