The debate surrounding the European Union’s planned ban on new combustion engine vehicles in 2035 is intensifying, with prominent voices now questioning its efficacy and potential unintended consequences. Clemens Fuest, President of the influential Ifo Institute, has publicly urged the German government to reconsider the prohibition, arguing it is a flawed instrument for climate protection and may ultimately prove counterproductive.
Ahead of a critical coalition committee meeting Thursday evening, Fuest’s remarks, published in the Neue Osnabrücker Zeitung, signaled a growing internal pressure on Chancellor Scholz’s government. The core of his argument centers around the likelihood of the ban inducing a “Havana effect” whereby aging vehicles with high emissions are retained in circulation for longer due to economic disincentives to replace them. He contends these older vehicles, kept on the road beyond their originally intended lifespan, will ultimately release more CO2 than newer, more efficient combustion engine cars would have.
Fuest advocates for a radical shift in strategy: the complete integration of the automotive sector into the EU’s existing carbon emissions trading system. This approach, he argues, would be more effective in driving down emissions by directly incentivizing the replacement of high-emission vehicles through a substantial increase in gasoline prices. The economist acknowledges that this would likely lead to a significant price hike at the pump, but posits this price signal would be more readily accepted than the restrictive and increasingly unpopular outright ban.
The proposal has found a visible champion in Bavarian Minister-President Markus Söder (CSU), indicating a growing constituency within the governing coalition willing to challenge the established policy direction. While proponents of the ban highlight the need for decisive action to accelerate the transition to electric vehicles, critics, including Fuest, warn that a rigid prohibition risks creating a backlash and hindering the long-term acceptance of climate policies. The coalition’s internal debate signifies a fundamental divergence in approaches to achieving Europe’s ambitious climate targets and the coming weeks are expected to deliver a crucial turning point in the direction of EU automotive regulation. The question remains whether the government will prioritize immediate, regulatory action or embrace a market-driven solution, even if that entails higher immediate costs for consumers.