BERLIN/BRUSSELS, March 7 (Reuters) – Germany has made a last-minute opposition to a landmark European Union law to end sales of CO2-emitting cars by 2035, demanding that car sales be allowed new with internal combustion engines after this date if they run on electronic fuels.
EU law would require all new cars sold from 2035 to have zero CO2 emissions, making it effectively impossible to sell new cars powered by fossil fuels.
The rules, which Germany, along with most EU countries and lawmakers, previously supported, would not ban internal combustion engines (ICEs).
But the law is seen as a death knell for the technology because of the lack of options to allow ICE cars to run without producing CO2.
Here’s what you need to know.
WHAT ARE E-FUELS?
E-fuels, such as e-kerosene, e-methane or e-methanol, are made by synthesizing captured CO2 emissions and hydrogen produced with renewable or CO2-free electricity.
Fuels release CO2 into the atmosphere when burned in an engine. But the idea is that these emissions are equal to the amount taken out of the atmosphere to produce the fuel, making it CO2 neutral overall.
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Germany and Italy want clearer guarantees from the EU that sales of new ICE cars can continue beyond 2035, if they run on CO2-neutral fuels.
WHO MAKES THEM?
Most major car manufacturers are betting on battery electric vehicles, a technology that is already widely available, as the main way to reduce CO2 emissions from passenger cars.
But suppliers and major oil companies are championing e-fuels, as are a number of automakers who don’t want their vehicles weighed down by heavy batteries.
E-fuels are not yet produced at scale. The world’s first commercial plant opened in Chile in 2021, supported by Porsche and aiming to produce 550 million liters per year. Other planned plants include Norsk e-Fuel in Norway, which will start production in 2024 with a focus on aviation fuel.
CAN E-FUEL CLEAN CARS?
E-fuels can be used in today’s ICE vehicles and transported through existing fossil fuel logistics networks – good news for suppliers of ICE auto component manufacturers and companies that transport gasoline and diesel.
Supporters say e-fuels offer a route to reducing CO2 emissions from our existing passenger car fleet, without replacing every vehicle with an electric one.
Critics point out that the manufacture of e-fuels is very expensive and consumes a lot of energy. Using e-fuels in an ICE car requires about five times more renewable electricity than running a battery electric vehicle, according to a 2021 paper in the journal Nature Climate Change.
Even advocates say that Europe will not have enough spare renewable energy to produce e-fuels at scale and will have to import it from other regions.
Some policymakers also argue that e-fuels should be reserved for hard-to-decarbonize sectors such as shipping and aviation, which, unlike passenger cars, cannot easily run on electric batteries.
WHAT DO YOU LEARN FOR EU LAW?
Days before the final vote on the EU law, which was scheduled for March 7, German Transport Minister Volker Wissing questioned Germany’s support for it, surprising policymakers including environment ministry led by the Greens.
Wissing, a member of the Lib Dem Party, said the use of e-fuels should remain possible after 2035, and a promised proposal from the European Commission on this was still missing.
EU law says the Commission will make a proposal on how vehicles running on CO2-neutral fuels can be sold after 2035, if that meets climate targets. But Germany’s transport ministry wants clearer guarantees.
Berlin’s last-minute move angered some EU lawmakers and diplomats, who warn that allowing a country to torpedo an already agreed law would jeopardize other carefully negotiated agreements on EU policies.
For now, the future of one of Europe’s core climate change policies is uncertain.
If Germany’s coalition government cannot agree on a position on the law, it will have to abstain in the EU vote. Italy has already expressed its opposition, along with countries such as Poland, raising the possibility of having enough support to block the law.
EU officials are scrambling to find a solution. The European Commission said on March 6 that it is in talks “at all levels” to conclude the law as soon as possible.
WHAT DO COMPANIES WANT?
Germany’s major auto component suppliers, including Bosch, ZF and Mahle, are members of the eFuel Alliance, an industry lobby group, as are major oil and gas companies from ExxonMobil to Repsol .
Automakers such as Piech, Porsche and Mazda generally support the technology. Porsche has a stake in e-fuel producer HIF Global and is the sole fuel buyer for its pilot project in Chile.
BMW ( BMWG.DE ) has invested $12.5 million in e-fuel startup Prometheus Fuels, while investing billions in battery electric technology.
Other car manufacturers such as Volkswagen ( VOWG_p.DE ) and Mercedes-Benz ( MBGn.DE ), meanwhile, have made it clear that they are betting on battery electric vehicles to decarbonize.
Reporting by Kate Abnett, Victoria Waldersee; edited by Jason Neely
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