The German government, under Chancellor Friedrich Merz of the Christian Democratic Union (CDU), has welcomed the European Commission’s softening of stringent CO2 emission targets for new vehicles, marking a significant shift away from the previously mandated “internal combustion engine phase-out”. Merz characterized the move as a positive response to the German government’s clear signaling and argued it opens the door for “greater technological openness and flexibility – to better reconcile climate goals, market realities, businesses and jobs.
The Chancellor announced a detailed assessment of the Commission’s revised proposals, emphasizing the “central importance” of technological neutrality and a commitment to avoiding increased bureaucracy. Specifically, Merz reiterated the CDU’s opposition to mandatory quotas for vehicle types within company car fleets, voicing concerns about potential burdens on German SMEs. “We continue to reject new statutory quotas for vehicle types in company car fleets. We must avoid overwhelming German SMEs – neither through quotas nor through excessive bureaucracy” he stated.
The Commission’s revised plan reduces the target for CO2 emission reductions for new vehicles to 90% from the previous commitment of zero grams CO2 per kilometer by 2035. This allows manufacturers to “compensate” for the remaining 10% of emissions by utilizing EU-produced low-carbon steel, e-fuels, or biofuels. This maneuver effectively paves the way for plug-in hybrids (PHEVs), vehicles with extended range, mild hybrids and traditional combustion engine vehicles to continue operation beyond 2035 alongside fully electric (EV) and hydrogen vehicles.
Critics have pointed out that given the existing EU Emissions Trading System (ETS) already aiming for climate neutrality in steel production and transportation, this compensation mechanism may not significantly accelerate actual emission reductions and risks being a form of “greenwashing.
Further adjustments include easing the CO2 target for vans to 40% from an initial 50% by 2030. Revised regulations for heavy-duty vehicles are also proposed, intended to provide “greater flexibility” in achieving 2030 goals.
Member states will now be tasked with setting binding targets at a national level to promote the adoption of low and zero-emission vehicles by large corporations. Access to public funding will be contingent on vehicles being low-emission and bearing the “Made in the EU” mark.
A further €1.8 billion is allocated to expedite the development of a fully EU-based battery value chain, with €1.5 billion in interest-free loans earmarked for supporting European battery cell manufacturers. This signals a concentrated effort to bolster European competitiveness in the electric vehicle sector, though questions remain about the practical impact of the relaxed emission standards and the true impetus for decarbonization.
