After the inception of the “Fit for 55” package in July 2021, which outlines the European Commission’s strategy to achieve a 55% emissions reduction by 2030, the focus has been on EU transport policy. As the year progresses, what developments can we anticipate?
The legislative package is currently reaching its concluding phases, as provisional agreements have been attained between the European Parliament and Council on all transport-related matters. However, as the European elections are slated for June 2024, there are still a few unresolved aspects within the realm of EU transport policy.
As per the legislation settled upon in the current year, vehicles that are newly sold after 2035 must be free of carbon emissions, marking the conclusion of petrol and diesel passenger cars. Prior to reaching this milestone, the Commission aims to enhance the permissible pollution levels emitted by newly sold cars from 2025 and heavy-duty vehicles from 2027.
In contrast to the CO2 emissions regulations, Euro 7 places emphasis on pollutants that pose health hazards, including particulate matter, nitrogen oxide, and carbon monoxide. This legislation has sparked controversy, being labeled as insufficient by environmental advocates and deemed both expensive and abrupt by the automotive industry.
Within the Council of the EU, a group of nations has formed a coalition with the aim of diluting the new regulations (and potentially discarding them entirely). Their argument is based on the belief that these rules would place an undue financial burden on the industry while yielding only marginal benefits.
Given this situation, the direction for Euro 7 remains uncertain: the Spanish Presidency will have to employ its diplomatic expertise to reach a consensus that satisfies most member states. Meanwhile, in the Parliament, Alexandr Vondra, the primary negotiator for the file and a representative of the nationalist ECR group, has swiftly voiced his criticism of the preliminary legislation.
“The suggested Euro 7 standard will negatively affect both consumers and manufacturers. Its consequences outweigh the positive environmental outcomes,” he stated.
This stance is strongly supported by Jens Gieseke, a center-right legislator within the EPP group.
Nevertheless, some legislators are advocating for a more robust Euro 7 regulation. Christel Schaldemose from the center-left S&D group and Bas Eickhout from the Greens have pressed for greater ambition, criticizing the opposing side for undermining legislation they consider crucial for enhancing urban air quality.
The division has placed the centrist Renew group in a pivotal role, as its alignment with either the right or left will significantly influence the outcome of the matter.
CO2 standards for heavy-duty vehicles
Another legislative dossier that remains on the agenda pertains to the CO2 standards for heavy-duty vehicles, including trucks and buses. This legislation is considered the counterpart to the contentious CO2 car standards.
Numerous vehicle manufacturers were relieved when the Commission revealed that the proposal for heavy-duty vehicle CO2 standards would not entail a 100% carbon reduction requirement, as seen in the case of cars and vans.
The suggested 90% goal by 2040 allows the industry to keep manufacturing conventional combustion engine trucks and buses, albeit in smaller numbers. With this proposal, the EU administration aims to encourage the adoption of battery and hydrogen-powered vehicles. The regulation also introduces more stringent requirements for city buses, demanding a transition to zero-emission technology by 2030.
The Commission’s decision not to completely halt combustion engines was met with approval by German MEP Jens Gieseke, who saw it as a sign that the Commission is moving away from its approach of banning. However, the rapporteur of the file, Yannick Jadot of the Greens, advocates for a 100% restriction starting from 2040. He argues that this is not only environmentally significant but also essential for maintaining the competitiveness of the EU industry.
Within the Council, the usual divisions have reappeared between nations advocating for heightened ambition and those favoring a “more pragmatic” approach to the proposal. Countries like Denmark and the Netherlands are advocating for a 100% target by no later than 2040. However, others such as Czechia, Poland, and Italy contend that the standards are already advancing too rapidly.
Making freight greener
In mid-July, just before lawmakers embarked on their summer recess, the Commission introduced the “Greening Freight Transport Package.” This comprehensive package comprises multiple files with the goal of transitioning cargo transportation from roads to railways and waterways, promoting the adoption of low-emission trucks, and streamlining the process of calculating the carbon footprint of freight trips.
Currently, both Parliamentary groups and EU member states are in the process of studying the package, and they have not yet finalized their positions. Nevertheless, the industry has already identified specific areas where they believe changes are needed and has shared a set of talking points.
The CER, a significant European rail trade association, has voiced “serious concern” about the Commission’s decision to permit longer and heavier trucks on EU roads, cautioning that this could lead to a detrimental shift in freight transport from rail to road. On the other hand, the IRU, a trade association representing freight operators, commended the Commission for making carbon footprint disclosure voluntary for companies.
Expect the political debate on the freight files to sharpen once legislators return from holidays.
US Inflation Reduction Act
The subsidies provided by the US through its “Inflation Reduction Act” have sparked controversy in various EU industries, particularly due to its provisions that prioritize domestic production. Nevertheless, when it comes to electric vehicles, the EU remains optimistic about securing improved terms for its car and battery manufacturers.
On July 20th, EU member states approved the initiation of negotiations for an “EU-US Critical Minerals Agreement.” This agreement is intended to allow critical minerals extracted or processed within the EU to be considered as meeting the requirements of the US tax credit scheme for electric vehicles, as outlined in the negotiation mandate.
The Commission’s spokesperson informed that they intend to finalize the negotiations as swiftly as possible. Nonetheless, automakers point out that while this addresses one aspect of the issue, the ultimate car assembly still needs to take place in America for consumers to be eligible for the tax rebate.
“A potential agreement of this nature would solely tackle the tax credit concerning critical minerals,” stated a representative from the German car industry association VDA.
The spokesperson added: “The other requirements, notably the vehicle assembly in North America and adhering to the proposed price limits, must still be met regardless of the potential EU-US raw materials agreement, which would not have the capacity to address these aspects.”
Recyclability of cars
On July 13th, the EU commission introduced the end-of-life vehicles regulation, unveiling fresh guidelines for the treatment of cars once they have reached the end of their operational lifespan. The proposal strives to streamline vehicle recycling by establishing novel design standards and advocating for increased recovery and reuse of valuable materials.
“By implementing our new proposal, we aim to facilitate the automotive industry’s shift towards a circular economy, enhance the recycling sector, generate over 22,000 job opportunities, and enhance the efficiency of the single market,” stated Thierry Breton, the Commissioner for the internal market.
The document will now undergo evaluation by the Parliament and Council.
Yet to come
An eagerly anticipated regulation yet to be introduced this year is the Multimodal Digital Mobility Services (MDMS) initiative. This legislation aims to streamline the booking process for long-distance rail travel within the EU and simplify the integration of various transportation modes.
The MDMS initiative has sparked significant reactions, leading to disagreements between airlines, rail companies, and third-party ticket vendors regarding the sharing of travel data. The release of the file is anticipated in September, but as usual, this timeline could be subject to adjustments.
The Greening Corporate Fleets initiative, aimed at encouraging companies to transition to environmentally friendly vehicles, is also set to be unveiled before the end of 2023. Unfortunately, the legislation pertaining to Hyperloop, the highly anticipated technology that proposes high-speed travel through vacuum-sealed tubes, has been delayed, possibly due to the absence of tangible examples of the transport mode.