EU agrees last minute e-fuels exemption to future ICE vehicles ban

By Oliver Kent

In a twist for EU leaders and Member States, it became apparent earlier this month that Germany was not going to approve a previously agreed deadline for the total phase-out of the sale of new vehicles with traditional internal combustion engines (ICEs).

Earlier this year in February, the EU Parliament voted in favour of a proposal to ban the sale of new petrol and diesel vehicles across the EU, with effect from 2035. That ban would have coincided with similar proposals from other jurisdictions, including the UK (proposed ban to come into effect from 2030), and plans from OEMs themselves to discontinue entire petrol and diesel product lines. However, an effort, spearheaded by Germany, has changed all that.

Now, following a deal agreed last Saturday (25 March 2023), there will be a new exception to the ban for ICE vehicles that are able to run on so-called ‘electrofuels’ or ‘e-fuels’1. E-fuels are a type of synthetic fuel that are manufactured using CO2, many of which are designed to be carbon-neutral (i.e. they emit an equal amount of CO2 when burned to that captured for production of the fuel).

The news will come as a relief to OEMs that want to continue manufacturing and selling traditional ICE vehicles in Europe. However, it will no doubt face strong criticism from environmental campaigners in favour of a complete ban. The latter will question the environmental credentials of e-fuels, with a 2021 study by the European Federation for Transport and Environment finding that beyond particle emissions, e-fuels emit the same or greater amounts of certain pollutants (such as NOx)2.

Aside from the environmental impact, it is not clear the extent to which this new exemption will be enforced. The intent appears to be that it should only apply to new vehicles if they only use e-fuels. However, without modifications to ensure that those vehicles are unable to run on traditional fossil fuels (or incentives to move people to e-fuels), the ban may ultimately prove toothless. Indeed, there will be nothing to stop consumers at the pumps filling those vehicles with regular petrol or diesel. According to Reuters, the European Commissions’ preference to enforce the exemption would be to have all new vehicles fitted with special sensors that could recognise e-fuels from fossil fuels, but that is understood to be facing some resistance from Germany because of the cost of developing new engines3

Rules to implement the agreement are currently being drafted, which will hopefully provide much needed clarification. In the meantime and against all previous predictions, it seems that the internal combustion engine will have a future in Europe beyond 2035.



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