EU Tries to Find Middle Ground with Vehicles that Run Only On E-Fuels

The European Commission seeks to create a new vehicle category that’s somewhere between internal combustion engine (ICE) cars and electric vehicles to buy time as it resolves a negotiation with Germany on phasing out combustion engine vehicles.

The commission seeks to allow sales of new ICE cars after 2035 provided that they run only on carbon-neutral or e-fuels and be equipped with technology that would prevent the engine from running when another type of fuel is used, according to a draft proposal seen by Reuters on Tuesday.

E-fuels, which aren’t currently produced at scale, are created through a synthesis of captured CO2 emissions and hydrogen from CO2-free electricity.

Last year, EU countries and the European Parliament agreed on passing a law to begin phasing out ICE vehicles by 2035 after months of negotiations. Germany’s Transport Ministry surprised the bloc when it submitted last-minute objections to the law, just days before the final vote to enforce the law.

Germany’s Transport Ministry’s main demand is that the EU continues to allow sales of new combustion cars in the new e-fuel category after 2035, but the Commission’s condition of adding technology that would recognize e-fuels from fossil fuels might prove problematic as it would mean that carmakers would need to develop new engines to include that capability. 

Sources familiar with the matter told Reuters that Transport Minister Volker Wissing was not interested in rejecting the Commission’s proposal, instead, they would like to make some improvements to it. Talks are ongoing between the Ministry and the Commission, and they are targeting to secure an agreement by the EU summit on Thursday.

According to an EU official, the combustion engine phaseout law beginning in 2035 must first be adopted before any proposal for registering e-fuel engines is made.

Information for this briefing was found via Reuters, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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