EU lawmakers ease car CO2 target proposal for 2035

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EU eases 2035 car CO2 targets

Highlights

European Parliament draft lowers 2035 car CO2 reduction target to 87.5% from 2021 levels, versus the Commission's proposed 90%.
Lawmakers allow a 7.5% top-up for automakers using low-carbon EU steel and agree on an 80% CO2 cut for new vans by 2035.
For 2030, CO2 targets remain 55% for cars and are reduced to 35% for vans, with compliance averaged over 2029–2031 for manufacturers.

Parliament groups revise 2035 emissions framework

As reported by Reuters, three mainstream party groups in the European Parliament have agreed on a draft position that lowers the proposed 2035 CO2 reduction target for cars to 87.5%, instead of the 90% cut put forward by the European Commission from 2021 levels. The text also allows a 7.5% top-up linked to production using low-carbon steel made in the European Union.

The Commission proposed last year that automakers cut CO2 emissions by 90% in 2035, down from an earlier 100% target, and said the remaining 10% could be offset through low-carbon steel and alternative fuels. Under the latest parliamentary deal, the agreement still needs approval from the centre-right European People's Party, the centre-left Social Democrats and the centrist Renew group before it becomes the European Parliament's formal position.

The parliament and EU governments would then need to negotiate a common text covering emissions targets for new car fleets in 2030 and 2035. According to the deal struck early on Tuesday, lawmakers also agreed that automakers should cut average emissions of new vans by 80% in 2035.

Auto industry pressure shapes wider EU climate debate

For 2030, the proposed CO2 reduction targets remain 55% for cars, matching the Commission's plan from last year, while the target for vans is reduced to 35% from the Commission's proposed 40%. Automakers would also be able to meet the 2030 goals over an average covering the years 2029 to 2031, giving manufacturers more flexibility in compliance.

Cars running on renewable fuels could also be recognised as zero-emission vehicles under the plan. Small affordable electric cars and especially efficient EVs could earn producers super-credits, helping them meet the emissions targets.

EU countries have long backed measures to cut carbon emissions and curb global warming, but economic concerns have in recent years led to weaker proposals. France and Germany, both of which have large car industries, last week agreed to support a 90% CO2 reduction target for cars in 2035 without compensatory measures.

Our earlier article on Mario Draghi’s warning about restrictive monetary policy explained how keeping interest rates above growth for too long can worsen debt dynamics and squeeze the investment needed for long-term resilience. Draghi argued that central banks should prioritise inflation control while avoiding unnecessary damage to growth, and he pointed to EU-level measures such as market integration and targeted industrial policy support to sustain productivity-enhancing investment.

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