The European Union countries endorsed a push to eliminate carbon emissions in new cars by 2035, which effectively marks the end of the era of the internal combustion engine.
After Italy, home to Ferrari NV and Automobili Lamborghini SpA, gave up demands for a five-year delay in the EU's plan for clean up their fleet, the Environment Ministers struck a deal on the proposal. Italian Ecological Transition Minister Roberto Cingolani told his counterparts earlier on Tuesday that he was satisfied with a compromise proposed by Germany that could allow the use of carbon-neutral fuels after 2035.
The agreement defines member states negotiating their stance for further talks with the European Commission and the EU Parliament on the final shape of the bloc's so-called Fit for 55 landmark greenhouse gas reduction package. With EU lawmakers already favoring giving up fossil fuels in the auto industry, it is highly likely that most car companies will have to switch to producing electric models in the next few years.
I have full confidence that the European car industry can manage," said Frans Timmermans, the commission's executive vice-president, as the heated talks were drawing to a close on Wednesday at around 2 a.m. in Brussels. Our carmakers are among Europe's industrial leaders and they can continue to be that as they embrace this global shift. As part of the package, governments agreed to strengthen the EU Emissions Trading SystemEU Emissions Trading System and strengthen its price-control mechanism. They want to create a climate fund to help mitigate the costs of the new cap and trade program for the most vulnerable, and delay a new carbon market for heating and road transport fuel by a year.
According to French Energy Transition Minister Agnes Pannier-Runacher, Europe is putting itself at a leading position in terms of climate challenges and technology thanks to this agreement. We are ensuring a just transition for each member state, each territory, and each citizen. Italy had a 90% reduction in carmakers emissions by 2035, the year that the European Commission has targeted a full cut, a longer exemption for small automakers, along with four other member states. It won some concessions on derogation for niche manufacturers like Lamborghini - which will be spared interim targets until the end of 2035, from 2029 proposed by the commission, according to France.
Also, Europe wants to ban Combustion Engines. Italy Says Not So Fast In an attempt to achieve a compromise, Germany proposed a non-binding addition to the car emissions law that would require the commission to propose registering vehicles running exclusively on carbon-neutral fuels after 2035.
The ministers agreed to endorse the key parameters of a sweeping carbon market reform as proposed by the commission, including a 61% reduction of emissions in the cap-and-trade program by 2030 from 2005 levels. They want to strengthen a mechanism preventing excessive price spikes to curb speculation, and allow the release of 75 million carbon permits into the market. If the average auction price of allowances in six months is in excess of 2.5 times the average price of the two preceding years, that would happen.
The deal limits the size of the Social Climate Fund to 59 billion euros $62 billion from 72 billion euros proposed by the European Commission.
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