EU drafts plan to allow sales of cars with e-fuel combustion engines

The European Commission has drafted a plan to allow sales of new cars with internal combustion engines after 2035 if they run only on climate-neutral e-fuels, as it tries to resolve a spat with Germany over moves to phase out combustion engine cars.

The draft proposal, seen by Reuters on Tuesday, suggests creating a new type of vehicle category in the EU for cars that can run only on carbon- neutral fuels.

Such vehicles would have to use technology that would prevent them from driving if other fuels are used, the draft said.

The proposal could offer a way for carmakers to keep selling combustion engine vehicles after 2035, the date when a planned EU law is set to ban the sale of new cars emitting CO_2.

After months of negotiations, EU countries and the European Parliament agreed to the law in 2022. But Germany’s transport ministry surprised other countries in March by lodging last-minute objections to the law, days before a final vote that would have seen it enter into force.

The ministry’s core demand is that the EU allow sales of new cars running on e-fuels after 2035. On Tuesday, it said it was in contact with the commission to try to reach a solution on an issue being watched closely by Germany’s powerful car industry.

“We are interested in a quick clarification, but it must be resilient and binding. We are currently examining this carefully,” a spokesperson said.

Two sources familiar with the matter said the commission’s condition that cars must be able to recognise CO₂-neutral fuels from fossil fuels was problematic for Germany because it would largely force carmakers to develop new engines.

German transport minister Volker Wissing did not want to completely reject the commission's proposal, but rather make some improvements to it, the sources said.

The parties are aiming to secure an agreement by Thursday’s EU summit.

A commission spokesperson declined to comment on the draft document, but referred to comments by EU climate policy chief Frans Timmermans, who said last week that any solution must comply with the 2035 phase-out law agreed in 2022.

“The talks are ongoing between the commission and the German authorities,” the spokesperson said.

An EU official said any proposal on registering e-fuel cars would be made only after the combustion engine phase-out law was finally adopted.

E-fuels are made by synthesising captured CO₂ emissions and hydrogen produced using CO₂-free electricity.

They are not yet produced at scale. A study published on Tuesday by the Potsdam Institute for Climate Research found that all planned e-fuel projects worldwide would produce only enough fuel to cover 10% of Germany’s demand for e-fuel use in aviation, shipping and chemicals in the next few years.

Reuters