EU Set To Back Down On Exhaust Emissions Rules

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Last Updated on: 4th March 2025, 12:11 pm

Government regulations are a key driver of advances in automotive technology, but are often unpopular with the public and manufacturers. When the US government began to impose new safety regulations, Henry Ford II grumbled loudly that “Safety doesn’t sell.” That was at a time when the steering column in most cars was a rigid tube aimed squarely at the chest of drivers. In frontal collisions, it became a spear that inflicted life threatening injuries on drivers. As the years went by, the government imposed any number of safety improvements — seat belts and air bags being some of the most contentious. It also pushed automakers to reduce the toxicity of the exhaust emissions spewing out of tailpipes. For those who argue that all government regulations are bad, please take a moment to view this short video that compares the crashworthiness of two popular Chevrolet models — a 1959 Bel Air and and 2009 Malibu. A human driver of the Malibu would likely walk away, thanks to government safety regulations. The next stop for the driver of the Bel Air would probably be the morgue. Which car would you want your family riding in?

Exhaust emissions rules became a thing when people in Los Angeles realized the poisonous smog over their city was caused primarily by the crud spewing from the tailpipes of millions of cars after it reacted with sunlight. America may have started the trend toward cleaning up exhaust emissions, but the Europeans soon climbed on the bandwagon as well. Over time, the EU has ratcheted up its tailpipe emissions rules again and again, with automakers subject to big fines for noncompliance. But despite all its good intentions, the latest round of exhaust emissions regulation is so strict that automakers face huge fines for noncompliance.

Exhaust Emissions Flexibility

The auto industry is vital to the economies of several large European countries, particularly Germany, France, and Italy, and is already under enormous pressure because of lower sales. The industry also keeps hundreds of suppliers all across Europe in business. The prospective fines for noncompliance could send economic shockwaves throughout the EU economy. In response, Ursala von der Leyen, the president of the European Commission, this week announced a proposal to give automakers an additional three years to bring their products into compliance with the latest exhaust emissions rules. In an address on March 3, 2025, she said:

“There is a clear demand for more flexibility on CO2 targets. The key principle here is balance. On the one hand, we need predictability and fairness for first movers, those who did their homework successfully. That means that we have to stick to the agreed targets. On the other, we need to listen to the voices of the stakeholders that ask for more pragmatism in these difficult times, and for technology neutrality, especially when it comes to the 2025 targets and related penalties in case of non-compliance.

“To address this in a balanced manner, I will propose a focused amendment to the CO2 Standards Regulation this month. Instead of annual compliance, companies will get three years — this is the principle of banking and borrowing; the targets stay the same; they have to fulfill the targets. It means more breathing space for industry and more clarity, without changing the agreed targets. I am sure that such a targeted amendment could be agreed swiftly by the European Parliament and the Council because it, of course, only makes sense if it is agreed quickly. At the same time, we will prepare to speed up work on the 2035 review, with full technology neutrality as a core principle.”

Let’s unpack her remarks, shall we? On the one hand, she doesn’t want to penalize those companies that have worked the hardest to meet the 2025 rules. On the other hand, she doesn’t want those companies that lagged behind to go out of business because they have to pay enormous fines. The approach is similar to what the US did last year by relaxing its emissions rules somewhat while retaining the overall objective of encouraging cleaner transportation technologies, which basically means more electric cars and trucks.

A Possible Back Door For Combustion Engines

Von der Leyen also signaled that she will open a possible back door for car manufacturers to avoid the decision to phase out internal combustion engines by 2035. She wants to “speed up work on the 2035 review, with full technology neutrality as a core principle.” More details are expected on Wednesday when the action plan for the automotive industry drawn up by Transport Commissioner Apostolos Tzitzikostas will be presented. “Technology neutrality” sounds suspiciously like the “government should  not be picking winners and losers” trope so popular with anti-government extremists in the US who cloak their unswerving support for fossil fuels in a cloak of “all of the above” blandness.

One of the three key points of her remarks on Monday was competitiveness. “We need European car supply chains to be more robust and more resilient, especially when it comes to batteries. Here, we have a challenge, because while our own production is in the process of scaling up, we see that imported batteries are cheaper. We cannot let EVs become more expensive. But we also cannot afford to create new dependencies.” For this reason, the Commission “will explore direct support for EU battery producers.” Nevertheless, it will be linked to conditions which, at first glance, could be somewhat similar to the requirements of the Inflation Reduction Act in the US by gradually introducing European content requirements for battery cells and components.

There is no precise timetable for such a support program or the implied backdoor for the 2035 regulation yet. It is thus still unclear how all the plans will be implemented and the targets achieved if, on the one hand, manufacturers are given a little more time to achieve their 2025 CO2 targets and, on the other hand, there is renewed discussion about technological neutrality without a clear expansion and funding strategy for fuels such as hydrogen and e-fuels.

In other words, von der Leyen is trying to be all things to all people, an approach that often leads to no one being happy. We can debate the wisdom of relaxing the 2025 exhaust emissions targets until the cows come home. On the one hand, it is good to keep the economy from sliding into a recession; on the other hand it is also good to maintain the Earth as a planet that is hospitable to human life. It isn’t easy being green, especially when the best of intentions collide with the realities of economic and political life. In the end, the Earth won’t wait for new technologies or grand pronouncements by political leaders. Humans have a limited time to learn how to live without fossil fuels and in the end, nature will grant us no time outs, no pauses, and no do overs. We have been warned. What we do with that warning is up to us.