17 mar 23

European Commission and Parliament unveil double boost for EVs

Tougher CO2 targets and support for green technologies should support electric vehicle sector.

Fleets can expect more support for adopting electric vehicles and higher penalties for driving fossil-fuelled vehicles, following a vote this week in the European Parliament to reduce EU member states’ emissions by 40% by 2030.

The revised law, called the Effort Sharing Regulation (ESR), increases the EU’s greenhouse gas (GHG) reduction target by the end of the decade from 30% to 40% compared to 2005-levels. It is a key element of the EU’s Fit for 55 in 2030 programme, which aims to cut GHG emissions by at least 55% by 2030 compared to 1990 levels.

The ESR’s new emissions targets will not be shared equally between countries, but depend on GDP per capita and cost-effectiveness. Denmark, Finland, Germany, Luxembourg and Sweden, for example, will have to deliver 50% cuts in their GHG emissions, while Bulgaria will only need to achieve a 10% reduction (see the full list here).

The measure is a welcome step after Germany recently blocked the ban on the sale of internal combustion engine vehicles from 2035. 

Sustainability is the key theme of the Global Fleet Conference in May - register here.

Nation by nation approach

Member states are free to choose the measures they need to meet their GHG reduction commitments.

The ESR sets country-by country binding annual reductions for GHG emissions from road transport, as well as the heating of buildings, agriculture, small industrial installations and waste management. Together, these industry sectors account for about 60% of all EU emissions. The ESR text now has to be formally endorsed by the European Council.

Rapporteur Jessica Polfjärd (EPP, SV) said: "With this law, we take a major step forward in delivering on the EU’s climate goals. The new rules for national emission cuts ensure that all member states contribute and that existing loopholes are closed. This allows us to send a clear signal that the EU is serious about being the global champion for a competitive and efficient climate agenda.”

Net-Zero Industry Act

The EU has committed to achieve net-zero GHG emissions by 2050. To support this decarbonisation objective, the European Commission this week proposed a Net-Zero Industry Act, designed to scale up the manufacturing of clean, green technologies within the EU.

The Act sets a target for EU factories to produce at least 40% of eight strategic net-zero technologies that Europe will need by 2030. These technologies include batteries and fuel cells, as well as wind turbines, heat pumps, solar panels, renewable hydrogen and carbon capture and storage.

The proposed law aims to accelerate the planning processes for green manufacturing infrastructure, increase access to finance for clean technologies, and boost training and creating jobs in sustainable industries. The measure forms part of the European Green Deal Industrial Plan — the Commission’s response to the enormous green subsidies package in the USA’s Inflation Reduction Act. The Commission wants to boost Europe’s resilience and avoid the ‘harmful dependencies’ exposed by the COVID-19 pandemic and the energy crisis driven by Russia's invasion of Ukraine. It also points out that more than a quarter of electric cars and batteries in the EU are currently imported from China.

Ursula von der Leyen, President of the European Commission, said: “We need a regulatory environment that allows us to scale up the clean energy transition quickly. The Net-Zero Industry Act will do just that. It will create the best conditions for those sectors that are crucial for us to reach net-zero by 2050.”

Jon Lawes, Managing Director of pan-European leasing business MHC Mobility (pictured above), welcomed the announcement of the ambitious targets for expanding production of batteries and other technologies critical to green mobility within the EU.

“European fleets have been facing a number of challenges, ranging from a lack of EV charging infrastructure to sustainably managing their transition alongside broader cost and inflation pressures,” he said. “The measures [in the Net Zero Industry Act] contain many of the essential ingredients for achieving net zero mobility in Europe and we could now see a rapid scale-up in the supply of EVs and charging stations across the continent.”

He added that it is now vital the Act is passed as quickly as possible, so countries can start to take full advantage of its available measures.

“It is equally critical that member states do their bit to ensure the proposals deliver on their potential. Ultimately that means putting money on the table,” said Lawes.

ACEA reaction

ACEA, the vehicle manufacturers’ association, echoed this theme, broadly welcoming the Net-Zero Industry Act, but questioning how it will translate into effective action, and especially how quickly manufacturers will be able to access essential financing to drive forward Europe’s green industry. It believes Europe has focused too heavily on regulating its way to carbon-neutrality, while other regions, such as the US, are incentivising their way out.

Images: Shutterstock, MHC Mobility

Authored by: Jonathan Manning