BRUSSELS — In a case of remarkably successful special pleading, Europe’s car industry has succeeded in watering down potentially very costly EU rules on CO2 emissions.
The effort was approved by the European Parliament on Thursday.
It’s yet another sign that the EU’s green efforts are running into growing resistance. The original idea had been to require European car manufacturers to reduce carbon emissions by 15 percent by 2025 compared to a 2021 baseline. Carmakers failing to hit the target would have to pay €95 for every gram of CO2 emitted above the limit per kilometer per non-compliant vehicle sold.
The industry warned that could amount to an eye-watering €15 billion in fines.
“It will cost resources, we’ll have to lower the price of electric cars and make discounts, destroying the [car’s] residual value,” Luca de Meo, CEO of Renault and former head of the ACEA carmaker lobby, warned last year.
Climate campaigners insisted the industry grumbling was overdone and that carmakers would be able to meet the target. But the Commission buckled under the pressure as automakers complained that green rules, plus the cost of switching to electric cars and the rising threat posed by Chinese rivals, made it imperative to take steps to save the industry.
The sector’s bottom line is now under even greater threat thanks to U.S. President Donald Trump’s car tariffs.
In April, the executive put forward an amendment that would average automaker emissions over three years instead of basing them solely on 2025. The change makes the targets much easier to meet for laggards who haven’t sold enough EVs.
The CO2 measure ended up passing easily, with 458 MEPs voting for the change, 101 against and 14 abstaining.
The Parliament’s vote was the final hurdle and the amendment is now set to be put into law. On Wednesday, member countries also backed the change.
“There’s no secret that my group has not been particularly fond of this proposal, but it is an urgent proposal,” said Mohammed Chahim of the Socialists and Democrats during a plenary debate earlier this week. “We cannot sit around and wait,” he added, citing pressure from the trade war with Washington.
But green NGO Transport & Environment complained that the Parliament had agreed to the measure despite a surge in EV sales this year.
“The boom is thanks to new, more affordable models that the carmakers launched to comply with the original EU target,” Lucien Mathieu, cars director at T&E, said in a statement. “This delay will allow the industry to take the foot off the gas for the EV roll-out while also slowing down investments.”
EV sales across the bloc increased almost 24 percent in the first quarter of this year compared to the same period in 2024, according to ACEA.
Hurting Elon Musk
While some MEPs grumbled about the walk-back, there was one silver lining: The change may hurt Tesla CEO Elon Musk.
The CO2 regulation allows automakers to pool their emissions, meaning a manufacturer that doesn’t meet its emissions goals can pay a carmaker that overshoots those targets. Such transactions have been particularly lucrative for Tesla — although its collapsing sales caused by Musk’s close association with Trump may make that provision less useful.
“We definitely don’t want the money to go to the Chinese or to Elon Musk,” said MEP Peter Liese of the European People’s Party at a press conference on Wednesday. “That is more important than a few months ago — that we don’t make the richest man in the world who terrorizes the rest of the world even richer.”
This is unlikely to be the last fight over greening the car sector.
The emissions reduction measure is part of a broader effort leading to a ban on the sale of new combustion engine cars by 2035. Multiple brands and conservative lawmakers and national governments want the ban reversed, or so thoroughly weakened as to be meaningless.
The Commission has already given some ground, agreeing to move forward the review of the legislation to the end of this year instead of 2026, but there is pressure to go even further.
Before the ink on the CO2 amendment was dry, lobbyists were already at work undermining the 2035 legislation and calling for more.
“This measure must not overshadow the broader structural shortcomings of the CO2 regulation, which affect the entire automotive sector,” automotive supplier lobby CLEPA said in a statement following the Parliament’s vote. “The current framework remains misaligned with market realities.”
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