EU Commission to grant car makers leeway on this year's climate targets

Ursula von der Leyen said the commission would grant carmakers three years to hit carbon dioxide emissions targets that were originally set for this year

EU Commission president Ursula von der Leyen said the changes would mean carmakers can miss the emissions target this year as long as they outperform in the next two.

EU Commission president Ursula von der Leyen said the bloc would grant carmakers a three-year window in which to hit carbon dioxide emissions targets that were originally set for this year.

The targeted amendment to give the auto sector flexibility under the 2025 emissions rules will be proposed later this month, according to Ms von der Leyen. In effect, the changes will mean carmakers can miss the target this year as long as they outperform in the next two.

Shares of European automakers including Volkswagen, Mercedes-Benz Group and Renault jumped following Ms von der Leyen’s remarks, sending the Stoxx 600 Automobiles & Parts Index up almost 3% in intraday trading.

“Instead of the annual compliance, companies will get three years on the principle of banking and borrowing,” she said on Monday in a press briefing. 

The targets will stay the same but it means more breathing space for industry and more clarity, without changing the agreed targets.

Europe’s carmakers have pushed to change the 2025 goal after an electric vehicle sales slump last year, which made it more difficult to hit the target and may have entailed billions of euros of fines.

While the move will provide some respite — Volkswagen had warned it was on the hook for a €1.5bn hit due to the rules — other companies like Volvo have called on the commission to stick to its goals to help provide regulatory certainty for those who have already invested heavily in new technology.

Less than two hours before Ms von der Leyen’s comments, Volvo said adjustments to the rules may delay the shift to electric vehicles.

Set years ago, the EU standards gave the industry plenty of time to prepare and several mechanisms to comply, Volvo chief executive Jim Rowan said in an emailed statement.

Volvo “has made the heavy investments needed to be ready for 2025”, Mr Rowan said. “Companies like ours should not be disadvantaged by any last-minute changes to legislation.” Volvo was among the automakers poised to benefit from over-complying with the EU’s regulation.

Environmental groups also criticized the additional flexibility. The advocacy group Transport & Environment described the change as "rewards laggards" and "does little for Europe’s car industry except to leave it further behind China". 

Bloomberg