Once again, EU legislators take a risk on the recital clause.

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Another key piece of legislation to decarbonise transport officially passed the European Parliament today.

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The EU’s emissions trading system, the “core” of the EU’s climate policy, as Parliament’s chief negotiator Peter Liese (EPP) has called it, will be made much stricter.

In the future, it will also include shipping. And airlines will no longer get emission allowances for flights within the EU for free.

Most importantly, however, a new system will be set up for road transport, heating, and small industrial process emissions.

This appears to affect consumers much more directly than anything covered in the ETS so far (which covers stuff like steel, cement, and aluminium).

However, it also corrects an unequal burden, which could have sooner or later caused a delay in road transport decarbonisation.

While the future of cars is meant to be mostly electric, electricity generation is already subject to an EU-wide carbon price. But fossil car fuels running on petrol or diesel are not.

From 2027 onwards, this will change. The new carbon market, dubbed the “Emissions Trading System 2” (ETS2), due to a lack of more creative ideas, will put a price surcharge on those fuels.

Of course, the key question everyone asks is: How much?

But in a market-based system, this cannot be answered easily. 

“Basically, everything is possible in terms of prices,” Michael Pahle, an expert on carbon markets at the Potsdam Institute for Climate Impact Research (PIK), told EURACTIV last week.

“Precisely because we know so little about price formation in the new ETS, it is equally possible that we will have very low prices as well as very high ones,” he said. 

This sounded different – very different – to what key EU lawmakers said ahead of the vote.

Key negotiators, including Green lawmaker Michael Bloss and Socialist Mohammed Chahim, mentioned a “price cap” of €45 per tonne of CO2 (10 cents per litre of petrol and 12 cents per litre of diesel), which equals what France is already putting on its fuel prices.

“Politically, Macron has always said, he has always promised, he will cap the price at €45,” Bloss said on 13 April. 

“There is no need to already assume price increases for households,” Chahim said. 

The explanation for the gap between the statements of politicians and experts is the same legislative mechanism that has already caused a stir in the transport bubble recently: the recitals.

This non-binding part of any EU law, normally meant only to explain what is written in the actual text, has been used again to put a goal into writing which may or may not be reached.

When EU negotiators agreed on the “combustion engine sales ban”, reducing allowed tailpipe emissions to zero for new vehicles as of 2035, the goal was written into recitals that cars “running exclusively on CO2-neutral fuels” would still be allowed even after that date.

But the German government, losing trust in the recital’s power, pressed the Commission to actually come forward with a timetable on how to secure the goal.

This time, it’s the €45 price limit that is written in the recitals – and only there.

A mechanism meant to dampen prices by releasing additional allowances is included in the actual law, but this cannot guarantee the price will not go above €45.

“There is a substantial gap between aspiration and implementation”, researcher Pahle said.

So what if prices will eventually go much higher than €45?

Will Macron insist on a strict price cap, as the Germans did on the e-fuel clause?

The unsatisfactory, and the most realistic, answer is “We shall see”.

But if France does demand a strict cap, the logic behind the ETS2 becomes blurry. As Socialist lawmaker Chahim said: “Then, it would not be a market mechanism.”

– Jonathan Packroff

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China looks to solidify its position as electric vehicle leader

Carmakers from around the world are currently in China to take part in the Shanghai auto show, one of the automotive sector’s largest exhibitions.

This edition, returning after a hiatus forced by the COVID-19 pandemic, is being used by China to demonstrate its electric vehicle offerings on the global stage.

China, with a population of over 1.4 billion, is already the world’s largest market for vehicles.  In 2022 alone, some 5.4 million electric vehicles were sold, making EVs the most popular vehicle type among Chinese consumers.

And after years of languishing behind other automotive powerhouses, the nation is starting to pull ahead from the competition in mass-producing affordable electric vehicles.

Brands such as BYD and Nio are rising in the ranks of the world’s most esteemed EV companies, representing a threat to European carmakers.

“Consumers lost interest in gasoline cars. That is the biggest challenge for foreign brands to compete in China,” industry analyst John Zeng of LMC Automotive told AP News.

Having become the dominant player in the trade of critical raw materials – vital components in the creation of car batteries – China’s increasing power in EV manufacturing is yet another blow to Europe’s goal of establishing itself as the epicentre of green industry.

While the Chinese government ruthlessly set out to grow the nation’s EV production, European nations exerted time and effort to fight EU attempts to phase out the combustion engine.

Ultimately, Germany won an exception that will see combustion engine vehicles running exclusively on e-fuels available for sale after 2035 – a victory that is looking increasingly Pyrrhic.

Indeed, Europe’s traditionalist mindset often sees it fight to retain its old industries – to keep the way we’ve always done things intact regardless of global trends.

But in the race to attract green industry, old Europe is looking increasingly sluggish.

– Sean Goulding Carroll

Tap the brakes on Euro 7, pleads Volkswagen

The slow pace of EU lawmaking, a byproduct of the consensus culture of Brussels, sometimes means that implementation dates that were far off when the file was conceived are almost immediate when the law is finally implemented.

Industry is rarely pleased when given a short window in which to adhere to EU laws. And Volkswagen is no exception.

The German car manufacturer, the world’s largest, has complained that the EU’s upcoming law on permissible levels of air pollution from road vehicles, known as the ‘Euro 7’ standards, is too much too soon.

As the law currently stands, carmakers would be required to ensure that all combustion engine vehicles meet the new pollution requirements by mid-2025. But Volkswagen says that autumn 2026 is the earliest that the new rules should apply.

The manufacturer also wants to see limits on emissions of microparticles from car brakes and tyres, introduced into legislation for the first time, pushed back to an unspecified date.

In general, automakers have reacted badly to EU efforts to further rein in pollution from cars, arguing that forcing changes to combustion engine vehicles will pull resources from the transition to electric powertrains.

Given the 2035 cut-off date for the sale of new petrol and diesel cars, the Euro 7 standards place a significant engineering burden on car companies that will bring little practical benefits, it is said.

However, green campaigners don’t buy this, questioning the trade-off between air pollution and corporate profits. Polluting cars won’t disappear for decades to come, they say, meaning any effort to curtail lung-destroying emissions should be welcomed.

Lawmakers, both those sympathetic to the arguments of the manufacturers and those siding with the NGOs, will debate the Euro 7 law over the coming year, ultimately deciding when it should come into force.

– Sean Goulding Carroll

The EU’s 2035 Fossil-Fuel Car Ban Explained

To cut carbon emissions in the transport sector, new EU legislation will see petrol and diesel cars phased out on EU roads. But how was this legislation passed and what does it mean for consumers? In this video, EURACTIV takes a closer look.

‘Uber hasn’t changed,’ whistleblower says

Uber went all in to break the French taxi sector, all the while dodging taxes and keeping drivers in high levels of precarity, Mark MacGann, the Uber Files whistleblower, told EURACTIV France in an exclusive interview.

EU lawmaker bets on Macron to limit fuel price increase

Ahead of a vote on the EU’s carbon market reform, Green lawmaker Michael Bloss reassured consumers that carbon prices will not go above the €45 limit, citing a political commitment by French president Emmanuel Macron.

UK suggests restricting green jet fuel from waste cooking oil

Green jet fuel made from used cooking oil and animal fats should be restricted on environmental grounds, a recent British government consultation document has suggested, raising questions over whether the EU will follow suit.

Europe goes from leader to laggard in tackling shipping’s climate impact

To retain its reputation as a climate leader, Europe must unequivocally embrace science-based climate targets for its shipping industry, argue Faïg Abbasov and Chiara Mingozzi of Transport & Environment.

[Edited by Zoran Radosavljevic]

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