Chancellor Friedrich Merz and President Emmanuel Macron have reached an agreement on a joint approach. The two countries want to reduce the mandatory CO2 emission cut from 100 to 90 percent starting in 2035. This would allow car manufacturers to continue building and selling new combustion engine cars even after that year.
Less Climate
Moreover, Paris and Berlin want car manufacturers to be exempt from compensating for the remaining ten percent of emissions. This goes beyond earlier proposals from the European Commission. Germany had long advocated for relaxation, while France previously maintained stricter climate rules.
In exchange for French support, Germany accepts stricter conditions regarding the European character of new cars. Paris wants European components and production to carry more weight in government subsidies and public procurement. In this way, both governments link climate regulations to their goal of protecting the European automotive industry.
Under Pressure
The agreement was reached during consultations around last week’s European summit in Brussels. Macron and Merz managed to bridge their earlier differences. Their joint stance may persuade other EU governments to also dilute earlier climate ambitions. Although both governments officially continue to support emission reductions, they are now abandoning the original obligation for fully emission-free new cars.
EPP
Relaxation is also underway within the European Commission. According to media reports, Commission President Ursula von der Leyen and EPP group leader Manfred Weber have reached an agreement on this matter. In the European Parliament, Weber has already announced that his EPP faction will propose rolling back many 'green' environmental and climate laws. Since the last European elections, the Christian Democrats can form a parliamentary majority with support from far-right factions.
The new Franco-German position does not yet mean a definitive change in European legislation. Further decisions by EU countries and the European Parliament are needed for that. However, the agreement increases political pressure on MEPs to revise earlier climate laws.
Competition
Last year, Commission President Ursula von der Leyen called on the European automotive industry in her State of the Union address to jointly develop and build a small, affordable European electric car. Critics say that European car brands conservatively cling to their current models, thereby losing the competition against cheaper hybrid and electric cars from Asian countries.
More European
The relaxation now advocated by France and Germany offers manufacturers more room for gasoline cars, diesel cars, and hybrids, while competition from cheaper electric and hybrid cars from Asia increases. France and Germany also want to tie stricter requirements to granting European production subsidies. Discussions are underway about requiring at least 70 percent European components, excluding batteries.
This could affect European car brands that produce cars outside the EU, for example in Turkey or Morocco. Such models risk losing some financial benefits. Thus, the discussion is not only about cleaner cars but also about where the European automotive industry builds its future.
