EU offers carmakers two-year relief to meet CO2 targets, keeps 2035 goals unchanged

The European Union's drive for cleaner air with progressively stronger vehicular emissions standards has seen a landmark development. Following the retention of the stringency of the final targets, the manufacturers have been granted an important lifeline to meet future CO₂ reduction targets, a move that offers relief in the short term but keeps long-term pressure firmly in place.

Extended timelines for CO2 cuts

In a major ruling, the European Parliament has approved a proposal permitting carmakers to achieve their CO2 emission targets on an average over the period 2025–2027, instead of a strict deadline by the end of 2025. This gives the industry a two-year buffer. The target itself, starting this year, requires a 15 percent decrease in fleet-wide average CO₂ emissions for the 2025–2029 period over the 2020-2024 baseline, with an average of 93.6 g/km.

The EU's roadmap doesn't stop there. From 2030, an even more stringent fleet-average of 49.5 g/km will be imposed, leading to an ambitious, if not revolutionary, 0 g/km goal by 2035. Although this does not categorically ban internal combustion engine (ICE) vehicles, it significantly opens the way for electric cars, unless rival technologies such as synthetic fuels or hydrogen combustion engines become widely available over the next decade.

This extension has undoubtedly been welcomed by major auto groups. Volkswagen, for instance, had anticipated potential fines of around €1.5 billion for not meeting the original 2025 deadline. Similarly, Stellantis had warned of potential production cuts to diesel and petrol vehicles, and Renault's leadership had projected collective industry fines reaching a staggering €15 billion.

The Indian Perspective: Navigating a Parallel Path

From an Indian perspective, the recent European Union timeline revision of its strict emission norms, although limited to its member states, offers a number of important observations. European standards have been the touchstone for India's own emissions norms in the past, and with the country's next iteration hopefully Bharat Stage VII (likely to be borrowing from Euro 7 regulations), the pragmatic strategy of implementation that the EU employs, which grants flexibility of timing, might deeply influence Indian policy.

This thought is especially poignant considering India's own history where the auto industry undertook significant investment and pressure to make quick improvements for the transition to BS-VI. Also, for Indian auto component manufacturers and vehicle exporters exporting to the European market, this extension provides a temporary respite.

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