LEAK: Only zero-emission cars will win EU green investment label

Cars are responsible for around 12% of total EU emissions of carbon dioxide. [Jonbgem / Flickr]

From January 2026, all cars sold in Europe will need to emit zero grams of CO2 per kilometre in order to be considered “sustainable” under the EU’s green finance taxonomy, according to a leaked draft seen by EURACTIV.

Cars will also have to emit less than 50gCO2/km to reach the ‘do no significant harm’ threshold until end 2025 and be considered green, according to the draft EU text, which the European Commission is expected to table in the coming weeks.

Cars are responsible for around 12% of total EU CO2 emissions, according to the bloc’s statistical office Eurostat. Transport is responsible for nearly 30% of the EU’s total CO2 emissions, 72% of which comes from road transportation.

By outlining what emissions threshold is considered green, the EU hopes that private funding will be driven towards electric vehicles and accelerate the transition towards clean mobility. The move also aims at preventing greenwashing by providing investors with clear guidance on what’s green and what’s not.

“It will steer the money, not in a prescriptive way, but it will classify sustainable cars unequivocally and universally,” said Luca Bonaccorsi, from green NGO Transport and Environment. “If you have a green fund and you want to invest in cars, you need to invest in zero emissions cars”.

“At the moment if an investor wants to invest in electric vehicles, there’s only one share to buy – Tesla,” Bonaccorsi said, pointing out this will give clearer guidance to private investors about which other companies have green projects.

“The impact of the taxonomy will be pervasive,” he continued, saying he was 100% sure that clear rules on green finance will have a tangible impact and drive private funding towards zero-emission cars.

Sales of electric vehicles are increasing slowly. In 2018 the sales of plug-in hybrid electric vehicles and battery-electric vehicles continued to rise, but their share of total sales only increased by half a percentage point from 1.5% in 2017.

Among German manufacturers, Volkswagen, and to a lesser extent, BMW and Daimler, have committed to roll-out new electric car models in the coming years.

“The rapid ramp-up of electric mobility is a clear priority for us up to 2030, especially for passenger cars and light commercial vehicles,” said Hildegard Müller, President of the German car industry association VDA, who pointed that the industry will be investing over €50 billion in electromobility over the next few years.

However, the VDA said combustion engines will still play a  key role on the path to reaching climate-neutral mobility by 2050, Müller said in a press release.

This stance is no longer aligned with the Commission’s view of green cars.

Among European automakers, there are also fears that the economic impact of COVID-19 will make it even harder for manufacturers to comply with the new EU standards.

“The European Commission’s proposals on the technical sustainability thresholds could potentially have a severe impact on the auto industry’s financing opportunities in the future,” said the European Automobile Manufacturers Association (ACEA).

In fact, ACEA believes the EU’s green finance taxonomy “could make it harder for manufacturers to obtain the funding necessary to transition towards a greener mobility in the future,” said a spokesperson from the association.

According to ACEA, this could limit the deployment of technologies which they consider key to decarbonise the auto sector in the short and medium term.

With its zero-emission proposal, the Commission has put in place an “oversimplified methodology,” ACEA said, pointing to industry projections showing that low-emission vehicles aren’t expected to represent the majority of sales until at least 2030.

Carmakers have criticised the Commission in the past for using tailpipe emissions to measure CO2 output, saying electric vehicles are only as green as the electricity they’re running on.

“The eligibility of ‘low-emission’ cars and vans only up until 2025, or the taxonomy alignment of only zero tailpipe emission busses and coaches are prominent examples of how the criteria aim at rewarding certain technologies over others,” the ACEA spokesperson said.

(Edited by Frédéric Simon)

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