German industry gears up for its next lobbying battle: the internal combustion engine

As Munich hosts the International Motor Show, German industry associations prepare to push the next German government to fight for the combustion engine in Brussels. EPA-EFE/SASCHA STEINBACH

While German carmakers unveil their latest electric vehicles at the International Motor Show in Munich, the industry associations they are members of have made their position clear: the next German government must fight for the internal combustion engine at EU level.

In the coming weeks, EU legislators will start deliberating a European Commission proposal that would de facto impose a ban of the production of new petrol- or diesel-powered cars as of 2035.

The EU proposal was tabled on 14 July as part of a wider package of climate and energy legislation aimed at cutting the bloc’s emissions in half by the end of this decade and reach net-zero by 2050.

At present, EU-produced cars are allowed to emit 95g of carbon per kilometre. This will be scaled back by 55% by 2030, moving to 0g in 2035. Vans, which are permitted 147g/km, will face a 50% reduction by 2030, but must also be emissions free by 2035.

“Stronger CO2 emissions standards for cars and vans will accelerate the transition to zero-emission mobility,” the EU executive said when it presented the new measures in July.

EU signals end of internal combustion engine by 2035

Sales of new cars and vans that produce carbon emissions will be banned as of 2035, proposals tabled by the European Commission revealed on Wednesday (14 July), a move which all but guarantees that the era of the internal combustion engine (ICE) is drawing to a close in the EU.

But while German carmakers like Volkswagen and Daimler have embraced the shift to electric mobility and even aim to pre-empt it, industry associations BDI and VDA have started pushing back.

“It is important to decarbonise the [transport] sector in a way that is open to all technologies … instead of effectively putting an end to the combustion engine,” said Siegfrid Russwurm, head of BDI, in an interview with Deutschlandfunk on 1 August.

BDI is a broad industry association comprising 100,000 companies and 8 million employees in numerous sectors while VDA represents German car manufacturers and their suppliers. Their members include part markers like Bosch, which stand to suffer the most from the phase out of the internal combustion engine.

“This is hostile to innovation and the opposite of technological neutrality,” said Hildegard Müller, the chief of VDA, in reaction to the Commission’s proposal.

Both associations have close connections to the German government. Müller was a member of Angela Merkel’s cabinet in the 2000s, illustrating the influence of the auto industry, according to Malte Kreutzfeldt, editor at taz, the German newspaper.

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Volkswagen chief executive Herbert Diess said Monday (6 September) it was “impossible” for the German car giant’s electric transformation to happen any faster, but he accused Angela Merkel’s government of holding back change with generous diesel subsidies.

Technology neutrality

The rallying cry of German industry associations is their demand for policymakers to be “open to all technologies”. For the VDA, that means plug-in hybrids, hydrogen powered cars, hydrogen fuel cells and synthetic fuels.

BDI, for its part, is a big supporter of synthetic fuels, also referred to as e-fuels because they are generally produced from electricity. Assuming the electricity comes from renewable sources, it would allow traditional cars to run virtually carbon-free, say e-fuel backers.

And yet e-fuels were dismissed by the European Commission, which has prioritised electrification in its July proposal, they complain. “Combustion engines with e-fuels are regulatorily effectively excluded, as they are treated like fossil fuel powered vehicles,” said Ralf Diemer, head of the eFuel Alliance, a synthetic fuel lobbying group.

“The end of the combustion engine must not mean the end of e-fuels,” added Hartmut Rauen, deputy executive director at VDMA, the German mechanical engineering association. With its CO2-cutting plan for cars, the European Commission risks halting e-fuel development and cause massive job losses, he warned.

A VDMA insider who asked not to be named told EURACTIV that parts suppliers in the German car sector felt politically ignored, because bigger brands like Volkswagen and BMW get all the political attention. In contrast, VDMA members are mostly SMEs, which are often not known to the wider public.

The European Commission, for its part, insists that its proposal is technology neutral. Should carmakers produce a petrol car that emits no CO2, it would be permitted under EU rules, said an official who was briefing the press before the July proposal was tabled.

Whether German lobby groups will prevail remains to be seen, but their track record suggests they stand a chance.

In 2013, pressure from the car industry led Berlin to intervene heavy-handedly in order to sideline green cars legislation. Diplomats at the time spoke of a “veiled threat” by Berlin against Ireland, which was applying for EU bailout money in the aftermath of the 2010 euro zone debt crisis. “In this case it has mostly been threats and intimidation and you can’t fight that. People do what you ask only out of fear,” one European diplomat said at the time.

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German industry associations are notorious for their influence on the federal government in Berlin, which in turn has shaped policies at EU level. 

Their influence in Brussels was exposed in the early 2000s during the negotiations on chemical safety rules, with the German industry association VCI pushing back against the landmark REACH regulation by invoking its impact on small and medium-sized companies.

“German lobby groups play a powerful role in both Berlin and Brussels,” says Vicky Cann, a researcher at Corporate Europe Observatory, a campaign group. 

“Too many German and EU policy-makers are prepared to deliver on their lobby demands for light-touch regulation and minimal disruption to their business models,” she added.

Following the REACH saga, the long-time minister president of Bavaria, Edmund Stoiber, was appointed in Brussels to chair the EU’s “High level group on administrative burdens” whose mission was to advise the Commission on making sure legislation did not unduly impact SMEs.

Stoiber retired in 2015 after eight years spent fighting what he described as the Brussels bureaucracy “Moloch”, bent on imposing red tape on the continent’s small companies.

Edmund Stoiber: 'I have changed the EU'

Former Bavarian leader Edmund Stoiber was the EU’s “Mr Red Tape”, retiring after seven years of trying to reduce bureaucracy in the bloc. Before presenting his final report, he spoke of a “change of consciousness” in Brussels and called on member states to do their share to cut excessive regulation. EURACTIV Germany reports.

[Edited by Frédéric Simon]

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