CARS AND CO2: EUROPEAN UNION REVIEWS SANCTIONS FOR MANUFACTURERS
The European car industry is facing a profound transformation, between the need to reduce CO2 emissions and the challenges of global competition. To support the competitiveness of the sector, the European Commission has proposed an amendment to the rules on sanctions for car manufacturers, introducing a three-year reporting period instead of one year. This measure could be a major relief for car manufacturers, already struggling with falling demand and new trade barriers.
A strategic shift for producers
The European Commission has announced a proposal to amend the system of sanctions for car manufacturers that do not comply with emission limits, introducing a significant change in reporting. Under the new proposal, producers will no longer have to report annually on the achievement of environmental objectives but over a three-year period. This measure could represent a strategic advantage for European car manufacturers, who are facing a period of economic and regulatory difficulties.
Global challenges for the automotive industry
The review of the legislation comes at a crucial time for the European car industry, which is facing significant global challenges. Declining demand in China and the US’s planned 25% tariffs are putting pressure on the sector, making it even more urgent to adapt to carbon-neutral targets without compromising business competitiveness.
Emission targets and sanctions
Currently, emission standards require every new car sold in the EU to reduce its carbon footprint from 116 grams of CO2 per kilometre to 93.6 grams. Failure to comply with these limits leads to significant penalties: about 2,400 crowns for each gram of excess CO2 per vehicle produced. This regulatory rigidity, according to Luca de Meo, president of Renault, could result in fines of up to 15 billion euros for European car manufacturers.
Dialogue with the European Commission
The President of the European Commission, Ursula von der Leyen, acknowledged these difficulties and launched a strategic dialogue with automotive leaders as early as January 2025. The results of this comparison will be presented by the European Commissioner, Apostolos Tzitzikostas, and the proposal to amend the emissions reporting system is part of this regulatory review. However, according to some experts, these interventions should have come much earlier. Petr Knap, an analyst at EY, points out that a structured dialogue with the automotive industry should have been in place for at least a decade to ensure a smooth and effective transition.
Impact on financial markets
The Commission’s announcement had an immediate impact on financial markets, with a rise in shares of major European car manufacturers. At 15:00 on the day of the announcement, Volkswagen recorded a 5% increase, BMW 2% and Mercedes-Benz 2.75%.
The role of the Czech Republic
The Czech Republic is also pushing for further changes to its regulatory system. The Czech government has proposed to the European Commission that the assessment period for emission targets be extended to five years, in order to reduce the burden on car manufacturers and ensure greater stability in the sector. Czech Prime Minister Petr Fiala pointed out that the sanctions planned for 2025 could undermine the competitiveness of the European car industry, which accounts for 7% of EU GDP and employs some 13 million people.
In conclusion, the changes proposed by the European Commission represent an attempt to balance the need to reduce CO2 emissions with maintaining the competitiveness of the automotive industry. Easing sanctions and extending the reporting period could give car manufacturers room to invest in innovation and meet global market challenges. However, it remains to be seen whether these measures will be sufficient to ensure the transition towards sustainable mobility without penalising the economic sector which is a fundamental pillar of the European economy.
Sources: https://www.seznamzpravy.cz/
