You may not know it if you rely solely on American media, but there is a growing revolt across much of Europe against Net Zero mandates in general and electric vehicle mandates in particular.
It seems that, led by luxury carmakers, the future may be bright for the venerable internal combustion engine if new synthetic fuels technologies can produce an affordable replacement for gasoline and diesel fuels.
The revolt had been brewing ever since Europe got a wakeup call with Russia’s invasion of Ukraine that upset the Net Zero applecart and led even Germany to reopen coal-fired power plants. Still, the EU last November had struck a provisional deal on a new vehicle emissions law that would have banned the sale of internal combustion engine (ICE) vehicles by 2035.
Two months later, though, the new Meloni government in Italy began to raise objections. The forced transition to EVs has already hit the Italian auto industry with job cuts, leading Transport Minister Matteo Salvini to argue that it makes no sense to put thousands of jobs at risk when there are plenty of reasons to keep ICE vehicles on the road with a carbon-neutral fuel.
Italy’s balking opened the door for German Finance Minister Christian Lindner to switch his government’s position to demand an exception for hydrogen-derived, carbon-neutral synthetic e-fuels (produced by electrolysis with added carbon) that can power ICE vehicles. Porsche, which has invested $75 million in a pilot plant to make e-fuels, and Ferrari could preserve their rich heritage and iconic models and still comply with zero-emissions requirements with e-fuels.
German Transport Minister Volker Wissing agreed, stating that, "We need e-fuels as there is no alternative if we want to operate our vehicle fleet in a climate-neutral way. Whoever is serious about climate-neutral mobility must keep all technological options open and also use them. I don't understand this fight against the car and why people want to ban some technologies."
Polish Prime Minister Mateusz Morawiecki has long objected to the EU ban and had pledged to do “anything” to stop the “pseudo-green idea by rich countries and bureaucrats from Brussels” to ban gasoline and diesel engines. Polish families, he contended, cannot afford these expensive vehicles, and an ICE ban would cause Polish firms producing car components for well-known global brands to suffer irreparable harm.
As by simply abstaining from a final vote on the hard ICE vehicle ban, Germany could have killed the proposed EU legislation, the European Commission agreed to draft a compromise to allow the sale of ICE vehicles capable of running on e-fuels after 2035. Environmental groups objected, claiming that – because gasoline and diesel will still be available to power older vehicles – owners of e-fuel capable vehicles will cheat and fill up with gasoline.
Alex Keynes, clean fuels manager for the NGO Transport & Environment, claimed that e-fuels are too expensive to be given a seat at the table. He cited a T&E study that concluded that e-fuels would be 47 percent more expensive than petrol in France in 2030. [What he did not say was whether even that fuel cost differential would make e-fueled ICE vehicles more expensive to own and drive than lithium-battery EVs.]
Ferrari’s Benedetto Vigna scoffed at the T&E rhetoric. He expects the price of e-fuels to fall as they become more popular and that these fuels would allow carmakers to focus on producing lower cost e-fuels instead of expensive battery-powered cars that have their own limitations. Besides, suggested car industry veteran Andrew Graves, e-fuels may also be the answer for keeping older model vehicles on the road while further reducing emissions.
In the United Kingdom (no longer in the EU), former Prime Minister Boris Johnson, in a move to one-up the EU, decreed a ban on new ICE vehicles by 2030 and on new hybrid vehicles by 2035.The adoption of this modified ban by the EU is putting pressure on the British government to follow suit.
Former Tory cabinet minister Sir John Redwood urged the Sunak government to consider the fact that, “Britain is in a desperate struggle to keep its car industry, and if we insist on phasing petrol and diesel out well before anyone else, we will find it harder to attract investment. The fewer bans there are,” he added, “the better to promote growth.” Like their Italian and German counterparts, British carmakers Aston Martin and McLaren are both investigating e-fuels for their future models.
There are other reasons that these bans on ICE vehicles are impractical. Graves says there is already a risk that there will not be enough EV charging stations or battery-making plants to satisfy demand in such a short timeframe. The still-fledgling industry remains beset with performance and safety concerns – as well as concerns over the environmental and societal damage done from the mining of critical metals used in EV batteries.
Another concern is cost, and thus popularity. EV sales have fallen across Europe with the lifting of subsidies. EV sales in Germany fell by a third from January 2022 to January 2023, and the market share fell from 55 percent of all car sales in December 2022 to just 15 percent in January 2023. The EV market share in the United Kingdom and the Netherlands fell by 50 percent month-to-month.
Automakers are still losing money in their quest to build all-EV fleets. Ford reported that its U.S. EV business had losses totaling $2.1 billion, a figure expected to rise to $3 billion in 2023. Ford finance chief John Lawler said it was normal for a startup to rack up losses, but if people have alternatives, not even the Inflation Reduction Act subsidies may be sufficient to turn car loving Americans into passive drivers of vehicles they cannot repair.
Finally, Europeans may be waking up to the realities of Chinese domination of the EV market and their attempted takeover of the European [and American] auto industry as well. The largest British auto dealership, Pendragon, has agreed with Chinese EV manufacturer BYD to sell its cars in the United Kingdom.
According to Ben Marlow, the Telegraph’s chief city commentator, the Chinese plan is to flood Europe with their own cheaper EV models to undercut European automakers and increase their market share. Not only does China control the market for many EV components, the Beijing government has thrown billions of dollars in subsidies to its EV industry.
And as Italy’s Matteo Salvini so eloquently put it, EU countries need to avoid “giving China entire industries and hundreds of thousands of jobs.”
NOTE: The concern over Chinese dominance of the EV market has reached the Colonies! Just days after Interior Secretary admitted that the Biden Administration’s push for EVs will deepen U.S. reliance on China, Chase Bank CEO Jamie Dimon, in his annual letter to shareholders, warned that China’s dominance of the green energy supply chain, coupled with the Biden EV policy, will imperil U.S. national security. Yet the juggernaut rolls on unimpeded.
Duggan Flanakin is a senior policy analyst for the Committee for a Constructive Tomorrow and a frequent writer on public policy issues.
