EU eases emission targets for cars

The European Parliament's Committee on the Environment started on 3 June 2026 the discussion of the reform of CO₂ emission standards for passenger cars and light commercial vehicles. The reform is part of the European Commission's broader Automotive Package.

The rapporteur of the proposal is Italian MEP Massimiliano Salini (EPP), amendment proposals can be submitted until 9 June 2026.

What applied until now

From 2035, the EU was supposed to have a de facto ban on the sale of new cars with internal combustion engines. The target was set at a 100% reduction of CO₂ emissions compared to 2021, i.e., zero tailpipe emissions. In practice, this meant that from 2035 manufacturers could only sell electric cars or hydrogen vehicles. The interim target for 2030 envisaged a 50% reduction in emissions for vans.

Emissions were assessed year by year and for each gram of CO₂ above the limit on each sold car a fine of €95 was threatened. With a fleet of one million vehicles and an excess of 5 grams, that represents €475 million per year.

What is changing?

1) Easing of emission targets

The emission reduction target for vans by 2030 is being eased from 50% to 40%. The target for 2035 is being lowered from 100% to 90% — for both passenger cars and vans. The remaining 10% of emissions will be able to be offset through a new credit system.

2) Credit system for renewable fuels and low‑carbon steel

Credits will be linked to the use of advanced biofuels, renewable fuels of non‑biological origin (e‑fuels), biogas and low‑carbon steel produced in the EU. Fuel credits can reduce a manufacturer's emission target by up to 3%, and steel credits by up to 7%.

3) Multi‑year averaging

Instead of annual assessment, manufacturers will be able to calculate an emissions average over three‑year periods — specifically for the cycles 2025–2027 and 2030–2032.

4) Super credits for small European EVs

By 2034, each small electric vehicle produced in the EU will be counted as 1.3 vehicles for the purpose of calculating average emissions. The aim is to support the affordable electric‑vehicle segment, where Europe is losing ground to Chinese competition.

5) Uniform labeling

The reform introduces EU‑wide labeling not only for new cars but also for vans and used vehicles sold by professional dealers. For used electric cars, a mandatory indication of the traction‑battery condition will be required. The Commission will create a public database where manufacturers must disclose information on every model.

What does this practically mean for manufacturers?

The combustion engine does not end completely

A manufacturer that sells a million cars a year can compensate roughly 10 % of them (i.e., 100 000 vehicles) with credits instead of being purely electric. That does not mean these cars do not have to meet any limits, but it opens space for plug‑in hybrids, vehicles on synthetic fuels or advanced biofuels.

Credits in practice

Imagine a manufacturer whose fleet has average emissions of 10 g CO₂/km instead of the target 0 g. If it can demonstrate that its customers refuel with renewable fuels (credit max 3 %) or that it uses low‑carbon steel from the EU in production (credit max 7 %), it can deduct these emissions. In total, the fleet can therefore not be 100 % zero‑emission and still comply with the regulation.

End of fear of one‑off spikes

Three‑year averaging of emissions addresses the situation where a manufacturer sells fewer electric cars in a given year due to a battery supply disruption or a drop in demand. Instead of an immediate fine, the deficit can be made up over the next two years. For the manufacturer this reduces risk and eases investment planning.

Super‑credits — who benefits?

A bonus of 1.3 vehicles for every small EV produced in the EU favours companies investing in affordable electric cars under €25 000 — for example Renault with the Model 5, Citroën ë‑C3 or Fiat. At the same time it disadvantages imports of Chinese small EVs, because the bonus applies exclusively to production in the EU.

Financial impact

Relaxing the targets and introducing credits dramatically reduces the risk of billion‑euro fines, freeing up capital for investment in new technologies instead of paying penalties.

Who profits — and who less

The reform benefits traditional European manufacturers with a broad portfolio (Stellantis, VW Group, BMW, Mercedes, Renault) the most, as they invest in hybrids, fuels and production in the EU. Purely electric manufacturers such as Tesla or Chinese carmakers profit relatively less — they have so far benefited from regulation that effectively required a transition exclusively to their type of product.

What it does not mean

The reform does not halt the move towards decarbonising transport. The climate‑neutrality target for 2050 remains. It is about expanding the pathways to get there: instead of a single one (full electrification), there are now several — e‑fuels, biofuels, more efficient production, low‑carbon materials.

Source: Demócrata, June 3, 2026. The reform is in the legislative process; the final version may change based on amendment proposals and negotiations with the EU Council.