Germany and France Propose Loosened EU Vehicle CO2 Targets with Industrial Protection Measures
Germany and France propose easing EU vehicle CO2 emission standards by 2035, allowing limited combustion engine sales and tightening local production subsidies, sparking mixed reactions.
Key details
- Germany and France propose relaxing the EU's 2035 car CO2 emission reduction targets from 100% to 90%, allowing combustion engines without offsetting for remaining emissions.
- The compromise includes stricter 'Buy European' rules limiting state subsidies to vehicles produced within the EU and potentially the UK.
- Environmental groups and some politicians criticize the deal for slowing electric vehicle adoption and weakening climate goals.
- The proposal aims to balance climate ambitions with competitiveness and technological neutrality, receiving support from the FDP.
Germany and France are moving towards a significant compromise regarding the European Union's stringent CO2 emission reduction targets for new vehicles in 2035. Chancellor Friedrich Merz and President Emmanuel Macron have proposed relaxing the current requirement for a full 100% reduction in fleet emissions, suggesting a 90% cut by 2035 that would allow manufacturers to sell combustion engine vehicles responsible for the remaining 10% of emissions without needing offsetting measures.
This proposal would give carmakers more flexibility compared to the European Commission's plan, which mandates compensation for any residual emissions through CO2-neutral technologies or offsetting via green steel use. The German-French draft ahead of EU-level negotiations contrasts with earlier positions, as it removes the stricter absolute ban on combustion engines and enables petrol and diesel cars to continue appearing in the market as long as fleet averages comply.
Alongside the eased CO2 limits, the compromise involves tighter "Buy European" provisions restricting state subsidies and purchase premiums to vehicles manufactured within the 27 EU member states, and potentially including the UK. This industrial policy concession marks a shift from Germany’s previous preference for broader supply chain considerations outside Europe.
The deal aims to balance ambitious climate goals with the competitiveness and technological development of the European automotive industry, acknowledging challenges in transitioning to electric mobility. However, it has drawn criticism from environmental groups and some politicians; Transport & Environment Germany warns the concession risks slowing electrophile adoption and undermining Europe's supply chains, while SPD MEP Tiemo Wölken questions the climate adequacy of the softened targets. Conversely, the FDP has expressed support for this more flexible, technology-neutral approach, viewing it as more pragmatic and beneficial for manufacturers and suppliers.
As negotiations continue in the European Parliament and Council, this German-French compromise could reshape voting alignments and the future regulatory landscape, profoundly influencing long-term investment decisions in automotive powertrains and production infrastructure across Europe.
Source articles (2)
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verkehrsrundschau.de Oct 16, 2026
Deutschland und Frankreich planen Verbrenner-Kompromiss
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electrive.net Oct 16, 2026
„Auto-Paket“: Was Frankreich und Deutschland bei den CO2-Zielen vorschlagen
Source comparison
Status of agreement
Sources report different statuses of the agreement between Germany and France.
verkehrsrundschau.de
"a final agreement has not yet been reached according to German government sources."
electrive.net
"Germany and France have come to a preliminary agreement regarding the EU's CO2 targets for vehicles."
Why this matters: One source states that a final agreement has not yet been reached, while the other suggests a preliminary agreement has been made. This difference affects the understanding of how close the two countries are to finalizing their proposal.