by Victoria Waldersee and Kate Abnett

BERLIN/BRUSSELS (Reuters) – Germany has opposed at the last minute a landmark European Union law aimed at ending sales of CO2-emitting cars by 2035, requiring new combustion engine cars to be authorized after this date provided that they run on synthetic fuels.

EU regulations would require all new cars sold from 2035 to be zero CO2 emissions, making it impossible to sell new cars powered by fossil fuels.

However, this law is perceived as the death knell of the heat engine, due to the lack of options allowing them to operate without producing CO2.

Germany, along with a majority of EU countries and MPs, has already backed another law that would not ban internal combustion engines.

Here is what you need to know about synthetic fuels:

WHAT ARE E-FUELS?

E-fuels, such as e-kerosene, e-methane or e-methanol, are made by capturing and synthesizing CO2 emissions as well as hydrogen produced from renewable or low-carbon electricity.

These fuels release CO2 into the atmosphere during their combustion, but these emissions should be equal to the amount removed from the atmosphere during the production of the fuel, neutralizing the CO2 emissions.

Germany and Italy want the European Union to more explicitly guarantee that sales of new internal combustion engine cars will continue beyond 2035, provided they run on low-carbon fuels.

WHO MAKES THEM?

Most major automakers are banking on battery electric vehicles. A technology already widely adopted as the main means of reducing CO2 emissions from passenger cars.

However, suppliers and major oil companies are championing e-fuels, as are a number of automakers who don’t want their vehicles weighed down by batteries.

E-fuels are not yet produced on a large scale. The world’s first commercial plant opened in Chile in 2021. Backed by Porsche, it aims to produce 550 million liters per year. Other plants are planned, including Norway’s Norsk e-Fuel plant, which is expected to start production in 2024 and focus on aviation fuel.

CAN E-FUELS CLEAN UP CARS?

E-fuels can be used in current internal combustion engine vehicles and transported through existing logistics networks for fossil fuels. This is good news for manufacturers of internal combustion engine parts as well as for petrol and diesel transport companies.

Its proponents claim that e-fuels reduce CO2 emissions from the current car fleet, without replacing each vehicle with an electric vehicle.

Critics point out that manufacturing e-fuels is very expensive and energy-intensive. According to a 2021 article in the journal “Nature”, using e-fuels in an internal combustion engine car requires about five times more renewable electricity than a battery electric vehicle.

Some politicians also argue that e-fuels should be reserved for hard-to-decarbonise sectors, such as shipping and aviation, which, unlike passenger cars, cannot easily run on electric batteries.

WHAT IS THE NEXT STEP FOR EUROPEAN LEGISLATION?

Days before the final vote on the law, which was scheduled for March 7, German Transport Minister Volker Wissing withdrew Germany’s support, putting one of Europe’s key climate change policies on hold. , with EU countries and MPs already agreeing on the law last year.

Besides Germany and Italy, countries like the Czech Republic and Poland have expressed concern over the law, raising the possibility of sufficient support to block it.

However, other EU MPs and diplomats say allowing a country to torpedo an already approved law would jeopardize other long-negotiated agreements.

The German Transport Minister, a member of the Liberal Democratic Party, said that the use of e-fuels should remain possible after 2035, and that a proposal promised by the European Commission on this subject had still not been presented.

In response, the European Commission has drafted a proposal, seen by Reuters, to allow carmakers to register new cars in the EU that can only run on climate-neutral e-fuels. This could be a first step towards allowing them to be sold after 2035.

The draft proposal states that vehicles must use technology that would prevent the car from starting if it used non-decarbonized fuels.

The International Council on Clean Transportation (ICCT) said it doubted it would be possible to check whether a vehicle runs on pure e-fuels or on a blend of fossil fuels , given that e-fuels have very similar properties to the fossil fuels they are meant to replace.

A European official told Reuters any new proposals would be tabled once countries approve the phasing out of combustion engines. The German Transport Ministry said it was reviewing the proposal.

WHAT DO COMPANIES WANT?

Major German automotive suppliers, such as Bosch, ZF and Mahle, are members of the eFuel Alliance, an industry lobby group, as are major oil and gas companies from ExxonMobil to Repsol.

Automakers such as Piech, Porsche and Mazda widely support the technology. Porsche owns a stake in e-fuel producer HIF Global.

BMW has invested $12.5 million in start-up Prometheus Fuels, while investing billions in electric battery technology.

Other automakers, including Volkswagen and Mercedes-Benz, are banking on battery electric vehicles to decarbonize. This week, Volvo and Ford called on European countries not to back down on the phasing out of new petrol and diesel cars scheduled for 2035.

(Reporting by Kate Abnett, Victoria Waldersee and Markus Wacket; Nathan Vifflin; editing by Kate Entringer)

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