The decarbonisation of road mobility and the future of the European car industry in light of the Euro 7 debate (October 10)

Speakers: Ruiz Rodrìguez Alberto, Marinescu Marian-Jean, Krajinska Anna
Moderator: Keating Dave

On the 10th October 2023, PubAffairs Bruxelles organised an evening of discussion on the decarbonisation of road mobility and the future of the European car industry in light of the Euro 7 debate with Mr Alberto Ruiz-Rodriguez, Industry Attaché, Spanish Presidency of the Council of the European Union; Mr Marian-Jean Marinescu MEP (EPP/RO), ENVI Vice-Chair; Ms Anna Krajinska, Manager, Vehicle Emissions and Air Quality, Transport & Environment and Dr Johannes Schmid, Head of Emissions and E-Mobility Policy, BMW Group.

The debate was moderated by Dave Keating, Brussels correspondent for France 24.

Dave Keating opened the event by introducing himself and welcoming attendees. He provided context for the Euro 7 debate and the policy initiative at large, which, he explained, aims to bring all vehicle types under a single set of rules, while also particles shed from brakes and tyres are now to be regulated for the first time in order to reduce pollution and improve air quality. Although there has been widespread consensus on the necessity to improve air quality standards and combat climate change, especially in transport, this legislative action has remained controversial both within and outside EU institutions from the outset, the moderator said. With this in mind, Dave Keating touched upon the questions of what could be expected from the European Parliament’s upcoming vote on the file and what could the European Council’s general approach entail for the European Parliament vote, as well as how EU institutions would be able to find a common ground. The moderator then introduced Alberto Ruiz-Rodriguez, Industry Attaché for the Spanish EU Presidency, who held a keynote speech.

Alberto Ruiz-Rodriquez opened his keynote speech by highlighting the fact that Euro 7 must be seen in the context of the overall framework of recent proposals introduced to regulate vehicle emissions which, among other things, established a 100% CO2 emission reduction target for new cars and vans by 2035, while addressing other polluting elements such as tyre abrasion and battery life.

He also specified that this is a crucial aspect for the preparedness of the EU industry, while noting that other internal combustion vehicles such as truck, buses and heavy-duty vehicles would not have the same restrictions and will continue to be produced after 2035. Due to road transport still being a major contributor to air pollution, a significant part of the EU’s urban areas is being exposed to pollutant concentrations above recommended limits, Mr Ruiz-Rodriguez emphasised. He then stated that this proposal was long awaited to bring light and heavy-duty vehicles’ emissions under a single legislative act. 

Subsequently, he drew attention to the necessity for car manufacturers and suppliers in Europe to make investments in order to comply with new legislative requirements to reduce emissions, while, at the same time, ensuring a cost-effective production and meeting consumers’ demands. In this connection and in light of raising energy costs and raw materials shortages, he highlighted the importance of finding a common ground between the need to both improve air quality and the importance of keeping the EU automotive industry competitive on the global stage. The speaker expressed his personal belief that the EU Council’s position struck the right balance between more stringent vehicle emission requirements and additional efforts for the industry, at a time when European car manufacturers are in the midst of a transition towards zero-emission vehicles production.

He then outlined what the compromised text of the EU Council entailed and highlighted that there has been a broad support for the “general approach”. The speaker subsequently explained that the Council institutional stance consists of including stronger testing conditions and emission limits for heavy duty vehicles, while emission limits for light duty vehicles would remain roughly similar to those laid down in Euro 6. Regarding the ‘onboard monitoring system’, for which some actors had asked for it to be set aside, the EU Council has kept this feature in the text, as it has not been recognised as detrimental to road safety, he added.

The speaker also explained that the EU Council has also substantially agreed with what the European Commission proposed in relation to brake particle emissions and tyre abrasion emissions, as well as battery durability. However, the same polity suggested new application dates of the Euro 7 regulation, compared to the European Commission’s proposal, for both light and heavy-duty vehicles, as well as systems, components and separate technical units to be fitted on those vehicles.

Mr Ruiz-Rodriguez concluded his speech by saying that the EU Council awaits with interest for the European Parliament to conclude its report in order to be in the position to start trilogues later this year, adding that the two co-legislators will need to consider the view of both EU institutional and non-institutional stakeholders alike in the next stage of negotiations.

The moderator then moved on to the panel debate, with the first question being directed at Marian-Jean Marinescu MEP concerning the possible outcomes in the Parliament for this discussion.

Marian-Jean Marinescu MEP stated that he could not predict in advance the position the European Parliament will eventually adopt, however, he added that he foresaw the outcome of the vote after several alternative compromises would be proposed. He also said that the issues at stake are more or less the same as that discussed in the EU Council, including the question of the timeline to apply Euro 7 standards.

Mr Marinescu MEP continued by highlighting that, instead of creating a new obligation for testing, a better option would be to focus on alternative fuels. On a similar note, he believed that that standards outlined in Euro 6 are optimal as authorities and manufacturers will not have to invest as much, compared to what is expected from them with the proposed Euro 7 standards.

The speaker then remarked that the discussion in the European Parliament on emissions themselves is ongoing without a prevalent opinion on whether they should be nearer to the Euro 7 proposal or the current Euro 6 standards. He also mentioned that there would be a large part of delegated and implementing acts before the implementation of new legislation could begin.

As a conclusion to his reply, Mr Marinescu MEP welcomed the idea that manufacturers would have the possibility of using carbon neutral fuels in their vehicles and keep the combustion engine “alive”, as introduced by the compromise proposed by the European Parliament’s rapporteur on this file. 

Dave Keating subsequently asked Anna Krajinska about her expectations for the file and what she thought of the way institutional stances were shaping up in the EU Council and the European Parliament.

Anna Krajinska began by reiterating the reasons why the regulation was needed in the first place, mentioning the continued high levels of air pollution across Europe and the dire effects they are having on citizens’ health. The speaker continued by noting that more than 90% of the EU population is living in areas in which pollution is extremely high, exceeding the WHO guidelines on air policy and by adding that road transport is unarguably the main contributor.

To combat this phenomenon, she emphasised the necessity to provide robust emission-cutting standards for all vehicles as the ones currently in place were set twelve years ago, they are now outdated and are even superseded by those in both the US and China. She also added that there are still several loopholes on testing left over from the Euro 6 legislation, for example, when vehicles accelerate or in function with hot weather, as emissions are often exceeding the limits set by current tests.

While expressing her belief that the European Commission’s proposal was not the most ambitious regarding standards, she also emphasised that it was an improvement compared to Euro 6. However, she also found the EU Council’s compromised text very disappointing, especially in relation to cars and tailpipe pollution, and took issue with the possibility that Euro 6 vehicles would be simply ‘greenwashed’ as Euro 7 ones.

In this connection, Ms Krajinska hoped that the European Parliament’s outcome would be more ambitious, especially as Europe prepares to transition to e-mobility and slowly phasing out internal combustion engines. She also opposed the inclusion of e-fuels into Euro 7 as several researches have shown that we cannot rely on this technology to cut pollution. She ended her speech by stating that Euro 7 is, in her opinion, the last chance to cut pollution for internal combustion cars.

The moderator then posed a question to Johannes Schmid regarding the potential impacts of the Euro 7 for the car industry, as per the European Commission proposal.

Johannes Schmid firstly welcomed the opportunity to provide a car manufacturer perspective on the Euro 7 file and started his reply by saying that BMW is committed to a technology-open approach in order to cut down CO2 and all other pollutant emissions, however, he also added that he strongly believed in the possibility to further develop the combustion engine, so that it has a reasonable positive impact on emissions.

He then stated that he found the European Commission’s proposal surprising regarding tests as they would provide a minimal impact on emission cutting, while making testing procedures virtually impossible and added that, in some parts, the proposal also risks to increase legal uncertainties. On the same note, he expressed satisfaction on the fact that both the EU Council and the Parliament have been considering changing these and other critical questions.

Subsequently, Dr Schmid also took issue with the timeline concerning the implementation of Euro 7 rules, due to the fact that the industry, in this instance, would need one year to test a procedure and two years to develop the final product. Dr Schmid concluded by saying that BMW strongly believes in a reasonable but effective Euro 7 legislation to cut down emissions, so that combustion engines can have a chance to become cleaner until other options become available after 2035.

Dave Keating subsequently welcomed questions from the audience, with the first one going towards Alberto Ruiz-Rodriguez, namely the manner in which he believed that policymakers and the automotive industry could best work together so the cost of this transition does not largely fall on the consumer.

Alberto Ruiz-Rodriguez welcomed this question and its relevance as it has been a matter that the EU Council has been trying to tackle throughout the negotiation process. He then acknowledged that when more stringent requirements are proposed for manufacturers, there is a risk that the cost will be borne by the consumers. However, he also stressed that the EU Council was trying to avoid such an outcome, especially if it would lead to both unnecessary financial burdens and consumers keeping their older vehicles without being able to change them. Mr Ruiz-Rodriguez also said that it is in the best interests of EU member states, the industry and European co-legislators alike to keep the costs at a reasonable level, while trying to reach the overall objectives of the Euro 7 proposal.

By considering that the issues being discussed have a high level of technicality that could be exposed to manipulation or simply misunderstood, Dave Keating asked what actions the auto industry can take in order to make the decarbonisation process transparent for consumers.

Johannes Schmid stated that consumers are of the most importance and acknowledged that they may not understand several obligations regarding vehicles’ tests, such as those in extreme conditions. He reported that BMW has been in the process of examining what was actually necessary regarding testing procedures. He also went through what was proposed as necessary within a vehicle, such as catalysts and devices for emission reduction and sensors within exhaust systems. With regard to sensors, he emphasised that their employment can also be difficult or costly to repair. Dr Schmid then outlined the extra expense that these technical additions would bring and highlighted the hurdles for the engineering of such products so that they are long lasting and easily repaired. The speaker eventually remarked the importance of ensuring that all parts of the vehicles with Euro 7 standards should last a lifetime in order for consumers not to feel the effects of excessive legislation.

Similar to the question posed to Johannes Schmid, the moderator asked Anna Krajinska how she believed there could be an assurance that the technical aspects of the file do not disorient consumers and what was her view on the narrative underpinning the Euro 7 debate.

Anna Krajinska acknowledged that the Euro 7 file is technical and complicated, while expressing the opinion that the automotive industry has not informed citizens correctly by publishing studies that have been severely criticised in their core content and have, in some instances, uselessly alarmed consumers.

She also stated that what Euro 7 is trying to achieve is to tackle the conditions that Euro 6 failed to address and added that, according to studies carried out by the European Commission and the Association of Emission Control by catalyst, the cost of a robust Euro 7 would actually be minimal on consumers, namely roughly up to 200€. She subsequently added that studies carried out by Transport & Environment found that citizens across Europe would be willing to pay up to 500€ extra per car, if it allowed their car to be less polluting.

The speaker also drew attention to the fact that, while the car industry is undergoing its transition to e-mobility, it is still making record profits. Hence, she stated, the industry cannot blame a lack of resources for not producing vehicles which are less polluting.

The moderator then asked Marian-Jean Marinescu MEP to weigh in on whether he thought that there was some misinformation circulating around the Euro 7 file and what were the most important technical changes that consumers and citizens need to be aware of.

Marian-Jean Marinescu MEP replied by stating that, while transport plays a valuable part in emissions, it also plays a valuable part in mobility, which is a central economic and societal question for EU citizens, as well. He added a personal anecdote, given that he has been a person who had lived during the times of the Iron Curtain, when he was unable to drive his car for certain months of the year because it was considered “too cold” or “too dangerous”, and highlighted the impracticalities of this imposition.

He subsequently recognised the value of having ambitious targets, but also to apply a realistic logic in relation to emissions. On the topic of the improvements needed in technology to apply Euro 7, Mr Marinescu MEP questioned that when changing software and temperatures for vehicles, interoperable catalysts were not introduced, although it would have been easier for manufacturers to install them. He also added that, when considering profits, the entire vehicle production value chain must be taken into consideration.

Regarding the technical terminology and consumers’ understanding, he stated that it is of primary importance for them to ensure that they can drive safely and emit less emissions, while keeping cost efficiency in mind, as, for most citizens, a vehicle should not become a luxury, but a means that they can use in their daily life.

The MEP also questioned some conclusions on costs provided in the European Commission impact assessment and added that a further increase in vehicle price would not be welcomed by EU citizens. To reply to Ms Krajinska on air pollution, as an anecdotal metaphor, the MEP pointed out when he hears about how many potential diseases are in the air, it worries him because of his age. He eventually highlighted the need to find an appropriate balance between reducing the effects of pollution and climate change, while ensuring Europe’s growth and jobs.

The moderator asked for the reaction of Johannes Schmid on the belief that there are misleading figures and also that the Euro 7 goals may be too ambitious. 

Johannes Schmid acknowledged that the European Commission’s impact assessment stated that the additional cost of Euro 7 would be around 200/300€ per vehicle, while pointing out that the industry carried out its own assessment and estimated that the cost would actually be around 2000€ per vehicle. He then outlined where these additional costs were coming from, namely due to the development of new technology for disks, surface coatings, additional parts for brakes, new sensors and catalysts, all needed to meet the proposed standards.

Against this backdrop, he stated that there needs to be a change in approach regarding the testing enshrined in the original Euro 7 proposal, as the benefit might be negligible and the cost for both producers and consumers would be quite high, especially by considering that several parts needed would not last the entire lifetime of a vehicle. Dr Schmid echoed Mr Marinescu’s MEP sentiments when looking at the bigger picture, as regulations need to be balanced out as, he concluded, while it is good to be ambitious, the standard cannot be unfeasible or unrealistic.

The moderator then acknowledged that the Euro7, along with other transport-related files, was becoming quite a heated issue and questioned Anna Krajinska on how she thought the political context would affect talks going forward over the next months.

Anna Krajinska stated that, while some interest groups were trying to derail the progress that Europe has made in terms of CO2 standards and electrification in transport, what it is essential to be clear on, is that to secure the EU’s industrial future and the prosperity of European citizens, also entails being at the forefront of the transition towards electric mobility. She compared the European approach to that in the United States, whereby the Inflation Reduction Act (IRA) provides financial and policy support for the manufacturing of batteries for electric cars, as well as with that of China, which has notably a solid industrial policy in this area.

Against this backdrop, she added, if Europe were to slow down now, the old continent risks losing the electric mobility transition race, while highlighting again that it is critical for EU economy not to lose this opportunity. She also underscored the important role that truck makers can play in upcoming CO2 standards setting, currently under review, in which the European industry has the opportunity to play a significant role in technology advancements.

She subsequently stated that backpedalling on emission reduction commitments now by putting forward fake solutions would not deliver on the decarbonisation that both the EU economy and the industrial leadership need to deliver.

In light of Ms Krajinska’s points of discussion, the moderator then asked Marian-Jean Marinescu MEP how he viewed the US and EU approaches on transport, specifically when it comes to the subsidy and tax break-based approach that Washington is pursuing with the Inflation Reduction Act (IRA).

Marian-Jean Marinescu MEP elaborated on the comparison between the US and Europe by stating that the IRA provides valuable financial means to produce technologies and alternative ways to reduce emissions, whereas, in Europe, we are setting targets without properly addressing the question of innovation technology and the associated industrial base. On the same note, he criticised the Net Zero Industry Act (NZIA) by stating that the funding for developing the technologies listed are simply insufficient. Regarding the suggestion that member states could help manufacturers to provide subsidies to citizens to cut emissions, the MEP noted that this would be an extra cost falling on the taxpayer.

He also questioned the supply of China’s produced electric cars on European markets and the risks associated to this process, with special regard to the lack of transparency of the Chinese government. He once again remarked the importance of needing to find a balanced approach to protect human health and the planet, while finding measures that would ensure the European competitiveness.

The moderator questioned Alberto Ruiz-Rodriguez on whether the EU Council had carried out an impact assessment in relation to the Air Quality Directive that is coming in parallel to the Euro 7 regulation.

In response to this question, Alberto Ruiz-Rodriguez stated that the EU Council is unable to carry out impact assessments, as only the European Commission is entitled to produce them. He also acknowledged that it was unfortunate that several proposals which are interconnected, including the Air Quality Directive, are being discussed at different times, as the combined impact of all of them could not be immediately assessed. However, he also highlighted that the CO2 standard emission proposal is already in place.

He added, that, in his opinion, while having ambitious targets on health and the planet is a positive note, EU institutions have also to take into account cost-efficiency by evaluating the effects that new measures would have for consumers.

Marian-Jean Marinescu MEP added to this point that, since the onset of the European Green Deal, his political group has asked for an overall impact assessment of the initiative, as all proposals regarding the green transition are interconnected. He then gave the example of the EU Climate law, according to which the energy mix in Europe in 2030 is expected to be composed of around 65% renewables, 16% nuclear energy and 13% gas, noting that those who advocate for eliminating nuclear and gas seem to forget that energy needs to be produced with the resources which are actually available. On the same note, he took issue on the prediction of the European Commission which foresees that, in 2030, the total need for energy in Europe will require 3150 terawatts, whereas we are currently using around 2700 terawatts. On this very prediction, the MEP doubted the European Commission target of only a roughly 10% increase of energy is realistic, if the EU economy is to be further electrified as per the targets of the European Green Deal.

The moderator then asked Johannes Schmid for his opinion on whether it would be beneficial for the automotive industry to have interconnected impact assessments.

Johannes Schmid acknowledged that BMW has been looking into the Fit for 55 package and the other interconnected pieces of legislation and argued that there was no clear pathway on how to provide clean energy for the transport sector. He added that the current setting of the Fit for 55 package is indeed lacking the overall means to meet the ambitious targets in several of its parts and that meeting the energy demand for the transition should be priority number one, along with charging infrastructures and electric vehicle manufacturing. He eventually stated that the question of price stability is also an issue to be addressed in order to provide a clear pathway towards the green transition.

The moderator subsequently asked Anna Krajinska on what she thought of the EU Council’s position to keep the existing test conditions and emission limits as they are in Euro 6 for passenger cars and vans, but to change the testing conditions for buses and trucks.

Anna Krajinska reiterated her earlier point, that if we were to keep the standards set out in Euro 6, then they should be called just as what they are and they should not be greenwashed by calling them “Euro 7 standards”. Indeed, she expressed the belief the application of Euro 7 is feasible and affordable and that tighter regulations applied in China and the US confirm this state of affairs. Regarding the changing of testing for buses and trucks, Ms Krajinska said that only minor aspects have been improved upon and, as a result, that the efforts will be not sufficient to drive real change. She also remarked that internal combustion trucks are poised to remain on our roads for a very long time, as per the current state of play of EU legislation.

The moderator inquired also with Johannes Schmid on whether we should continue to refer to standers for passenger vans and cars simply as “Euro 6”.

Johannes Schmid felt that the naming was not important, while stating that that Euro 6 is effective at cutting down emissions, along with the electrification process. He added that BMW appreciated the approach of the EU Council and that there was no need to diverge radically from what the European Commission proposed as there are several elements which, in his opinion, constitute a good foundation for the way forward. He concluded by stating that he wished to see the Euro 7 finalised as a basis to have an evolutionary approach to the electric mobility transition, rather than a revolutionary one.

The moderator subsequently moved on by inquiring to all speakers on whether targeted subsidies were necessary in order for Euro 7 standards to succeed at a national level, as well as to Anna Krajinska, on the issue of whether WHO standards on air quality are kept in proper consideration.

Jean-Marian Marinescu MEP reminded that the EU is already working on this type of investments, for example with the Next Generation Fund, but added that he would not be in favour of providing subsidies, especially for Euro 7. He further stated that, as happened in other sectors of the economy, if the industry is sure that subsidies will be available, there is a high chance that prices would still increase, resulting once again in the taxpayer covering the cost. Indeed, the MEP stated that private investments in innovative technologies would work better  than subsidies

Whereas, Jhoannes Schmid compared the EU and US approach by saying that while Europe is actually investing valuably in green technology, it is also focusing on targets and bans. Dr Schmid further added that the US Inflation Reduction Act is more effective and less bureaucratic, as well as fitter to foster new investments and innovation strategies for a zero-emission economy and society.

On the topic of subsidy possibilities, Anna Krajinska did not believe that there should be any subsidies for emission standards as they have always been driven by regulation and that it is up to car makers to adapt. She further strengthened her point by adding that when the European automotive industry sells its cars in China and the US, it has to comply with the technology required for the given emission standards. She also wished to rectify the idea that Europe is not just simply setting targets or bans, as the EU has spent billions on new technologies for the electric vehicle transition, for example by subsidising the battery supply chain.

On the question of WHO air quality standards, Anna Krajinska highlighted that it is clear from the EU Air Quality Directive that a much higher level of ambition is required in order to actually improve air quality than what is currently materialising out of the EU Council and European Parliament stances on the Euro 7 file. Otherwise, much stronger enforcing measures for cities such as low and zero emission zones will be needed in order to comply with WHO air quality standards, she concluded

The Q&A session covered the following issues: WHO standards on air pollution in relation to both the EU air quality directive and the Euro7 file, the proposed timeline to comply with Euro 7 standards for manufactures and suppliers, as well as the issue of skilled workforce available in Europe, the question of financing investing in technologies which are related to Euro 7, the question of secondary legislation after the Euro 7 is finalised, the question of why the European automotive supply industry has overall supported  the Euro 7 files as proposed by the Commission, the question of whether the Euro 7 legislation will be finalised under this legislative term, the question of legal certainty, with special regard to the EU secondary legislation, the question of greenwashing of Euro 6 standards, the question of withdrawing the Euro 7 file given that the proposal could end up being almost empty, the necessity of finalising a meaningful Euro 7, the question of battery durability for cars within the Euro 7 legislation.   

Do you wish to know more about the issues discussed in this debate? Then check out the selected sources provided below!

European vehicle emissions standards – Euro 7 for cars, vans, lorries and buses, European Commission, Public Consultation

Commission proposes new Euro 7 standards to reduce pollutant emissions from vehicles and improve air quality, European Commission, Press Release

Revision of CO2 emission performance standards for cars and vans, as part of the European Green Deal, Legislative Train Schedule, European Parliament

Euro 7: Council adopts position on emissions from cars, vans, buses and trucks, European Council, Press Release

Fit for 55 package, European Parliament Think Tank

European Green Deal: Commission proposes rules for cleaner air and water, European Commission, Press Release

Inflation Reduction Act Guidebook, White House

German car industry boss: EU is doing ‘anti-industry-policy’, Euractiv

EU car emission limits face pushback from eight members – document, Reuters

Euro 7: Direct costs 4 to 10 times higher than European Commission estimates, new study reveals, European Automobile Manufacturers’ Association (ACEA)

Proposal for a Euro 7 regulation, Position Papers, European Automobile Manufacturers’ Association (ACEA)

Euro 7 Council position: Step in right direction, but cost pressure remains high, industry cautions, European Automobile Manufacturers’ Association (ACEA)

Auto industry: European Parliament Euro 7 vote improves Commission proposal, but still falls short, European Automobile Manufacturers’ Association (ACEA)

Euro 7 Parliament vote: auto industry calls on policy makers to let realism prevail,  European Automobile Manufacturers’ Association (ACEA)

Euro 7: A missed opportunity and a gift to carmakers?, Transport & Environment

Euro 7: Letʼs make it count, Transport & Environment

Carmakers are hiking the prices of small cars far above inflation, Transport & Environment

Carmaker greed exposed: Manufacturers make record profits but fight €150 pollution fixes, Transport & Environment

Proposed Euro 7 emission limits could prevent over 7,200 deaths in Europe by 2050, ICCT, International Council On Clean Transportation

EU set to demand e-fuel cars have no climate impact, Reuters