The automotive lobby has succeeded in convincing the French government to wield its full influence with the European Commission, in order to loosen the rules for reducing vehicles’ CO2 emissions. On Monday, November 4, the French economy minister announced, in Les Echos newspaper, that he would ask Brussels not to apply the penalties for non-compliance with the new standards, which are due to come into force in 2025.
The tougher CAFE (Corporate Average Fuel Economy) standard aims to lower the average level of CO2 emissions, per kilometer and per car sold, by 15%, when compared with 2021. Manufacturers who failed to meet this target would face fines that could total up to billions of euros.
The lobbyists have argued that the electric vehicle (EV) market outlook has changed since the normative framework was first decided. After having risen sharply, sales have slowed in recent months. This downturn could force brands such as Volkswagen (VW) or Renault to abandon sales of their combustion-powered vehicles in order to lower their average, which would be detrimental to their profitability and employment rates.
France’s position on granting the industry a reprieve could be decisive, as Germany, Italy and several Eastern European countries have already voiced their concerns to Brussels about the implementation of these sanctions.
Adapted regulations
Carmakers have chosen a good time to call on the Commission to show some pragmatism, as the sector has entered a difficult period. VW is preparing to close three plants and cut tens of thousands of jobs, while many players in the sector have lowered their profitability forecasts.
However, the reality of the sector is far from uniform. Some, like Stellantis (Peugeot, Citroën, Fiat, Opel) or BMW will have no trouble meeting the CAFE standard, which proves that the regulations were tailored to the automakers’ ability to lower their CO2 emissions – they just had to do everything in their power to achieve it.
Some have preferred to sell more large, high-margin vehicles, rather than develop a range of smaller, more affordable models, which would be compatible with Brussels requirements. Renault, for example, is entering this market, with its €34,000 electric R5, somewhat late. Under these conditions, it will be difficult to attract enough customers to EVs to meet the new standards.
Even though the French government has insisted that it has no intention of challenging the EU’s decarbonization trajectory, and the 2035 deadline for the end of the combustion engine, its request to relax CAFE regulations runs counter to its national low-carbon strategy. In the transport sector, the most polluting of all, responsible for a third of emissions, the aim is to reduce emissions by 31%, by 2030, thanks to the rise in EV sales, which should account for two-thirds of total sales. To achieve this, it is essential to remain consistent and constant.
France also runs the risk of opening Pandora’s box at the European level, at a time when the political configuration is far less favorable to the continued implementation of the Green Deal. Some members of the right-wing European People’s Party have become ready to ally themselves with the far right in order to overturn the most restrictive laws. Yet the energy transition is at a crucial juncture. Brussels must beware of encouraging a trend that could end up emptying the Green Deal of all its substance and set the decarbonization trajectory back considerably.
