EU Wants e-Fuel Vehicles Climate-Neutral for Sales to Continue

The European Union is poised to set a requirement that e-fuel vehicles sold beyond 2035 be 100% carbon neutral. A draft document revealed that vehicles powered by e-fuels will have to be completely climate neutral in order to be sold in EU member nations. The EU’s current climate policies require that all vehicles sold in the regional bloc from 2035 have zero carbon emissions at the tailpipe.

However, although all EU member nations agreed to the climate policy this year, Germany argued that e-fuel cars should be exempted from the policy banning the sale of new CO2-emitting vehicles from 2035. This policy essentially prohibits the sale of fossil-fuel-powered cars and vehicles that use other fuels but still produce CO2.

Germany’s efforts to exempt e-fuel cars from climate-change requirements bore fruit earlier this year when EU officials agreed to allow the sale of alternative-energy vehicles past 2035 even if they produce emissions. E-fuels are a relatively new entrant into the energy market and are typically created by mixing hydrogen with carbon dioxide.

These e-fuels are burned in combustion engines and release emissions, but supporters of the technology say the e-fuel production process can offset these emissions because it is quite climate neutral. Conversely, opponents say e-fuels are energy inefficient and expensive, while also wasting resources that could have been invested somewhere more worthwhile.

German lawmakers held up legislative processes for an entire month amid intense debate about the merits of exempting e-fuel vehicles. Their victory may be short-lived if a recent draft EU proposal by Brussels requiring that e-fuel cars run entirely on carbon dioxide-neutral fuels becomes law. The proposed rule would be more stringent than the rules governing low-carbon fuels in other climate policies in the region. In contrast, the EU generally allows member nations to use certain fuels even if their use produces emissions as long they can attain 70% carbon emissions savings.

Most international pundits have recognized climate change as a significant threat to humanity, and the global community has begun adopting policies to reduce the impact of climate change and extreme weather. As fossil fuels are among the largest polluters on the globe, these efforts involve reducing the world’s reliance on fossil fuels and transitioning to technologies that run on renewable energy.

This includes replacing fossil-fuel-powered cars with zero-emission electric cars and transitioning from coal and oil-generated electricity to wind and solar power. Given the role transportation plays in producing emissions in the EU, replacing internal combustion engine vehicles with cleaner alternatives by 2035 would put the EU on track to achieving its climate change goals.

As the regulatory frameworks promoting electric vehicles start being implemented, we are likely to see the sales of manufacturers such as ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO) registering a significant uptick as bans on ICE vehicles bite.

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