France and Germany near provisional deal to ease EU 2035 car CO2 target

France and Germany are nearing an agreement to ease the European Union's 2035 vehicle emissions requirements and to widen preferential market access for Britain, according to a report by ESG News. The agreement remains provisional and would require broader EU approval, the report says.

Under the European Commission's earlier proposal, manufacturers would cut car CO2 emissions 90% by 2035 against 2021 levels and compensate for the remaining 10% through low-carbon steel and alternative fuels. That compensation structure would in effect bridge the gap to a 100% reduction.

The emerging Franco-German text keeps the 90% reduction target and removes the low-carbon steel and alternative-fuel compensation requirements.

According to the report, dropping the compensation obligations would lower compliance costs and leave automakers more room to choose vehicle technology and production strategy, but it would also weaken the original framework's overall emissions ambition. German automakers have sought greater flexibility in meeting future emissions standards, the report says.

Germany's domestic position is not settled. The country's Social Democratic environment minister has suggested a 95% reduction instead, with low-carbon steel covering the final five percentage points; that version would preserve a compliance role for low-carbon steel that the Franco-German approach removes.

The negotiations also cover proposed EU rules on local-content and low-carbon requirements in public procurement, auctions and subsidy programmes. France has advocated restricting eligible products to those manufactured inside the EU's 27 member states. Germany and several other countries favour a broader definition that includes closely integrated trading partners. Under the provisional agreement, automotive eligibility under "Made in Europe" provisions would extend to European partners participating in the EU internal market on January 1, 2020. That cutoff includes Britain, which formally left the single market at the end of 2020.

Separately, the Commission has weighed a one-year delay to methane rules on imported oil and gas, as this publication has reported.