How Europe is bending the rules to spare carmakers from climate fines

Good morning. Today, Laura and our parliament correspondent report on the political rallying around Europe’s car industry, at the expense of green targets, and we have a dispatch from crisis-wracked Romania as the country’s parliament tries to form a government amid the burning dumpster fire of its presidential election.

Buying time

Europe’s carmakers are likely to get some relief as politicians are cooking up a way for them to escape fines for not selling enough electric vehicles, write Andy Bounds and Laura Dubois.

Context: The EU automotive industry is falling short of carbon emission targets that will hit next year, and reckons it is on the hook for €16bn in fines. This comes as carmakers shed jobs and close factories, selling 2mn fewer cars last year as cheaper Chinese models took market share.

Sympathy for the industry is growing even among Green politicians, as manufacturers complain they can’t force customers to buy electric vehicles when they are more expensive than conventional ones and lack charging networks.

Germany’s economy minister Robert Habeck, from the Greens, yesterday told journalists he would be in favour of more flexible fines for missing emissions targets — echoing a demand of the centre-right European People’s party (EPP).

“What I can envisage is that the emissions targets remain, but that you stretch fines over a longer period of time,” Habeck said. “Companies can then reduce or completely avoid fines by ramping up e-mobility more quickly.”

He went on: “In this difficult situation for the car industry, I think we don’t have to take additional billions from the companies. This should rather be invested in electric mobility.”

The idea of introducing a three-year period over which you average out emissions, incentivising the sale of EVs in 2026 and 2027, has also been embraced by the centre-right, and will be part of a strategy to be adopted by the EPP today.

Jens Gieseke, its author and a German MEP from Lower Saxony, the home state of VW, said politicians had to be flexible. “It’s not a good idea to have these fines . . . when the transformation is difficult.”

Sigrid de Vries, head of car industry body Acea, welcomed the proposals. “It’s positive that the EPP is considering pragmatic flexibilities, including options like compliance averaging,” she said.

Luca de Meo, chief of carmaker Renault, said a decision was needed “now” as carmakers would have to make provision for fines. He told journalists yesterday that companies had already spent €250bn on making their vehicles greener — but could not force customers to buy them.

Chart du jour: Political risk

Business bankruptcies have risen since French President Emmanuel Macron’s dissolution of parliament in June, as corporate France’s disenchantment with the political elite hit new depths.

Muddling through

Romania’s mainstream parties have been engaged in a delicate dance of building a ruling coalition this week, an exercise made infinitely more complex by the rise of the far right and nefarious external interference in the country’s electoral process that led to the annulment of last month’s presidential vote, writes Marton Dunai.

Context: The far right grabbed 33 per cent of the parliamentary vote earlier this month. But the separate presidential elections went up in flames, and are set to be repeated in 2025, after pro-Russian candidate Călin Georgescu rode anti-establishment protests and a massive TikTok campaign to victory in the first round. He benefited from a host of a host of illicit campaigning and even a Russia-based cyber attack.

The parliamentary result saw the rest of the vote split evenly among the legacy parties. So while these share deep enmity, they will all need to work together and show a great deal of self-restraint to co-operate against three nationalist groups.

The nationalist Alliance for the Union of Romanians (AUR) has grown into a robust force with 20 per cent of the parliamentary vote. Two smaller breakaway groups from AUR — an extreme rightwing outfit called SOS Romania and a youth movement called POT — complete the anti-establishment mixture at the massive Palace of the Parliament, a building that dates back to the era of communist dictator Nicolae Ceaușescu.

On the other side of the political divide is the same old bickering group of social democrats, centre-right, liberals and ethnic Hungarians that have held power for 35 years. Lacking an alternative, they will probably find a way to form a government — but expect the cohesion to be minimal.

What to watch today

1. Moldovan President Maia Sandu meets EU Council president António Costa and European parliament president Roberta Metsola in Brussels.

2. Ukrainian Prime Minister Denys Shmyhal attends a German-Ukrainian business forum in Berlin with Chancellor Olaf Scholz.

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