How can Europe phase out fossil fuel cars?

With pressure mounting on EU and national policy-makers to do much more to reverse the trend in growing transport carbon emissions to reach climate neutral economy before 2050, many governments have announced plans to ban the sales of new fossil cars - petrols, diesels and gas - in the coming decades. But the question of the compatibility of such measures with EU single-market rules has recently come to the fore. T&E has commissioned the legal consultancy Milieu to look into the feasibility of such national bans and under what conditions they would be possible.

The legal study concludes that:

1. Any measure to restrict the placing on the market of cars that otherwise comply with EU type approval rules will have to be checked under Article 114(5) of the EU treaties as to its compatibility. It is likely to be difficult for such bans to meet the three conditions of: 1) being based on new evidence; 2) the problem being specific to the member state in question; and 3) constituting a new problem at the same time. Therefore, amendments to the EU type approval framework would be necessary to pursue national bans of conventional cars.

2. Amending the whole type approval law to allow individual member states ban fossil cars would be difficult to justify as it would distort the EU single market and be potentially open to abuse (selling a car in one country but using it in another). Therefore, a better option could be to use the provisions known as Enhanced Cooperation, whereby nine or more member states can jointly instate a ban on new fossil cars. Whether individual or joint bans of conventional cars is pursued, T&E recommends that the new EU car CO2 standards to be proposed in 2021 allow such a derogation so as to enable individual member states to go further and remain ambitious in their fight against the climate crisis.

3. The legal study also looks into the possibility of setting national CO2 standards, either at vehicle level or fleet-wide. While this can be done under the environmental legal base, compliance with the single market rules remains difficult given the unavoidable distortion of intra-EU trade and circulation of vehicles. Even if the standard was set fleet-wide, it would have to be notified to the Commission and proven proportionate. T&E warns however that setting such national standards in the absence of increased supply of zero-emission cars across the EU - regulated by the EU car CO2 standards - would simply shift the limited EV supply between member states and not accelerate the overall deployment across Europe, limiting the climate benefits of such measures. This should therefore - as a minimum - be accompanied by increasing the EU car CO2 standards and/or discounting the additional EV credits due to such national measures for EU-wide CO2 compliance.

4. The lawyers clearly underline that the most legally certain, sound and effective way to phase out CO2 emitting cars and go to a zero emissions cars fleet is via EU-wide phase-out provisions. T&E recommends setting such a phase-out date at EU level for the last combustion car to be sold no later than 2035, while allowing individual member states to achieve that earlier.

5. The study also looked into other measures with the similar effect of phasing out conventional cars, singling out notably the effectiveness of taxation to drive consumers towards zero-emission models. Particularly promising in T&E’s view would be to mandate large corporate fleets and leasing companies - those governed by total cost of ownership considerations - to purchase zero emission models and go to EV-only new fleets by 2030. While more work is needed to assess this in detail, preliminary legal research shows that such demand-side level measures at EU level would be feasible if it can be shown that 1) such fleets have the same characteristics across Europe, and 2) the action is justified in terms of proportionality and subsidiarity. T&E recalls that the EU already sets social and labour requirements on fleets across Europe, so it should therefore be feasible to add environmental mandates. And public fleets are already regulated in the EU Clean Vehicles Directive; a similar concept should be created for large private fleets.

This legal study is a useful guiding document to understand the key uncertainties and difficulties in setting combustion car bans at national level. It confirms T&E’s call for Europe to set the goal of having only zero-emission cars on its roads in 2030s as the most effective option, and one that is needed to achieve the ambition of the European Green Deal.