Europeto park the combustion engine within 15 years

Hansvan LeeuwenEuropecorrespondent

Jul15, 2021 – 1.35am

Save

Share

London | The European Union will put the combustion engine on the scrap heap from 2035, and install electric charging points every 60 kilometres on major highways, as part of a sweeping package of climatemeasures unveiled on Wednesday.

All new cars will in effect have to be zero-emission by the middle of next decade, putting European auto makers on notice that they must rev up their plans to shift into electric vehicle (EV) production or even hydrogen-fuelled cars.

To alleviate EV drivers’ “range anxiety”, a new regulation will require all 27 EU governments to put massive investment into building EV charging points every 60 km on major highways, and hydrogen refuelling stations every 150 km.

An electric vehicle charging station in Greece. Bloomberg

The measures are part of the European Commission’s attempt to put rubber on the road towards meeting its ambitious climate targets: a 55 per cent cut in the bloc’s carbon dioxide emissions from 1990 levels by 2030, with a view to reaching net-zero by2050.

Under the plans the EU will also extend the EU’s carbon pricing system, the Emissions Trading System (ETS), to cover transport and buildings - which could be politically sensitive if it drives up the cost of plane tickets, road and sea freight, and home heating. Alongside the ETSexpansion, the European Commission confirmed it would press ahead with aphased-in carbon border tax to protect European companies from cheaper, higher-carbon imports.

The Carbon Border AdjustmentMechanism (CBAM) will start in just a handful of sectors, but when fully rolledout it will push Australian exporters tothe EUtowards decarbonising their production processes and supply chains.

The EU accounts for about one-sixth of global GDP and is home toabout 450 million people, so the effects of the “Fit for 55” climate packagewill ripple out to Australia.

Francis Wedin, CEO ofPerth-based lithium start-up Vulcan Energy, said his sector would feel the impact.

“After 2035 you won’t be ableto buy a new fossil-fuel-powered car in Europe. That’s not far away, and the sheer scale of lithium that Europe will require to achieve that is just phenomenal,” he told The Australian Financial Review.

Alongside that demand impact- which could also fuel demand for cobalt, nickel and rare earhts - Mr Wedin noted that the CBAM would eventually expand to cover chemicals..

“Lithium is not included inthe first round of the CBAM but ... the shift is inevitable, and we are movingcloser towards that. It can’t be part of the EU strategy to produce EVs thatare made using raw materials from overseas with a high carbon footprint - thatcarbon will have to be accounted for.”

Passenger cars account forabout 12 per cent of the EU’s carbon dioxide emissions, and some of the largestcar makers are scrambling to get ahead of the regulatory changes and the shiftin market demand.

Volkswagen is aiming for EVsto account for 70 per cent of its car sales by 2030, and Renault is shootingfor 90 per cent.

The Fit for 55 measures stillhave to be approved by the European Parliament, and will also go through thepolitical wringer in member states.

French President EmmanuelMacron has reportedly been arguing for a greater reliance on hybrid vehiclesduring the transition, rather than an all-out dash to EVs and hydrogen.

The ETS, through which heavyindustries and the power sector buy and sell permits to emit carbon, includessignificant allocations of free permits.

These are supposed to dry up,and the carbon price will also be extended to sectors such as cars, aviationand housing - where it might hit voters in the hip pocket.

Some of the most vigorous debate on the plan among national governments and within countries is expected to centre on how quickly the ETS is extended and the free permits are cancelled, and how any compensation packages will be targeted and delivered.

The challenging politics are not lost on the European Commission. Its leaders have acknowledged the risk that prices will rise, with a regressive economic impact on poorer people.

So the package is also offering a quarter of the revenue from its ETS, or €72.2 billion ($114 billion), to a Social Climate Fund to soften the impact.