On Tuesday, the European Commission presented proposals for the automotive package. The aim is to achieve climate neutrality by 2050 while offering more flexibility to car manufacturers and simplifying the rules, according to the Commission. The regulatory package goes far beyond the question of phasing out combustion engines, with CO2 emission standards being a key component.
From 2035, car manufacturers must reduce emissions "at the tailpipe" by 90 percent. The remaining 10 percent must be compensated. This can be achieved, for example, by using CO2-low steel produced in the Union or through e-fuels and biofuels. It is stipulated that CO2-low steel from Europe may contribute up to seven percent to the fleet target, and climate-neutral fuels up to 3 percent.
In essence, this means that in addition to pure electric and hydrogen vehicles, there will still be new plug-in hybrids (PHEV), range extenders, mild hybrids, and vehicles with combustion engines in the EU after 2035. Furthermore, the package includes various support mechanisms to accelerate the use of locally emission-free vehicles.
The hydrogen industry association Hydrogen Europe describes the regulation on green steel as a positive signal for the steel industry, which is making billion-dollar investments to reduce the CO2 footprint of its products and comply with the ETS and CBAM. Now the industry has a clear market for the product.
According to Hydrogen Europe, high-quality primary CO2-low steel will largely be produced using clean hydrogen through DRI technologies. The association assumes that the automotive package will create a lead market for green steel from Europe and thus boost demand. According to
Jorgo Chatzimarkakis, CEO of Hydrogen Europe, it could go even faster. "This is the first concrete step towards creating real lead markets, and bringing forward the date from 2035 to 2030 could further increase the commercial viability of clean steel," he says. Additionally, the association suggests setting similar standards in the upcoming revision of the regulation on standards for heavy-duty vehicles (HDVs) to further increase demand.
Furthermore, the EU should base the definition of clean steel on a movable scale. It is expected that the "Industrial Accelerator Act" planned for January will provide clear guidelines on how CO2-low European steel is to be defined, according to Hydrogen Europe.
The German Engineering Federation VDMA is less enthusiastic about the new green steel regulation. The linking of CO2 fleet targets with European green steel and renewable fuels sounds theoretically good, as it could help the steel and fuel industries ramp up the markets. "But here too, less is more," says Hartmut Rauen, Deputy Managing Director of the VDMA. Instead of offering manufacturers real flexibility options, the Commission relies on very detailed specifications. The actual usability and impact of a precise cap of 7 percentage points for green steel and 3 percentage points for renewable fuels are associated with many question marks.
