2018 was an important year for EU energy legislation, as lawmakers rushed to complete the promises of President Jean-Claude Juncker before the end of the term in just four months time. But it is still uncertain whether these new energy laws, including the bloc’s first limits on CO2 emissions from trucks, will be passed before the March deadline.
If lawmakers run out of time, it could mean that new lawmakers have to start over from the beginning when they take office this summer, following the pan-European election in May.
The end of the five-year term of the European Commission, the EU’s executive which drafts legislation, and the European Parliament, the directly-elected chamber that adjusts and approves that legislation, is fast approaching. And this time, the end-of term crunch is even more stressful because of Brexit.
The EU’s other co-legislating body, the Council of Ministers, also must approve legislation. The Council and the Parliament each draft their own versions of a new law and must agree to reconcile them into one version, much like the House and Senate in the United States. The Council is made up of ministers from the national governments of each of the 28 EU member countries, whereas the Parliament is made up of directly-elected representatives of EU citizens, bypassing the national governments.
Each minister in the Council gets a weighted vote based on the size of their country’s population. The U.K., therefor, has had the third-strongest vote in the Council, giving it a huge influence over legislation. But as of March 29, the U.K. is scheduled to leave the EU and will no longer be involved in these votes. That will majorly change the voting dynamic in the Council and would in theory mean that all votes taken before March 29 are no longer valid.
Even though the U.K. is scheduled to leave, the country’s ministers have not been behaving that way in Brussels – taking tough lines on legislation being crafted over the past year that will in theory not affect them.
This means that several Council positions on open legislation could be invalidated in three months unless they have already been passed into law. This could affect the pending legislation to set the EU’s first limits on truck CO2 emissions.
Keep On Trucking
In May, the European Commission made good on a promise made by President Juncker when he took office in 2014 to propose the EU’s first truck CO2 limits – joining countries like the US and Japan which have had such limits in place for several years. European retailers have been pleading for such standards for years, eager to get their shipping costs down.
The proposal would require truckmakers to lower fleet average emissions by 15% by 2025 and 30% by 2030, based on 2019 levels.
In November the European Parliament voted to increase this to 20% by 2025 and 35% by 2030. They also voted to add a zero and low-emission vehicle mandate, requiring automakers to make a minimum number of such vehicles (most likely electric) or face penalties.
Last week, national environment ministers in the Council voted to back the Commission’s proposal exactly, rejecting any raising of ambition or minimum electric vehicle targets.
Instead, ministers backed the commission’s ‘supercredit’ approach, which allows for such vehicles to count more toward the fleet average – thus rewarding vehicle makers for making electric vehicles rather than punishing them for not making them. However they adjusted the Commission’s methodology and replaced it with a a sales benchmark.
According to an analysis by environmental NGO Transport & Environment, the parliament’s position would deliver an additional €14,000 in fuel savings per new truck in its first five years compared to the council’s position.
It will now fall to Romania, which takes over the rotating presidency of the Council on January 1, to negotiate with the Parliament on behalf of the 28 national governments. The pressure will be on, because if a deal can’t be reached in three months, the whole thing could fall apart and the newly-configured Parliament and Council will have to start over in the Autumn, probably delaying the entry into force of the legislation, and therefor the emissions savings, by several years.
But the negotiations will be tough. ACEA, the industry body representing automakers, has said the Parliament’s position is “aggressive”.
“Members of the European Parliament seem to be blatantly ignoring the fact that the potential for electrifying the truck fleet is far lower than for cars, due to issues such as extremely high upfront costs, range limitations, insufficient infrastructure – particularly along motorways – as well as reluctant customers,” said ACEA Secretary General Erik Jonneart.
But the environmental lobby is heaping pressure on the Romanian government to come more toward the Parliament’s position. “The upcoming Presidency should now move towards the European Parliament position and adopt higher CO2 targets and sales targets for zero-emission trucks,” said T&E cleaner trucks officer Stef Cornelis. “It will help the logistics sector to become more sustainable and competitive. That’s exactly what EU regulation should do”.
Both sides are aware, however, that too much rancour in these talks over the next three months could delay the legislation for years. This would be bad for the automakers as well, since they rely on forward visibility and need to know what the future regulatory landscape is now so they can start adjusting their vehicle design.
Traffic Jam For Car Legislation
Last week the Austrian government, which currently holds the Council presidency, and European Parliament negotiators reached a deal on updated car CO2 limits setting a 15% reduction by 2025 and a 37.5% reduction by 2030.
The agreement is halfway between the Council’s position of a 35% CO2 cut and the Parliament’s 40%. The legislation would also set a 31% target for van emissions by 2030.
But many in the Parliament are disappointed that so many provisions in their version of the legislation, adopted in October despite intense pressure from the auto industry, have been negotiated away.
Like with trucks, the Council also rejected a European Parliament idea to set mandates for producing electric cars. Instead, they proposed an incentive scheme, which the Parliament negotiators accepted in the end. Under the scheme, countries that have low electric vehicles sales will get a bonus multiplier of 0.7 for electric cars produced. This multiplier would end once electric vehicles represent more than 5% of a country’s fleet.
T&E says the agreement is “a good deal for citizens,” but “well below what’s needed to achieve the EU’s 2030 climate targets”. ACEA says the deal “will be extremely demanding on Europe’s auto industry”.
However the full parliament and full council will still need to back this deal at some point in the next three months. Usually this step is a formality, but due to the sensitivity of the auto sector there have been surprises in the past.
For instance, in 2013 German Chancellor Angela Merkel blocked an already-agreed deal on the last round of car CO2 emission limits which had been negotiated by the Irish council presidency. In between signing off on the Council mandate and the deal, Merkel had been the subject of intense pressure from the powerful German automotive industry.
However following the Dieselgate scandal, the German automotive industry wields less political power than it did five years ago. EU sources say they don’t expect any last-minute surprises on the council side, especially considering automakers don’t want to risk a delay in the legislation. Merkel already came out strongly against the Parliament’s position before the Council set its negotiating mandate.
Problems are more likely to arise on the Parliament side, where members are angry that so many of their key asks were negotiated away. A full parliament vote is expected to be held in January in Strasbourg. Should that vote fail, there would likely be a rush to hold a second vote before the end of the term, to avoid having to start over. That is a scenario neither side wants to see.