Towards Decarbonised Road Transport Driven by a Globally Competitive EU Automotive Industry

According to the cep researchers, Europe’s automotive industry is under pressure from two sides. On the one hand, due to a lack of demand it cannot yet sell enough electrified vehicles in Europe to meet the CO₂ reduction targets. On the other hand, it is in danger of losing international markets for efficient combustion and hybrid vehicles to global competitors. Demand in this segment will exist worldwide for a long time to come.

The study describes a number of policy options to allow for a flexible approach towards decarbonisation. The cep researchers explain that in this way the ambitious climate targets of the EU can be achieved while keeping the global competitiveness of the European automotive sector.

cep economist Martin Menner, who authored the study with Götz Reichert, André Wolf and Jan Voßwinkel, emphasises: “In the EU, the future EU emissions trading system ETS 2 effectively limits CO₂ emissions and guarantees the achievement of the EU climate targets in road transport. It is therefore not detrimental to climate protection if the EU allows more flexibility within CO₂ limits. In this way, European manufacturers can adapt to constantly changing conditions.”

Menner warns against the loss of lucrative markets to global competitors: “With a view to the international markets, the EU should enable its automotive industry to further develop efficient combustion engines in Europe in the long term – in line with the open-technology approaches in China and the USA.” Calling for a balanced strategy for a market-driven decarbonisation, Menner adds: “The most important element will be e-mobility. Good framework conditions such as an adequate charging infrastructure, and a timely implementation of the ETS 2 are essential for this. But we also need a long-term perspective for a domestic market for efficient combustion and hybrid vehicles powered by alternative fuels in order to keep export-oriented jobs and value creation as well as research and development in the EU.”