EU Council agrees to end sale of fossil fuel cars in 2035

This is one of the ambitious goals from the new agreement details for the “Fit for 55” package

The EU Council, through a meeting of the member states’ environment ministers, finalized in the early hours of the morning the details of a legislative agreement for the “Fit for 55” package. The agreement is expected to strengthen the negotiating stances of the states vis-à-vis the European Parliament, which still has to approve it.

It took almost all night of debates and discussion in order to hammer out a common position that would be acceptable to all, and this is now a fact. Among the agreed provisions is the 100% CO2 emission reduction target for new cars and vans, meaning that combustion engine vehicles will not be sold anymore in the EU from 2035 onward.

Other agreements affect the EU emissions trading system (EU ETS), effort-sharing between member states in non-ETS sectors (ESR), emissions and removals from land use, land-use change and forestry (LULUCF), and the creation of a social climate fund (SCF).

Main points of the agreement

The Council agreed to raise the targets for reducing CO2 emissions for new cars and new vans by 2030 to 55% instead for cars and to 50% for vans. The Council also agreed to introduce a 100% CO2 emissions reduction target by 2035 for new cars and vans.

In 2026, the Commission will assess the progress made towards achieving the 100% emission reduction targets and the need to review these targets taking into account technological developments, including with regard to plug-in hybrid technologies and the importance of a viable and socially equitable transition toward zero emissions.

The Council also agreed to create a new, separate emissions trading system for the buildings and road transport sectors. The new system will apply to distributors that supply fuels for consumption in the buildings and road transport sectors. However, the start of the auctioning and surrender obligations will be delayed by one year compared to the Commission proposal (auctioning of allowances from 2027 onwards and surrender from 2028 onwards).

The ministers agreed to phase out free emission allowances for the aviation sector gradually by 2027 and align the proposal with the global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The EU ETS will apply for intra-European flights (including the United Kingdom and Switzerland), while CORSIA will apply to EU operators for extra-European flights to and from third countries participating in CORSIA. 

The Council agreed to an EU-level greenhouse gas emissions reduction target of 40% compared to 2005, for the sectors not covered by the ETS, namely domestic maritime transport, agriculture, waste and small industries. The buildings and road transport sectors will be covered under both the new dedicated ETS and the effort-sharing regulation. These sectors combined currently generate about 60% of EU greenhouse gas emissions.

Subsidizing the social side of the transition

The Council agreed to establish a Social Climate Fund (to the tune of 59 billion euros) to support vulnerable households, micro-enterprises and transport users to support the creation of an emissions trading system for the buildings and road transport sectors.

Each member state would submit to the Commission a ‘social climate plan’, containing a set of measures and investments to address the impact of carbon pricing on vulnerable citizens. The fund will provide financial support to member states to finance the measures and investments identified in their plans, to increase the energy efficiency of buildings, the renovation of buildings, the decarbonisation of heating and air-conditioning in buildings and the uptake of zero-emission and low-emission mobility and transport, including measures providing direct income support in a temporary and limited manner.