Car-producing countries are pressuring the EU to waive CO2 fines

By Andrey Sychev and Kate Abnett

BRUSSELS (Reuters) – The leaders of car manufacturing hubs Germany, Italy and the Czech Republic pressed Brussels on Thursday to waive financial penalties for carmakers that miss EU emissions targets from next year.

German Chancellor Olaf Scholz said after a summit of EU leaders that it made no sense to add to the industry’s difficulties and that fines should not limit companies’ ability to invest in electric vehicles (EVs).

Scholz, who is under pressure from a snap election next February, said carmakers were bringing out new electric cars but consumers could not be forced to buy them.

“I think it’s right not to impose fines and to look into how to do this. It’s not straightforward, but I’ve had such in-depth discussions and I think a way will be found,” he said.

Scholz also welcomed a plan by European Commission President Ursula von der Leyen to launch a “structured dialogue” with the car sector. EU leaders agreed to his proposal, he said, to discuss the outcome at the next EU summit in March.

The prime ministers of Italy and the Czech Republic also planned to call on von der Leyen on Thursday to drop fines on carmakers that miss CO2 targets, EU diplomats said on condition of anonymity.

European carmakers could face about 15 billion euros ($15.62 billion) in fines for missing the targets, with the region’s biggest automaker Volkswagen the hardest hit, according to industry estimates.

Automakers have warned of factory closures and thousands of job losses as they grapple with weak demand, Chinese competition and lower-than-expected sales of electric cars.

France also joined opposition to fines this week. A government paper, seen by Reuters, said Paris did not want to weaken CO2 targets but supported a solution to avoid penalties for carmakers next year.

“The reality we are facing now is not the one we prepared for to begin with,” Agnes Pannier-Runacher, France’s climate minister, told a meeting of EU ministers on Tuesday.

The EU’s 2025 target sets a CO2 limit that manufacturers must meet on average across the fleet of cars they sell during the year. A drop in EV sales could increase a manufacturer’s average fleet emissions, causing it to miss the CO2 target.

Austria, Bulgaria, Romania and Slovakia have also called on the EU to reconsider its CO2 reduction policy for cars. Only a few countries – including Sweden, home of Volvo – have spoken out in favor of keeping the fines.

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(Reporting by Andrey Sychev, Kate Abnett and Philip Blenkinsop; Editing by Matthias Williams, Barbara Lewis and Deepa Babington)