European fuel makers urge EU to rethink plans for ICE car ban due to energy crisis

EU proposals to ban the sale of new internal combustion engine cars and vans by 2035 should be reconsidered given the impact Russia's war in Ukraine has had on soaring energy and battery metals costs, a coalition of European fuel manufacturers has told EU policymakers.

In June, environment ministers from the EU's 27 member states approved proposals to end the sale of vehicles with combustion engines in the trade bloc by 2035. The plan means that new passenger cars and light commercial vehicles may no longer emit tailpipe emissions, a requirement seen as a de facto to a ban on internal combustion engines.

But the EU's focus on full vehicle fleet electrification to curb CO2 emissions will create "unnecessary risks; industrial, economic, social and in terms of delayed GHG reductions," the industry groups said in a joint letter.

"Since the publication of the Commission's proposal for CO2 standards in cars and vans in July 2021, the geopolitical landscape has changed dramatically, with implications for energy and raw material dependencies," the letter states.

Rising costs of battery materials and supply constraints will likely keep electric vehicle prices high and slow the pace of fleet turnover, extending demand for fossil fuels, according to the letter signed by European refining industry group FuelsEurope and biofuel makers associations ePure and the European Biodiesel Board.

The slow pace of building recharging infrastructure in Europe and the potential for greater near-term coal use to generate power also dents the rationale for a ban on ICE cars in 2035, according to the letter.

Biofuels, e-fuel options

The fuels groups called for greater policy scope for the production and use of lower-carbon, advanced and synthetic fossil-free fuels, such as biodiesel and "e-fuels" which can be used in ICE vehicles and hybrid powertrain cars.

"The current situation requires a difficult rethink of long-held assumptions how we can best reach climate neutrality in 2050 while ensuring a just transition of the EU industry," the letter states. "In this light, all solutions that are able to deliver a reduction in GHG emissions should be considered."

The market share of gasoline and diesel cars in Europe slipped below 51% of sales for the first time during the fourth quarter of 2021, as the growing appeal of hybrid and fully electric vehicles continues to displace conventional road fuel demand.

Analysts at S&P Global Commodity Insights have forecast that plug-in electric car sales in Western Europe alone would make up 37% of the global total by 2025, when plug-in EVs on the road in the region will displace around 173,000 b/d of the region's gasoline and diesel demand.

Gasoline and middle distillate demand in Western Europe has already recovered to pre-pandemic levels of 1.8 million b/d and 5.6 million b/d, respectively, S&P Global estimates.

However, regional demand for gasoline and middle distillates -- which peaked in 1992 and 2006, respectively -- is seen falling to 1.35 million b/d and 4.7 million b/d by 2030, under a reference case scenario.