The European Commission has officially proposed a revision to its dramatic and controversial climate policy in December 2025. This signals a retreat from the total ban on new internal combustion engines previously slated for 2035.
Note that the new “Automotive Omnibus” package replaces the original 100 percent emissions reduction mandate with a more flexible 90 percent target.
Climate Commissioner Wopke Hoekstra defended the move as a pragmatic necessity during a recent address to the European Parliament.
He further argued that the pivot is essential to maintain industrial competitiveness while keeping the overarching goal of climate neutrality by 2050 within reach.
Specifically, under the new framework, the 10 percent allowance for tailpipe emissions will permit the continued sale of hybrid and plug-in hybrid vehicles. This shift acknowledges that many consumers and manufacturers are not yet ready for a purely battery-electric market.
The European Commission is introducing a unique offset mechanism for the remaining emissions to ensure environmental integrity. Automakers will be able to earn credits by utilizing low-carbon green steel produced within the European Union for their vehicle frames.
Another part of the proposal is the integration of carbon-neutral fuels, such as synthetic e-fuels and advanced biofuels, to allow traditional engine technology to persist.
Economic pressures from abroad played a decisive role in the policy reversal. The rise of lower-cost electric vehicle imports from China has placed immense strain on European manufacturers like Volkswagen and Stellantis.
Recent political shifts in the United States under the second Trump administration also weighed heavily on the decision-making process in Brussels.
To be particular, while the U.S. moves toward deregulation of its own fuel standards, EU leaders feared that a rigid ban would leave European brands at a global disadvantage.
Another element of the proposal is the inclusion of breathing space for the light commercial vehicle sector, which has struggled with electrification. The 2030 carbon reduction target for vans has been lowered from 50 percent down to 40 percent to ease the transition.
Small and affordable electric vehicles will receive a significant boost through a new super-credit system for vehicles under 13.8 feet.
These credit mechanisms aim to incentivize the production of entry-level electric vehicles within the European Union to capture the mass market.
Nevertheless, the proposal must now navigate the European Parliament and receive approval from member state governments before becoming law. If passed, it will represent the most significant adjustment to the European Green Deal since its inception.