EP adopts more flexible rules for CO2 emissions of new cars

The European Parliament has supported temporary flexibility in the application of CO2 emission reduction targets for cars and light commercial vehicles, in order to facilitate the transition period for an industry facing accelerated technological changes and increasingly strong global competition, the European Parliament announced on its website.

On Thursday, the European Parliament voted for a targeted amendment to the CO2 emission standards for new cars and light commercial vehicles, allowing manufacturers more flexibility in meeting the set targets during the period from 2025 to 2027. The proposal from the European Commission was supported by 458 representatives, 101 voted against, and 14 abstained.

Instead of the previous system of annual emissions monitoring, the new mechanism allows manufacturers to ‘average’ their results over a three-year period. This means that car manufacturers will not have to meet the CO2 emission reduction target individually each year, but rather the average of their total emissions over the three years – 2025, 2026, and 2027.

For example, if they exceed the allowed amount of emissions in 2025, they will be able to ‘compensate’ for this by achieving better results (lower emissions than prescribed) in the following years. It is important that their average for those three years remains within the set limits.

This opens up space for strategic balancing of any emissions exceedances in one year by surpassing targets in the next or previous year, thus providing manufacturers with additional predictability in planning development and production.

Obligations remain, but with additional flexibility

According to existing rules, vehicle manufacturers in the European Union must reduce the average CO2 emissions of new vehicles by 15 percent by 2025 compared to 2021 levels. These targets are applied through five-year cycles, but with the obligation to meet them for each individual year. The new rule retains the overall target but introduces transitional flexibility for the period 2025–2027, which may ease the industry’s adaptation in the context of strong transformation.

The European Parliament expedited the legislative process by adopting the proposal under urgent procedure, and the Council of the European Union has already given formal approval for the same text of the law on May 7, 2025, paving the way for the rapid entry into force of the new regulation.

This measure is part of a broader industrial action plan of the European Commission for the automotive sector, published on March 5, 2025. The plan emerged from a strategic dialogue on the future of the European automotive industry, initiated by Commission President Ursula von der Leyen on January 30 of the same year. The dialogue was preceded by public consultations and a series of meetings with industry and stakeholders, aimed at identifying and addressing the key challenges facing the sector. European car manufacturers, including suppliers, are facing complex demands for the transition to electric vehicles, the need for massive investments in battery technology development, reorganization of production, and growing competition from China and the USA. Many European companies have warned of the risk of deindustrialization and job losses if the transition is not carried out sustainably.

In this context, flexibility in the application of environmental goals is not a retreat from climate ambitions, but an attempt to carry out the transition responsibly while preserving European competitiveness.

—

—