As the European Commission prepares to publish its proposal for the review of the CO₂ Standards for Light-Duty Vehicles (LDV), a pivotal moment for Europe’s climate, transport and industrial strategy is approaching. In anticipation of this, carmakers, automotive suppliers, and fuel manufacturers have come together to issue a rare and important joint statement, forming a united industrial front with a shared ambition to accelerate transport decarbonisation. Their message is clear: keeping multiple technological pathways open, including renewable fuels alongside electrification, will be essential for Europe to meet its long-term climate objectives while safeguarding its industrial competitiveness.
Europe’s commitment to the Paris Agreement requires decisive and coherent action across all sectors, and road transport is no exception. The EU has already developed powerful regulatory tools with the CO₂ standards for LDVs, the Renewable Energy Directive (RED), and ETS II, that can reduce transport emissions. But as the signatories of the statement highlight, these tools are not yet working together coherently.
Today, CO₂ vehicle standards focus exclusively on new vehicles, measuring emissions solely at the tailpipe and assuming all internal combustion engine vehicles run entirely on fossil fuels. Conversely, the RED regulates the actual fuel mix used across both new and existing fleets, by mandating the renewable share in the fuel, which already delivers measurable CO₂ reductions. This discrepancy creates a regulatory gap: renewable fuels contribute to climate goals in practice, but not in how vehicle emissions are officially counted.
This misalignment does not only create administrative confusion, it risks undermining investments across the renewable fuel value chain. If renewable fuels are recognised in the RED but overlooked in CO₂ vehicle standards, companies have little incentive to scale up production, undermining opportunities for faster, cost-effective emissions reductions in all transport sectors.
A more coherent approach is possible and necessary.
Recognising the Real Contribution of Renewable Fuels
One of the proposed adjustments is the introduction of a Carbon Correction Factor (CCF). Under current rules, an internal combustion engine vehicle is counted as emitting 100 percent fossil-fuel-based CO₂, even when the actual EU fuel mix contains renewable components. According to the SHARES database, renewable fuels already exceeded five percent of the EU mix in 2022. A CCF would correct the accounting by reflecting the real share of renewable fuels used.
This is not about giving preferential treatment to combustion technologies; it is about acknowledging measurable climate benefits that are already being delivered. Accurate accounting ensures that policy sends the right signals to industry, consumers, and investors.
Defining Zero-Emission in a Technology-Neutral Way
The joint statement also raises an important point about vehicles running exclusively on renewable fuels. Their climate footprint should be considered neutral, and be treated in the regulation just as battery-electric and hydrogen fuel-cell vehicles. Allowing these vehicles to be recognised well before 2035 would not replace electrification; it would complement it. Delaying their recognition, instead, until 2035 would slow momentum precisely when Europe needs to accelerate investment in new production technologies, infrastructure and manufacturing of renewable fuels.
A Clear Legal Framework for Renewable Fuels
Another key element is the need for a unified legal definition of renewable fuels within the CO₂ regulation. The RED already provides clear sustainability criteria. Aligning the CO₂ regulation with that definition would remove ambiguity, improve planning security, and strengthen investor confidence, all critical elements for scaling up emerging industries.
A Long-Term Trajectory to Guide Investment
Finally, the joint statement calls for a realistic, gradually increasing CO₂-reduction requirement for renewable fuels. This would ensure that new production facilities contribute meaningfully to long-term climate objectives while safeguarding existing investments. By signalling a stable, predictable trajectory, Europe could stimulate innovation and industrial development across the renewable fuels sector.
Toward a More Integrated and Resilient Climate Strategy
Europe’s climate ambitions demand both speed and flexibility. Electrification will continue to play the leading role in reducing emissions from passenger cars and light commercial vehicles. But it should not be the only actor on the stage. Renewable fuels, especially when produced sustainably and at scale, offer an additional and increasingly viable pathway, one that can leverage existing vehicle fleets, allow faster uptake of the fuel production for the benefit of aviation and maritime, support industrial competitiveness, and help ensure supply resilience during the transition.
A more integrated policy approach that recognises real-world CO₂ reductions across technologies would strengthen Europe’s climate strategy rather than diluting it. The question is not whether one solution is superior to another, but how Europe can best harness all available tools to meet its climate objectives efficiently and responsibly.
As the European Commission will publish soon its review of the CO₂ Standards for LDV, the arguments presented by industry stakeholders deserve careful consideration. Their proposals do not undermine electrification; they reinforce the EU’s ability to achieve its climate goals by broadening the paths available.
Europe has long been a global leader in technological innovation. With thoughtful, coherent policy design, it can lead again by developing a diversified, resilient, and long-term oriented strategy for clean mobility.
Alain Mathuren is the Communication Director of FuelsEurope.
