German Chancellor publicly announces: the ban on internal combustion engines in cars has become history—Academician Ding was indeed right.

Yet, in the first half of 2026, employment in Germany’s automotive industry fell by 42,300 year-on-year—the lowest since 2005—and ranked first among all large industrial sectors (with over 200,000 employees) in terms of job cuts. The supplier networks behind Volkswagen, Mercedes-Benz, and BMW affect hundreds of thousands of families and the tax revenues of entire industrial regions. Meanwhile, the EU has only about 1.1 million public charging points—far short of its 2030 target of 3.5 million. Battery costs remain uncompetitive against Chinese counterparts, and public charging prices fail to pencil out for ordinary households. At this point, telling voters that “net-zero by 2035 is a solemn commitment” no longer resonates. Merz doesn’t need to argue—he just needs to say one sentence: “The ban has become history.” The most honest part of the Franco-German agreement lies in its stipulation that the average emissions reduction across *all* newly sold vehicles must reach 90%. This means automakers can continue selling gasoline and hybrid vehicles—as long as they sell enough battery-electric models to offset them. This isn’t “technology neutrality”—it’s mathematical permission. The utility factor for plug-in hybrids has been relaxed; the 2030 interim emissions target has been extended to allow cross-year averaging; the Euro 7 emissions standard has likewise been softened; and large-displacement pure internal-combustion engines have gained breathing room when paired with hybrid systems. All these adjustments point toward the same objective: preventing European automakers from being penalized to death by their own regulations mid-transition. France’s role in this deal deserves special attention. Paris is not a diehard loyalist to internal combustion—but it wants something else. On the other side of the Franco-German agreement, France has written the “Made in Europe” threshold into subsidy eligibility and public procurement criteria: henceforth, any vehicle seeking national subsidies, purchase incentives, or public procurement contracts must be fully assembled in Europe, and at least 70% of its parts’ value (excluding batteries) must originate in Europe. Corresponding localization requirements also apply to batteries, electric drive systems, and critical electronic components. Japan, South Korea, Turkey, and others are explicitly excluded from priority consideration. Germany’s demand is time; France’s demand is barriers. Germany seeks to loosen the carbon-emissions leash; France aims to shut Chinese supply chains out of subsidy access. If successfully adopted, the 2035 rules will formally evolve into “90% emissions reduction without mandatory offsets + technology openness + preference for European manufacturing.” This rewriting of the rules is not about “reassessing whether carbon targets are scientifically sound,” but rather about reallocating who bears the cost. Europe has now realized that the 2035 ban’s costs would collapse its industrial foundation—so it uses a political document to shift that burden onto the abstract concept of “credibility of climate commitments.” When promises lose value, tearing them up carries no psychological cost. When Merz declares “the ban has become history,” no one needs to apologize for commitments made five years earlier. Von der Leyen’s Commission had already lowered the 100% target to 90% back in December 2025—and left a loophole via compensation mechanisms. What France and Germany are doing now is simply dismantling that loophole entirely, turning “the remaining 10% need not be compensated” into black-and-white text. Academician Ding hit the nail on the head: This is the true status of rules amid headwinds: they aren’t violated—they’re redefined. The power to redefine them doesn’t reside with those who originally signed the agreements, but with those who can no longer bear the weight. Europe can no longer bear it—so the “internal-combustion ban” has shifted from “historic legislation” to “a hollow phrase buried in history.” Chinese EV manufacturers observing this development need not mock.

EU industrial green policy upgrade

Since the beginning of this year, the EU has rolled out a series of new industrial green regulations at an accelerated pace, rapidly shaping a comprehensive, multi-layered regulatory framework covering carbon costs, market access, and industrial investment. On January 1, the EU’s Carbon Border Adjustment Mechanism (CBAM) entered its substantive fee-collection phase; on March 4, the European Commission published its legislative proposal for the Industrial Accelerator Act (IAA). These two policies are closely coordinated and functionally complementary, jointly establishing a green regulatory system spanning carbon costs, market access, and industrial investment. Superficially, CBAM and the IAA fall under distinct policy domains—trade policy and industrial policy, respectively—but both converge on a shared objective: reshaping the competitiveness of EU industry and seizing leadership in setting global rules for future low-carbon, clean industries. CBAM’s core logic is to impose carbon tariffs on imported goods, narrowing the cost gap between such imports and EU-produced goods, thereby enhancing the competitiveness of domestic manufacturing through carbon pricing. Yet carbon tariffs alone are insufficient to revive European manufacturing. On the eve of CBAM’s formal implementation, the EU’s Simplified CBAM Regulation entered into force in October 2025, introducing systematic revisions to compliance procedures: it introduced an annual import exemption threshold of 50 tons; postponed the declaration deadline to September 30 of the following year; reduced the quarterly carbon certificate purchase requirement from 80% to 50%; and embedded frameworks for emissions calculation, carbon-price exemptions, and penalties—significantly improving CBAM’s operational feasibility during its full implementation phase. Meanwhile, in sectors such as photovoltaic cells and new-energy vehicles, certain non-EU enterprises—leveraging economies of scale and vertically integrated supply chains—have already established pronounced cost advantages.

European Industry Calls for Carbon Reform Changes to Avoid Factory Closures

16 hours ago

Over 100 European industrial firms, including Covestro and Evonik, warn that proposed EU carbon market reforms threaten production due to rising costs. They urge policymakers to adjust the Emissions Trading Scheme before the December vote to prevent factory closures.

reuters

2026-11-05

European Industry Calls for Carbon Reform Changes to Avoid Factory Closures

European Industry Calls for Carbon Reform Changes to Avoid Factory Closures

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