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Petrol heads rejoice!

The EU will let you keep your roaring internal combustion engines beyond 2035. But it will cost you!

On Tuesday, REUTERS reported that the EU is preparing an amended version of its regulation to ban internal combustion engine cars in 2035 in order to address concerns from Germany and more recently Italy. Where the EU had originally planned to ban internal combustion engines (ICE) altogether, the two countries have lobbied hard for a continuation of sales of ICEs provided they run exclusively on CO2 neutral fuels, so called e-fuels. The new proposal, which aims to find everyone’s approval as early as this Thursday at the EU summit, therefore seems to (grudgingly) give way to this demand in an attempt to not derail the entire Green Deal planning, which heavily depends on the transformational change in transportation and mobility that will be enforced by this particular regulation.

This puts the spotlight on a previously fairly unknown industry: The producers of e-fuels and related technologies. E-fuel production is based on the extraction of hydrogen. This typically happens by means of an electrolysis process that breaks down water (e.g. seawater from desalination plants) into its components if hydrogen and oxygen. In a second step, the hydrogen is combined with CO2 extracted from the air and converted into a liquid energy carrier: The e-fuel. It is worth noting, that this process does itself require a fair amount of electricity and is generally less energy efficient than just running the entire vehicle using electricity.

For this reason, the proposed changes to the regulation will likely not substantially slow down the large-scale transition away from ICEs to EVs as the EV will remain the more cost-efficient way of operating a vehicle in a CO2free world. It does on the other hand open a new market for car makers and fuel suppliers to continue to provide ICE enthusiasts with those roaring engines.

Find out more about the e-fuel industry and the listed companies that are already active in this field in our research report on sustainable fuels below. 

Source: Exclusive: EU drafts plan to allow e-fuel combustion engine cars | Reuters