Germany angers EU after putting brakes on fossil fuel car ban

Berlin has upset EU partners by blocking a milestone agreement to ban new sales of fossil fuel cars from 2035, as German domestic politics take the bloc hostage.

Exhaust pipes of a Volkswagen, photographed with the brand skyscraper at the VW plant in Wolfsburg.
Exhaust pipes of a Volkswagen, photographed with the brand skyscraper at the VW plant in Wolfsburg. Photo: picture alliance/dpa | Julian Stratenschulte

The planned ban is key to Brussels’ push to make the bloc climate-neutral by 2050, with net-zero greenhouse gas emissions. Now, the German chancellor’s scramble to keep his coalition together has enraged many in the EU, since the deal had already passed through each stage of the Brussels legislative process — including approval by member states.

The bloc was due to formally nod it into law on Tuesday but, in an unprecedented manoeuvre, Berlin now says it can not give its agreement.

The European Parliament has already voted to formally approve the text of the bill, which will de facto mean that all new cars sold after 2035 will have to have electric motors.

This means the text can no longer be altered, despite Germany now insisting on further assurances from Brussels that synthetic fuels could still be used in engines after 2035.

The fuel Germany wants an exemption for is still under development and produced using low-carbon electricity. Some of the world’s biggest car manufacturers are based in Germany and synthetic fuels would make it possible to extend the use of combustion engines.

Faced with the unexpected roadblock, the European Commission, the EU’s executive arm, said it would “work constructively” with Berlin to get the bill adopted “quickly”.

The commission did not say, however, exactly what commitment it could give, since the text already paves the way for the use of synthetic fuels if they are deemed to help achieve the aim of zero carbon emissions.

German ‘navel-gazing’

French MEP Pascal Canfin, who oversaw the bill’s passage though scrutiny in parliament, slammed Berlin’s “blackmail”.

He warned that if other member states follow suit on issues important for their domestic agenda it could threaten other texts that form part of the EU’s Green Deal, an ambitious push to achieve carbon neutrality by 2050.

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“The very spirit of European construction is in danger through this incoherent position,” he told AFP.

Separately an EU diplomat, speaking on condition of anonymity, said Germany was exploiting its outsize influence in Brussels. “Only a large EU country can afford to act in such a way,” he said.

Germany is not alone in its concerns. Italy, another major car maker, already said it was opposed, and Poland and Bulgaria had been expected not to vote in favour.

Unlike Germany, however, their opposition was clear from the start, and their opposition was not enough to block the bill’s passage through the Brussels committees.

“Germany is going back on months of negotiations … this is a challenge to the EU’s decision-making process that we rarely see,” said Eric Maurice, of the Robert Schuman Foundation, a European think tank. Maurice said the situation arose from the German government’s “navel-gazing” and the dysfunction on display in the coalition of the Social Democrats, the Greens and the Liberals.

The situation hurts other countries and the EU’s “proper” functioning, he added.

Chancellor bowed to pressure

Behind the block is Germany’s liberal Free Democratic Party (FDP), which is courting votes among the large part of the German population that it suspects opposes the ban on combustion engines.

The FDP wants to assert itself against the Greens by acting as the automobile sector’s defender.

In a bid to keep the coalition together, Chancellor Olaf Scholz bowed to pressure and pushed for the exemption for synthetic fuels.

Environmental groups oppose such fuels and argue they are expensive, require huge amounts of electricity to produce and are polluting since they emit nitrogen oxide, another greenhouse gas.

READ ALSO: How climate change could cost Germany almost one trillion euros by 2050

The automobile industry had largely expected European regulations and invested massively in electric vehicles.

Even if they prove to be helpful in the green transition, synthetic fuels “will not play an important role in the medium-term future of passenger cars”, Markus Duesmann, the boss of Audi, said in the weekly Der Spiegel.

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Can German homeowners expect high renovation costs under new EU law?

The EU is paving the way for new legislation that would make both new and existing homes more climate-friendly - but the law could bring steep costs for homeowners in Germany. Here's what we know so far.

Can German homeowners expect high renovation costs under new EU law?

What’s going on?

Unusually warm winters, droughts, forest fires and catastrophic floods – over the past few years, the effects of the climate crisis have become impossible to ignore. 

And while Germany surprisingly met its emissions targets in 2022, there’s still one major polluter that’s hindering the Green revolution: the energy sector. 

Alongside the transition to climate-friendly renewables like wind and solar energy, a major barrier to battling climate change is poor insulation in the country’s housing stock. An estimated 58 percent of Germany’s residential buildings have proper insulation, but this number varies drastically from state to state – and thin walls and leaky windows can drive up energy usage and costs dramatically.

Enter the EU’s Green Deal, which sets out a whole new set of energy standards for homes. 

Just like fridges and other appliances, the EU wants all properties in Europe to be given an energy efficiency rating from ‘A’ to ‘G’ – with G representing the 15 percent of properties in a country that are the least energy efficient. 

By 2030, the EU wants all homes to reach an energy efficiency class of E, and by 2033, an efficiency class of D. New builds, meanwhile, will need to be climate neutral. It points out that buildings account for 40 percent of energy usage in Europe and are also responsible for a third of all emissions.

READ ALSO: Ask an expert: Is now a good time to buy property in Germany?

How could this affect German homeowners?

The first thing to note is that Germany currently uses a slightly broader range to categorise how climate-friendly a building is: from A to H, rather than A to G. 

That means homeowners in the H, G and F categories could soon need to think about doing some energy-saving renovations, like changing the windows, insulating floors and roofs or swapping gas and oil heating systems for heat pumps or other more climate-friendly options. This is estimated to affect around seven million homes. 

Writing on Twitter, CDU MEP Dennis Radtke suggested that costs for some homeowners could quickly enter the six-figure range. “We are talking about costs between €190,000 and €340,000 for a 140-square-metre home,” he said. “We can’t place the costs of the fight against climate change on grandma’s little house.” 

Flats in Berlin

Flats in Berlin. Photo: picture alliance/dpa/Deutsche Presse-Agentur GmbH | Monika Skolimowska

However, energy efficiency experts have estimated that costs could be closer to €100,000 per home, and that the renovations will cost €254 billion in Germany alone. 

Jakob Grimm, a consultant at the homeowners’ association Haus & Grund, initially expects that most homeowners will simply need to look at improving one aspect of their energy efficiency in order to stay on the right side of the regulations – assuming they aren’t already in the A to E rating. That could mean better windows, newer heating systems or better insulation.

The regulations could also have an impact on property prices – and particularly those of older houses. Kai Warnecke, president of Haus & Grund, believes there could be a dramatic drop in the value of homes that have poor efficiency classes as a result of the new rules.

The EU on the other hand is convinced that climate-friendly renovations will pay off for homeowners in the longer term. That’s also the view of Green Party parliamentarian Jutta Paulus, who points out that energy efficient buildings can save consumers thousands of euros per year. 

READ ALSO: Reader question: How do I install a heat pump in my German property?

Can people get financial help?

That’s highly likely. The German government has a number of existing low-interest credit schemes, tax cuts and other financial assistance available for people looking to improve the energy efficiency of their homes. 

In some cases, people can receive low-interest loans of up to €150,000 and repayment grants of up to €52,500 for the work carried out. That’s for people undertaking major renovations who live in the least energy efficient homes. People in higher-rated homes, meanwhile, can get a repayment subsidy of up to €37,500 – meaning they don’t have to pay back that part of the loan.

Flats near the Frauenkirche in Dresden.

Flats near the Frauenkirche in Dresden. Photo: picture alliance/dpa | Sebastian Kahnert

There are also subsidies available for single measures. Replacing an old gas or oil heating system with an eco-friendly heat pump, for example, can net you up to €24,000 in government grants.

The best way to find out what you may be entitled to is to enlist the help of an energy efficiency expert, who can guide you on what measures will have the most impact on the efficiency of your home and the best ways to pay for them. These aren’t cheap, but if you’re a flat owner in a building with other owners, the costs of the consultation and any work carried out will be split between the members of the home owners’ association. 

READ ALSO: Reader question: Should I modernise my heating system in Germany?

What should renters know? 

The new regulations are likely to be pretty good news for renters and will hopefully spell the end of draughty flats that are impossible to heat in winter. 

That said, there may be one thing that could get more expensive: the government’s CO2 tax. Originally brought in by the Grand Coalition of the CDU/CSU and Social Democrats (SPD), this adds €25 per tonne of CO2 onto emissions-heavy purchases like energy and fuel. 

The traffic-light coalition of the Social Democrats (SPD), Greens and Free Democrats (FDP) recently changed the way this is split between renters and landlords. Rather than the full costs being borne by the renter, landlords pay a proportion depending on how energy efficient the property is.

That means people renting poorly insulated flats have to pay a much smaller share, while someone in a super climate-friendly new-build would pay the lion’s share. 

If your landlord does renovate the building, you may see your rent increase and also have to shoulder more of the CO2 tax. On the flip side, your energy costs should be much lower over time.

READ ALSO: What to know about mortgages and fees when buying property in Germany

What happens next?

On Tuesday, the Green Deal was voted through by the EU parliament – and now it’s up to member states to pass the laws in their own countries.

That means Economics Minister Robert Habeck (Greens), who’s responsible for the energy brief, will have to draft a law that brings the new regulations into force.

Economic and Climate Minister Robert Habeck.

Economic and Climate Minister Robert Habeck. Photo: picture alliance/dpa | Fabian Sommer

This will give us greater clarity on a number of issues, like what happens if homeowners don’t renovate their properties in time. Habeck could also decide to shake up some of the subsidies for energy efficiency measures and even offer more help to struggling property owners – provided he can convince the liberal-led Finance Ministry to loosen its purse strings yet again.

Useful vocab 

Energy efficiency rating – (die) Energieeffizienzklasse

Renovation – (die) Sanierung 

Harmful to the climate – klimaschädlich 

Grant – (der) Zuschuss 

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