The EU Environment Council on March 17, 2026, failed to reach a unified position on the revision of CO2 emission standards for cars and vans, exposing a deep divide between member states. France and Sweden led a coalition advocating for a strict electric mobility pathway, while Poland and Hungary demanded greater flexibility, including the continued use of internal combustion engines beyond 2035. The meeting, chaired by the Polish Presidency, was intended to finalise the Council's negotiating mandate but ended without agreement, postponing a decision to a future session.
Commission Proposals and Prior Debates
The clash follows the European Commission's automotive package presented on December 16, 2025, by Executive Vice-President Stéphane Séjourné and Commissioner Wopke Hoekstra. That package proposed a 90% fleet-wide CO2 reduction by 2035, with a compensation mechanism allowing manufacturers to offset the remaining 10% via sustainable fuels or low-carbon steel. Commissioner Hoekstra further elaborated on these proposals on January 28, 2026, emphasising flexibility and technological neutrality. However, the Council debate revealed that member states remain split on the core question of whether to allow combustion engines beyond 2035.
Positions and Cleavages
France and Sweden, supported by Denmark and the Netherlands, argued that the 2035 target should remain an effective ban on new internal combustion engine vehicles, with only battery electric and hydrogen fuel cell vehicles permitted. They stressed the need for regulatory certainty to drive investment in charging infrastructure and battery production, aligning with the Commission's Battery Booster initiative. In contrast, Poland and Hungary, backed by the Czech Republic and Slovakia, called for a more flexible approach, allowing plug-in hybrids and combustion engines running on e-fuels or biofuels to count towards the 2035 target. They argued that a rigid ban would harm their domestic automotive industries, which rely on combustion engine production, and increase costs for consumers.
Impact on Stakeholders
The deadlock creates uncertainty for EU car manufacturers, who face divergent national regulations and potential delays in investment decisions. A strict electric mandate would benefit producers of battery electric vehicles and charging infrastructure companies, but could disadvantage manufacturers with strong combustion engine supply chains, particularly in Central and Eastern Europe. National authorities in countries like Poland and Hungary would face pressure to support industrial transition without clear EU-level flexibility. EU consumers may experience a fragmented market, with varying availability of vehicle types and prices across member states.
Next Steps
The Council is expected to resume discussions under the upcoming Danish Presidency, which may seek a compromise. The European Parliament, which adopted its position in January 2026, has called for a 100% zero-emission target by 2035 with limited derogations. Trilogue negotiations cannot begin until the Council agrees a common position, prolonging the legislative process.