After the agreement on the approval of cars with combustion engines beyond 2035, Federal Finance Minister Christian Lindner wants to reform the taxation of motor vehicles. The use of climate-friendly fuels – so-called e-fuels – should be taxed less than petrol or diesel. “If the fuel is climate-friendly, then the taxation of the vehicle tax to the energy tax must be adjusted,” said the FDP chairman of the German Press Agency. The Ministry of Finance will present a concept for this.

Lindner admitted that it will be a while before cars with e-fuels in the tank will be driving on German roads. “But for people and the economy it will be an important planning factor that e-fuels are taxed more cheaply than fossil fuels.”

Lindner and the FDP are thus continuing their commitment to the combustion engine. After weeks of wrangling about the future of this drive, Transport Minister Volker Wissing (FDP) agreed on a compromise with the EU Commission on Friday evening. After 2035, new vehicles with internal combustion engines can be registered in the EU if they are fueled with climate-neutral fuel.

High production costs: are e-fuels even worth it?

E-fuels are made with renewable electricity from water and carbon dioxide extracted from the air. Unlike conventional fossil fuels such as petrol or diesel, they do not release any additional gases that are harmful to the climate. Due to the high power consumption during production and the high production costs, it is currently still unclear whether the production of cars powered by e-fuels is really worthwhile, or whether it is cheaper to rely entirely on battery-powered electric cars.

“Pandora’s box opened”: Expert fears uncertainty

The German Association of the Automotive Industry nevertheless reacted positively to the compromise between the Federal Government and the EU Commission on Saturday. “We need all climate-friendly technologies to achieve the EU climate targets,” said VDA President Hildegard Müller. E-fuels are an important expansion of the possible spectrum.

However, car expert Ferdinand Dudenhöffer fears that car manufacturers who are currently looking for the right path away from fossil fuels will become unsettled. “The EU Commission’s unprofessional approach has fueled the discussion as to whether it is really right to go so uncompromisingly on the electric car,” says the expert from the Center Automotive Research. “Pandora’s box is open for all doubts about electric mobility.” This is bad for the European auto industry, “because the Chinese and Americans will increase the gap to the European industry in electric cars as a result of the new investment uncertainties.”

Climate protectors also complain that the “urgently needed focus of the automotive industry on efficient electromobility” will be watered down with the agreement. “This rotten compromise undermines climate protection in transport and it harms Europe,” says Benjamin Stephan of Greenpeace.

Compromise is to be implemented by autumn 2024

The compromise between the federal government and the EU Commission ends a long stalemate that could also have political repercussions. The European Parliament and EU states had actually already agreed in October that only emission-free new cars may be registered in the EU from 2035. However, Germany insisted that cars fueled with e-fuels be included. At the beginning of March, at the urging of the FDP, the federal government blocked the confirmation of the agreement by the EU states because the Commission’s commitments were not yet sufficient.

According to Wissing, concrete procedural steps and a binding schedule have been fixed for the implementation of the solution that has now been found. “We want the process to be completed by autumn 2024,” he said.

The final vote of all 27 EU countries should now take place next Tuesday. In addition to Germany, other countries such as Italy, Austria and Poland were originally critical of the project. With German approval, however, it is considered fairly certain that the necessary majority will be achieved.

Environment Minister Lemke: “It’s good that this impasse is over”

Chancellor Olaf Scholz (SPD) welcomed the compromise at the weekend. However, he also made it clear that he still considers an application of the regulation to be open. “No one can say how many use it and whether it will be relevant at all.”

The Greens reacted with relief on Saturday that a compromise had finally been found. “It’s good that this impasse is over,” said Environment Minister Steffi Lemke. “Anything else would have severely damaged both confidence in European procedures and in Germany’s reliability in European politics.”

However, it is feared that in the future other EU members could follow Germany’s example and unravel solutions that have already been found in disputes. In this respect, it is not yet foreseeable what long-term damage the dispute has caused in the European Union.