What the Automotive Package Actually Says — The Details That Matter

The European Commission’s Automotive Package, presented on December 16, 2025, is one of the most significant regulatory shifts in European automotive history. It does not abandon the 2035 deadline — but it fundamentally changes what that deadline means in practice.

Under the previous regulation, carmakers faced a 100% CO₂ reduction target by 2035 — effectively a full electric mandate. The new proposal replaces this with a 90% reduction target, with the remaining 10% of emissions compensable through three mechanisms: the use of e-fuels and biofuels (up to 3%), the incorporation of low-carbon steel made in the EU (up to 7%), or a combination of both.

EU Automotive Package December 2025 — 90% CO₂ reduction target replaces 100% ban · plug-in hybrids · range extenders · ICE vehicles viable beyond 2035 with e-fuels compliance · Photo: Unsplash

The practical consequence is that plug-in hybrids (PHEVs), range extenders, mild hybrids, and certain internal combustion engine vehicles are no longer automatically excluded from the EU market after 2035. Provided manufacturers meet the 90% fleet-wide reduction and compensate the remaining 10% through the permitted mechanisms, they retain the flexibility to sell a mix of powertrains — including vehicles running on certified e-fuels.

Why This Is Bigger Than It Looks — The Fleet-Wide Mathematics

The 10% offset mechanism may sound modest, but its implications for synthetic fuel demand are substantial. The EU passenger car market registers approximately 10 million new vehicles per year. At 90% CO₂ reduction, the average fleet-wide emissions remaining are roughly 10 g CO₂/km per vehicle sold. If manufacturers choose to compensate this through e-fuels rather than steel credits, the certified synthetic fuel volumes required scale directly with fleet size.

Transport & Environment estimates that allowing up to 3% of the offset via alternative fuels would enable carmakers to sell any powertrain after 2035 — including pure combustion vehicles — as long as the fleet average stays within the 90% reduction threshold. This creates a structural, ongoing demand for certified e-fuels in the automotive sector for the first time.

The E-Fuels Certification Challenge — What Still Needs to Happen

The Automotive Package opens the regulatory door for e-petrol — but the key is in the certification. For e-fuels to count toward the 10% offset, they must be certified as carbon-neutral under the EU’s Renewable Energy Directive (RED III) as renewable fuels of non-biological origin (RFNBOs). This certification framework is still being finalised in secondary legislation.

The Commission has acknowledged this gap: the proposal specifies that “applicable emissions accounting rules and certification rules are to be defined in secondary legislation.” This creates a window — and a risk. If certification rules are not in place by 2030, manufacturers planning to use e-fuels for compliance will face uncertainty. The legislative timeline in H1 2026 is therefore critical not just for the primary regulation but for the secondary measures that make e-fuels compliance practically workable.

E-fuel certification under RED III RFNBO rules is the critical next step · Secondary legislation defining accounting and certification rules expected 2026–2027 · Photo: Unsplash

Range Extenders — The Architecture That Makes E-Petrol Work

The Automotive Package’s explicit permission for range extenders beyond 2035 is particularly significant for e-petrol economics. A range-extended electric vehicle (REEV) running on e-petrol offers a fundamentally different efficiency profile than a conventional ICE car: the combustion engine operates exclusively as a generator, running in its optimal efficiency band at all times, never subject to the variable load conditions that reduce ICE efficiency in conventional driving.

Horse Powertrain’s H12 engine — achieving 44.2% thermal efficiency and 3.3 litres per 100 km WLTP in range extender configuration — demonstrates the real-world potential. At 3.3L/100km, the fuel cost of e-petrol at €3.40/L is approximately €11.22 per 100 km. With natural hydrogen from Lorraine at €0.50/kg bringing e-petrol production costs to ~€1.80/L, that figure drops to €5.94 per 100 km — competitive with today’s electric charging costs in many EU markets.

What This Means for Greater Region E-Petrol Production — The Industrial Opportunity

The Automotive Package transforms e-petrol from a niche compliance mechanism into a structural component of EU automotive regulation. For the Greater Region — Belgium, Luxembourg, Lorraine and Saarland — this creates a clear industrial opportunity: produce certified e-petrol at scale, close to the automotive manufacturing clusters of Germany, Belgium and France, using natural hydrogen from Lorraine and captured industrial CO₂ from the region’s steel and chemical industries.

The EU Automotive Package does not guarantee e-petrol will succeed at scale. It depends on REGALOR II confirming the Lorraine deposit, on HY4Link being built, on RED III certification being finalised, and on natural hydrogen costs reaching the €0.50/kg target. But for the first time, the regulatory framework unambiguously supports a role for e-petrol in the EU automotive market beyond 2035 — and the Greater Region has the industrial assets to supply it.