KAMA Opposes EU's Sudden Greenhouse Gas Regulations... "Serious Impact Feared on Domestic Companies"

Growing Concerns and Opposition Within Europe, Even in Regions with Advanced Automotive Industry

[Asia Economy Reporter Ki-min Lee] The Korea Automobile Manufacturers Association (KAMA) expressed concerns on the 4th that the European Union's carbon emission reduction legislative package (EU Fit-for-55), announced last month, could have a negative impact on domestic automobile manufacturers.

On the same day, KAMA announced that it delivered a letter of recommendation expressing concerns about the EU Fit-for-55, signed by Chairman Jeong Manki, to the Ministry of Trade, Industry and Energy, the EU Commission, the EU Delegation to Korea, and the European Automobile Manufacturers Association (ACEA).

The EU Fit-for-55 is a policy proposal by the EU Commission that aims to reduce greenhouse gas emissions by 55% by 2030 compared to 1990 levels, up from the previous target of 40%, and to ban the sale of internal combustion engine vehicles starting in 2035. It must be ratified by the EU Council and the European Parliament in the future.

KAMA pointed out that domestic companies, which heavily rely on the sale and export of internal combustion engine vehicles, will have to reconsider their EU export models and production plans, which were established based on existing EU regulatory standards, from scratch, indicating that the negative impact on the domestic industry will be significant. From 2017 to 2019, electric vehicle sales in the Eurozone increased by 110%, while charging stations increased by only 58%, leading to criticism of infrastructure development failure during the same period.

Furthermore, KAMA criticized the ban on internal combustion engine sales as a measure that reduces the flexibility of automobile manufacturers to utilize various carbon reduction technologies and limits consumer choice, stating, "Since it is impossible to predict which technology will achieve carbon neutrality from a full lifecycle perspective, it is necessary to move away from the fixed notion that only electric vehicles are 'eco-friendly cars' and internal combustion engine vehicles are 'polluting cars,' and adopt a stance of technological neutrality and openness."

KAMA argued that expanding the construction of charging stations, which can be considered a key factor in the spread of electric vehicles, should provide high purchase attractiveness to consumers in terms of charging convenience, and that it is reasonable to promote industrial transformation through incentive-based policies. In particular, regarding the carbon border adjustment mechanism, considering that Korea and the EU are major automobile trading partners, that Korea runs a trade deficit in automobile trade with the EU, and that Korea implements an emissions trading system (ETS) similar to Europe’s, KAMA requested that domestically produced cars continue to be excluded from this mechanism.

The EU Fit-for-55 faces strong opposition even within Europe, where the automobile industry holds significant weight. The governments of Germany, France, and Italy have expressed opposition to the 2035 ban on internal combustion engine sales and the sharp tightening of automobile carbon dioxide standards. They especially voiced dissatisfaction with the exclusion of vehicle types such as hybrids and plug-in hybrids, which contribute substantially to carbon dioxide reduction during the transition period.

ACEA pointed out that carbon neutrality in the transport sector hinges on carbon reduction from a full lifecycle perspective, that the problem lies in the absence of clean fuels rather than internal combustion engine technology itself, and that all technological options, including high-efficiency internal combustion engines and hybrids, should not be excluded to enable efficient carbon reduction during the transition period.

The German Automobile Association (VDA) also stated that the 2035 ban on internal combustion engine sales is a policy that limits the market to a single powertrain technology and is an announcement made without considering the market and consumers. Additionally, the Italian Automobile Association (ANFIA) expressed opposition and concern, stating that the impact on domestic companies based on internal combustion engine vehicles and about 5,000 parts suppliers is enormous.