Published by Global Banking and Finance Review
Posted on December 16, 2025
1 min readLast updated: January 20, 2026
The EU is considering a scheme to allow combustion-engine vehicles beyond 2035, using alternative fuels and green steel to meet climate targets.
BERLIN, Dec 16 (Reuters) - The European Commission is weighing a new compensation scheme that could allow car makers to sell combustion-engine vehicles beyond 2035, Germany's Handelsblatt newspaper reported on Tuesday, citing senior Commission sources.
Under the proposed framework, up to 30% of climate targets could be met through alternative fuels, while approximately 70% would be achieved using green steel, the report said.
Discussions over the precise accounting rules are ongoing, Handelsblatt quoted sources close to the negotiations as saying.
The report comes ahead of the Commission's official legislative proposal, also due on Tuesday, following lobbying efforts from Germany, Italy, and the automotive industry that prompted Brussels to ease its proposal for a full ban on new combustion-engine cars.
The mechanism under consideration could result in effective emissions reductions of 90%, Handelsblatt said, with CO2 offsets allowing the continued sales of combustion-engine vehicles.
(Reporting by Kirsti Knolle; Editing by Jacqueline Wong)
The European Commission is the executive branch of the European Union responsible for proposing legislation, implementing decisions, and managing the day-to-day operations of the EU.
Alternative fuels are energy sources that can replace conventional fossil fuels. They include biofuels, hydrogen, and electricity, aiming to reduce greenhouse gas emissions and reliance on oil.
Green steel refers to steel produced with significantly lower carbon emissions compared to traditional methods, often using renewable energy sources and innovative technologies.
CO2 offsetting involves compensating for carbon dioxide emissions by funding projects that reduce or remove greenhouse gases from the atmosphere, such as reforestation or renewable energy initiatives.
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