Two European Parliament committees have backed a compromise that would weaken the EU’s 2035 car CO2 target. Under the text, carmakers would need to cut new-car fleet emissions by 95 per cent in place of the full 100 per cent. They could also earn credits worth up to 7.5 percentage points for using low-carbon European steel.
What did the committees agree?
The Industry committee (ITRE) and the Transport committee (TRAN) each approved the compromise on 22 October 2026, in separate sessions. ITRE backed it by 49 votes to 27, with five abstentions. TRAN followed by 27 votes to 18, with one abstention.
The text forms part of the EU’s so-called auto package. At its heart, it changes the 2035 target for new cars. The current law demands a 100 per cent cut in tailpipe CO2 compared with 2021. The compromise lowers that figure to 95 per cent.
In addition, carmakers that use low-carbon steel produced in Europe could count that effort towards their CO2 obligations. Those credits would be worth up to 7.5 percentage points.
Why is the gap between 95 and 100 per cent important?
A 100 per cent target effectively means every new car sold from 2035 must produce zero tailpipe emissions. In practice, that has been widely read as an end to new petrol and diesel car sales in the EU.
A 95 per cent target leaves a little room. Carmakers could, in principle, keep selling a small share of vehicles that still emit some CO2. That share could include plug-in hybrids or other models with combustion engines.
The steel credits could widen that room further. If a carmaker claimed the full 7.5 points, its effective tailpipe cut could fall to 87.5 per cent, a figure several reports have highlighted. The exact effect will depend on the final wording.
How would the steel credits work?
Steel production is a major source of industrial emissions. Rewarding carmakers for buying cleaner steel could, in theory, cut emissions elsewhere in the supply chain. As a result, lawmakers appear to be shifting some attention from the exhaust pipe to the way cars are built.
Key details remain open, though. Full rules on how low-carbon steel would be defined weren’t available at the time of writing. It also isn’t clear yet how carmakers would prove their steel qualifies. Those points will decide how much the credits count in practice.
How does this compare with other proposals?
The European Commission’s own draft asks for a 90 per cent cut, with the remaining 10 per cent made up through green steel and low-carbon fuels. German Chancellor Friedrich Merz and French President Emmanuel Macron have both backed a 90 per cent cut without that compensation.
Several carmakers and some member states argue that the original timeline is too tight. They point to high battery costs, strong overseas competition and uneven electric car sales across Europe. Environmental groups and many EV advocates, on the other hand, see a firm end date as a vital signal for investors, charging operators and suppliers.
What happens next?
These two votes don’t set Parliament’s position. The Environment committee (ENVI) leads on the file and is due to vote in early November. A plenary vote is likely in December. After that, Parliament and member states in the Council of the EU will negotiate a final text, with a deal expected in early 2027.
As a result, both the 95 per cent target and the 7.5-point steel credit could still change before any law takes effect.
What does this mean for drivers and car buyers?
For most people shopping for a car today, nothing changes yet. The 2035 deadline is still years away, and the rules aren’t final. Carmakers have also invested heavily in electric models, which will keep arriving whatever the exact target.
Even so, the votes show which way the debate is moving. Europe still plans a deep cut in car emissions by 2035, but the route there may include more exceptions than first planned. For buyers weighing up an EV, price, range, charging access and running costs remain the bigger factors.
