On November 5, the European Parliament’s Environment Committee (ENVI) approved its position on revising climate targets for the EU automotive sector. The proposals soften the European Commission’s initial plan but give a more prominent role to purchases of low-carbon steel produced in the European Union.
For new passenger cars, the proposed target for reducing tailpipe emissions by 2035 would fall from 100% to 87.5%. A further 7.5 percentage points could be credited through the use of low-carbon steel from the EU, bringing the overall reduction target to 95%. Without these steel credits, the target for cars would remain at 87.5%.
Requirements for vans would also be eased: emissions would have to be reduced by 35% by 2030, rather than the current target of 50%, and by 80% by 2035, rather than 100%. Steel credits could cover up to 7.5% of the target for vans from 2035, but their use would not be mandatory.
Unlike the European Commission’s original proposal, credits for low-carbon steel could be used as soon as the new rules take effect. Until 2035, they would be allowed to offset no more than 3% of the target; the limit would then rise to 7.5%.
Last December, the European Commission proposed revising the existing emissions requirements for cars as part of a package of measures to support a “clean and competitive European automotive sector.” ENVI’s decision does not yet change the law: it must be approved by the full European Parliament and the Council of the EU. The committee’s compromise is scheduled to be put to a vote during the December plenary session. If approved, it will serve as the basis for further negotiations with EU governments.
ENVI’s proposals do not establish their own definition of low-carbon steel. The committee refers to a future steel act under the EU Ecodesign for Sustainable Products Regulation (ESPR), which is now expected to be adopted in the first half of 2027. The definition was initially planned for inclusion in the draft Industrial Acceleration Act, but was moved to the ESPR after disagreements in the industry over “sliding scale” adjustments and local-content requirements.
To qualify for a credit, steel must be produced in the EU. Under ENVI’s wording, steel is considered to be produced in the European Union if it is “melted and poured for the first time within the Union.” The committee links this rule to the “melted and poured” criteria introduced under steel overcapacity regulations, which strengthened EU safeguards for the sector in July.
The “sliding scale” provides a more favorable classification for products made using less steel scrap. The approach is intended to account for the limited global supply of scrap and support the transition to electric arc furnace steelmaking, as well as direct reduced iron projects. These are often seen as the most realistic way to decarbonize the sector; such a mechanism could also help traditional steelmakers finance the transition.
However, the scale adjustment reflects progress in decarbonization, rather than just the actual carbon footprint calculated using product carbon footprint metrics or a life-cycle assessment. Critics fear this could diminish the significance of low-carbon steel labeling and make it harder for manufacturers of finished products to assess actual emissions.
In construction, carbon requirements linked to environmental product declarations are already in use, including under the Construction Products Regulation, national certification rules and local permitting procedures. Electric arc furnace steelmakers fear that the new criteria will account for their technology less favorably than production using integrated blast furnace and basic oxygen furnace facilities. According to a recent study of the UK construction sector, steel buyers primarily want to see proper certification and an approved environmental product declaration, rather than having to understand the details of different production routes.
The European steelmakers’ association Eurofer has meanwhile agreed on its own compromise definition of low-carbon steel. It allows “sliding scale” adjustments for carbon steel flat products and certain long products, but provides for other, unadjusted criteria for most long products and all stainless steel.
ENVI’s text on the future definition under the ESPR says the European Commission should take into account the need to incentivize the production of direct reduced iron using carbon-free hydrogen. Participants familiar with the development of the criteria do not believe this wording necessarily conflicts with Eurofer’s compromise: the automotive industry mainly uses flat products from integrated blast furnace and basic oxygen furnace production.
