The European Parliament has taken another step towards revising the European Union’s 2035 vehicle-emissions framework, after lawmakers from three major political groups agreed amendments offering manufacturers greater flexibility in meeting carbon dioxide reduction targets.

The compromise, approved on 22 October by Parliament’s Transport and Industry committees, proposes an 87.5 per cent reduction in average emissions from new passenger cars by 2035, compared with the 2021 baseline. This is less stringent than the European Commission’s proposed 90 per cent reduction and represents a further departure from the existing 100 per cent reduction in tailpipe emissions for new cars and vans.

The changes have not become law. They remain subject to parliamentary procedures and negotiations with EU governments. Nevertheless, the committee agreement shows how concerns over manufacturing competitiveness, production costs and technological choices are reshaping European climate legislation.

A fundamental revision of the 2035 framework

The original 2035 target, adopted in 2023 as part of the EU’s Fit for 55 legislation, required manufacturers to achieve a 100 per cent reduction in average tailpipe carbon dioxide emissions from new cars and vans. It effectively directed the market towards battery-electric and other zero-emission vehicles.

Manufacturers have argued that the transition is taking place under difficult commercial conditions. Competition from Chinese producers, costs of developing new platforms and batteries, and uncertainty over charging infrastructure contributed to demands for regulatory flexibility.

In December 2025, the European Commission responded with an automotive package proposing a 90 per cent reduction requirement by 2035. It would permit manufacturers to compensate for some remaining emissions using mechanisms involving low-carbon steel produced in the EU and qualifying renewable fuels.

The latest parliamentary compromise would lower the target further, to 87.5 per cent, while allowing low-carbon steel credits to count towards compliance. For light commercial vehicles, lawmakers also proposed reducing the 2035 target to 80 per cent and the 2030 target to 35 per cent.

Why low-carbon steel matters

A notable feature of the compromise is the connection between car-emissions rules and European steelmaking. Steel production is a major industrial source of carbon dioxide, and companies face investment requirements to replace conventional production processes with lower-emission alternatives.

Regulatory credits for carmakers using qualifying European low-carbon steel could create demand for cleaner industrial materials and encourage domestic investment. But emissions avoided during production are not equivalent to reductions in exhaust emissions. The accounting mechanism therefore creates a distinction between cutting tailpipe output and compensating for some remaining emissions through materials and manufacturing.

The compromise also connects vehicle rules with a broader industrial-policy debate about European-made products. As EU Today previously reported, vehicle decarbonisation has increasingly become part of the discussion about European industrial competitiveness.

Electric vehicle sales continue to increase

The debate comes despite growth in electric vehicle registrations. According to figures from the European Automobile Manufacturers’ Association, battery-electric cars represented 22.7 per cent of new EU passenger car registrations in the first nine months of 2026, against 16.1 per cent during the same period of 2025.

Approximately 1.93 million battery-electric cars were registered between January and September, with considerable growth in Germany and France. Hybrid-electric vehicles nevertheless remained the largest single powertrain category at 36.3 per cent, while petrol and diesel together represented 28.2 per cent, down from 36.9 per cent a year earlier.

The figures show that electrification is progressing, but combustion engines still account for a substantial share of sales. Manufacturers must make investment decisions across several technologies while anticipating changing legislation.

Disagreements over industrial strategy

The parliamentary compromise follows discussions between France and Germany about the relationship between car-emissions rules and measures favouring European production. Paris has emphasised domestic industrial capacity; Berlin has pressed for greater technological flexibility.

Supporters of looser standards argue that manufacturers need time to adjust investment and respond to consumer demand. Critics warn that weakening the target could delay investments in electric vehicles, batteries and charging networks by making future demand less certain.

The eventual legislation will determine not only which vehicles may be sold after 2035, but also how the EU balances emissions reduction, international competition and the position of its manufacturing industry.

Europe’s electricity market recorded substantial regional differences on Tuesday, 27 October, with average wholesale prices ranging from approximately €6 per megawatt-hour in northern Sweden to more than €255 in Romania.

The figures reveal a persistent difficulty for European energy policy: although the continent has an increasingly interconnected electricity market, businesses and consumers remain exposed to very different underlying wholesale costs depending on location.

According to European day-ahead electricity market data, Sweden’s SE2 bidding zone recorded an average of €6.23 per megawatt-hour, while Finland stood at approximately €6.65. Romania reached €255.20, roughly 41 times northern Sweden’s price. Bulgaria registered approximately €254, Hungary €241 and Greece €225. Germany recorded approximately €155, Belgium €160 and France €162.

These are wholesale prices for delivery on 27 October, not final bills for households or businesses. Their differences nevertheless raise questions about how effectively Europe’s electricity networks distribute power from areas of lower-cost generation to those facing greater costs.

Why a common market produces different prices

European electricity trading is organised through interconnected national and regional markets. Cross-border capacity allows relatively inexpensive power to reach regions where demand is greater or local generation is more expensive.

When transmission capacity is adequate, neighbouring prices can converge. Physical networks, however, have limits. Congested interconnectors can prevent additional imports even when large price differences exist.

Other influences include availability of power stations, renewable output, fuel prices, consumption and system stability. Regions with substantial hydropower, nuclear generation or strong renewable production may experience comparatively low prices. Markets relying on gas-fired generation can be more expensive when gas plants are needed to satisfy the final increment of demand.

The result is a market responding to common European conditions but still shaped by local generation and transmission constraints.

Southeastern Europe’s structural constraints

The European Union Agency for the Cooperation of Energy Regulators, ACER, has repeatedly examined the causes of regional price divergence. In its 2026 assessment of cross-zonal electricity trade, the agency considered unusually high prices and limited access to lower-cost power in southeastern Europe.

Constraints include available cross-border capacity and shortages of flexible generation able to respond to changing renewable output, especially in the evening. Countries including Greece, Bulgaria, Romania, Hungary, Croatia and Slovenia have encountered substantial regional differences.

Those findings do not prove the cause of each price movement on 27 October. They do, however, explain why disparities can persist despite common market rules. ACER has advocated improved coordination among transmission operators, more effective use of existing networks and additional flexibility through storage and demand management.

Industrial consequences of expensive electricity

Energy-intensive industries, including steel, chemicals and fertiliser production, are particularly sensitive to electricity costs. Where contracts are exposed to wholesale markets, sustained regional price differences can influence output and investment decisions.

The relationship between wholesale prices and bills is not immediate. Firms may hedge prices, use long-term contracts or produce their own power. Network charges, taxes and government support also affect the amount paid. Still, persistent market differences can shape industrial competitiveness.

As EU Today reported, EU energy ministers are due to examine proposed changes to electricity network charges and market administration on 29 October. Network tariffs are distinct from wholesale prices, but both affect total electricity costs.

Renewables and the need for flexible networks

According to ACER’s energy-market monitoring, renewable sources represented around half of EU electricity generation in 2025. Solar energy can reduce prices during the day, but output falls sharply towards evening, sometimes requiring more expensive power stations to increase generation.

This increases the value of storage, flexible production, responsive demand and international connections that can balance surpluses and shortages between regions. Yet major transmission lines can take years to complete owing to planning, permitting, investment and construction requirements.

The priority is therefore not simply to install more renewable capacity. Europe’s grids and supporting technologies must be capable of moving and using that output efficiently.

What the price divide reveals

A single day’s wholesale prices should not be mistaken for long-term average electricity costs or a permanent competitive advantage. Nevertheless, the persistence of regional disparities documented by regulators shows the problem extends beyond isolated daily volatility.

For EU institutions, the question is whether further market integration can make energy more affordable while preserving incentives to invest in generation and transmission. National governments must balance security of supply, infrastructure financing and industrial competitiveness.

Electricity trading across Europe is increasingly integrated. The physical systems supplying it remain considerably less uniform. Until those constraints are addressed, the price of power will continue to reflect geography as well as the underlying cost of energy.