Why the
EU’s 2035 green car rule will be a nightmare for Cyprus’ Council presidency
The
island nation with no car industry will have to wrangle France and Germany into
a common position.
December
16, 2025 6:00 am CET
By Jordyn
Dahl
This
article is part of the Cypriot presidency of the EU special report.
BRUSSELS
— Cyprus, a country without a car sector to speak of, has six months to
negotiate a deal aimed at saving one of the European Union's biggest industries
while not gutting the bloc's climate goals.
The key
is going to be managing the clash between France and Germany over cars and
climate.
It's
shaping up to be quite the battle after the European Commission presented its
automotive package on Dec. 16, overturning the 2035 combustion engine ban and
unveiling a new regulation that aims to set national targets for zero-emission
corporate fleets — vehicles owned or leased by companies for business purposes.
The
Commission's opening bid kicked off a firestorm of reactions with Germany and
the center-right European People's Party claiming victory and left-leaning
groups saying the reversal opens the door even further for Chinese incumbents.
Climate
Commissioner Wopke Hoekstra says the executive is confident the 2035 proposal
will remain relatively unchanged in the EU interinstitutional negotiations. But
the role of shaping the final position of national governments in those talks
will go to Cyprus when it takes over the six-month rotating presidency of the
Council of the EU on Jan. 1.
With
Berlin promising to push for a further weakening of the law and Paris saying
that allowing pure combustion engines to be sold past 2035 is a non starter,
that will be no easy feat.
Cyprus is
promising to be an honest broker. "The Cyprus presidency aims to reach a
text where as many member states as possible can get behind," a presidency
spokesperson said.
The
potential for conflict is enormous because the stakes are so high.
Responsible
for 9 percent of the bloc's gross domestic product, the automotive sector and
its downstream suppliers are a critical economic pillar for the EU. It's also
one facing multiple headwinds: a trade war courtesy of the U.S., stagnating
sales in Europe and stiff competition from Chinese rivals.
A wave of
layoffs and intense lobbying has pressured the Commission to give leniency on
this year's emission targets and to reexamine the law mandating that only new
zero-emission cars can be sold from 2035.
Yet
weakening the 2035 law clashes with the EU's climate goals. The bloc aims to
slash greenhouse gas emissions from transport by 90 percent by 2050 — a key
part of its target of becoming climate neutral by mid-century.
Battle
lines
Talks
three years ago on the original 2035 legislation saw France and Germany pitted
against one another, with other capitals taking sides depending on their own
industrial priorities.
Berlin
and Central European nations have maintained their anti-ban stance, with a
coalition of countries — Bulgaria, the Czech Republic, Italy, Poland and
Slovakia — calling on the Commission to include plug-in hybrids, alternative
fuels and other carveouts in its reform of the 2035 legislation.
Paris and
its green-oriented allies, meanwhile, wanted more stringent action on climate
change.
When the
combustion engine ban was passed in 2023, Cyprus voted in favor. Berlin was
never much of a fan of the legislation, but did end up reluctantly signing on.
But the
politics around the issue have changed dramatically over the last three years.
Climate legislation is out of vogue, becoming a favored target of right-wing
and populist parties — pressing mainstream politicians to amend or scrap
measures.
German
Chancellor Friedrich Merz campaigned on overturning the 2035 ban entirely but
his coalition between the center-right Christian Democrats and center-left
Social Democratic Party prevented him from adopting that stance in Brussels.
Instead,
the coalition agreed in November to a proposal that would allow hybrids and
what Merz called a "highly efficient combustion engine." Berlin later
clarified that such an engine is, well, one that "is highly
efficient."
“Our
common goal should be to achieve innovation-friendly regulations that are open
to all technologies and strike a balance between climate protection and
industrial competitiveness,” Merz said in a letter to the Commission.
France is
also shifting its pro-climate stance under pressure from its own anti-2035
forces.
In
October, France and Spain put forward a proposal that would give automakers
flexibilities on the 2035 target so long as they meet local content
requirements. Both the 2035 reform and the corporate fleets measure are set to
include some degree of "Made in Europe" quotas.
Italy has
continued its drumbeat for biofuels, which can power combustion engines but
critics say is too costly to produce at scale and that it's not as green as
proponents claim.
That sets
up Cyprus and its diplomats, for whom the car industry isn't a key issue, for
the mother of political battles.
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