[Net Zero 1st Street] Europe Locks Down for Carbon Neutrality... Urgent Crisis for Automakers

[Ostrava (Czech Republic) = Asia Economy Reporter Kim Hyewon] Reducing emissions from the transportation sector, which accounts for 20-30% of greenhouse gas emissions by country, is considered the top priority for achieving carbon neutrality. This is why major advanced countries, including those in Europe, were the first to impose strict environmental regulations on the automotive industry. The trend of these countries expanding and reforming subsidy programs for eco-friendly vehicles is in the same context. There is a clear shift toward prioritizing national interests in automotive industry policies to realize carbon neutrality. In contrast, South Korea is experiencing severe side effects in many areas as subsidy policies and infrastructure development are not keeping pace with the adoption rate of eco-friendly vehicles such as electric cars.

According to the European Union (EU) Commission and the Korea Automobile Manufacturers Association on the 4th (local time), the ‘Fit for 55’ package, which the EU Commission is currently legislating, aims to reduce greenhouse gas emissions by 55% by 2030 compared to 1990 levels. Various incentive programs granted to companies that sell many eco-friendly vehicles are also planned to be completely abolished starting in 2031. Ultimately, the goal is to ban the sale of internal combustion engine vehicles entirely from 2035.

Global automakers, including Hyundai Motor Company and Kia, are under immediate pressure. Although they have joined forces with the European Automobile Manufacturers Association (ACEA) to respond jointly, the government’s strong determination makes overturning the regulations difficult. The industry is appealing for a sufficient grace period when setting CO2 regulations, reflecting difficulties such as the economic impact of the COVID-19 pandemic and the lack of electric vehicle charging infrastructure.

The revised alternative fuels infrastructure directive, which effectively mandates EU member states to build electric vehicle and hydrogen charging infrastructure, is also a significant burden. For example, for passenger electric vehicles, regulations require the establishment of 300 kW charging stations every 60 km by 2025 and 600 kW charging stations every 60 km by 2030. Hydrogen charging stations must be installed every 150 km by 2030. The automotive industry estimates that to meet the 2030 CO2 regulation set by the EU Commission, at least 6 million electric vehicle charging infrastructures are needed within the region. The calculation is that 200,000 charging infrastructures are required to reduce CO2 by 1 gram. Jung Seongsu, head of Hyundai Motor’s Brussels office, said, “We are continuously discussing with the EU Parliament and member state governments to ensure that industry requests such as CO2 emission regulations and the revised alternative fuels infrastructure directive are reflected in the final legislation. Currently, eco-friendly vehicle policies are heavily focused on electric vehicles, but we are also requesting EU-level policy support to expand the dissemination of hydrogen-related technologies.”

Recently, not only Europe but also the United States and Japan have been increasing subsidies for electric vehicles, while South Korea is trending toward reducing them, raising concerns about declining competitiveness. Germany has more than doubled its electric vehicle subsidy cap from the previous 4,000 euros to 6,000 euros in 2019 and 9,000 euros in 2020, and extended the payment deadline to 2025.

Ostrava (Czech Republic) = Reporter Kim Hyewon

This content was produced with the assistance of AI translation services.