Paris and Berlin put it in writing: VEEFs are to become zero-emission vehicles

Germany and France have put it in writing. In a joint position on the EU’s Automotive Package dated 15 October 2026, the two largest member states call for vehicles running exclusively on renewable and low-carbon fuels – VEEFs – to become a new category of zero-emission vehicles. Ten days ago, we reported on the first leaks of this deal. The paper now on the table confirms its core and goes further on renewable fuels than many had expected. Because France had so far been among the countries blocking the inclusion of renewable fuels in the CO₂ standards for new cars and vans, the agreement could unlock a general approach in the Council of the EU.

VEEFs: from a recital to a vehicle category

In the Commission’s proposal, vehicles running only on renewable fuels appeared in a recital – Recital 11 – but not in a binding article. Berlin and Paris now want that approach “implemented in concrete terms”. Four points stand out:

• Zero-emission status. VEEFs are to be a new category of zero-emission vehicles. That matters far beyond the fleet regulation, because tax incentives, registration rules and procurement criteria across Europe refer to the zero-emission definition.
• No late start date. The paper names no date of application. “As soon as possible” would have been better, but there is also no deliberately late date that would have made the category irrelevant for years.
• Open on fuels. The category covers “eligible renewable and low carbon fuels” – without limiting it to e-fuels or excluding particular renewable fuels, as had been discussed during the negotiations.
• Enforcement. Exclusive use is to be guaranteed by technical requirements, robust control and penalty mechanisms, and safeguards ensuring that the engine cannot be converted back.

For the Power-to-X community, this is the most significant step since the e-fuels exemption was first promised in 2023. A fleet regulation that only measures tailpipe emissions cannot tell fossil petrol from a synthetic fuel made from renewable energy with recycled CO₂. A zero-emission category for VEEFs finally creates a regulatory home for cars that run on defossilised fuels.

The catch: fuels “produced in Europe”

The weakest point of the paper is one sentence: “These fuels shall be required to be produced in Europe.” From SPIN’s perspective, this is the wrong lever. The climate does not care where a molecule of e-fuel is made – it cares about how quickly fossil carbon is displaced. Renewable electricity is cheapest where sun and wind are abundant, and the EU’s own hydrogen strategy has long counted on imports. A local-content rule for fuels narrows supply, raises costs and slows down exactly the ramp-up that the VEEF category is meant to trigger.

The paper adds that incentives to ensure European production “need to be considered in the respective legislation”. This suggests that the details will be negotiated in the upcoming revision of the Renewable Energy Directive rather than in the car regulation – and that softer instruments, such as multipliers for European fuels, could replace a hard requirement. How Berlin and Paris envisage this is not yet clear.

For Switzerland, there is an additional question: what does “Europe” mean? For vehicles, the paper defines “Made in Europe” as the EU-27, with an opt-in for European partners that were part of the single market on 1 January 2020, subject to full reciprocity and anti-circumvention measures. Whether this definition will also apply to fuels, and whether Switzerland – connected to the single market sectorally through its bilateral agreements – could qualify, is open. For Swiss producers of renewable fuels, this is decisive. Bern should seek clarity early.

No fuel credits – but 90 per cent without offsetting

A fuel credit mechanism, which would have allowed manufacturers to count renewable fuels placed on the market towards their fleet targets, is not part of the package. Instead, the 2035 target is to become a genuine 90 per cent CO₂ reduction, and manufacturers would not have to compensate the remaining ten percentage points. The Commission had proposed 90 per cent as well, but with the residual emissions to be offset through low-carbon steel and renewable fuels. Berlin and Paris justify dropping the offset with the growing use of renewable fuels in the existing fleet – an implicit recognition of their role, but without a direct incentive for anyone to produce them.

Earlier media reports had spoken of an 80 per cent target. The paper itself says 90 per cent – although, with VEEFs counting as zero-emission vehicles, the actual share of battery-electric cars among new registrations could end up lower.

The rest of the package at a glance

• Flexibility: averaging over 2030–2031 and banking of credits generated in 2029, capped at 7 g CO₂/km per manufacturer. Vans get a five-year averaging period for the 2025 target.
• Plug-in hybrids: the utility factor stays at its current level until 1 January 2030 for models with at least 80 km of electric range; afterwards it is updated annually on the basis of real-world data.
• Super credits: battery-electric cars made in Europe count 1.2 times, small ones 1.4 times; with European low-carbon steel and aluminium, the factors rise to 1.3 and 1.5. This replaces the steel offset mechanism previously envisaged.
• “Made in Europe”: local-content requirements for vehicles and batteries that tighten in steps from 2028 to 2034 and beyond; 80 per cent of a manufacturer’s vehicles must meet them.
• Corporate fleets: indicative national targets instead of mandatory ones – but only “Made in Europe” vehicles would be eligible for public purchase incentives and public procurement.

Switzerland already has the simpler answer

Switzerland has aligned its CO₂ rules for new cars and vans with the EU’s for years, so what Brussels decides will sooner or later shape Swiss rules as well. On one point, however, Switzerland is ahead. To prove that a VEEF really only runs on renewable fuel, the paper relies on control and penalty mechanisms and on technical safeguards in the vehicle. Article 11a of the Swiss CO₂ Act takes a far more pragmatic route: an importer who places as much synthetic fuel on the market as a vehicle will consume over its lifetime may count that vehicle at 0 g CO₂/km. No special pumps, no chips, no checking what drivers fill up with – what counts is that the renewable fuel enters the market and displaces fossil fuel.

As we argued in our first analysis, the EU would do well to adopt this principle – without copying the flaws in the Swiss implementing ordinance. Renewable fuels and electrification are not rivals; together they reduce cumulative CO₂ emissions faster than either on its own. The Franco-German paper takes that idea seriously for the first time. The next step is to make sure that a “made in Europe” clause for fuels does not slow down what the VEEF category is meant to accelerate.

Sources: Joint German-French Position on the Automotive Package, 15 October 2026; Joint Franco-German press statement on the future of the European automotive industry, Élysée, 16 October 2026.

🤖 AI transparency: This text and its visual were created using AI, reviewed and approved by a human.