EU 2035 CO2 targets for vehicles face fresh pressure from Berlin

German

EU 2035 CO2 targets for vehicles face new pressure from Berlin. Friedrich Merz urged European Union policymakers to keep multiple drivetrains on sale after 2035. However, he wants technology-neutral EU 2035 CO2 targets for vehicles that protect competitiveness.

The European Commission plans to revise car and van CO2 standards on 10 December. It already offered more compliance flexibility for 2025–2027. Therefore, Berlin sees a window to reshape the 2035 pathway.

Technology-neutral compliance expands beyond tailpipe metrics

Merz signaled flexibility in a letter to Ursula von der Leyen. He asked for continued acceptance of efficient combustion engines after 2035. Meanwhile, he also backed plug-in hybrids and range-extender EVs beyond 2035.

Berlin also wants rules to recognize value-chain reductions. It wants regulators to credit sustainable inputs like green steel. As a result, automakers could offset vehicle emissions with cleaner materials and processes.

Fleet rules, e-fuels, and industry pressure shape the 2026 debate

Merz wants more flexible interim fleet targets to cut penalty risk. He also supports higher blending quotas for synthetic and biogenic fuels. However, he rejects mandatory EV quotas for corporate fleets. Instead, he prefers incentives that accelerate adoption without mandates.

Industry lobbying has intensified after Stellantis dropped its 2030 all-electric sales goal. Campaigners warn that weaker rules could raise exposure to imported EV competition. Meanwhile, BYD growth adds urgency to Europe’s industrial strategy. Therefore, EU 2035 CO2 targets for vehicles now sit at the center of policy and market risk.

The Metalnomist Commentary

Technology-neutral rules can protect jobs and investment during a messy transition. However, Europe must avoid locking in slow decarbonisation pathways. Therefore, policymakers should pair flexibility with clear, enforceable emissions outcomes.

German industry decarbonisation pressure tests Berlin’s policy toolbox

German Bundestag

Germany’s German industry decarbonisation pressure is intensifying as policymakers reject extra steel support while insisting current tools are enough.

German lawmakers have rejected an opposition motion for more targeted steel decarbonisation aid, but they openly acknowledge mounting competitiveness risks. They point to weak export markets, rising energy costs and the phase-out of free EU ETS allowances as key drivers of German industry decarbonisation pressure. As a result, firms in steel and chemicals now face climate policy tightening just as global demand softens.

Meanwhile, Berlin is promoting an industry power price and extended power price compensation as its main answer to German industry decarbonisation pressure. Officials stress that grid fee cuts, carbon cost compensation and tax reductions are not “subsidies” but cushioning against global shocks. However, industry groups warn these measures remain fragmented and late compared with US and Asian incentive schemes. The debate now centres on how much state help is needed to keep core assets onshore.

Germany searches for a cheaper decarbonisation path

Germany’s government insists German industry decarbonisation pressure must be managed without choosing the “most expensive way”. Policymakers now frame circular economy, raw materials partnerships and smarter infrastructure as cost-control levers. Therefore, they emphasise more recycling, reduced raw material dependence and tighter integration with resource-rich partners.

However, the steel and fertilizers sectors argue that ETS tightening and CBAM timing create a dangerous cost squeeze. Industry leaders warn that phasing out free allowances before export support is clear risks accelerating plant closures. They call for extended free allocation, slower ETS tightening and faster clarity on CBAM-linked export schemes.

Steel, chemicals and CCS at the heart of the debate

Steel, fertilizers and chemicals sit at the core of German industry decarbonisation pressure, because they rely on high-temperature processes and constant energy. Officials argue that extending power price compensation signals to investors that Germany wants these sectors to stay and evolve. As a result, Berlin is pushing Brussels to widen eligibility and lengthen compensation schemes.

At the same time, the government wants a more permissive stance on carbon capture and storage. Economy officials argue that onshore CCS should become the norm, not the exception, if Germany wants deep industrial decarbonisation at realistic cost. Yet political resistance to CCS, local opposition and permitting delays still threaten timely deployment.

The Metalnomist Commentary

Germany’s battle with German industry decarbonisation pressure shows how climate ambition and industrial policy now collide in real time. Unless export support, power price relief and CCS rules are aligned quickly, Europe’s largest industrial base risks losing capacity before low-carbon investments mature. For metals, fertilizers and chemicals, the next legislative cycle will decide whether Germany remains a core production hub or shifts further toward managed deindustrialisation.

Aurubis–Troilus copper offtake agreement secures long-term Quebec concentrate supply

Aurubis

Aurubis–Troilus copper offtake agreement locks in a long-term stream of Quebec copper-gold concentrate. The Aurubis–Troilus copper offtake agreement will supply about 75,000 wet metric tonnes each year. As a result, the Aurubis–Troilus copper offtake agreement underpins smelter feed while advancing Troilus’ project finance.

Offtake terms link Berlin and Quebec’s next copper project

Aurubis signed a multi-year deal for ~75,000 wmt/yr of copper-gold concentrate. Deliveries will start after mine construction and financing close. The agreement was inked in Berlin during Canada’s prime ministerial visit. Therefore, the contract aligns strategic industry ties between Germany and Canada.

Financing pathway leverages German guarantees and lenders

Troilus targets a debt package of up to $700mn for project build-out. The plan includes KfW IPEX-Bank and Euler Hermes untied loan guarantees. Consequently, the offtake strengthens bankability by securing a committed buyer. Aurubis benefits from diversified feed and low-risk concentrate sourcing in the Atlantic basin.

The project will deliver concentrate from Quebec’s established mining corridor. Logistics should favor reliable shipments into European smelters. Meanwhile, the deal supports European supply security for energy-transition metals. Copper demand from grids, EVs and data centers continues to expand.

The Metalnomist Commentary

This offtake is classic “pre-FID de-risking.” A top-tier smelter anchor improves debt terms and schedule confidence. Watch final concentrate specs, penalty elements and shipping terms, which will shape realized economics.

Germany sets four-year BEV support for 2026–29 to revive private EV demand

BEV

Germany sets four-year BEV support for 2026–29 to restart private buying after a volatile incentives cycle. Germany sets four-year BEV support for 2026–29 with income-based eligibility and a fixed budget ceiling. Therefore, the plan targets affordability and stability rather than blanket market stimulation.

Germany sets four-year BEV support for 2026–29 after incentives ended in 2023 and BEV sales fell 27% in 2024. That decline let the UK overtake Germany as Europe’s largest BEV market. Meanwhile, Berlin now aims to smooth demand with a multi-year framework instead of short bursts.

Households under €80,000 taxable income can claim €3,000 for BEVs and €1,500 for plug-ins. The threshold rises to €90,000 with two children, with €500 per child and extra top-ups for lower earners. As a result, the subsidy design pushes support toward families and mid-income buyers.

Income caps and hold rules reshape demand and resale behavior

A 36-month holding period applies across the scheme to reduce quick resale of subsidised cars. Applications open in May, but registrations must occur after 1 January 2026. Therefore, the policy sets a clear start line for OEM planning and dealer pipelines.

The €3bn budget could support about 800,000 vehicles, which may sit below potential demand if sales rebound. If uptake accelerates, support per vehicle could effectively tighten through allocation pressure. However, the scheme may still lift baseline demand by lowering upfront cost and improving buyer confidence.

Plug-in limits and budget pressure could shift the mix

Plug-ins qualify only until mid-2027 and only with an 80km electric range or emissions under 60g CO2/km. Berlin may also tighten plug-in funding later using real-world CO2 performance data. Meanwhile, that approach addresses the risk that incentives pull buyers toward plug-ins rather than full BEVs.

The timeline also aligns with Germany’s extension of the EV vehicle-tax break to 2035, which supported a late-year sales rebound. December registrations reached 54,774, up 63% year on year. As a result, the new subsidy could amplify momentum if supply and pricing cooperate.

The Metalnomist Commentary

This policy looks like a demand-stabiliser with guardrails, not an aggressive volume push. However, the income caps will steer buyers toward lower-priced models. That dynamic could widen the lane for cost-competitive entrants, including Chinese brands.

Vulcan Frankfurt LiOH processing plant secures key permit in Germany

Vulcan Energy Resources

The Vulcan Frankfurt LiOH processing plant has cleared a major regulatory hurdle with its new German construction permit. The 24,000 t/yr lithium hydroxide monohydrate facility will sit in Frankfurt and anchor Vulcan’s European battery strategy. As a result, the Vulcan Frankfurt LiOH processing plant moves closer to supplying regional cathode and EV manufacturers with local low-carbon lithium.

Vulcan plans to fund the Vulcan Frankfurt LiOH processing plant during July–December 2025. However, the company must raise sufficient capital by 31 December to retain €104mn in German government grants awarded in late July. This deadline adds urgency to financing discussions and underscores Berlin’s support for EU battery value chains. Vulcan will feed the plant with lithium chloride from its Landau extraction project in southwest Germany, creating an integrated domestic supply route.

Offtake-backed model underpins Vulcan’s project financing

Long term offtake contracts provide a strong commercial base for the Vulcan Frankfurt LiOH processing plant. Vulcan has committed 182,000t of LiOH over ten years to LG Energy Solutions, Umicore and Stellantis. Therefore, a significant portion of future output is already locked into Tier-1 battery and automotive customers.

In addition, Vulcan is negotiating a fourth offtake deal it expects to sign by year end. This additional contract should further support project finance discussions with lenders and strategic investors. Meanwhile, Stellantis has already backed the Frankfurt plant through a $50mn equity investment in 2022, becoming Vulcan’s second-largest shareholder. This mix of offtake, strategic capital and grants gives the project a diversified funding stack.

Frankfurt LiOH plant targets 2027 start within EU battery buildout

Project timelines show how the Vulcan Frankfurt LiOH processing plant fits into Europe’s broader battery expansion. Vulcan began producing LiOH at a Frankfurt demonstration plant in November 2024 to de-risk technology and qualification. The company now targets commercial production at the full-scale facility in 2027, subject to successful financing.

Meanwhile, the integrated Landau–Frankfurt flow sheet aims to deliver lower-carbon lithium to EU customers. This is increasingly important as battery passports, ESG scoring and local content rules shape sourcing decisions. Therefore, the Vulcan Frankfurt LiOH processing plant could become a flagship European lithium hub if execution stays on track.

The Metalnomist Commentary

Vulcan’s progress confirms that offtake-backed lithium chemicals projects with strong policy support remain bankable, even in a volatile capital market. The key test now is whether Vulcan can close funding in time to secure German grants and hit its 2027 start date. For cathode producers and OEMs, Frankfurt’s eventual ramp-up will be a critical signal for how fast Europe can localise strategic lithium chemicals.

Europe Faces Challenges in Strategic Battery Funding Amid Market Oversupply

EU Battery

European countries are struggling to adopt a unified and strategic approach to funding domestic battery supply chains as global oversupply of battery materials, led by China, continues to push prices lower through at least 2030. These issues were a key focus of the Future Battery Forum held this week in Berlin, Germany.

Oversupply in Battery Materials

The battery materials market, including nickel and cobalt, faces oversupply due to significant production increases from Indonesia and the Democratic Republic of Congo (DRC). According to Siyamend Al Barazi, head of unit mineral economics at Germany’s Dera (German Mineral Resources Agency), "markets will be oversupplied at least until 2030." China's state subsidies, estimated at $230 billion from 2009 to 2023, have further contributed to this glut, maintaining downward pressure on global prices.

European Critical Raw Material Challenges

Despite the establishment of the EU Critical Raw Material Act (CRMA), which identifies 34 critical and 17 strategic materials vital to green and digital technologies, European funding efforts fall short of addressing the massive investment needs for battery material production and processing.

In September, Germany's KfW bank approved a €1 billion raw materials fund, while similar initiatives were launched by Italy, France, and the UK. However, panelists at the forum, including Jonathan Vanherberghen from Rio Tinto, argued that these amounts are insufficient for large-scale projects. For example, the capital expenditure for Rio Tinto's Jadar lithium project in Serbia alone stands at $2.5 billion.

Fragmented Funding and Industry Concerns

The fragmented funding landscape in Europe has made it difficult to pool resources effectively. Vanherberghen noted that funds like KfW’s could be more impactful if extended over longer periods to accommodate changing market cycles. Similarly, Cris Moreno, CEO of Vulcan Energy, highlighted that funding of at least $1 billion annually is required to meet the region’s ambitions. Moreno’s own lithium project in Germany has an estimated cost of $1.4 billion.

Despite the challenges, these funding initiatives provide some support by attracting institutional investors and fostering collaboration with car manufacturers, which are under increasing pressure to meet carbon targets and ESG (Environmental, Social, and Governance) standards.

Toward a Unified European Strategy

Experts at the forum emphasized the need for a more unified and sizeable funding mechanism to bolster Europe’s battery supply chain. A single, cohesive approach would allow Europe to compete with countries like China, South Korea, and Japan, where government support for raw material projects is significantly more robust.

Vanherberghen concluded, "Funds like that will only support projects with the highest ESG standards. Bringing these things together could create a much more effective system than the fragmented approach currently in place."