Autogas at risk as EU pushes ahead with ICE phase out

The agreement to ban the sale of internal combustion engine vehicles spells trouble for the LPG industry's transition goals, writes Dafydd ab Iago

EU environment and climate ministers have agreed on phasing out the internal combustion engine (ICE) by 2035 and on including road transport and heating fuels in EU carbon trading at the same time as the LPG sector gathered at the European LPG Congress in Barcelona. Both measures threaten the use of autogas and LPG, and the industry's plans to transition to renewable forms of LPG or dimethyl ether (DME) in the coming three decades.

EU ministers on 29 June reached agreement on a set of legal files implementing EU climate policy, including an effective 2035 cutoff date for the sale of new ICE vehicles. It means the Council of the EU and the European Parliament now both support the end date for ICE vehicle sales, paving the way for the revised regulation to become EU law as early as the first half of next year. Ministers have also called for a 55pc greenhouse gas (GHG) emissions cut by 2030 for cars and 50pc for vans, and 100pc for both by 2035 based on tailpipe emissions.

The proposals threaten the European LPG industry's plan to replace LPG with bio-LPG and renewable DME, trade association Liquid Gas Europe's (LGE) general manager Ewa Abramiuk-Lete said before the ministers' decision. "They should recognise the positive role renewable liquid fuels can play in the decarbonisation of passenger vehicles," Abramiuk-Lete said. Setting a 100pc target reduction for tailpipe GHG emissions from 2035 is a "step in the wrong direction".

The EU needs to adopt "a patchwork of solutions" rather than banking solely on electrification of the transport and heating sectors, SHV Energy's Bram Graber said at LGE's Barcelona congress when news of the decision emerged. "For investment to be sustainable, we need first to convert conventional fossil LPG into sustainable transition fuels and renewable liquid gas to be accepted as a low-carbon molecule for the future," UGI International chief executive Laurence Broseta told delegates.

The feasibility of transitioning from fossil LPG to bio-LPG, renewable LPG and renewable DME depends much on political goodwill. The final law has not yet hit the bloc's official journal. "Given that today some 90pc of car buyers are still buying ICE vehicles, and over 95pc use liquid fuels, opening the regulation to recognise climate-neutral fuels simply makes sense," refiners' association FuelsEurope says. The industry promises to give "every assistance" to the European Commission in an assessment process due before the end of 2026.

Last-minute demands by countries, backed by major car manufacturer Germany, led to a compromise that if adopted into law would allow the registration of vehicles "running exclusively on CO2-neutral fuels in conformity with EU law", as well as 2050 climate neutrality goals, after 2035 — albeit following assessment by the commission. This assessment must consider the deployment of zero and low-emission vehicles, and analysis of the secondhand market, sustainable alternative fuels and impacts on consumers. And it must ensure a fair transition to zero-emission road transport — all key features of the LPG industry's talks with EU policy makers.

Emissions costs

The EU is also going to oblige LPG companies to cover their related GHG emissions by buying allowances from a parallel emissions trading system (ETS) for road transport and heating fuels. Among the changes that could end up in the final text is a provision whereby those same firms would only be able to pass a certain proportion of the ETS costs on to customers. Poland, which has the EU's largest autogas market, consuming nearly 2mn t/yr, was foremost among the countries resisting the transport and heating ETS plans. Warsaw held out to the very end as EU environment and climate ministers met. "Taking into account that the existing ETS is not functioning well, we cannot accept [an] extension of the system to transport and buildings," Polish climate minister Anna Moskwa said.