This paper outlines the vital importance of supporting the ongoing progress towards the mass adoption of EVs and electromobility. It also highlights the risks of diverting the focus – and the vital investments required for electrification – towards the fictitious solution of e-fuels.

We therefore reiterate our full support for both the 2035 zero-emission targets for cars and vans and the inter-institutional agreement set out in a European Commission statement and confirmed by recital 11 of the CO2 Standards Regulation on the introduction of synthetic fuels beyond this date. If there were to be any role for alternative fuels, it should be minimal, and limited to vehicles running exclusively on 100% climate neutral RFNBOs.

Investment in the net-zero industrial ecosystem requires a clear, consistent and properly implemented regulatory framework. European transport industries are committed to, and are building, this ecosystem. EU auto manufacturers have committed around €250 billion to electrification by 2030, while 86 new electric vehicle models will be launched between 2024-26 (58 in segments A, B and C). The EV charging industry is already investing heavily in expanding both public and private charging infrastructure; and – with an average of €33 billion per year invested in our distribution grids over recent years – financing for utilities are continuing to grow to accompany the transition of the grid.

However, adding e-fuels to this regulatory framework will create investment uncertainty. This will ultimately deter stakeholders from fully committing to electric vehicle manufacturing and infrastructure roll-out. Given the combination of increasing competition from non EU countries, rising energy prices and a shortage of qualified EU workers, it is ever-more crucial to focus EU investments on electric vehicles to reach critical mass and help the EU remain globally competitive. A stable regulatory environment remains essential for maintaining Europe’s leadership in sustainable transport and ensuring that investments are directed towards proven, scalable technologies rather than nascent ones such as e-fuels.

Europe’s transition to electromobility is generating demand for a skilled workforce capable of driving innovation and advancing Europe’s standing in the global clean tech market. Any delays to the transition to electromobility would in turn delay the urgently required shift of the workforce from the fossil fuel industries to the electromobility supply chain and the e-mobility infrastructure ecosystem. Given the current regulatory framework and CO2 standards, jobs in energy production and energy infrastructure in Europe are expected to increase by 128% and 543%, respectively. E-fuels also do not offer the same potential for creating the quality, high-value and future-proof jobs in emerging sectors.

By investing in electromobility, Europe can build a workforce that is properly equipped for the green transition. It will bring skilled employment to local communities and ensure that the transition to clean mobility is supported through jobs with long-term prospects and benefits for European workers. A 2021 BCG study showed almost 80,000 extra operational production workers will be needed in the manufacture of batteries and accumulators, while OEMs will require 30,000 new software and system developers to manufacture electric motor vehicles.

Given the growing need for energy security, electromobility offers Europe the opportunity to establish robust local supply chains based on locally recycled materials and locally produced renewable energy, thus reducing the need for imported fossil fuels. This is important, given that the vast majority of any future e-fuels used in Europe would be imported. As the global market for EVs continues to grow, Europe must concentrate its efforts on bridging the gap to other global leaders.

The rising cost of energy is a key factor in the recent difficulties facing Europe’s industries. Developing a transport mode as energy intensive as e-fuels (e-fuels require five times the energy of direct electrification; hydrogen three times) would only drive energy costs higher across Europe.

The production of synthetic fuels is already highly energy intensive; each kilowatt-hour used to produce synthetic fuels is precious energy that cannot provide for other, more efficient, means. Synthetic fuels generated to store electricity during production peaks will be far from sufficient to match Europe’s demand and should be directed to hard-to-abate sectors such as aviation, shipping and energy intensive industries, not road transport for which more energy efficient technologies exist.

With electricity demand continuing to escalate, using synthetic fuels for land transport risks further undermining Europe’s industrial competitiveness by inflating operating costs for manufacturers, reducing the appeal of Europe as a hub for industrial investment. Prioritising energy-efficient, directly electrified transport modes is therefore essential for maintaining energy affordability, supporting industry and ensuring Europe’s long-term economic resilience.

The Platform for Electromobility urges European lawmakers to prioritise investments in clean mobility, and to avoid policies that would instead divert the required critical resources towards inefficient and expensive alternatives. By focusing on electromobility, we can create a sustainable, competitive and resilient transport sector that serves Europe’s citizens, economy and environment.

We consequently reiterate our full support for both the 2035 zero-emission targets for cars and vans and for the inter-institutional agreement – expressed in a European Commission statement1 and confirmed by recital 11 of the CO2 Standards regulation2 – on introducing synthetic fuels past this date. If any future role were to be given to alternative fuels, it should be minimal and restricted to vehicles running exclusively on 100% climate neutral RFNBOs (renewable liquid and gaseous fuels of non-biological origin).

A stable regulatory system is crucial. Attracting investment to create the net-zero industrial ecosystem for electromobility will be facilitated by maintaining a consistent, clear regulatory framework and climate objectives. This means first and foremost ensuring that the European Green Deal legislations as voted in the 2019-2024 mandate remain steady over time. We strongly warn against disruption of the Green Deal and their long-term planning notably by limiting the scope of major reviews. At a more granular level, we call for stability in the regulatory frameworks of all transport modes. It is a key element for successful risk management. A consistent, clear regulatory framework secondly means performing sound impact assessments before proposing new legislation. Potential legislations should be in line with the direction taken by the Green Deal as voted during this mandate. Thirdly, regulatory stability means  focus on proper implementation through the swift adoption of all necessary complementary acts In a nutshell, implementing before reviewing.

Existing EU funds can already serve as valuable assets if they are distributed efficiently and intelligently, notably by streamlining access to finance, particularly for net-zero industries, through instruments such as the Innovation Fund and InvestEU. To do so, we have identified five “low-hanging fruits” measures that can be taken without further delay:

• Low hanging fruit 1: Guarantees. As a matter of priority, public investment tools should crowd in private investments by increasingly making use of instruments like guarantees. Firstly, the InvestEU Fund should be further mobilised in support of a 360° e-mobility industry strategy. Secondly, the European Investment Bank (EIB) Group should strengthen the provision of commercial bank guarantees for investments by companies across the EV value chain, replicating the recently announced €5 billion guarantee facility for the wind sector[1].

• Low hanging fruit 2: Innovation Fund. We welcome the recent initiative under the Innovation Fund to dedicate €3 billion to the EV battery value chain. This new mechanism needs to focus on the most sustainable EU battery and components manufacturers[2]. A robust mechanism needs to be built, including for channelling increased funding from Member States to match EU funding.

• Low hanging fruit 3: Capacity building. To enhance accessibility, we propose that EU or national administrations train and appoints specific staff to provide advisory services to both applicants and national authorities responsible for distributing EU funds. A substantial portion of these funds, especially in the case of Recovery funding, may remain unallocated due to the constrained administrative capacity of Member States[3] to prepare projects or process applications. Supporting project preparation and speeding up authorization procedures at the national level would thus benefit both the applicants and the authorities involved.

• Low hanging fruit 4: Mid-term MFF revision. The mid-term revision of the MFF is the opportunity for European institutions and Member States to significantly raise funds of strategic programmes (STEP but also CEF) to provide appropriate financing instruments to support a competitive decarbonisation of the EU industry and support investments in clean, sustainable mobility solutions.

a. Why a Net Zero Investment Plan now?

The climate investment gap is deepening by the day and the way to fill the gap will be a major challenge for decision-makers in the coming years. European elections are the democratic the window of opportunity to set priorities about where EU funds should flow and the level of support that EU will provide to shift the continent to clean mobility. 2024 is thus a milestone year for the green transition. The STEP platform is, although welcomed, unfortunately far from the pan-European response to global competition on cleantech that the EU needs. Therefore, we support the creation of a major Net-Zero Investment Plan after the EU elections.

b. Predictable and upfront support for op-ex

The EU should ensure that financial instruments do not exclusively prioritise innovation but also consider the importance of providing strategic support for operating expenses and production, for a limited duration. We highlight the fact that operational expenses (op-ex) are not covered by the current InvestEU funding framework. This means that in addition to promoting innovation, financial support should be directed towards sustaining and optimizing day-to-day operations and the production processes of net-zero industries, thereby creating a more balanced approach to funding allocation. Beyond deciding the level of support that will be provided to the green and digital transition of the transport sectors, upfront predictability and certainty about possible funding should also be provided. A rulebook for financing should make sure op-ex support is both predictable and upfront.

c. Consider ventures with higher risk profiles

To complement this new approach and move closer to a truly comprehensive funding allocation, it’s essential to also consider ventures with higher risk profiles. For instance, when it comes to the Alternative Fuels Infrastructure Fund, the current financing terms are notably stringent. These terms often exclude high-risk endeavours, as they require a minimum of 50% funding from national banks or partners, effectively limiting opportunities for investment in riskier projects. This, in turn, disproportionately affects emerging industries and initiatives in Central and Eastern Europe. To address this issue, the European Investment Bank (EIB) should explore investments in riskier ventures, and InvestEU should be equipped to provide loans and equity for such undertakings. The InvestEU Program, designed to offer guarantees to both public and private banks, can play a pivotal role in enabling them to take more substantial risks in their lending and equity operations. This approach can facilitate the inclusion of ‘investments in riskier ventures’ and contribute to a more diverse and dynamic investment landscape.

d. How to finance a Net Zero Investment Plan?

This Net-Zero Investment Plan should be structured under the EU Multi Financial Framework on the one hand, and via new bond issuance programme replacing the Next Generation EU programme on the other hand. In addition, this broader investment plan should ensure that sufficient European and national funding resources, leveraging private sector investment, are available to achieve Europe’s objectives as set in the Climate Law and in the Smart and Sustainable Mobility Strategy. On top of the achievement of dedicated programs such as the TEN-T, it should include a dedicated Green Industry fund. State Aid measures should be re-designed and local supports coordinated at EU level to ensure a level playing field at European level,. The future State Aid regime should mandate EU governments to integrate environmental and social considerations to their support schemes, so that only best-in-class projects benefit from public support at regional and national level.

Stability also requires robust international cooperation. Strengthening ties with diverse regions would diversify sources, reduce geopolitical risks and uncertainties, ensure a secure supply chain, enhance global industrial collaborations, and uphold a fair competitive environment for all clean transport industries.

1. Proactively setting a Level Playing Field

The EU response to other regions’ recent green industry support program should be prepared with care, to avoid provoking a global subsidy race. The goal should be to create an international level playing field between all economies, aimed at reaching Paris Agreement climate targets (COP21) together and aligned on WTO rules. For certain industries, level playing field can only be reached by matching competitors’ support: for examples, for battery manufacturing, the US IRA provides a significant op-ex support per kWh produced; for reskilling workers, massive support for training automotive workers is proposed. We call for EU policymakers to match such support in some manner to help its European battery industry compete on more equal terms. Without such matching, there can be no global level-playing-field for e-mobility related manufacturing.

1. Cooperation to avoid trade disruption

With several studies by the OECD[1] highlighting the challenges faced by European railway producers in the Chinese market, as well as the public assistance received by their companies, the question of China’s undisclosed subsidies benefiting its products is not new for the railway industry. Cooperations should be reinforced to ensure there are no such practices risking unbalancing global competition.

1. Cooperation to diversify sources

Dependence on one single third country for green transport technologies is tangible^[2] and should also be mitigated. China dominates the production of solar panels, batteries for EVs and part of the world trade in wind turbines. To diversify sources, we support proposals to form a green technology partnership between governments and businesses of the major economic powers to reduce strategic dependencies. Such partnership would be intended to complement, not replace, existing supply chain. Beyond cooperation with third countries, cooperation should also be within European countries and industrial partnerships to multiply joint purchases and thus secure supply of strategic raw materials at advantageous prices.