Position Paper: Proposal for the Revision of the Regulation setting CO2 emission standards for new cars and vans
14 November 2025 | The Automotive Package announced at EU level offers the opportunity to establish a European lead market in the automotive sector through voluntary market incentives. The goal is to strengthen the competitiveness of the European automotive industry while simultaneously promoting the production of low-emission steel in the EU — a win-win situation.
The proposed system for recognising low-emission steel within the regulation consists of three interlinked elements:
- Transformation-incentivizing entry criteria for low-emission steel: The system requires a minimum classification under LESS, which is then stepwise increased over time to support the transformation of steel production towards climate neutrality. The steel used by the automotive manufacturer must meet a defined LESS classification in order to qualify for emission-reduction credits.
- Determination of emission-reduction credits: CO₂ credits can be calculated either on the basis of the LESS classification (LESS-based approach) or on average Product Carbon Footprint values (PCF-based approach). The resulting credits can then be applied to tailpipe emissions or directly offset against financial penalties. The latter option would also allow credits to be traded between automotive manufacturers, analogous to CO₂ pooling.
- Bonus system for steel made in EU (super credits): Automotive manufacturers receive additional incentives when using low-emission steel produced in the EU, thereby strengthening the competitiveness of the European industry.
The proposed system enables targeted, low-bureaucracy consideration of upstream emissions without introducing complex life-cycle assessment methods, while simultaneously strengthening EU value creation in a strategic lead market. Through this voluntary, market-based mechanism, industrial and climate policy objectives in two strategic sectors can be coordinated more efficiently.
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