The European Union will reportedly make an exemption for synthetic fuels (or e-fuels) under its planned 2035 ICE ban under pressure from Germany. However, the new leeway reportedly comes with conditions that German officials still dislike.

In a draft proposal for the ICE phaseout, reportedly seen by Reuters, the ban now includes an exemption for vehicles tuned to burn synthetic fuels. It will require these vehicles to lock out other fuels to limit their net carbon emissions, which e-fuels greatly reduce.

The exemption was reportedly requested by Germany in February, due to the auto industry making up the largest proportion of its industrial sector. Germany’s transport minister however reportedly remains unsatisfied with the European Commission’s accommodations and wants to tweak them further. The current proposal would reportedly require the development of new ICEs tailored to e-fuels, which would be difficult for German automakers committed to ceasing ICE development—Audi for example plans to cease ICE production by the end of 2026. The European Commission reportedly aims to resolve its conflict with Germany by Thursday’s E.U. summit.

Porsche Taycan 4 Cross Turismo. Porsche

Exemptions for low-volume manufacturers producing CO2-emitting vehicles have already been added to the proposed ICE ban, leaving loopholes for commercial and performance vehicle manufacturers. In theory, the e-fuel accommodation opens this up to mass-market manufacturers too, allowing for the continued production and use of ICE vehicles in Germany and beyond.

Synthetic fuels are a gasoline substitute made by capturing CO2 from the atmosphere and processing it into fuel using electricity. If made with renewable energy, they have much lower full-cycle emissions than petroleum products. However, a study by the Potsdam Institute for Climate Research reportedly found that the global e-fuel industry is on track to fall far short of global demand, limiting its viability as a fuel source.

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