ICCT: Relaxing CO₂ standards for cars could cost up to 185,000 jobs in the EU
ICCT released a 58-page report titled “Powering jobs: employment under the EU’s passenger car CO₂ standards.” According to analysts, weakening EU CO₂ standards for passenger cars would result in 185,000 fewer jobs in Europe’s automotive industry by 2025. The automotive industry argues the opposite: it is the rigid target for 2035 that threatens jobs.
What currently applies and what Brussels wants to change
Between 2025 and 2027, manufacturers must achieve an average fleet emissions level of 93.6 g CO₂/km, which is 15% lower than the baseline year of 2021. By 2030, the reduction target rises to 55%, and by 2035 to 100%, effectively ending the sale of new gasoline-powered cars.
At the end of 2025, the European Commission proposed easing these rules in the “Auto Package” draft. Some parliamentary committees are following this approach. Most MEPs want a 95% reduction target by 2035. Manufacturers could go even 7.5 percentage points lower if they use low-emission European steel in their vehicles. The proposal still needs to go through further stages of review in the committees.
Three ICCT Scenarios
The authors calculated three variants:
Current Standards: existing regulations unchanged.
Policy Measures: current standards plus actions to boost production in the EU, such as local content requirements under the Industry Accelerator Act or national incentives. ICCT did not model these tools separately but assumed a higher share of EU-produced BEVs and PHEVs.
Delayed Standards: a five-year delay in standards, with electric vehicles accounting for 100% of new car sales only by 2040. ICCT itself calls this a “simplified assumption,” as the relaxation could take various forms.
By 2030, the differences between scenarios are small. By 2035, they look like this:
Scenario
Employment in 2035 vs 2025
Current standards
about 2% less
Current standards + industry policy
about 10% more, or around 320,000 jobs
Delayed standards
up to 6% less, or up to 185,000 jobs
Laxing regulations would temporarily slow down cuts in internal combustion engine vehicle production. However, according to ICCT, it would also hinder growth in electric vehicles, batteries, recycling, and chargers, resulting in fewer overall jobs. The biggest difference between the scenarios comes from vehicle production itself. Batteries, recycling, and charging infrastructure account for an increasingly larger share over time.
What the report does not include
ICCT deliberately separated the impact of CO₂ standards from the rest. In addition to the vehicle model, factors such as automation, digitization, geopolitics, and overall economic conditions were also considered. The need for worker retraining was not evaluated either. These are political scenarios, not a forecast of the entire labor market.
Sandra Wappelhorst, lead author of the report, says: “Weakening CO₂ standards is presented as a way to protect jobs, but our analysis shows the opposite. The EU should complement these standards with measures to strengthen domestic EV supply chains. Relying on outdated technologies like internal combustion engines will not help workers in the long run.” Peter Mock, director of ICCT Europe, adds that maintaining current standards will help European manufacturers take the lead in the EV market.
ICCT is not a neutral arbiter here, and a five-year delay is just one possible form of relaxation. Even under the “no changes” scenario, targets are 2% lower than in 2025. Benefits only appear when Brussels adds industrial policy measures.
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