Written by Nicolas d’Hanis
Dear reader,
As autumn settles in there is no shortage of developments keeping Brussels busy. From industrial competitiveness to climate resilience and energy security, the EU’s policy agenda continues to move forward, with important decisions taking shape across several key files.
In this edition, we take a closer look at the Franco-German “Made in EU” deal and what it could mean for the automotive sector and the Industrial Accelerator Act (IAA). We also explore the latest developments on the EU Emissions Trading System (ETS) reform, the new Climate Resilience Framework and the EU’s plans to strengthen energy security through joint energy purchasing.
The spotlight
Franco-German ‘Made in EU’ deal: can it unlock the EU’s industrial agenda?
On 16 October 2026, France and Germany reached a political agreement linking stricter “Made in Europe” requirements for the automotive sector with more flexible EU car emissions rules.
The deal aims to unblock negotiations on two closely connected files: the revision of CO₂ emission standards for light-duty vehicles (LDVs) and the proposed Industrial Accelerator Act (IAA). While France and Germany hope to accelerate both files, their agreement exposes divisions among Member States and within the European Parliament over climate ambition, European industrial preference and the EU’s approach to international trade.
Read on to learn more about the contents of the deal!
How would the deal change the EU’s 2035 car emissions target?
Under the Franco-German agreement, carmakers would face a 90% reduction in fleet-average CO₂ emissions by 2035 compared with 2021 levels, against the Commission’s proposed 100% reduction. The remaining 10% would not have to be compensated through measures such as low-carbon steel or other emissions-reduction mechanisms.
This represents a key win for Germany, which has long pushed for greater flexibility to keep combustion-engine and hybrid vehicles on the market beyond 2035, in line with the interests of its automotive industry. In return, Germany has backed European production requirements for the sector, a long-standing French priority, linking access to certain public support measures to European manufacturing.
Therefore, the deal ties greater technological flexibility to a stronger “Made in Europe” approach. However, the agreement remains a negotiating position rather than a change to EU law. Other Member States have not yet endorsed it, some criticising France and Germany for not consulting them and trying to bypass the wider EU legislative process.
Can the compromise gain traction in the European Parliament?
The European Parliament’s emerging compromise follows a different approach from France and Germany. Their proposal would require carmakers to cut fleet-average CO2 emissions by 87.5% by 2035. Of this reduction, 80% would be mandatory, while the remaining 7.5% to be achieved through investments in green steel. It would also introduce a category for vehicles running exclusively on eligible alternative fuels.
Will the Franco-German deal reshape the Industrial Accelerator Act?
The Franco-German agreement highlights a fundamental disagreement over the scope of the IAA’s “Made in Europe” provisions. France wants the approach to extend beyond cars to other strategic industries, including steel and nuclear energy, while Germany cautions against treating the agreement as a blueprint for wider industrial policy compromises.
Under the Franco-German deal, cars made in the EU and certain neighbouring countries could qualify for “Made in Europe” status. However, the UK, Switzerland and Norway would only be included if they offer the EU the same benefits in return.
This geographical scope finds some echo in the ENVI committee’s opinion, calling for a stricter “Made in Europe” approach and limits to when products from third countries can qualify as European. However, it has raised concerns among other MEPs and Member States about the implications for existing trade relationships. Some EPP MEPs have gone so far as tabling amendments to reject the IAA proposal altogether. Meanwhile, the draft report submitted on 11 September by the lead joint INTA-ITRE-IMCO committee is still being discussed.
What’s next?
While the LDV file is progressing in the European Parliament, Member State experts will discuss the Irish Presidency’s third IAA compromise text on 26–27 October, which would require the Commission to consult them before deciding which non-EU countries qualify for equivalent treatment under the ‘Made in Europe’ rules and for which products. Both files will ultimately require agreement between Parliament and Council through trilogues.
For businesses across the automotive, steel and clean-tech value chains, the outcome of negotiations on both files will shape the balance between emissions-reduction obligations, access to public support and incentives for European manufacturing. Publyon is following developments across both files.
Policy updates
Commission opens EU-wide platform to connect biomethane buyers and suppliers
On 4 November, The European Commission will launch the first trading round of its Biomethane Mechanism, aiming to bring together companies seeking renewable gas with potential suppliers across the EU. Additionally, Commission will also release a regulatory dashboard setting out the national frameworks in major biomethane markets, intended to make cross-border transactions easier. Buyers may submit their requirements until 23 December, while suppliers can respond from 21 January 2027.
The initiative comes at a time of growing interest in biomethane as both a decarbonisation option and a source of energy system resilience. While Energy Commissioner Dan Jørgensen described biomethane as a strategic asset, a TNO report found that biomethane has attracted investment more readily than more technologically complex biofuel routes.
Commission introduces Climate Resilience Framework
On 27 October, the European Commission unveiled a new EU Framework for Climate Resilience, setting out how the EU intends to prepare public authorities, infrastructure and businesses for more frequent and severe climate impacts. The framework assumes that Europe may need to plan for substantially higher warming over the coming decades, potentially reaching 3°C above pre-industrial temperatures by 2100.
The Commission estimates that the EU must invest around €70 billion each year in climate adaptation, including €29 billion annually in resilient infrastructure. Funding should come from state aid in order to encourage private investment, with the Commission projecting that the market for climate resilience technologies will reach €3.5 trillion by 2050. Climate Commissioner Wopke Hoekstra said that there is a strong case for a fossil-fuel industry levy, alongside wider application of the polluter-pays principle and existing instruments such as the EU Emissions Trading System.
Parliament backs three-year delay to EU Methane Regulation as Council talks stall
On 22 October the European Parliament voted for a three-year delay before the implementation of the EU Methane Regulation. The law sets rules to measure, report and reduce methane emissions from the energy sector, including obligations for fossil-fuel importers to provide information on the methane intensity of imported oil, gas and coal. The amendment, led by the EPP with support from ECR, goes beyond the Commission’s initial proposal which only called for a one-year delay. In the meantime, the Council has not been able to come to a negotiating position and will rediscuss the delay on 28 October.
EU pushes for global electrification target ahead of climate summit
The EU is moving towards support for a global goal to raise electricity’s share of final energy use to 35% by 2035 at the COP31 climate conference. On 13 October, the European Commission asked Member States for authority to negotiate and potentially endorse the Turkish-backed initiative, while seeking to ensure that the target is explicitly linked to clean and low-carbon electricity. As currently framed, the proposed global goal does not specify how the additional electricity demand should be supplied. In the meanwhile, the European Parliament voted in support of the 35% goal.
EU ETS revision advances
On 12 October, EU Member State Ministers discussed the wider revision of the EU Emissions Trading System (ETS) at the Environment Council. The ETS is the EU’s carbon market, which sets a cap on greenhouse-gas emissions from covered sectors and requires companies to buy allowances for each tonne of CO2 they emit. Several EU countries opposed the Commission’s plan to make free allowances conditional on decarbonisation efforts, including France, Italy, and Poland, as opposed to countries including the Netherlands, Sweden, and Austria.
Later, on 22 October, the Parliament backed nearly 100 million extra free allowances for energy-intensive industries for 2026-2030. Both the Commission and Council have argued for a 33 million more free allowances on top of the 80 million suggested by the Commission. However, the Parliament argues that two-thirds of the 33 million should go to the Innovation Fund and Modernisation Fund. The Council and Parliament will now enter trilogue negotiations on the file.
Ireland proposes lower funding for decarbonisation in next long-term EU budget
On 10 October, the Irish Presidency circulated a revised negotiating text for the 2028-2034 Multiannual Financial Framework (MFF). The proposal reduces several EU spending lines relevant to the clean transition. The proposal would allocate €20.18 billion, in 2025 prices, to clean transition and industrial decarbonisation measures within the Competitiveness Fund, below both the Commission’s €23.2 billion proposal and the €22.3 billion figure previously tabled by Cypriot Presidency. It would also cut the energy strand of the Connecting Europe Facility to €21.25 billion, compared with €26.5 billion proposed by the Commission.
The document would reduce the overall EU budget by 8% to €1.622 trillion, or €141 billion below the Commission’s plan. On the revenue side, it retains the proposal to direct 30% of EU Emissions Trading System (ETS) carbon market revenues to the budget, while increasing the MFF share of the Carbon Border Adjustment Mechanism (CBAM) revenues from 75% to 90%.
Commission considers joint energy buying
On 6 October, European Commission President Ursula von der Leyen announced that the EU will establish a task force to consolidate Member States’ energy demand and explore joint purchasing through a market operator. The initiative would build on the EU Energy Platform, which was created after Russia cut gas supplies in 2022 to match buyers with alternative suppliers, but would extend the approach beyond gas to include other energy sources. Von der Leyen argued that fragmented national demand for gas, oil, renewables and nuclear weakens Europe’s purchasing position during periods of market stress.
The proposal was backed by EU leaders at the 15-16 October European Council, where high energy costs displaced the planned competitiveness discussion.
Commission escalates action over national delays in implementing Fit for 55
On 1 October, the European Commission opened enforcement cases against Member States that have not fully implemented legislation underpinning the Fit for 55 package, the EU’s core legislative programme for reducing net greenhouse-gas emissions by at least 55% by 2030 compared with 1990 levels. Croatia was urged to complete transposition of the revised Renewable Energy Directive, while Greece, Spain, Italy and Malta were asked to finalise measures required under the updated Energy Efficiency Directive. The Commission also challenged Belgium, Czechia, Ireland, Italy, Hungary, Luxembourg, Malta, Poland and Slovakia over overdue draft national building-renovation plans under the revised Energy Performance of Buildings Directive.
In parallel, Hungary has been taken to court over intra-EU arbitration provisions linked to the Energy Charter Treaty, and Bulgaria over incomplete implementation of internal electricity-market rules.
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