BRUSSELS - The EU on Dec 16 walked back a 2035 ban on new petrol and diesel cars seen as a milestone in the fight against climate change, as the bloc pivots to bolstering its crisis-hit auto sector.

Under proposals decried by environmental groups, carmakers will now have to cut exhaust emissions from new vehicles by 90 per cent from 2021 levels – down from an envisaged 100 per cent – with the remainder “compensated” in various ways.

The EU’s industry chief, Mr Stephane Sejourne, insisted the bloc’s green ambitions stood intact as he put forward a plan billed as a “lifeline” for Europe’s auto industry.

“The European Commission has chosen an approach that is both pragmatic and consistent with its climate objectives,” he told AFP.

The combustion-engine ban was hailed as a major win in the climate fight when adopted in 2023.

But carmakers and their backers have lobbied hard over the past year for Brussels to relax it, in the face of fierce competition from China and a slower-than-expected shift to electric vehicles (EVs).

Weakening the ban is the most striking result yet of a pro-business push that has seen the EU pare back a slew of environmental laws this year – on the grounds they risk weighing on growth.

In practice, automakers will still be able to sell a limited number of polluting vehicles – from plug-in hybrids to diesel cars – past 2035.

To do so, they will have to compensate for the planet-warning emissions these cars spew into the atmosphere through two types of carbon credits.

The first will be generated by the use of made-in-Europe, low-carbon steel in car manufacturing.

The second will be outside carmakers’ hands and tied to the amount of e-fuels and biofuels that energy companies put on the market every year.

Beset by announcements of job cuts and factory closures over the past yea...