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Germany asks EU for wiggle room on combustion engine phaseout

STOCKHOLM (Reuters) - Germany has asked the European Union to propose rules allowing combustion-engine cars that run on CO2-neutral fuels to be sold in Europe after 2035, the date by which the EU has agreed all new cars should have zero emissions.

Under the landmark law agreed by the EU last year requiring that by 2035 carmakers achieve a 100% cut in CO2 emissions from new cars sold, it would be impossible to sell new fossil fuel-powered vehicles in the 27-country bloc.

The law is aimed at speeding up Europe's shift to electric vehicles to combat climate change. But Germany is seeking wiggle room for combustion engines that run on fuels produced using electricity, or e-fuels.

"The commission should come forward with a proposal [on] how e-fuels can be used, or how combustion engines which are run with climate-neutral fuels can be can be organised," Germany's state secretary for transport, Michael Theurer, said on Monday.

Speaking on his arrival to a meeting of EU transport and energy ministers in Stockholm, Theurer said Germany was convinced battery electric vehicles are the "way to go", but wanted to see other CO2-free technologies also supported.

"We need hydrogen [fuel cell] technology and also e-fuels, especially in heavy vehicles, in truck transport," he said.

E-fuels, which can be made using captured CO2 emissions - with the idea that this balances out the CO2 emitted when the fuel is combusted, so the overall fuel is "CO2 neutral" - are being developed to allow modified versions of combustion engines to continue to be used.

Germany is home to car manufacturing giants including Volkswagen, which has pledged to produce only electric cars in Europe from 2033, and BMW, which has warned against setting dates to ban fossil fuel-based car sales.

The EU law containing the 2035 deadline says the European Commission should make a proposal on how vehicles running on CO2-neutral fuels can be sold after 2035, if this complies with climate goals.

EU Transport Commissioner Adina Valean said many in the transport sector shared Germany's concerns. "I think the discussion is not closed, even though the vote was taken," she told a news conference.

(Reporting by Kate Abnett; Editing by Leslie Adler)