Britain must rethink its net zero ban on new petrol and diesel cars after Brussels watered down restrictions across Europe, the chairman of JCB has said.

Lord Bamford insisted that “the internal combustion engine certainly has a future”, in comments that will add to pressure for Rishi Sunak to drop a 2030 crackdown on non-electric vehicles.

It comes after Brussels last week agreed to water down its zero-emissions vehicles mandate by allowing the sale of internal combustion engines as long as they burn carbon-neutral petrol alternatives known as e-fuels.

The move prompted some in Whitehall to consider exploring e-fuel exemption, although the Prime Minister and Grant Shapps, the Energy Secretary, stood by their existing plans when unveiling further green measures last Thursday.

JCB is already working on hydrogen-powered diggers to replace its traditional models. The business sold 75,000 machines in 2020.

Lord Bamford, a major Tory donor and one of the country's most successful businessmen, said: “The internal combustion engine has a role to play in a zero-carbon future.

“Governments around the world need to be technology-neutral, as they legislate for how best to reach net zero targets.

“Fossil fuels are the problem, not the engine itself. JCB has engineered and developed new engines that run on hydrogen gas, a zero CO2 fuel – they provide the same power and performance in our machines as their diesel counterparts.”

Britain is to ban all new non-hybrid petrol and diesel cars in 2030. Hybrids will then be outlawed in 2035, with new vehicles only permitted if they are pure electric or run on another zero-emission fuel such as hydrogen.

Petrol and diesel cars will also be banned on the Continent from 2035. But following an intensive lobbying effort by German carmakers, a carve-out was agreed that allows the sale of vehicles that can run on e-fuels – which will be made from carbon sucked out of the air and hydrogen produced using renewable energy, and so will not emit new CO2.

Lord Bamford said: “If e-fuels can be made to work in a carbon neutral way in cars, the internal combustion engine certainly has a future. Governments should be wary of outlawing engines, when the root cause of the problem is the fossil fuels we currently put in the fuel tank.

“Let’s be more open-minded about the possibilities; battery-electric technology is not the only possible solution to the problem.”

E-fuels could also offer a lifeline to smaller, specialist UK racing car makers.

Morgan and Lister, which make racing cars, are considering adopting the fuels alongside Aston Martin and McLaren.