Germany has been pouring money into renewables for years now and, since Angela Merkel’s Energiewende, has also been phasing out its nuclear-power sector. The reason for the former, for the most part, was climate policy, and for the latter, a longstanding neurosis. The combination of the two, despite increasing reliance on “cheap” Russian gas, was to give Germany very high electricity prices. And now that cheap Russian gas has turned out not to be so cheap after all, well . . .
The impact on the planet’s climate of all this? Next to nothing. Or nothing.
Germany has a world-class auto sector, an industry in which it hopes to preserve a leading role despite the dangers this sector faces as a result of the transition to electric vehicles (sales of new internal-combustion-engine vehicles will be banned throughout the EU from 2035).
The impact on the planet’s climate of this transition? In all probability, minimal.
Over on Linkedin, Thomas Schäfer, the CEO of Volkswagen Passenger Cars, has thoughts (my emphasis added):
On the international stage, Germany and the European Union are rapidly losing their attractiveness and competitiveness. The USA, Canada, China, Southeast Asia and regions like North Africa are forging ahead. We are treading water. I am very concerned about the current development regarding investments in the industry’s transformation. This needs to be urgently prioritised – unbureaucratically, consistently and quickly.
Europe lacks price competitiveness in many areas. When it comes to the cost of electricity and gas, in particular, we are losing more and more ground. Unless we manage to reduce energy prices in Germany and Europe quickly and reliably, investments in energy-intensive production or new battery cell factories in Germany and the EU will be practically unviable. The value creation in this area will take place elsewhere.
So, the high energy costs that are (in part) the result of the EU and German efforts to curb climate change will make it more likely that Germany and the EU will miss out on an important part of the value chain that goes into the manufacture of electric vehicles also, it is claimed, necessary to protect the climate.
I’m not sure that either Berlin or Brussels has thought this all through, but central planning is like that.
Schäfer continues:
I find it alarming that the European Union with its regulatory framework is not well positioned for the industry’s transformation that is now underway. With the Inflation Reduction Act, the USA offers companies highly attractive incentives to invest in new plants and production.
Translation: The subsidies that Washington is offering to encourage production of electric vehicles and their components in the U.S., subsidies that are apparently necessary despite the immense pent-up demand for EVs and the immense opportunity represented by the green economy, are adding to the EU’s misery.
It will be no surprise if the next stage in the development of this splendid green economy will be growing trade tensions between the EU and the U.S.
And more subsidies all round.