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German Car Industry Says 'Nein Danke' To Carbon Correct

Politics / Climate Change Jun 20, 2013 - 04:41 PM GMT

By: Andrew_McKillop


Barack Obama, perorating and posing at the Brandenburg Gate felt obliged to put on his most somber look and gurgle a few lines about the glorious quest of all civilized countries, led by the US and Germany, fighting the menace of global warming. Obama has rebranded this the “struggle against bad weather” - possibly because there has been no warming of the Earth for over 10 years - but Germany's industrial chiefs call European Carbon Correct a suicide pact.

Their action to fight the menace of Carbon Correct is now taking off the gloves.

Members of Chancellor Merkel's own inner cabinet, as reported by several wire services from 19 June, have warned EU member states that German car makers are threatening to scale back or even scrap production plans in Europe – including Germany - unless EU countries receiving inward investment from the car makers support a major cutback of Europe's proposed vehicle emissions rules. This in turn intensifies pressures on Merkel from inside her own CDU, the ruling party in Germany's coalition government, for a root and branch cutback of the low carbon quest's goals.

Speaking at a June 12 Berlin conference of the BDEW (the German Association of Energy and Water Industries), Merkel was forced to say: “Dealing with the renewable energy reform (reforming Energiewende) is the most urgent of the energy topics, in my view". This is because energy prices, constantly racked up by the obsession with low carbon, are now a hot election topic for the coming general elections of September. Consumers, including all private consumers and an increasing slice of industrial users have been hit by surcharges, taxes and levies which pay for the energy shift and maintain the fragile circus of carbon finance and trading.

Anticipating the blowback from industry, many firms were given exemptions or refunds of payments for some of the charges, estimated as costing the Federal government about 8 – 9 billion euros per year in 2012, but this firstly led to further increases of power bills for households. In addition, the costs of Energiewende have gone on growing, adding unscheduled increases due to program delays, to unforseen additional funding needs for “iconic projects” led by Germany's gigantic offshore windfarm program. For German industry, led by its carmakers, this is more than enough because it is now certain that unless Energiewende goals are considerably scaled back, and carbon limits are heavily reduced, industry will soon face an energy cost spiral.

Germany's carmakers have united to send her a message she can and will understand. With EU governments and lawmakers aiming to finalise rules on CO2 emissions-per-kilometre for cars manufactured in Europe next week, which at the political level have been given outline approval by most of the 27 member states, Germany has stepped up the pressure on them to water down limits on vehicle emissions to protect the country's ultra powerful car industry. This particularly concerns high-end and luxury car makers including BMW, Audi, Porsche and Daimler Benz.

The degree to which Merkel has got the message is shown by the German diplomatic muscle being applied to get car emissions regulations toned down and cut back. One EU diplomat cited by European media, 20 June, said Berlin reminded Lisbon that Portugal's 78 billion euro ($100 billion) eurozone bailout was heavily financed by Germany, in Berlin's bid to convince Portugal to drop its opposition to softer car emissions limits.

According to European Commission sources, speaking on condition of anonymity and reported by Reuters, 18 June, Germany's position has won backing from “several east and central European countries with domestic auto production”, but France, Britain and Italy are opposed, although for widely different and even “conflicting reasons” reflecting the sharply increasing divergences of political opinion of who will be the winners and losers from Europe's low carbon quest.

The proposal from the European Commission would set a goal of 95 grams of carbon dioxide per kilometre as an average for all new vehicles sold in Europe from 2020. As also operated by the US Federal government's CAFE system for fleet-weighted fuel economy, manufacturers of car ranges with higher consumption or emissions will be obliged to pay penalties. In the US, the Obama administration and some states, especially California are using this penalty process to force car makers to produce more electric cars – even if they are unsaleable.

Writing in the June issue of the DGAP (German Council on Foreign Relation)'s newsletter, Paul Hockenos asked: “Where Are All the Electric BMWs?  Germany's streets show little sign so far of a green revolution. All the e-cars Chancellor Merkel has promised – they are still in the factory (which is) not really a big surprise”.

As he noted, Chancellor Merkel had pledged that 1 million e-cars will be on Germany’s roads by January 1st, 2022, but there are only 5 570 today in major part due to their extreme price. Energiewende policy makers and ideologists claim that car emissions can be cut back as far as 60 grams CO2/kilometre by 2020 or before on a fleet-weighted basis. They reject out of hand, with thinly veiled contempt the propositions made by Eurogas (the gas industry association) and truck manufacturers including Volvo, as well as European oil major Shell to rapidly convert vehicle fleets, starting with heavy vehicles, to cleaner burning and lower emission natural gas, the price of which can only fall. 

Achieving Energiewende car emissions goals on a fleet-weighted basis will need the mass production, and sale of cars needing at most 2 litres of fuel per 100 kms, about 120 miles per US gallon or 130 miles per UK gallon. German auto engineers and transport researchers have mapped out the implications of this. Apart from mass utilisation of all-electric cars, other fantasy visions of the low carbon-transport future include the conversion of at least one lane on all major autobahn to overhead power cable energy supply, to operate truck-trailer and other electric trolley vehicles including buses, further reducing CO2 emissions.

Why electric rail transportation should not be further used appears nowhere in the musing of Energiewende ideologists.

Present outline rules for cars set by the Energiewende will need mass production of flyweight plastic or carbon fibre two-seat-only cars similar to but lighter than Smart cars of today, running on a suitcase-sized battery and small thermal engine, costing over 20 000 euros each. For BWM and other carmakers this fantasy vision of their corporate future lost its last abilities to amuse when Merkel was still able, in early 2013, to claim that electric power and natural gas price rises, needed to fight global warming, were as inevitable as ever tightening car emissions-per-kilometre, to fight global warming. Today she promises “very major reforms” of Energiewende from the moment she steps back into office after the September elections – including a very probable energy price freeze and almost certain cutback in CO2 emissions reduction goals.

The major risk for Merkel is that she will be obliged – because she moved so slowly – to throw the baby out with the bathwater, losing the political advantages that Energiewende also delivered. German metropolitan areas already had their own energy-saving and environment-improving master plans and  targets pre-dating the Energiewende plan's intensification since 2005. These green cities take pride in their highly subsidized and efficient public transportation, traffic-free downtowns, road pricing, bike lanes and routes, rental-bike programs, car sharing, city energy saving, district heating, modernized street lighting and other environment-friendly endeavors often operated in tight coordination with Germany's Stadtwerke municipal-owned energy utilities.

Hybrid buses using natural gas, manufactured by Mercedes-Benz, are a commonplace part of city bus fleets. Interchange stations are often large, well serviced and protected, with a full range of support to bicycle transport including underground cycle parking, repair and maintenance workshops, bike wash facilities, bike rental and sales shops, and car sharing rendezvous points making it all so easy to not own and use a car. Forcing consumers to buy and use overpriced technological gimmicks to satisfy the whims of Energiewende ideologists has already produced a reaction from previous supporters of the plan, that Merkel has gone out on a limb they call “technological imperialism”.

By acting quickly to stem the tide of justifiable criticism of Energiewende Merkel could or might have prevented the need for root and branch reform of the plan. That best-by date was however long ago, making it certain that the shockwaves from Germany reforming Energiewende will ripple all across Europe, starting this year.

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2013 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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