GWPF Newsletter: Green Bloodbath

China’s Tesla Fights For Survival, Germany Slips Into Recession

In this newsletter:

1) Green Bloodbath: After $5 Billion In Losses, China’s Tesla Fights For Survival
Bloomberg, 22 September 2019
 
2) New Climate Package May Hit Germany’s Top Companies With €Billions
Reuters, 20 September 2019 

 
3) Climate Activists May Have Killed Germany’s Car Show 
Automotive News Europe, 23 September 2019 
 
4) German Industrial Recession Drags Economy Deeper Into Slump
Bloomberg, 23 September 2019 
 
5) €55 Billion For Nothing: Merkel Unable To Ease Green Protest, Despite Astronomical Virtue Signalling
Clean Energy Wire, 23 September 2019
 
6) The Green Paradox: Why Europe’s Climate Policies Increase Global Co2 Emissions
GWPF & Achse des Guten, 21 September 2019 
 
7) Electric Cars: Low Earners May Never Get To Drive One
Deutsche Welle, 20 September 2019 
 
8) And Finally: Eating Meat Is A Crime Against Humanity And Should Be Banned, Says Top UK Barrister
Daily Mail, 23 September 2019 

Full details:

1) Green Bloodbath: After $5 Billion In Losses, China’s Tesla Fights For Survival
Bloomberg, 22 September 2019

It took Tesla Inc. about 15 years to rack up $5 billion in losses. The company known as China’s Tesla did it in four.

The bleeding continues. Shanghai-based NIO Inc. is poised to report Tuesday that it lost another 2.6 billion yuan ($369 million) — around $4 million a day — during the second quarter, according to the average of two analyst estimates. That would bring accumulated losses at the company, which is backed by technology giant Tencent Holdings Ltd., to about $5.7 billion since William Li founded the carmaker in 2014.

Cost overruns, weak sales, and major recalls have led NIO to plunge 74% since its market value hit a record $11.9 billion about a year ago. More broadly, the company’s reversal of fortune illustrates why concerns are mounting that China created an electric-vehicle bubble that may be about to burst.

“This year and the next, there’s going to be a lot of card-shuffling for these EV startups,” said Siyi Mi, an analyst at BloombergNEF. “Before, venture capital chased after them, but it’s not the case any more.”
Total EV sales in China, where half of the world’s electric cars are sold, fell for the first time in July after the government scaled back subsidies. Deliveries dropped again in August, raising doubts that one of the final pillars of strength in China’s broader auto market, which has fallen 14 out of the past 15 months, is wavering.

Full story

2) New Climate Package May Hit Germany’s Top Companies With €Billions
Reuters, 20 September 2019 

FRANKFURT (Reuters) – Germany’s blue-chip companies could face billions of euros in costs to cut carbon emissions under a climate protection plan unveiled by the government on Friday, according to a study by asset manager Union Investment.

“According to our research, almost every one of the (30) DAX companies will be facing big challenges, even under low CO2 price scenarios,” said Henrik Pontzen, head of environmental, social and corporate governance at Frankfurt-based Union Investment’s portfolio management business.

Germany, which is responsible for just over 2% of the world’s greenhouse gases emissions, mainly aims to cap carbon emissions from buildings and transport.

Its utility sector has already made substantial reductions, forced by mandatory carbon permit trading (EU-ETS) in Europe that incentivises carbon efficiency.

But the country is on still track to miss targets to cut greenhouse gases emissions, of which CO2 is the main one, by 55% in 2030 from 1990 levels, having achieved less than 30% so far.

Union Investment said that putting a carbon price on areas not captured by the ETS could cost the DAX group of companies 5.2 billion euros ($5.7 billion) a year, an estimate it based on a price of 30 euros a tonne of CO2 equivalent.

This sum would be equivalent to 3.7% of the cumulative operating profit of the combined DAX group in 2018, it said.

Full story

3) Climate Activists May Have Killed Germany’s Car Show 
Automotive News Europe, 23 September 2019 

The Frankfurt auto show is doomed. It's hard to come to any other conclusion after the number of visitors to this year's event fell by nearly a third.


Thousands of demonstrators protested outside the IAA International Motor Show in Frankfurt Saturday, calling for a radical change to Germany's transportation policy.

Even before the event opened to the public on Sept. 12, the buzz surrounding it suggested things were grim.

The absence of brands including Toyota, Renault, Peugeot, Nissan, Fiat and Ferrari was a serious blow for the organizers, the VDA, Germany's auto industry association. On top of that, thousands of climate activists protested outside the entrance, highlighting the simmering tensions between the German car industry and the country's environmentalists.

Automakers demonstrating their growing commitment to decarbonizing their fleets with new electric models such as the Porsche Taycan, Opel Corsa-e and Volkswagen ID3, failed to excite the public.

This year's show, which ended Sunday, had 560,000 visitors, according to the VDA. This compares with 810,000 when the biennial event was last held in 2017 amid Volkswagen Group's diesel crisis and talk of driving bans in polluted city centers.

Remarking on the numbers of automakers who skipped the event, the decline in floor space rented and less ambitious stands, former Opel CEO Karl Thomas Neumann tweeted that this year's show was a huge fail and "a sad shadow of what it used to be." He predicted that there will not be a 2021 show.

Full story

4) German Industrial Recession Drags Economy Deeper Into Slump
Bloomberg, 23 September 2019 

Germany’s economy is suffering its worst downturn in almost seven years as a manufacturing slump deepens, raising pressure on the government to add fiscal stimulus.

Factory activity shrank at the fastest pace in a decade in September and growth in services softened, according to a monthly report by IHS Markit. There were also further signs that the labor market is taking a hit. That could have an adverse impact on demand and set off a negative spiral for Europe’s biggest economy.

Adding to the gloom, the nation’s VDMA engineering industry group said Monday there’s no turnaround in sight. It predicts production will drop 2% in 2020 after a similar decline this year.

The confluence of trade tensions, challenges for the auto industry and looming Brexit are threatening to push Germany into recession after the economy shrank in the second quarter. According to Markit, the economy may struggle to record any expansion at all for the rest of the year.

Full story

5) €55 Billion For Nothing: Merkel Unable To Ease Green Protest, Despite Astronomical Virtue Signalling
Clean Energy Wire, 23 September 2019

The German Green Party has said it will try to amend the government coalition's 2030 climate package through its influence in Germany's council of federal states, the Bundesrat, where the Greens have significant influence thanks to their participation in many state governments. Green Party co-leader Annalena Baerbock told news agency dpa that her party would seek to tighten the programme. "We will keep petitioning for a true transition in the transport sector and an end to the fossil combustion engine," Baerbock said, calling the pricing mechanism that starts with a price of 10 euros per tonne of CO2 by 2021 a “joke”. In a written statement, Baerbock said the government's climate policy ideas had left her "deeply disappointed" and amounted to a "withdrawal from the Paris Agreement”. The Greens are currently members in nine out of 16 state governments and have entered coalition talks in two other states, Brandenburg and Saxony. The Bundesrat's consent is necessary for many laws in Germany.

6) The Green Paradox: Why Europe’s Climate Policies Increase Global Co2 Emissions
GWPF & Achse des Guten, 21 September 2019 

German economist Johannes Bachmann explains the so-called ‘Green Paradox’ — when unilateral climate policies accelerate the worldwide extraction of fossil fuels and global CO2 emissions.

Yesterday, 20 September, the so-called “Climate Cabinet” of Germany’s federal government met to set the course of German climate policy for the coming years.

Christoph Kramer spoke with Johannes Bachmann about the so-called Green Paradox and the economic concepts that fuel it. Dr Bachmann is an economist and a member of the Hayek Society. Two years ago he received his doctorate from Michael Bräuninger, a Hamburg economist and former research director of the Hamburg Institute of International Economics (HWWI). In his dissertation Bachmann dealt with the effect of climate policy measures on CO2 emissions.

Christoph Kramer: Mr. Bachmann, if one looks into your dissertation as a layman it’s all Greek to me. Could you please briefly explain exactly what the thesis is about and what methodology you used?

Johannes Bachmann: I can well understand that. On the one hand, there are quite a few technical terms in the work, and on the other, there are many formulas. It is a typical dissertation: a work by an academic for academics.

The aim of the thesis was to examine the effects of climate policy measures on the supply side of fossil fuels. To this end, I calculated how owners of raw materials adjust their production quotas as a result of CO2 taxes or subsidies for renewable energies in order to continue generating as much revenue as possible. Why did I focus on the supply side of all things? The answer is: the quantity of fossil fuels that is extracted from the earth is also consumed.

The term “green paradox” is used in your work when climate policy accelerates the worldwide extraction of fossil fuels and global warming. How can this happen?

First of all, I have to say that the concept of the Green Paradox goes back to Hans-Werner Sinn. The scientific discussion about this, which was initiated about 10 years ago, finally led me to do my doctorate. Sinn’s credo is that climate policy should not only achieve half solutions, i.e. without taking into account the reactions of raw material suppliers.

How can we imagine the emergence of a Green Paradox? Well, here is what we need to be aware of: In contrast to a producer of goods, a raw material owner is basically faced with the question as to whether it is better to extract and offer some of his resources now or rather in the future. He will take into account that an increasing shortage or increased demand in the future will lead to an increase in the value of his property. If he assumes a high increase in value, his current production rate will be comparatively low.

However, if he expects that climate policy measures will greatly reduce the increase in value of his reserves in the future, he will increase his production and invest the proceeds in securities. This automatically leads to an acceleration of both fossil fuel extraction and CO2 emissions. Hans-Werner Sinn comes to the conclusion that the successive promotion of climate policy measures can cause precisely this problem.

Climate policy can therefore provide incentives that achieve exactly the opposite of what it actually intends. Hence the term “green paradox”. Since my dissertation was based on market constellations other than those of Hans Werner Sinn, I arrive at more moderate results in some areas and more drastic results in others.

Full interview 

7) Electric Cars: Low Earners May Never Get To Drive One
Deutsche Welle, 20 September 2019 

Already struggling to keep ageing vehicles on the road, low-wage workers could be forgotten in the electomobility age. 

Germany's autobahns appear to be packed full of brand new Audis and Volkswagens, but nearly half of all cars are more a decade old. The country has never seen such an aged fleet of vehicles, according to the KBA automotive watchdog. Nor has the United States, where the average car is almost 12 years old.

These statistics should imply a vast potential market from all income groups for new electric vehicles. However, until now, new battery-powered cars have mostly been targeted at the higher end of the market. So buyers are more likely to be trading in 3 or 4-year-old luxury models than beat-up bangers.

Lower-income groups, who can pick up a traditional used car for just a few hundred euros, risk being left out of the electromobility era altogether. A lack of enough cheap second-hand electric vehicles is likely to remain an issue for at least a decade; another is the high cost of new cars, although manufacturers say prices are coming down.

As owners of older vehicles, working class communities will also likely be disproportionately affected by city-wide bans and driving levies on the most polluting combustion-engine cars.

Germany, like many other countries, offers subsidies of up to €4,000 ($4,400) to offset the cost of a new electric vehicle. On Friday, the government said it would hike those incentives within two years to help it meet a target of cutting carbon dioxide (CO2) emissions from vehicles in half by 2030. The subsidies will be paid out of the proceeds of a new carbon tax.

Targeted subsidies

But critics complain that these bonuses have, so far, mostly been taken up by the wealthy and that a tax on CO2 emissions will be regressive — deducting a proportionally greater amount from those on lower incomes. Instead, they believe, subsidies for electric cars should be explicitly targeted at disadvantaged groups…

Tovar likened the German government's electric vehicle policy to the subsidy scheme for solar panels, which he said allowed wealthier households to benefit financially by selling their excess electricity to the national power grid. This income stream is often unaccessible to low earners in public housing.

Similarly, higher-income households will quickly absorb the cost of installing home charging infrastructure for their new battery-powered cars, while low-income groups may be the last to get connected and be forced to rely on higher-priced public charging stations.

Full story

8) And Finally: Eating Meat Is A Crime Against Humanity And Should Be Banned, Says Top UK Barrister
Daily Mail, 23 September 2019 

A leading barrister says eating meat could become illegal, because it is so bad for the environment.

Michael Mansfield, the Left-wing lawyer known as ‘Moneybags Mansfield’ for his huge earnings from high-profile cases, is expected to call for a crime of ‘ecocide’ today.

Mr Mansfield, a self-styled ‘radical lawyer’ who has represented the victims of the Grenfell Tower and Hillsborough disasters, will speak at the launch of a vegan campaign at the Labour Party conference in Brighton today.

Mr Mansfield will say: ‘I think when we look at the damage eating meat is doing to the planet, it is not preposterous to think that one day it will become illegal.

‘There are plenty of things that were once commonplace that are now illegal, such as smoking inside.’


The 77-year-old will make the comments as part of a panel debating the effects of livestock farming on climate change, at the launch of Viva!’s Vegan Now project.

He is also expected to call for legislation to criminalise the destruction of nature, which he compares to a ‘crime against humanity’.

Mr Mansfield will say: ‘We know that the top 3,000 companies in the world are responsible for more than £1.5 trillion worth of damage to the environment, with meat and dairy production high on the list.

'We know that because the UN has told us so. It is time for a new law on ecocide to go alongside genocide and the other crimes against humanity.’

Full story

The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.