Wednesday, May 6, 2020

GWPF Newsletter: German Govt Split Over Post-Pandemic Climate Policies

Net Zero Mania Threatens To Derail Lockdown Recovery

In this newsletter:

1) German Coalition Govt Divided Over Post-Pandemic Energy And Climate Ambitions
Green Energy Wire, 5 May 2020

2) German Car Industry Faces Existential Crisis
The Wall Street Journal, 5 May 2020

3) Rupert Darwall: Net Zero Mania Threatens To Derail Lockdown Recovery
The Daily Telegraph, 5 May 2020

4) Costly Climate Policies Must Be Abandoned To Save Economy
Press Release, Global Warming Policy Foundation, 27 April 2020

5) Montford & Hughes: Subsidising Renewables Won't Renew The UK Economy
Andrew Montford and Gordon Hughes, CapX, 4 May 2020
6) Reminder: Join Us For Our Webinar Today At 5PM (UK Time)
GWPF, 5 May 2020

7) Professor Deepak Lal Passes Away At 80

Full details:

1) German Coalition Govt Divided Over Post-Pandemic Energy And Climate Ambitions
Green Energy Wire, 5 May 2020

Members of Angela Merkel's conservative CDU/CSU party alliance have voiced concerns about the chancellor's endorsement of a raised 2030 EU climate target, writes Klaus Stratmann in the Handelsblatt.

"One may well ask whether a tightening of targets is appropriate in view of the coronavirus crisis," Georg Nüßlein, deputy leader of the CDU/CSU parliamentary group, told the newspaper. As the "last remaining genuine industrial country" in Europe, Germany could not achieve an emissions reduction beyond the current target of 55 percent without risking "massive relocation of CO2-intensive production," he warned.

Handelsblatt writes that the CDU/CSU parliamentary group is expected to adopt a paper next week, which will call for a new allocation of greenhouse gas reduction contributions among member states in the EU Effort Sharing mechanism in case the European target is raised.

Meanwhile, members of the Social Democratic Party (SPD), the junior member in the governing coalition, called for combining the coronavirus recovery with ambitious energy and climate policy and warned against putting climate targets into question in the face of the pandemic. In a position paper seen by the Clean Energy Wire, MPs Johann Saathoff and Bernd Westphal wrote that the CDU/CSU is "preventing a sustainable energy transition" and called on the conservatives to let go of "old technologies", as holding on to these inhibited innovative solutions and thus hurt the German economy. They added that the country must immediately align the expansion paths of renewable energies with the target of 65 percent share in power consumption by 2030. This, they argue, is being blocked by the CDU/CSU as it insists on nationwide minimum distance regulations for onshore wind turbines to the nearest settlements.

Full story

2) German Car Industry Faces Existential Crisis
The Wall Street Journal, 5 May 2020

Car sales in Europe have fallen to historic lows as dealerships shut down and consumers retrenched

BERLIN—Talks between Germany’s flagship car companies and the country’s government kicked off on Tuesday to discuss potential state aid for an industry that was already struggling when the coronavirus pandemic hit and is now facing an existential threat.

Hardly any new cars were sold in Europe last month as government-ordered lockdowns shut dealerships around the region. In the U.K., sales fell 97% to 4,321 vehicles, the lowest level since 1946, the Society of Motor Manufacturers and Traders, an industry lobby group, said Tuesday. France and Spain, two of the top five European car markets, reported drops of 90% and 97% respectively.

The auto industry is a huge part of the European economy. It employs some 14 million people in the European Union, accounting for 6% of jobs, according to the European Automobile Manufacturers’ Association. In the past, European car makers have produced about 19 million vehicles a year, around a fifth of all cars made in the world, contributing heavily to the region’s trade balance.

The talks, launched on Tuesday via videoconference, bring together German Chancellor Angela Merkel and top executives from Volkswagen AG, Daimler AG, BMW AG , the German auto lobby, and the IG Metall trade union. The discussions are expected to last several weeks, Ms. Merkel’s spokesman said, and are focusing on aid for auto makers, including a possible cash-for-clunkers program modeled on the measure that helped the industry overcome the 2007-09 recession by providing taxpayer-financed discounts to consumers who traded in old vehicles for new ones.

The industry, which was struggling with weakening global demand and rocketing costs associated with its transition to electric vehicles long before the pandemic began, has raised pressure on the government to help in recent weeks.

While generous wage subsidies for furloughed workers mean the sector has seen few job cuts so far, this could change if demand doesn’t pick up in coming weeks as the companies run through their cash piles.

“April is going to be a month with the lowest ever number of new cars sold in Europe, even worse than after the Lehman Bros crisis in 2008,” Emilio Herrera, the chief of Kia Motors Europe, told the Journal by Skype from his home office in Spain.

Paralyzed by lockdowns, Europe’s biggest auto makers have bled billions of euros in liquidity each week as factories sat idle, and have seen profits plummet this year. The weakest companies, some of which may be just weeks from running out of cash, have seen their corporate bonds downgraded to junk status.

And while many auto makers began switching their factories back on last month, only a fraction of their workers are returning. It could take months or years before production in one of Europe’s most important industries returns to pre-pandemic levels.

The health crisis has caught the industry at a sensitive time. After nearly a decade of growth and robust profits, global car sales peaked in 2017, and car makers have been fighting falling demand since.

Meanwhile, global efforts to curb greenhouse-gas emissions have forced car makers to invest billions of dollars to build a new generation of electric cars that car executives doubt many consumers will be interested in buying.

Full story

3) Rupert Darwall: Net Zero Mania Threatens To Derail Lockdown Recovery
The Daily Telegraph, 5 May 2020

Boris Johnson has only one chance to ensure rapid and sustained economic recovery from the lockdown - and that is to scrap every obstacle that stands in the way of economic growth, the biggest of all being the net zero climate noose.

When economies emerge from the pandemic, aggressive climate policies should be the priority, according to Dominic Raab, the foreign secretary and Boris Johnson’s deputy. Sounding like a modern day King Canute, he has urged governments to turn the tide on climate change. "There’s no choice between cutting our emissions and growing our economy," Mr. Raab claims. "That’s a myth the UK has helped to shatter over the past decade."

In fact, the last decade saw Britain rack up its worst productivity performance since the Industrial Revolution. Ministers don’t tell us how we cut them by exporting our industrial base – emissions relating to imports from China are 276pc higher compared to 1997.  The Government can forget about re-shoring vulnerable supply chains as it would push up our emissions.

France’s Emmanuel Macron, by contrast, is a good deal more honest, having described the choice on climate as profound and brutal. Decarbonising inflicts costs on the poorest in society and it shrinks blue-collar job opportunities, worsening the North South regional divide.

Britain legislated its commitment to cut its greenhouse gas emissions to net zero after a mere ninety-minute debate in the House of Commons last June. Unlike the original 2008 Climate Change Act, the Government did not provide an economic impact assessment of net net and its  analysis of the costs, of what it would to do the economy and  an  estimate of the potential climate benefits to Britain.

Lack of scientific and economic rigour and objectivity is par for the course development of net zero and  adoption of  the 1.5°C target. In the run up to the 2009 Copenhagen climate conference, the president of the Maldives held the world’s first underwater cabinet meeting to dramatise the threat to low-lying islands from rising sea levels and lobby for the 1.5°C limit and incorporated in the 2015 Paris Agreement. Yet there was no satisfactory scientific basis for the sinking island fable. As Charles Darwin explained in the 1830s, coral atolls are formed by gentle subsidence of the seabed and, surprise, surprise, islands such as the Maldives have seen their land area expand.

After the politicians had decided on the policy, scientists, in the shape of the Intergovernmental Panel on Climate Change (IPCC),were  invited to provide a special report in 2018 on the impacts of global warming of 1.5 °C above pre-industrial levels.
The IPCC had a problem. Its existing 1.5°C carbon budget – the amount of greenhouse gases that can be emitted to keep global warming from rising  more than 1.5°C above pre-industrial levels – was all but used up.

Obviously there was no point in agreeing a limit only to have it busted almost immediately.  Helped by computer climate models running too hot and over-predicting warming since 2000, an IPCC lead author admitted, the IPCC found a way of more than doubling the 1.5°C budget and keeping the climate show on the road. Although the IPCC only had medium confidence in its revised 1.5°C budget, it claimed high confidence that emissions had to reach net zero by 2050.

Perhaps that’s because the IPCC sees net zero as providing, it says, the opportunity for "intentional societal transformation" and makes little secret of its ideological hostility to capitalism and economic growth. Like the government, the IPCC doesn’t put a price tag on net zero, but the few numbers it produces are eye-popping, with costs ranging up to sixty times the hypothetical climate benefits estimated by the Obama administration.

Indeed, the IPCC concedes that net zero will hit the world’s poor hard with higher food prices and delay the transition to clean cooking, one of the biggest causes of avoidable deaths in poorer countries. There is no ethical, economic or social justification for such policy overkill and its immense destruction of human welfare.

Fortunately net zero isn’t going to happen whatever politicians here might think. The West’s pre-pandemic emissions account for around one quarter of global emissions. Buying into net zero will turn Europe into a continent of zombie economies, but the rest of the world isn’t going to follow.

The Prime Minister has only one chance to ensure rapid and sustained economic recovery from the lockdown - and that is to scrap every obstacle that stands in the way of economic growth, the biggest of all being the net zero climate noose. If he fails, he and his government will be toast, his political career be ruined and the Conservatives will be remembered for this policy-made economic disaster. Keeping Boris’s commitment to net zero won’t be pretty.

Rupert Darwall is a Senior Fellow of the RealClear Foundation and author of The Climate Noose published by the GWPF

4) Costly Climate Policies Must Be Abandoned To Save Economy
Press Release, Global Warming Policy Foundation, 27 April 2020

Unilateral decarbonisation policy stands in the way of economic recovery

London, 27 April: European governments have no choice but to abandon costly climate plans that are threatening to burden nations with huge costs and millions of job losses if they want a strong economic recovery from Covid-19 lockdowns. That’s according to a new report by Rupert Darwall, a former special adviser in the UK Treasury.

In a new paper released today, Darwall shows how the imposition of unilateral climate policies on business and industry will have a devastating effect on any economic recovery from Covid-19.

With Net Zero costing up to 60 times hypothetical climate benefits, voters in Britain, America and Australia are putting economic recovery ahead of the environment, according to a recent IPSOS Mori poll. The report reveals that the West’s pre-pandemic carbon dioxide emissions accounted for only one quarter of global emissions.

“It is naïve as well as futile to think the tail of the West’s emissions is going to wag the global climate dog,” Darwall says.

What is more likely to doom UN climate talks is the deep rift that’s opening up because of China’s disastrous cover-ups about the Covid-19 virus. “It is not a coincidence that the UN climate talks got under way after the end of the Cold War,” Darwall says. The deterioration in relations between the US and China and the re-emergence of geopolitical rivalry after 30 years are likely to prove terminal for the global climate agenda, Darwall suggests. 

The Climate Noose: Business, Net Zero and the IPCC’s Anti-capitalism can be downloaded here (pdf)


5) Montford & Hughes: Subsidising Renewables Won't Renew The UK Economy
Andrew Montford and Gordon Hughes, CapX, 4 May 2020

Thanks to pro-renewable policies, electricity prices have doubled since 2002. The idea that ‘green jobs’ justifies a certain energy policy is not serious economics. Making UK energy even more expensive will not create jobs, it will destroy them.

As we start to glimpse a chink of light at the end of the coronavirus tunnel, thoughts are starting to turn to the economic crisis that is now upon us, and a recovery plan that will deliver quickly.

One idea was put forward on this site a few days ago. Sam Hall, the director of the Conservative Environment Network, says that renewables are cheap, and getting cheaper, and that the way to bring about recovery is therefore to keep building windfarms just as fast as we possibly can. He cites in his support a recent report by the trade body for the global renewables industry, IRENA, which claims that there are big economic gains to be had by buying from their members. The benefits, they say, will far outweigh the costs.

It is easy enough to dismiss these claims in Mandy Rice-Davies style: they would say that, wouldn’t they? But it is worth looking at the claims in more detail.

We have been pointing out for some years that hard data shows that offshore windfarms in the UK are only achieving small cost reductions and only rather slowly. A recent academic review of the accounts of UK offshore windfarms confirmed this, finding that the costs are still many times those of gas-fired power stations, even without considering the costs of dealing with their intermittent output and getting the electricity to where it is needed.

Further work using similar data shows that operating costs for onshore and offshore wind farms are increasing at 3–5% per year in real terms, which means that they will be uneconomic once the generous prices guaranteed under the Contracts for Difference regime expire. Hall is keen on what he calls the “promising” technology of floating offshore turbines, but the harsh reality is that they have much higher capital and operating costs.

He also raises the spectre of peak oil as another reason why our future should be renewables-driven. But the insinuation that we are going to run out of oil in a world that is awash with it does not hold water. Moreover, it is gas that is the chief competitor to renewables, both for electricity generation and for heating. Gas is abundant, cheap and has low carbon emissions. And with gas prices having fallen, the effective subsidy to renewables has become even more pronounced.

It’s small wonder then that the government has tried to “socialise” (for which, read “hide”) many of the costs that renewables impose on the grid. To take a very recent example: SSE has just been given permission to build a subsea interconnector from Shetland to the mainland costing over £600 million. This is solely for the benefit of a large wind project in Shetland. Once built, the capital and operating costs of the link will be pooled with all transmission costs and charged to consumers in, say, Oxford and Southampton, who will gain nothing from it. This is pure subsidy to a Scottish project paid by English electricity users.

All this means that electricity prices, which have doubled since green policies started to be introduced in 2002, will continue to rise inexorably. This, it is fair to say, is not a recipe for a rapid recovery from the virus. In fact it is a clear plan for long-term decline.

The argument that there will be significant benefits from a headlong drive for renewables is equally unconvincing. “Green jobs”, or indeed any argument that policy should be built around job creation is not serious economics. Jobs are a cost of a project, not a benefit.

If the Government is foolish enough to continue with the green agenda and to subsidise renewable energy, the effects will be disastrous. They will be penalising everyone who has to compete in world markets against producers who do not have to bear the costs of such misguided policies, so they will destroy jobs rather than create them. And in the process they will be taking money out of the pockets of energy consumers and taxpayers and handing it to overseas manufacturers and investors who free-ride on UK renewables subsidies.

Andrew Montford is deputy director of the Global Warming Policy Forum; Gordon Hughes is an energy economist and a former senior adviser at the World Bank.

6) Reminder: Join Us For Our Webinar Today At 5PM (UK Time)
GWPF, 5 May 2020

Coronavirus, Climate Change and the Role of Science in Public Policy

TODAY, 5pm UK Time

The ongoing coronavirus pandemic has sparked a vigorous debate about the role of science in public life. Both governments and their detractors have claimed they are 'following the science', a refrain that is very familiar to those of us who have followed the climate change debate. But to what extent can science really tell us what to do? Should expert opinion ever override the democratic process? Or are fear and uncertainty preventing us from making rational decisions?

You can register for the webinar by clicking this link: 

7) Professor Deepak Lal Passes Away At 80
T C A Srinivasa Raghavan, Indian Business Standard, 1 May 2020

Deepak Lal, one of the world’s leading economists and a founding member of the Global Warming Policy Foundation (GWPF), passed away on April 30 at the age of 80.

Deepak Lal was deeply suspicious of governments and politicians. That could have been one reason why he quit India’s foreign service in 1966 after just three years. It was an inspired decision. He would never have fitted into the bureaucracy, where brilliance is sneered at.

For five years, from about 2014, whenever he was in India, he and I sat in adjacent chairs at the weekly editorial meetings of this newspaper. He would shuffle in with his walking stick, mask and, in the summer, his straw hat. At first he would bring along his pipe but later on I think he gave up tobacco.

In these five years, I had just one grievance against him. As the designated supplier of samosas, I took around 2,500 samosas to the meeting, at the rate of 10 per meeting over about 250 weeks. He never took one, never, not once. In fairness, though, he didn’t touch the biscuits, either.

He was past his academic prime by then and had also developed fixed views on most things. But this is better than those who develop fixed views in their forties. It wasn’t such a bad thing in his case also because he was rarely wrong. And, above all, he still knew his economic theory. Most Indian economists have either forgotten it or never knew it to begin with.

Born in Lahore in 1940 and educated at the traditional triad of Doon School, St Stephens and Oxford University, he drifted away to the US at the end of the 1980s. Before that, he had taught in England. He eventually became a professor of economics at UCLA.

His research interests were hugely varied and you could find the entire list on his webpage. Not a lot of it was very influential in the mainstream economic thinking, but he did stick to his guns that always had two barrels — classicism and liberalism. These two values defined the man.

There were many things that he took a dim view of. China was one of them. He regarded its economic policies as bizarre. In many articles in this paper as well as in other publications, he would praise its achievements and then go on to say these were not sustainable. Human freedom is what makes for long-lived greatness, he believed, and the communist party’s lack of regard for them would hold China back. The current dispensation in China was as much a source of annoyance for him as was the current Democratic Party in the US. Stupid fellows, he said.

On Brexit he was a hawk which is not surprising, considering he was a member of the UK’s Shadow Chancellor’s advisory group for nine years from 2000 to 2009. The Labour Party was in power then. He thought Britain would gain by opting out.

He said he had voted in 1975, all bright eyed and bushy tailed, for Britain joining the common market. But what “I, along with many of my peers in 1975, came to see as the Common Market, evolved into the EU; we had been lied to by the Europhile political elites. Whilst selling us a free-trading area they were in fact surreptitiously co-opting us in the creation of a political union, a United States of Europe: a state run by unelected technocrats.”

But it was not just China and the EU that annoyed him. He was equally derisive of India. The excessive focus on ‘people’ was all right for politics and politicians, he thought, but not for economics and economists. He would quietly laugh at economists who batted persistently for redistribution without reference to its costs.

Full obituary

Many of Deepak Lal’s articles and columns on climate and energy can be found on the GWPF website

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

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