Net Zero Watch: Net Zero will hamper West and boost China, warns CEBR

 

In this newsletter:

1) Told you so! Net Zero will hamper West and boost China, warns CEBR
The Daily Telegraph, 26 December 2023
 
2) China’s BYD to overtake Tesla as world’s biggest electric vehicle seller
Semafor, 29 December 2023

 
3) Chinese carmakers flood the European market with electric vehicles
NPR, 28 December 2023
 
4) China plans to dominate green shipbuilding
Bloomberg, 29 December 2023
 
5) Vandana Hari: China and India got their way in COP28 agreement in Dubai
Nikkei Asia, 21 December 2023

6) No one wants used EVs, making new ones a tougher sell too
Bloomberg, 22 December 2023
 
7) Electric vehicles are losing momentum with U.S. buyers
The Wall Street Journal, 27 December 2023
 
8) Spain's socialist government confirms nuclear shut down to begin in 2027
Reuters, 27 December 2023

9) Keir Starmer considers scrapping Labour's £28bn green investment plans
The National, 23 December 2023
 
10) And finally: Germany to keep coal power longer than expected
Bloomberg, 22 December 2023

Full details:

1) Told you so! Net Zero will hamper West and boost China, warns CEBR
The Daily Telegraph, 26 December 2023
 

Net zero will impose significant costs on the rich world over the next two decades, speeding up the economic power shift away from advanced economies.

Rapidly growing Asian countries such as Indonesia and Vietnam will continue to grow their share of world GDP to 2050, as ageing populations and rising debt in western economies drag on their growth, according to the Centre for Economics and Business Research (CEBR).

It warned that US debt was becoming “unsustainable” as President Biden spends huge sums on net zero policies under his $500bn Inflation Reduction Act.

Douglas McWilliams, deputy chairman of the CEBR, said: “There is a cost in green investment. And there is the cost of having to restrain various things that otherwise would happen naturally in the economy.”

He also warned that there was unlikely to be a green jobs boom in Britain.

“As you transition, there will be new jobs created. The problem for the UK is a lot of these new jobs are likely to be in places like China that dominate the market for electric vehicles.

“Other than Australia, we have the lowest proportion of our GDP coming from manufacturing and the idea that from such a small base, you will suddenly make the UK into a manufacturing powerhouse I think is pretty unlikely.”

However, the consultancy warned that China’s demographic decline and the scars of its zero-tolerance Covid policy mean the Asian powerhouse may never overtake the US as the world’s largest economy on a sustainable basis. India is expected to become the world’s largest economy by 2080.

Full story
 
See also

* Prof Jun Arima: Eco-Fundamentalism as Grist for China’s Mill

* Prof Gwythian Prins: The Worm in the Rose

 
 
 

2) China’s BYD to overtake Tesla as world’s biggest electric vehicle seller

Semafor, 29 December 2023

China’s BYD is poised to overtake Tesla as the world’s biggest electric vehicle seller. When it does – most likely in the current quarter – it will be yet another another sign of China’s growing clout in the automotive industry.
 
Chinese automakers have long dominated the huge domestic market, but the country now rivals Japan as the world’s biggest car exporter, having overtaken Germany, South Korea, and the U.S. in recent years.

China’s rise as an EV superpower is underpinned by generous government subsidies so Chinese EV companies can sell cars at a loss without breaking a sweat. They’re also world leaders in producing low-cost batteries, which make up about 40% of the cost of a vehicle. China’s battery leadership is not going anywhere: By 2030, China is estimated to have 69% of global battery-production, enough to make 90 million cars a year, compared to Europe and the U.S., whose predicted global capacity of 14% each will suffice for 19 million vehicles each in a year, the Economist reported.

European car manufacturers look on nervously

European manufacturers are predicted to lose out on over $7bn a year in lost profits by 2030 due to the rise of Chinese-made EVs. Renault’s CEO recently said that Chinese EV makers are “a generation ahead of us.” China’s EV exports have risen by a staggering 851% over the past three years, mainly to Europe. The EU is weighing how to respond, and has started an investigation into Chinese government subsidies to EV makers to assess whether to impose stricter tariffs on the growing number of Chinese EVs entering Europe. European car manufacturers are divided on the question of tariffs, with the German car industry warning that China could retaliate with trade restrictions of its own, Euractiv reported.
 
Full story
 
3) Chinese carmakers flood the European market with electric vehicles
NPR, 28 December 2023

 

China for the first time has exported more cars than any other country.
 
Its carmakers could become a threat to established car brands in Europe, but they are also a case study for the EV revolution.

More and more European drivers are going electric. And this has given rise to an unlikely competitor for traditional European carmakers like BMW and Volkswagen - Chinese electric vehicle makers. And as NPR's H.J. Mai reports, European carmakers are considering this an existential threat.

Full story
 
4) China plans to dominate green shipbuilding
Bloomberg, 29 December 2023
 


Targets building half world’s low-carbon vessels by 2025

China wants to extend its lead in global shipbuilding to a new generation of vessels that burn cleaner fuels.

The nation is targeting building more than half of global vessels powered by lower-carbon fuels including liquefied natural gas and green methanol by 2025, according to a joint statement released by the Ministry of Industry and Information Technology and four other departments.

The goal is in line with Beijing’s plans to future-proof its massive industrial complex by focusing on sectors that will gain prominence as the world tries to reduce emissions over the next few decades. China already dominates global production of solar panels, batteries and electric vehicles.

China’s shipyards built more than 50% of the world’s ships over the first 11 months of 2023. But shipbuilding is on the cusp of a massive transformation, with fleet owners beginning to replace oil-powered vessels with ones that burn cleaner fuels as they try to reach an International Maritime Organization pledge of zeroing out emissions around 2050.

Last year, orders for ships powered by slightly cleaner LNG jumped to near 40% of the total, from about 15% in 2019, according to BloombergNEF. Green methanol, a fuel with little to no lifetime emissions, has seen orders more than double this year, BNEF said in an August report.

In addition to the target for building such vessels, China also plans to speed up research and design of new types of ships powered by liquefied ammonia, hydrogen and even carbon dioxide. A unit of China State Shipbuilding Co. has secured more than $1 billion in contracts to build methanol container ships for A.P. Moller-Maersk A/S, local media reported earlier this month.

Full story
 
5) Vandana Hari: China and India got their way in COP28 agreement in Dubai
Nikkei Asia, 21 December 2023

The agreement reached last week at the U.N. Climate Change Conference in Dubai represents a major victory for developing Asia, especially economic giants China and India.

The influential pair are heavily reliant on coal, oil and natural gas and have strenuously advocated a balanced transition from fossil fuels that keeps energy affordability and accessibility firmly in sight.

Contention around fossil fuels -- in particular, thorny debates around their phase-out or "phase-down" to accelerate the move toward net-zero carbon emissions by 2050 -- was the biggest challenge standing in the way of agreement among the nearly 200 nations attending the Dubai summit. Achieving resolution took negotiators an extra night and day beyond the planned 13-day run of the conference.

The forum, officially the 28th Conference of the Parties (COP) to the U.N. Framework Convention on Climate Change, finally eschewed radical approaches to reach consensus around a pragmatic call for a "transition away" from fossil fuels.

Critically for China and India, the participants agreed that the transition in global energy systems should happen in a "just, orderly and equitable manner."

These are crucial watchwords across emerging Asia, where policymakers are walking a tightrope between safeguarding economic growth by ensuring accessible and affordable energy on the one hand and stepping up efforts to curb greenhouse gas emissions on the other.

These countries have been pushing back against pressure for more ambitious transition targets from island states and the wealthy nations that contributed the bulk of the world's historic emissions, but it has been an uphill task.

More than 100 nations pushed for strong language on a fossil fuel phase-out in the COP28 agreement, but this was opposed by the members of OPEC, most prominently Saudi Arabia, the de facto leader of the oil exporters' group. The kingdom reportedly said behind closed doors that it would reject any language calling for a reduction in the use of fossil fuels.

Natural gas also won a reprieve. Though not explicitly mentioned in the final deal in Dubai, its importance as a transition fuel was implied by signatories agreeing to "accelerating efforts globally towards net zero energy emission systems, utilizing zero- and low-carbon fuels well before or by around mid-century."

China and India also managed to safeguard their production and use of coal from unrealistic phase-out targets.

Drafts of the Dubai agreement had included curbs on investments in coal-fired power plants without the use of technologies to capture and store released carbon dioxide and on the permitting of new fossil fuel-based power generation capacity.

But delegates finally agreed merely to "accelerating efforts towards the phase-down of unabated coal power" after India appeared to successfully push back on language calling for a rapid phase-down.

Coal accounts for around three-quarters of India's power generation and around 61% of China's. Though both have been among the most active in the world in installing renewable capacity, they are not yet in position to rapidly reduce their reliance on coal, given the fuel's abundance and low cost.

China has said that it will gradually reduce its coal consumption after 2025 but has yet to announce a more specific target.

Unexpectedly, China and India declined to join 130 other countries in Dubai in pledging to work toward tripling installed global renewable energy capacity to at least 11,000 gigawatts by 2030. Both countries had backed the same goal at the Group of 20 summit in New Delhi in September and have plans in place to double their renewable capacities by 2027.

But they were uncomfortable with anti-coal language included in the pledge or an accompanying commitment to work to double their annual rate of energy efficiency to 4% by 2030, due to cost concerns. Still, one can expect China and India to go full steam ahead on their own renewables plans as best they can.

China and India also sat out the Global Cooling Pledge that 64 countries made in Dubai to cut emissions from refrigerators and air conditioners by at least 68% by 2050 from 2022 levels.

India needs affordable cooling and is concerned about the hefty investment required to shift to new technologies. China has been working on improving energy efficiency for several years now, including in cooling products, but sees reining in surging use of air conditioners during heat waves as particularly challenging.

Beyond their efforts to look out for their specific national interests, China and India marked a milestone at COP28 as they started to assume leadership in steering critical global policies.

The duo's biggest achievement -- a major source of relief for many of the smaller emerging Asian economies at the COP28 table -- was ensuring a pragmatic, balanced and fair approach in the conference's final agreement regarding the production and consumption of fossil fuels.
 
Full post
 
6) No one wants used EVs, making new ones a tougher sell too
Bloomberg, 22 December 2023
 
The shift away from cars with dirty combustion engines is running into a new hurdle: Drivers don’t want to buy used electric vehicles, and that’s undermining the market for new ones, too.

In the $1.2 trillion secondhand market, prices for battery-powered cars are falling faster than for their combustion-engine cousins. Buyers are shunning them due to a lack of subsidies, a desire to wait for better technology and continued shortfalls in charging infrastructures. A fierce price war sparked by Tesla Inc. and competitive Chinese models are further depressing values of new and used cars alike, threatening earnings at rivals like Volkswagen AG and Stellantis NV.

Because most new vehicles in Europe are sold via leases, automakers and dealers who finance these transactions are trying to recover losses from plummeting valuations by raising borrowing costs. That’s hitting demand in some European markets that were in the vanguard of the shift away from fossil fuel-powered propulsion. Some of the biggest buyers of new cars, including rental firms, are cutting back on EV adoption because they’re losing money on resales, with Sixt SE dropping Tesla models from its fleet.

“When a car loses 1% of its worth, I make 1% less profit,” said Christian Dahlheim, who heads VW’s financial services arm. The issues with secondhand EVs, he said, have the potential to destroy billions of euros in earnings for the broader industry.

Used EVs Trail Combustion Cars on Residual Values

The problems are expected to intensify next year, when many of the 1.2 million EVs sold in Europe in 2021 will come off their three-year leasing contracts and enter the secondhand market. How companies tackle this problem will be key for their bottom lines, consumer confidence and ultimately decarbonization — including the European Union’s plan to phase out sales of new fuel-burning cars by 2035.

Full story
 
7) Electric vehicles are losing momentum with U.S. buyers
The Wall Street Journal, 27 December 2023

 

Electric-vehicle sales growth hit a speed bump in the U.S. this year, and the impact is being felt throughout the industry.

Carmakers around the world have invested billions of dollars in EV technology, spurred on by tailpipe emissions regulations designed to boost sales of battery-powered models. But as customers in the U.S. hesitate to make the switch from traditional gas-engine vehicles, some auto companies are delaying plans on electric-vehicle spending.

Sales of electric models rose rapidly in the first 11 months of the year, faster than the car market as a whole but at a slower pace than in previous years.

Car executives say they are confident that sales will accelerate as additional lower-priced models come out and the availability of public chargers improves.

In the near term, the cooling buyer interest has weighed on U.S. makers that had ramped up vehicle and battery production in anticipation of a larger surge in customer demand. Electric-vehicle sales began to stall in the latter half of this year, a move that car executives attributed to the relatively high prices of electric models.

Full story & charts
 
8) Spain's socialist government confirms nuclear shut down to begin in 2027
Reuters, 27 December 2023

MADRID, Dec 27 (Reuters) - Spain on Wednesday confirmed plans to close the country's nuclear plants by 2035 as it presented energy measures including extended deadlines for renewable projects and adjusted renewable auctions.

The management of radioactive waste and dismantling of the plants, whose shut down will begin in 2027, will cost about 20.2 billion euros ($22.4 billion) and will be paid for by a fund supported by the plants' operators, the government said.

The future of the country's nuclear plants, which generate about a fifth of Spain's electricity, was a hot issue during the recent electoral campaign, with the conservative opposition People's Party (PP) pledging to reverse the planned phase-out. More recently, one of the main business lobbies called for extending the use of these plants.

Among other measures were changes to the rules governing development of new green energy projects and renewables auctions.

The government agreed to extend key administrative deadlines for new projects. The deadline to obtain a building permit, for example, was increased by six months to 49 months.

Renewable auctions may now include qualitative criteria to take into account social and environmental standards to "recognise the added value of European products," the Energy Ministry said in a statement.
 
9) Keir Starmer considers scrapping Labour's £28bn green investment plans
The National, 23 December 2023
 
Keir Starmer is reportedly considering scaling back Labour’s £28 billion green investment plans.

The Labour leader has long promised that, if elected prime minister, his party would invest £28 billion in green capital investment every year until 2030.

After already delaying the commitment to borrow the money in the first-year of a Labour government and instead promising it would “ramp up” by the middle of their first parliament, it appears Labour are now considering diluting the pledge or even dropping it entirely.

According to The Guardian, Starmer and shadow chancellor Rachel Reeves are due to discuss the policy next month as several senior figures in the party call for it to be scrapped.

It comes amid concern that the Tories will utilise the policy as a battleground after Rishi Sunak rolled back on the UK’s net zero commitments earlier this year.

An insider told the Guardian: “There will be a pivot in the new year and the £28bn price tag as it exists now is unlikely to survive that.

“Whatever ultimately happens will be a further watering down of the position. This will be the Tories’ number one area of attack so they need to deal with it.”
 
Full story
 
10) And finally: Germany to keep coal power longer than expected
Bloomberg, 22 December 2023

The energy regulator, known as BNetzA, determined that “systematically relevant” coal plants need to be available as back-up power sources in the event of an emergency.

Two of Germany’s largest energy providers will keep some coal plants in service longer than previously expected, following a regulator’s decision to prohibit the closure of the facilities before March 2031.

Uniper SE and EnBW Energie Baden-Württemberg AG had both sought to phase out units earlier than that date. Now, the plants may have to remain on standby at least.

The energy regulator, known as BNetzA, determined that “systematically relevant” coal plants need to be available as back-up power sources in the event of an emergency, newspaper Die Welt first reported Thursday. The agency later confirmed the move. Germany, Europe’s largest economy, has relied more heavily on coal after Russia cut natural gas supplies and after shutting its last nuclear plants this year.

Full story

The London-based Net Zero Watch is a campaign group set up to highlight and discuss the serious implications of expensive and poorly considered climate change policies. The Net Zero Watch newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.netzerowatch.com.