We’re just ruining our industries

_ Hans-Werner Sinn, Dr. Sc., president, ifo Institute for Economic Research (1999-2016), member, advisory council, Federal Ministry for Economic Affairs and Energy (Germany); professor emeritus, Ludwig-Maximilian-University. Translation into English by Yuri Kofner. Vienna, 28 September 2020.*

“In today’s energy mix, electric cars are dirtier than diesels” – says one of Germany’s most renowned economists and proves this with figures. The former head of the Ifo Institute also harshly criticizes von der Leyen’s specifications, especially for the auto industry. “No engineer in the world” could do that. In the fight against climate change, another decisive move would be required instead.

The German ex-Ifo boss Hans-Werner Sinn harshly criticizes the climate policy of EU Commission President Ursula von der Leyen. The “hodgepodge of detailed measures” with which the new 55 percent CO2 reduction target is to be implemented suggests “central planning requirements”. And the specifications for the car manufacturer are a sham package, “that reminds of the shutdown device in the automotive industry”.

Electric cars are dirtier than diesel cars, according to the economist, who is one of Germany’s most renowned economists. Basically, climate policy is necessary because global warming “is not the imagination of over-the-top scientists”, Sinn told journalists.

Oil consumption remains “absolutely stable” despite the “green saber rattle”.

In Sinn’s view, however, the EU measures under discussion (“Green Deal”) fall far too short. The reason: The world is connected to one another via the markets for fossil fuels, especially oil and gas. If Europe uses less oil and gas, it will go elsewhere. “The Americans will drive even bigger SUVs, the Asians do the same,” said Sinn. In contrast to coal, the unused oil does not simply remain in the ground. “The oil sheikhs and Putin’s gas oligarchs are not doing that.” It could even be the case that the “oil sheiks” are initially extracting even more because of the “green saber rattling” in the EU – if they fear that their business will soon collapse. So far, oil consumption has never been irritated by fluctuations in demand; it is “absolutely stable”.

Goals for the automotive industry: “No engineer in the world can do that”

The latest proposals from the EU Commission for the automotive industry are a thorn in the side of Sinn. According to this, the CO2 emissions of cars should decrease by 50 percent per kilometer from 2021 to 2030. It has been clear since spring 2019 that the CO2 emissions from new cars should be reduced by 37.5 percent by 2030 compared to 2021. And since this year, all new cars registered in the EU should comply with an average CO2 limit of 95 grams per kilometer.

To reduce this to 47.5 grams is impossible, says Sinn. “No engineer in the world will be able to put a car that consumes 1.8 liters of diesel per 100 kilometers on the road.” For comparison: in Germany, the average diesel consumption in 2018 was around 7 liters per 100 kilometers.

“In today’s energy mix, electric cars are even dirtier than diesel cars”

All of this is only done to “dirigistically” press electric cars onto the market, Sinn continued. The fact that electricity-powered cars with zero CO2 emissions are included in the bill of the EU Commission is cheating. “With today’s energy mix, electric cars are even dirtier than diesel cars.” Electricity is still generated with a lot of coal, especially in Eastern Europe. The batteries come to a large extent from China, “they are manufactured with an enormous amount of energy using coal,” said Sinn.

An electric car would have to drive 219,000 kilometers before it would be on a par with a diesel car in terms of CO2. On average, the lifespan of a car is only 190,000 kilometers.

“We’re just ruining industries”

The former head of the Munich Ifo Institute spoke of a “naive belief in the power of central planning in Brussels”. He could “only warn against going this way. We are only destroying the industries and that does not help.” Behind the lobbying for electric cars are mainly the French nuclear and local auto industries; He does not understand that Germany and its big car manufacturers have agreed to the EU plan. In net terms, it would even be better for the global climate to initially consume more oil in Europe, according to Sinn.

The German economist also spoke about China. China stands for 28 percent of global CO2 emissions. “But they don’t see that they should limit themselves.” In China, wind and solar energy are growing – the share of green energy is one fifth – but so are the number of coal-fired power plants and thus the harmful CO2 emissions, “tremendously”. In the first half of the year, a new coal-fired power plant was built in the Middle Kingdom on average every ten days. The electric cars, which are also booming in China, “are added”, says Sinn.

China wants to further increase its exhaust gas quantities – officially

China’s President Xi Jinping said last week that his country would increase its CO2 emissions in the coming years. “Before” 2030 the emissions peak should be reached, and “before” 2060 the People’s Republic wants to become climate neutral. China still has around 60 percent of electricity from coal and now has higher per capita carbon emissions than Europe. In 2019, it was 6.47 tons in the EU and Great Britain, 8.12 tons in China and 15.52 tons in the USA.

In terms of absolute emissions, according to data from the International Energy Agency (IEA), China was most recently (2018) well ahead of more than 9.5 billion tons, the USA came in at 4.9 billion tons and the EU-28 at 3.15 billion . Metric tons. A look at the past shows that of these three world regions only the EU has significantly reduced its emissions: According to IEA data, in 1990 the countries of the Union were still responsible for CO2 emissions of more than 4 billion tons. At that time, CO2 emissions in the USA were 4.8 billion tons, in 2019 they were 4.77 billion tons. China’s curve has grown steeply, because in 1990 the country only blew 2.1 billion tons of CO2 into the air.

Sinn: The only way is global emissions trading

Economist Sinn sees only one solution: global emissions trading, as it already exists for power plants in Europe. The scientist also referred to the Kyoto Protocol, which allows the transfer of pollution rights between the signatory countries. “The countries that have committed to reducing quantities can pay other countries to do it for them,” explained Sinn. The emissions certificate trading system works; the restriction on coal is only a small contribution.

The taxonomy regulation of the EU from December 2019, according to which investments that are found to be particularly sustainable, should receive preferential access to financing via the EIB, for example, also makes no sense. This is as if von der Leyen “takes a green brush and paints the bonds of the companies, the promissory notes that they issue in the markets, green”. And depending on how “green” these are, this leads to an interest rate differentiation because the European Central Bank (ECB) reacts to it. “The EU uses the lever of the ECB”, that is an impermissible intervention in the capital market and “certainly a case for the Constitutional Court in Germany”.

Source: www.industriemagazin.at

*Translated and republished without prior written consent. For educational purposes only.

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