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Climate protection planned economy endangers EU and Euro

2020-09-20T10:43:53.173Z


Commission head Ursula von der Leyen announced noble climate protection goals in her speech on the State of the European Union. But how these goals are to be achieved, the EU should leave to the market economy, otherwise Germany and thus Europe could suffer considerable economic losses.


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EU Commission President Ursula von der Leyen during her speech on the State of the European Union on September 16

Photo: European Union / imago images / Xinhua

Ursula von der Leyen

(61) announced major goals in her first address on the State of the European Union last week.

The most prominent was certainly the increase in the target for saving CO2 emissions to 55 percent by 2030 compared to 1990 in order to achieve the climate protection targets.

Although it is still unclear how exactly these savings will be achieved, initial information is seeping through.

According to unconfirmed reports, the automotive industry will have to reduce the CO2 emissions of its new vehicles by an average of around 50 percent between 2021 and 2030 instead of the previous 37.5 percent.

The EU Commission is even considering a ban on the internal combustion engine. 

The increase in climate protection targets is widely welcomed.

Finally - according to the assessment - Europeans are taking climate protection seriously and facing the greatest challenge facing humanity.

Who should be against it? 

Climate protection as an economic stimulus program

Even before Corona, I explained at this point that for economic reasons, climate change would have had to be invented if it hadn't already existed.

Why?

Climate change is a perfect opportunity to overcome years of stagnation in Europe and to drive inflation rates up.

Both exactly what governments and the EU Commission urgently want.

It has also been clear for some time that the European Central Bank (ECB), which sees itself as playing a major role in this issue, would generously finance the state programs. 

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Now, a few Corona months later, we are in exactly this new world: The direct financing of states by the central banks is only sparsely concealed in the euro zone.

Large spending programs and even shared debt at the EU level, which was recently highly controversial, are suddenly a reality due to Corona.

What has been used to combat the consequences of the pandemic cannot be bad for the fight against climate change, it is argued, and it opens the door to a policy of central bank-financed programs.

The Charm of New Debt?

At first you don't hurt anyone.

More money comes into the cycle, demand increases and those in charge of politics can let themselves be celebrated as saviors - and at the same time make them forget that they made a significant contribution to the crisis.

 Politics in the EU is pursuing an approach that can hardly be described as anything else than centralized, planned economy.

Politicians apparently believe that they know better than the market how the climate protection goals can be achieved: through specifications that even go so far that certain technologies are determined centrally, for example for the electric car.

The fact that there are alternative fuels that are produced from renewable energies is being suppressed.

Of course, this is countered by the fact that the requirements for the conversion are so gigantic that we cannot afford to lose time with many different technologies.

If we want to be quick and efficient, that will only work if the "planning authority" in Brussels shows the way.

I doubt it.

You have to be able to afford pioneers

The tightening of climate protection targets is supported by the Europeans' conviction that they must - and can - take on a global pioneering role.

That in Japan alone over 20 new coal-fired power plants will go online by 2025?

No matter.

That over 150 new coal-fired power plants are being prepared worldwide?

It doesn't matter either.

The local hope is that renewable energies will soon make fossil fuels superfluous.

It is also said that they are already cheaper than the old power plants - but without mentioning that renewable energies are not always available and that we need a fossil or nuclear backup due to the lack of storage options.

Therefore, the higher the share of renewable energies, the higher the electricity costs.

Good to see in Germany, the country with the highest electricity prices in Europe, despite, no because of the high proportion of renewable energies. 

Is that why you shouldn't go this way?

No, of course we have to take measures to reduce CO2 emissions.

However, we have to be careful not to overdo ourselves economically with ambitious goals and, above all, with a planned economy approach.

The EU in particular should be afraid of this.

The European Union owes its success to the massive prosperity it brought to the citizens of the participating states.

Many studies underline this finding, but also show that it is above all the domestic market that increases the prosperity of all nations.

The euro, on the other hand, has contributed to an ever deeper division in the EU, because the stronger countries in it are getting stronger and the weaker countries are getting weaker.

This development has been whitewashed for years by the policy of the ECB, the increasing imbalances in the European payment system Target2 and the ever-increasing national debt.

This was the only way to keep the illusion of prosperity halfway.

With the corona crisis, the problems came to light again and led to the breach of the dam: the open entry into a transfer and debt union.

Both of these only work because Germany's economic performance is now available as collateral.

The possibility of the German state to burden the local citizens and companies in the future gives the EU creditworthiness.

In plain language: As long as the German economy is running, the EU will stick together.

Germany faces massive problems

Germany's ability to be the financier and guarantor of an increasingly ailing EU is not in doubt, neither in Brussels nor in Germany.

We are too much carried by the good ten years that lie behind us without realizing that these were the result of cheap money and the weak euro.

The advances in productivity - i.e. the growth in prosperity - have been falling significantly for years.

Industry is increasingly relocating production abroad and we are lagging far behind on important issues such as digital infrastructure.

The energy transition - the Wall Street Journal speaks of the "stupidest energy policy in the world"!

- is increasingly becoming an existential threat to the location.

It would be high time for politicians in this country and in the EU to think about how to make the German economy fit for the future: in their own interest and to ensure the creditworthiness of the EU and ongoing transfers from Germany to other countries to back up.

Instead, the opposite happens.

Politicians outdid themselves with interventions in the market that will accelerate the decline, and are relying on guidelines and individual measures, based on studies like this one by Greenpeace, which was presented last week.

Central message:

  • The number of automobiles in Europe will halve by 2040

  • These cars must all be electric

  • These are small and light, which means no electric SUVs

  • No new diesel, gasoline or even hybrids should be registered as new vehicles by 2028 at the latest

  • All cars with internal combustion engines must be removed from the road by 2040

The consequences are clear: the market for cars in Europe will more than halve after these demands.

In addition, these cars will be concentrated in the small car segment - exceptions for politician limousines?

The battery is the core component and its manufacture is very energy-intensive - and therefore more expensive in Europe!

And since the rare earths required for this are concentrated in China, we can assume that the market will then be dominated by Asian manufacturers.

China's official goal of producing half of the world's electric vehicles by 2025 is quite realistic and shows where we are headed. 

The German automotive industry is not well positioned for this change.

Today, money is made with large and heavy vehicles; this is the only way to pay the relatively high salaries.

If there are only small electric vehicles left, the air becomes thin.

Probably too thin.

So it is not surprising that the number of dismissals is increasing.

Industry expert

Ferdinand Dudenhöffer

(69) already expected 100,000 jobs to be lost in the wake of the Corona crisis.

It won't stop there.

From the company's point of view, it is extremely rational to massively cut jobs in Germany and to protect or even expand the foreign locations.

The general conditions there are more favorable in perspective, but it can be assumed that other regions will not take similar drastic action against industry. 

Technical progress takes time

So is that a plea for a scrapping bonus?

Under no circumstance!

After all, what is the point of promoting the sale of products that you want to ban?

Is that a plea not to take climate protection seriously?

Neither!

It is an urgent appeal to recognize that technological progress takes time.

If you tighten goals that are already difficult to achieve and thus increase the pressure, that will only be of any use if technological development proceeds so quickly that you can achieve the goals.

Otherwise it will only do harm. 

Which brings us to the core problem of climate protection policy in Europe: Politicians are not limited to setting targets (minus 55 percent CO2), but also want to decide how this target will be achieved.

It would be better to leave this decision to the market.

We have already successfully used the vehicle for this: trading in CO2 certificates.

Certificate trading should be extended to all sectors of the economy in the EU.

The prices for the certificates should rise significantly and predictably and the income from them should be distributed to the citizens in the form of tax cuts, disproportionately to the lower and middle incomes.

The advantage is obvious: the market would decide very quickly where it is most efficient to save CO2.

It is quite possible that the automobile manufacturers would then have to reduce their CO2 contribution on a less fast curve, simply because it is already particularly expensive and time-consuming in this area. 

One thing is certain: it is of very little use to the global climate if CO2 emissions occur in other regions of the world instead of here.

It is also clear that the EU as an affluent community has no chance if Germany's economic power falls away.

Combining economy and climate

But that doesn't mean that you shouldn't do anything.

Of course we have to act and of course Europe can make an important contribution.

However, this contribution must be made in a market-based way through noticeable and sustainable pricing of CO2.

We have successfully used the instrument in Europe and it was politics that made the mistake of not including the transport sector from the start.

The EU can still decide how to achieve the CO2 targets.

With or without receiving the Union.

But I fear that the hubris of the actors is too pronounced to tread the efficient and effective path.

In the end we will not achieve a goal - neither climate protection nor the preservation of prosperity nor the cohesion of Europeans. 

Daniel Stelter is a member of the opinion makers of manager-magazin.de.

Nevertheless, this column does not necessarily reflect the opinion of the editorial team of manager magazin.

Source: spiegel

All news articles on 2020-09-20

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