European regulators have focused on climate change. Specifically, the mandating of a ‘green transition’ requiring a rapid take-up of electric vehicles, ending of the sale of petrol and diesel vehicles, and even a transition away from being able to heat your home or use your freezer 24/7. What is most surprising is the ease with which these measures passed into law some years ago without any proper mainstream scrutiny. Media simply accepted that politicians know what they are doing and, in the UK and many EU member states, simply forgot to ask whether the costs justify the end. To be blunt, the end is to be where we all are today, but without using oil, gas or coal. Cost estimates vary, but for the UK they lie somewhere above the UK’s Climate Change Committee’s estimate of GBP 1.3 trillion and other estimates of around GBP 4.5 trillion.
In Europe, Christine Lagarde, president of the European Central Bank, is hoping to stop climate change by ‘overhauling the entire economy’ including disputedly eliminating cash completely, as per recent social media posts1.
Atmospheric Scientists and Businesses Criticise the Rules
As the political classes have come under intense focus, so the combination of both real-world scientists and profit driven businesses have cranked up the pressure. Owing to the funding dominance of the climate change lobby, the leading atmospheric pressure scientists are producing volumes of increasingly impressive pushbacks. In July, Professors William Happer and Richard Lindzen published a round up report, citing two of their recent papers which claim2:
- US and worldwide governments have committed to Net Zero by 2050. But CO2 levels are so small, at 430 parts per million, that achieving this will only reduce temperatures by 2/100 degrees F in the US, and by 13/100 degrees F worldwide. However, the cost will be disastrous.
- If present CO2 levels were roughly doubled to 800 ppm the supply of global food would increase by 60%.
John Clauser, an equally eminent scientist – 2022 Nobel Prize Winner in Physics, published a paper considering “What Causes Temperatures to Change?” He concluded three points:
- Pre-eminence of cloud cover as primary cause of temperature change;
- No significant anthropomorphic cause;
- When cloud cover is dense, oceans cool, and when thin they warm.
More worryingly, the respected Bruges Group published one year ago the last book in a trilogy entitled “Climate, Eco-Socialism” in which it located years of global warming activism within the ideology of Central Bank Digital Currencies and 15-minute cities, terming these policies the ‘misanthropic designs of the global elite’.
Even more recently, global banking giant HSBC has parted company with its head of Sustainability, Ms Herweiljer, as her role was demoted. The bank has also abandoned plans to build a carbon credit trading desk and, along with BlackRock, JP Morgan, State Street and Pimco, has banned the use of the term “ESG” (Environment, Sustainability, Governance). Larry Fink of BlackRock led this initiative, calling the term too ‘political’.
A particularly hot topic is electric vehicles (EVs). The EU has mandated the phasing out of non-EVs by 2035. Ironically, owing to Brexit the UK has set a five years earlier deadline of 2030. The method of forcing the change through is to penalise the manufacturers with heavy penalties for failing to sell enough EVs. And these penalties, especially in the UK, are brutal. Although demand for EVs, itself heavily incentivised by corporate tax concessions, remains stubbornly fixed at 16%, and is likely to dip. But the penalties mean that unless manufacturers sell 22% of all cars as EVs this year, 44% next year and so on up to 100% in 2030, manufacturers will be fined GBP 15,000 per non-EV sold. As a result, Stellantis last week closed its famous Luton plant with the loss of 1,000 jobs. Ford has announced losses of 800 jobs and demanded a rethink on the rules: worryingly demanding tax incentives for EV buyers. Nobody seems to realise that governments simply do not have the power to determine market appetites, especially as EV second hand resale values are crumbling, as insurers now realise that it costs multiple times the insurance cost of a petrol car to cover EVs, especially as the cost of driving EVs relative to petrol has doubled over the last five years.
In Europe, although the pathway is 5 years slower, tensions are rising. Oliver Zipse, CEO of BMW questioned the EU’s mandates and tariffs, calling them “overly prescriptive” and urging more talks3. In Italy, Prime Minister Georgia Meloni describes the present approach as “self- destructive”4. In Czech Republic where vehicle manufacture is an economic mainstay, the industry is lobbying hard for new talks.
And who are the likely beneficiaries of this multi speed decarbonisation transition? Why, China of course. The province of Guangdong is pushing to lower the price of electricity to USD 6.4 or even 5.5 per kwh. In the US the price is USD 7.9 per kwh, or 39% higher. In Europe the price is USD 19.7, or 250% higher.
Grounds for Hope – US Election Result 5 November.
When Donald J Trump won the US elections earlier in November, and with the presidency both houses of congress, petrol car enthusiasts had to pinch themselves. “Drill baby drill” he cheered in his acceptance speech as European dawns were breaking. And of course, he has already quickly selected Elon Musk to oversee a potentially huge shutdown of the US federal agencies, with rumours that 499 such agencies could be reduced to around 100. Surely not. Possibly Mr Musk has DJT at a disadvantage; many of us suspect Musk to be a crypto “hoddler”. Either way, Musk is clearly someone who will enjoy cutting swathes of bureaucracy. And this is the point. After years of the two sides drifting then speeding further apart, Net Zero is a kind of pinnacle where the two sides deviate extensively. One suspects that when (when rather than if) the bubble bursts, it will be very tough for the political left to revive enthusiasm, especially with thousands of scientists and businessmen increasingly emboldened to speak out against it.
Conclusion
We are at a clear crossroads for Net Zero. Sceptics would say, ‘find a green net zero fanatic’ as the UK has done with new minister, ‘red Ed’ Miliband. As if he has no well-funded advisers, reading all the pro and anti-propaganda, he simply speaks climate extremism after reading the latest weather reports anywhere in the world.
But the key question is, what can central banks do about this? The question would be hard enough even if we were not in the middle of a major global banking crisis. But this is only a crisis in the western, demographic quartile occupying about half of the world5. Your authors leave further consideration of this to yourselves. Former Bank of England Governor, Mervyn King has said that central banks are impotent in this regard.
Perhaps the cornerstone here is that the connection between debt and productivity in every EU member state is now hopelessly lost. Some countries have realised it: political leaders of the US, China, India don’t accept the climate-change rhetoric and its implications. Some European political leaders have doubts (for instance, Hungary). In the other countries, the acceptance is only for the monetary compensations and subsidies they could obtain. How long will it take before Brussels wakes up?
1 No, Christine Lagarde doesn’t want to scrap cash to fight climate change | Euronews
2 Happer-Lindzen-Net-Zero-Policies-Will-Have-A-Trivial-Effect-on-Temperature-2024-07-15.pdf
3 BMW CEO: Europe must cancel petrol engine ban to reduce reliance on China | Reuters
4 Giorgia Meloni puts brakes on Italy’s solar energy rollout
5 The Economist Democracy Index – Wikipedia
Photo by Mika Baumeister
