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UK leader Rishi Sunak signals plan to backtrack on some climate goals

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Oxfam’s Rishi Sunak ‘big head’ protests outside the Parliament in London, Tuesday, Sept. 19, 2023. On the eve of the UN Climate Ambition Summit, Oxfam’s Rishi Sunak ‘big head’ staged a protest on top of a giant oil barrel, amongst dozens of real oil drums, supporting the Make Polluters Pay campaign. Calling for oil and gas giants, such as BP and Shell, to pay more tax to raise critical funds to help communities devastated by climate change. (AP Photo/Kin Cheung)

By Jill Lawless in London

LONDON (AP) — Prime Minister Rishi Sunak is preparing to water down some of Britain’s environmental commitments on Wednesday, saying the country must fight climate change without penalizing workers and consumers.

The news drew wide criticism from political opponents, environmental groups and large chunks of U.K. industry, but was welcomed by sections of the governing Conservative Party.

Sunak issued a late-night statement Tuesday in response to a BBC report saying the prime minister is considering extending deadlines for bans on new gasoline and diesel cars — currently set for 2030 — and on new natural-gas home heating, due in 2035.

Sunak said he would set out a “proportionate” approach to the environment. He summoned his Cabinet to an unscheduled conference call to discuss the plans ahead of a speech hastily rescheduled for Wednesday afternoon. It had been due later in the week.

“For too many years, politicians in governments of all stripes have not been honest about costs and trade-offs,” Sunak said. “Instead, they have taken the easy way out, saying we can have it all.”

Sunak did not confirm details of his announcements. He said he would keep a promise to reduce the U.K.’s emissions of climate-warming greenhouse gases to net zero by 2050, but “in a better, more proportionate way.”

The government has previously boasted of Britain being a leader in cutting carbon emissions. U.K. greenhouse gas emissions have fallen by 46% from 1990 levels, mainly because of the almost complete removal of coal from electricity generation. The government had pledged to reduce emissions by 68% of 1990 levels by 2030 and to reach net zero by 2050.

But with just seven years to go until the first goalpost, the government’s climate advisers said in June that the pace of action is “worryingly slow.” Sunak’s decision in July to approve new North Sea oil and gas drilling also spurred critics to question his commitment to climate goals.

Former Prime Minister Boris Johnson, who brought in the 2030 gasoline car target when he was leader, said businesses “must have certainty about our net-zero commitments.”

“We cannot afford to falter now or in any way lose our ambition for this country,” he said.

News of plans to backtrack broke as senior politicians and diplomats from the U.K. and around the world — as well as heir to the British throne Prince William — gathered at the United Nations General Assembly in New York, where climate is high on the agenda. Sunak is not attending, sending his deputy instead.

Greenpeace U.K. policy director Doug Parr said the prime minister was “taking the public for fools.”

“Rowing back on home insulation and commitments to help people move away from gas will ensure we stay at the mercy of volatile fossil fuels and exploitative energy companies,” Parr said.

Environmentalists were not the only ones blindsided by the move. Automakers, who have invested heavily in the switch to electric vehicles, expressed frustration at the government’s apparent change of plan.

“We’re questioning what is the strategy here, because we need to shift the mobility of road transport away from fossil fuels towards sustainable transport,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, an industry body.

Ford U.K. head Lisa Brankin said the company had invested 430 million pounds ($530 million) to build electric cars in Britain.

“Our business needs three things from the U.K. government: ambition, commitment and consistency. A relaxation of 2030 would undermine all three,” she said.

Analyst Tara Clee of investment firm Hargreaves Lansdown said the retreat could undermine Britain’s hard-won reputation for leadership on green technology, threatening the wider economy.

“The market has been directing capital to the net-zero transition and has been working in good faith,” Clee said. “These changes send a message that nothing is set in stone, and committing in earnest to a movable goalpost could be a major business risk.”

Britain’s Conservatives have been openly reassessing their climate change promises after a special election result in July that was widely seen as a thumbs-down from voters to a tax on polluting cars.

The party, which trails behind the Labour opposition nationwide, unexpectedly won the contest for the suburban London Uxbridge district by focusing on a divisive levy on older vehicles imposed by London’s Labour mayor, Sadiq Khan. Some Conservatives believe axing green policies is a vote-winner that can help the party avoid defeat in a national election due by the end of next year.

“We’re not going to save the planet by bankrupting the British people,” Home Secretary Suella Braverman said Wednesday.

But Conservative lawmaker Alok Sharma, who chaired the COP26 international climate conference in Glasgow in 2021, warned that it would be “incredibly damaging … if the political consensus that we have forged in our country on the environment and climate action is fractured.”

“And frankly, I really do not believe that it’s going to help any political party electorally which chooses to go down this path,” he told the BBC.

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Automotive

The EV ‘Bloodbath’ Arrives Early

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From the Daily Caller News Foundation

By David Blackmon

 

Ever since March 16, when presidential candidate Donald Trump created a controversy by predicting President Joe Biden’s efforts to force Americans to convert their lives to electric-vehicle (EV) lifestyles would end in a “bloodbath” for the U.S. auto industry, the industry’s own disastrous results have consistently proven him accurate.

The latest example came this week when Ford Motor Company reported that it had somehow managed to lose $132,000 per unit sold during Q1 2024 in its Model e EV division. The disastrous first quarter results follow the equally disastrous results for 2023, when the company said it lost $4.7 billion in Model e for the full 12-month period.

While the company has remained profitable overall thanks to strong demand for its legacy internal combustion SUV, pickup, and heavy vehicle models, the string of major losses in its EV line led the company to announce a shift in strategic vision in early April. Ford CEO Jim Farley said then that the company would delay the introduction of additional planned all-electric models and scale back production of current models like the F-150 Lightning pickup while refocusing efforts on introducing new hybrid models across its business line.

General Motors reported it had good overall Q1 results, but they were based on strong sales of its gas-powered SUV and truck models, not its EVs. GM is so gun-shy about reporting EV-specific results that it doesn’t break them out in its quarterly reports, so there is no way of knowing what the real bottom line amounts to from that part of the business. This is possibly a practice Ford should consider adopting.

After reporting its own disappointing Q1 results in which adjusted earnings collapsed by 48% and deliveries dropped by 20% from the previous quarter, Tesla announced it is laying off 10 percent of its global workforce, including 2,688 employees at its Austin plant, where its vaunted Cybertruck is manufactured. Since its introduction in November, the Cybertruck has been beset by buyer complaints ranging from breakdowns within minutes after taking delivery, to its $3,000 camping tent feature failing to deploy, to an incident in which one buyer complained his vehicle shut down for 5 hours after he failed to put the truck in “carwash mode” before running it through a local car wash.

Meanwhile, international auto rental company Hertz is now fire selling its own fleet of Teslas and other EV models in its efforts to salvage a little final value from what is turning out to be a disastrous EV gamble. In a giant fit of green virtue-signaling, the company invested whole hog into the Biden subsidy program in 2021 with a mass purchase of as many as 100,000 Teslas and 50,000 Polestar models, only to find that customer demand for renting electric cars was as tepid as demand to buy them outright. For its troubles, Hertz reported it had lost $392 million during Q1, attributing $195 million of the loss to its EV struggles. Hertz’s share price plummeted by about 20% on April 25, and was down by 55% for the year.

If all this financial carnage does not yet constitute a “bloodbath” for the U.S. EV sector, it is difficult to imagine what would. But wait: It really isn’t all that hard to imagine at all, is it? When he used that term back in March, Trump was referring not just to the ruinous Biden subsidy program, but also to plans by China to establish an EV-manufacturing beachhead in Mexico, from which it would be able to flood the U.S. market with its cheap but high-quality electric models. That would definitely cause an already disastrous domestic EV market to get even worse, wouldn’t it?

The bottom line here is that it is becoming obvious even to ardent EV fans that US consumer demand for EVs has reached a peak long before the industry and government expected it would.

It’s a bit of a perfect storm, one that rent-seeking company executives and obliging policymakers brought upon themselves. Given that this outcome was highly predictable, with so many warning that it was in fact inevitable, a reckoning from investors and corporate boards and voters will soon come due. It could become a bloodbath of its own, and perhaps it should.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

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Business

Honda deal latest episode of corporate welfare in Ontario

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From the Fraser Institute

By Jake Fuss and Tegan Hill

If Honda, Volkswagen and Stellantis are unwilling to build their EV battery plants in Ontario without corporate welfare, that sends a strong signal that those projects make little economic sense.

On Thursday, the Trudeau and Ford governments announced they will dole out an estimated $5 billion in corporate welfare to Honda so the auto giant can build an electric vehicle (EV) battery plant and manufacture EVs in Ontario. This is the third such deal in Ontario, following similar corporate welfare handouts to Volkswagen ($13.2 billion) and Stellantis ($15.0 billion). Like the previous two deals, the Honda deal comes at a significant cost to taxpayers and will almost certainly fail to create widespread economic benefits for Ontarians.

The Trudeau and Ford governments finalized the Honda deal after more than a year of negotiations, with both governments promising direct incentives and tax credits. Of course, this isn’t free money. Taxpayers in Ontario and the rest of Canada will pay for this corporate welfare through their taxes.

Unfortunately, corporate welfare is nothing new. Governments in Canada have a long history of picking their favoured firms or industries and using a wide range of subsidies and other incentives to benefit those firms or industries selected for preferential treatment.

According to a recent study, the federal government spent $84.6 billion (adjusted for inflation) on business subsidies from 2007 to 2019 (the last pre-COVID year). Over the same period, provincial and local governments spent another $302.9 billion on business subsidies for their favoured firms and industries. (Notably, the study excludes other forms of government support such as loan guarantees, direct investments and regulatory privileges, so the total cost of corporate welfare during this period is actually much higher.)

Of course, when announcing the Honda deal, the Trudeau and Ford governments attempted to sell this latest example of corporate welfare as a way to create jobs. In reality, however, there’s little to no empirical evidence that corporate welfare creates jobs (on net) or produces widespread economic benefits.

Instead, these governments are simply picking winners and losers, shifting jobs and investment away from other firms and industries and circumventing the preferences of consumers and investors. If Honda, Volkswagen and Stellantis are unwilling to build their EV battery plants in Ontario without corporate welfare, that sends a strong signal that those projects make little economic sense.

Unfortunately, the Trudeau and Ford governments believe they know better than investors and entrepreneurs, so they’re using taxpayer money to allocate scarce resources—including labour—to their favoured projects and industries. Again, corporate welfare actually hinders economic growth, which Ontario and Canada desperately need, and often fails to produce jobs that would not otherwise have been created, while also requiring financial support from taxpayers.

It’s only a matter of time before other automakers ask for similar handouts from Ontario and the federal government. Indeed, after Volkswagen secured billions in federal subsidies, Stellantis stopped construction of an EV battery plant in Windsor until it received similar subsidies from the Trudeau government. Call it copycat corporate welfare.

Government handouts to corporations do not pave the path to economic success in Canada. To help foster widespread prosperity, governments should help create an environment where all businesses can succeed, rather than picking winners and losers on the backs of taxpayers.

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