By: Andreas Kluth
We all want to reduce emissions of greenhouse gases. And hardly anybody is as enthusiastic in that quest as the European Union and, within it, Germany. The EU aims to be carbon neutral by 2050, Germany by 2045.
So imagine the scandal: Germany is blocking EU policies meant to help reach these climate goals. And the shame: Germany is once again placing its own economic interests above its responsibility to lead.
Actually, not so fast. The controversy concerns combustion engines in cars. And there are some subtleties that can easily get lost.
The EU – which is to say its Parliament and Commission, after two years of arduous negotiations with member states – agreed last year to ban, from 2035, the sale of cars with motors that burn hydrocarbons and belch carbon dioxide. That deal was supposed to be finalised this month. Then Germany unexpectedly upset the apple cart by demanding that the ban should only apply to engines burning petrol or diesel, while exempting those running on synthetic e-fuels.
At least in theory, such e-fuels are carbon-neutral. Using only renewable energy, you split hydrogen from water. Then you take carbon out of the air and combine it with the hydrogen to get the same molecules that make up gasoline. When a car burns this fuel, it emits carbon dioxide, but only what was previously sucked out of the atmosphere.
Still, many climate experts and policymakers consider e-fuels a sham. Among other things, the technology is certainly much less efficient than the best option – electric cars powered by batteries.
So why would the Germans suddenly lobby to exempt an also-ran technology? One reason is that German car and component makers are the country’s keystone industry, and several of the top brands – such as Volkswagen and Porsche – have a lot riding on e-fuels.
A more immediate factor is German domestic politics. The government of Chancellor Olaf Scholz consists of three parties – his own Social Democrats, the environmentalist Greens and the pro-business Free Democrats. Much of the time, they don’t get along. But the Free Democrats have been particularly sulky of late. They’ve been getting clobbered in regional elections and need a hot-button issue to energize their base, which includes auto honchos and Porsche fiends (the FDP’s boss, Christian Lindner, has owned several). If it seems like Germany as a country is being difficult in Brussels, it’s really just the Free Democrats.
This story obviously sounds devastating so far, because it adds to a narrative that Germany keeps shirking its European duties by being parochial, solipsistic or just plain hypocritical. At least since the euro crisis began in 2009, the whole continent has been debating the need for Germany, the largest EU member, to act as the bloc’s leader, or “hegemon.” But again and again, Berlin has balked, leaving its European partners frustrated or aghast.
So at first blush it looks bad: A German Free Democrat – Transport Minister Volker Wissing – wants to boost e-fuels to help his party and his country’s carmakers, at the expense of the EU achieving something big. Berlin is once again proving that it’ll never put the bloc’s interests, or even the planet’s, above its own. Other EU members could follow its example and hold the EU hostage to their preferences.
But let’s listen to what Wissing has to say. His point is that the EU should stay focused on the goal – climate neutrality – while staying agnostic about the technologies the market will use to get there. Let’s make cars clean by law, he says, but let the private sector and consumers figure out how.
This is actually a weaker version of what most economists – and classical liberals like me – have been recommending all along. If you want people to emit less carbon, the best solution is to make the stuff so expensive – via a carbon tax or cap-and-trade – that nobody would want to manufacture or drive a gas guzzler. In that case, no need to additionally ban anything. The EU actually has a system to set such a carbon price, but keeps compromising it.
It’s instead turning increasingly to bans, including this one. But if that’s the chosen path, the thing banned should at least be the undesirable outcome – net carbon emissions – rather than any particular technology.
Staying agnostic makes practical sense, too. For example, it could turn out that almost all cars on the road are electric, but a few still run on e-fuels. The supply chains of the latter could then bring e-fuels to poor countries that can’t electrify their vehicle fleets yet – because they can’t afford the charging infrastructure, for example. Overall carbon emissions may fall faster if e-fuels survive as an option.
So much for the engines. What about the larger issue of German leadership? So far, Berlin has certainly caused yet another communications disaster. Among the most livid are the French and the Spanish. But Wissing is also winning some supporters, including the Italians, Czechs and Poles, and maybe other eastern Europeans and the Portuguese.
Now, what’s so bad about all this? The likeliest outcome is that, after two years of talking, the 27 countries in the EU talk for another two weeks and then enact a policy that’s been tweaked, and possibly improved. Is that failure? A sign of European fractiousness and dysfunction? To me, it looks more like the deliberative process working as it should. In that case, Germany would actually deserve kudos for once.
* This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
* Andreas Kluth is a Bloomberg Opinion columnist covering European politics. A former editor in chief of Handelsblatt Global and a writer for the Economist, he is author of “Hannibal and Me.”
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