Motoring journalists have been obsessed with electric vehicles for a couple of years but media spruikers of the technology seem to have missed the global implications of the rise of EV production, especially in China.
Car buffs will have noticed how many of the vehicles discussed on motoring websites are now EVs, even though they made up just 3.1 per cent of vehicle sales last year and probably constitute just 1 per cent of the national car fleet. As this column reported on November 15, 2021, the instant torque, and therefore rapid acceleration, of EVs compared with internal combustion engines, is attractive to enthusiastic drivers.
The much discussed downsides are range anxiety and recharging times. EV owners who live in older homes without off-street parking are finding recharging difficult as councils refuse to let owners run power cords across footpaths.
The larger problem for the world, and for the car industries of many first world nations, is China’s rapid rise towards becoming the world’s number two car maker. Many of its new overseas sales are EVs. This industrial transformation is built on soaring fossil fuel power use in China.
So drivers in Europe and the US are paying premium prices for emissions free vehicles that are made in the country that has for decades been driving most of the rise in global CO2 emissions. Its emissions fell slightly last year because of Covid lockdowns. Total global emissions rose 1 per cent last year to a record 58 gigatons after a 6 per cent rise in 2021.
Bloomberg reported on January 26 that China is to pass the US, Germany and Korea in terms of overall car production, to sit second only to Japan.
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“Overseas shipments of cars made in China have tripled since 2020 to reach more than 2.5 million last year. The target is to sell more than 8 million passenger vehicles overseas by 2030 – more than twice Japan’s current shipments,” according to the Bloomberg report.
These are all annual export sales.
As this column has observed, essentially Europe has been outsourcing its polluting industries to China and India for decades. This reduces CO2 emissions in Europe and destroys jobs for European workers but at no net benefit to the planet because European companies are simply making goods in highly polluting countries with lower environmental standards than the UK and EU.
Ironically, another big beneficiary of the gas crisis forcing up power prices in Europe in the wake of Russia’s invasion of Ukraine is the US, where power remains cheap largely because of the fracking revolution.
European car makers such as Volkswagen, BMW and Ford Europe are moving production to the US, and more models to China, as power prices in Europe make local production unviable.
US President Joe Biden’s new green subsidies are accelerating the move to the US. The Guardian reported on January 30 that the UK electric van start-up Arrival would cut 800 jobs – about half its workforce – as it sought US expansion to take advantage of green subsidies.
But as with much international action designed to win popular political support, Biden’s new Inflation Reduction Act, that spends $US369bn on green projects, is not really reducing emissions and in fact is delivering windfall profits to US oil majors, The Wall Street Journal editorialised last week.
“Behold the irony. President Biden has done more to enrich Big Oil than Donald Trump or any other White House occupant in decades. See how his Administration’s crusade to limit US oil and gas production is reaping record profits for ExxonMobil and other fossil fuel giants,” the WSJ editorial read.
Exxon had just reported a record $US55.7bn profit, while the previous week, Chevron “announced a record annual $US36.5bn profit and a $US75bn stock buyback program,” the WSJ said.
The rise of EVs also raises equity concerns in car markets. They are more expensive than traditional cars, driven by the wealthy and subsidised by governments. They are in effect a wealth transfer from the poor to the rich.
The head of Kia UK told The Times in London on January 23 that there would be no low cost electric vehicles in the UK for some time. Even the electric version of the tiny Fiat 500 costs more than £30,000 in the UK.
The Daily Telegraph in London that same day reported an Automobile Association study showing new peak and off peak power rates were boosting the cost of charging EVs, which at peak pricing times was now more expensive than filling a petrol car.
The car industry produces 7 per cent of global CO2 emissions. The real problem with global attempts to reduce total emissions sits in the electricity space where China has persuaded Western governments to commit to shutting down fossil fuel generation that it and its industrialising rival India are only planning to expand.
Like turkeys voting for Christmas, Western governments, our own included, are not just shutting down reliable fossil fuel power generation but are moving to renewables products largely manufactured in China, again with expanding Chinese fossil fuel use. China makes more than 80 per cent of the world’s solar panels, many manufactured using slave labour in western China. It also dominates the global market for wind turbines, making 70 per of world supply.
Meanwhile, the Greens here want Australia to stop all new coal mines when coal is our number two export earner, ban expansion of gas exploration and production when we are the world’s largest natural gas supplier, and reject domestic nuclear power when we have 37 per cent of world uranium reserves.
Certainly China’s command economy and coercive trading relationships give it a serious comparative advantage in EV manufacture. Yet the benefits for the planet are dubious.
While across the life of a car, EVs will be produce fewer emissions than conventional cars (even if largely still reliant on coal and gas power for recharging), their manufacture – especially their lithium ion batteries – is emissions intensive.
The technology needed to recycle these batteries is in its infancy and most today are simply dumped in landfill where they are a danger to water tables. Mining for the rare earths used in battery manufacture is also carbon intensive and the metals need to be shipped to China, often from South America, Africa and Australia.
The world’s largest car maker, Toyota, has been sceptical of batteries because of what is likely to be a life expectancy of 10 years. Toyota has proven hybrid technology and is renowned for cars of long durability. It is betting billions of research dollars on hydrogen cell cars that are also non-polluting at the tailpipe but with engines that last longer than EV batteries.
Treasurer Jim Chalmers may learn a bit about the power of markets from watching the rise, perhaps temporary, of government mandated EVs.
Many foreign policy commentators were writing off the liberal democracies three years ago based on China’s ability to keep its population free of Covid. Yet China’s eventual opening up has been a disaster, and a lesson for those who have been underestimating the power of markets.
There also remains a slim hope that with only seven years until 2030, all the prophets of climate doom will finally be shown for the frauds they are, given global temperatures look nothing like a “climate catastrophe”.
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