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VW Warning: EU Climate Policies “Threaten The Very Existence” Of Germany’s Car Industry

September 9, 2019

By Paul Homewood


Far too often in this country, big business has been only too happy to prostrate itself over global warming.

In Germany, however, there are signs of resistance:


Diess lamented that the EU’s campaign against conventional petrol cars was “threatening the very existence” of Germany’s car industry.

“The current campaign against individual mobility and thus against conventional cars is reaching existence-threatening proportions.”

Diess also attacked the proposed switch to electric cars as detrimental to the environment because Germany’s electricity systems is still dominated by coal-fired power generation.

“Instead of using petrol or diesel, we’ll basically use coal, even if we’re electrically powered, and in the worst case we’ll use even lignite,” he said. “That drives the idea of electric mobility ad absurdum!”

Full story (in German)


In fact, German industry sources have been spelling out this concern for years now, worried that mass migration to EVs would harm their car industry and give China’s a huge advantage.

The importance of Germany’s car sector to the national economy cannot be overstated, as Bloomberg report today:


Germany is at a crossroads, and nowhere will that be more evident than at the Frankfurt auto show this week.

Despite sleek new electric models like the Porsche Taycan, the traditional showcase of German automotive excellence risks becoming a platform for protest rather than preening, drawing attention to a generation of young consumers more likely to demonstrate against the car’s role in global warming than shop for a new VW, BMW or Mercedes-Benz.

Autos have made Germany into a global manufacturing powerhouse, but pollution concerns — intensified by Volkswagen AG’s 2015 diesel-cheating scandal — have sullied the reputation of a product that once embodied individual freedom. More recently, trade woes and slowing economies have hit demand. The consequence is Germany’s car production slumping to the lowest level since at least 2010.


Germany is teetering on the brink of recession, and the auto industry is pivotal to the economy’s health. Carmakers such as Volkswagen, Daimler and BMW AG as well as parts suppliers like Robert Bosch GmbH and Continental employ about 830,000 people in the country and support everything from machine makers to advertising agencies and cleaning services. With factories from Portugal to Poland, the importance of the sector radiates across Europe as well.

With emissions regulations set to tighten starting next year, concerns are mounting that companies across the country’s industrial landscape are ill-equipped to deal with the technology transition resulting from climate change and increasing levels of digitalization. IG Metall organized a demonstration in June, with more than 50,000 people rallying in Berlin, to draw attention to the risk of widespread layoffs from what Germany’s biggest industrial union calls “the transformation.”


If that’s not enough, a new report from McKinsey warns that the obsession with renewables threatens both Germany’s economy and energy supply:


A new report by consulting giant McKinsey finds that Germany’s Energiewende, or energy transition to renewables, poses a significant threat to the nation’s economy and energy supply.

One of Germany’s largest newspapers, Die Welt, summarized the findings of the McKinsey report in a single word: "disastrous."

"Problems are manifesting in all three dimensions of the energy industry triangle: climate protection, the security of supply and economic efficiency," writes McKinsey.

In 2018, Germany produced 866 million metric tons of carbon dioxide, a far cry from its goal of 750 million tonnes by 2020.

Thanks to a slightly warmer winter, emissions in Germany went down slightly in 2018, but not enough to change the overall trend. "If emissions reductions continue at the same pace as they did over the past decade, then CO2 targets for 2020 will only be reached eight years later, and 2030 targets will not be reached until 2046."

Germany has failed to even come close to reducing its primary energy consumption to levels it hoped. McKinsey says Germany is just 39% toward its goal for primary energy reduction.

Despite much hype, Germany still generates just 35% of its electricity from renewables. And if biomass burning, often dirtier than coal, is excluded, wind, water and solar electricity in Germany accounted for just 27% of electricity generation in 2018.

But McKinsey issues its strongest warning when it comes to Germany’s increasingly insecure energy supply due to its heavy reliance on intermittent solar and wind. For three days in June 2019, the electricity grid came close to black-outs.

"Only short-term imports from neighboring countries were able to stabilize the grid," the consultancy notes.

As a result of Germany’s energy supply shortage, the highest observed cost of short-term "balancing energy"  skyrocketed from €64 in 2017 to €37,856 in 2019.

"It can be assumed that security of supply will continue to worsen in the future," says McKinsey…..

German utilities too are warning of insecure supply. “By 2023 at the latest, we will be running with eyes wide open into a shortfall in secure capacity,” a managing director for the Germany energy industry association BDEW said.

"The ongoing phase-out of nuclear power by the end of 2022 and the planned coal withdrawal will successively shut down further secured capacity," explained McKinsey. "In particular, the industrial regions in western and southern Germany are affected, in which many capacities go off the grid and at the same time, one can not expect high rates of development of renewables."

In June, Germany imported more electricity than it exported, and by 2023, Germany will become a net electricity importer, McKinsey predicted.

The growing insecurity of German energy supply is made worse by the fact that its neighbors Belgium and Netherlands may shut down baseload capacity: coal plants in the Netherlands and nuclear plants in Belgium.

As such, McKinsey worries that Germany may not be able to meet demand with imports. "In the medium term, there is a risk that there will not be enough supply capacity in the entire European network."

That could happen as soon as five years from now. "Without adequate expansion, the first bottlenecks could occur as early as the middle of the next decade, and they will continue to worsen until 2030."

If Germany continues to phase out both coal and nuclear, Germany will lose "the equivalent of 43% of total secured output in 2018."

To stabilize the electricity grid and avoid becoming too dependent on imported natural gas, Germany is expanding coal mining to the Hambach forest, where environmental activists were arrested last September.

Meanwhile, local communities and environmentalist have successfully blocked the building of transmission lines from the windy north to the industrial south.

"By the first quarter of 2019, just 1,087 kilometers of the planned 3,600 kilometers of power lines were completed." At that rate, McKinsey notes, "the 2020 target will not be reached until 2037. "

German consumers have paid dearly for the energy transition. German electricity prices are 45% above the European average, McKinsey reports. Green taxes account for 54% of household electricity prices.

Electricity prices will continue to rise through 2030, McKinsey predicts, despite promises in recent years by renewable energy advocates and German politicians that they would go down.

And higher prices will threaten the German industry’s competitiveness. "Even a modest increase of a few euros per megawatt-hour," McKinsey says, "could jeopardize the competitiveness of energy-intensive industries in Germany."

Radical change is required, McKinsey says. "Small changes in direction are no longer sufficient to lead the energy transition back on track. What is required is a fundamental turn in energy policy."

Among the radical changes required include building transmission lines eight times faster than they are currently being built, building new back-up power plants, and installing instruments to control electricity demand, all of which would drive electricity prices even higher.

"But it is also clear that the consequences of a blackout would be much higher," warns McKinsey.

Alternatively, Germany could abandon its phase-out of nuclear energy, something the consultancy, like many others in the country, does not mention.

  1. markl permalink
    September 9, 2019 6:06 pm

    So reality comes in and bites them on the butt for a wake up call. All this has been known and forecasted by just about anyone who isn’t a CC alarmist and German industry is just now raising the flag? This is what happens when you go to sleep with the dogs….. you wake up with fleas. And as usual the UN will continue their goal of CO2 mitigation because this is their real goal all along.

  2. rah permalink
    September 9, 2019 6:13 pm

    They have more problems than that. Merkel just went to china with her tin cup in hand and came away basically empty.
    China is losing it’s ability to purchase imports due to a declining economy and continued devaluation of it’s currency.
    “BERLIN (Reuters) – Weaker demand from abroad drove a bigger-than-expected drop in German industrial orders in July, suggesting that struggling manufacturers could tip Europe’s biggest economy into a recession in the third quarter.
    Germany’s export-reliant economy is suffering from slower global growth and business uncertainty caused by U.S. President Donald Trump’s ‘America First’ trade policies and Britain’s planned, but delayed, exit from the European Union.
    Contracts for ‘Made in Germany’ goods fell 2.7% from the previous month in July, data showed on Thursday, driven by a big drop in bookings from non-euro zone countries, the economy ministry said. That undershot a Reuters consensus forecast for a 1.5% drop.
    “The misery in manufacturing continues. The decline in new orders significantly increases the risk of a recession for the German economy,” VP Bank analyst Thomas Gitzel said.
    Germany’s gross domestic product contracted by 0.1% quarter-on-quarter in the second quarter on weaker exports, with the decrease in foreign sales mainly driven by Britain and below average demand from China…………………………………”

    • Phoenix44 permalink
      September 11, 2019 7:55 am

      Not just the US – everywhere I go in France there is a huge emphasis on “Made in France” from food to hire bikes to wheelbarrows. The French think it will help with jobs (only in the short term) and are now wondering why they have a cost of living problem…

  3. Rudolph Hucker permalink
    September 9, 2019 7:11 pm

    Reality and common sense, will dawn on the ‘loonies’ of the EU parliament, even those who are dimmer than a TOC H lamp will eventually understand .

    • Bertie permalink
      September 9, 2019 7:19 pm

      Rudolph. Your use of a phrase that I haven’t heard for ‘centuries’ brought a smile to my lips!

    • rah permalink
      September 9, 2019 7:28 pm

      I don’t think so. At least not until the gun is at their head and the trigger nearly tripped, if then. They, along with the Chinese, Wall Street, and Never Trumper’s everywhere are pinning their hopes on the Orange man going down in 2020. If he doesn’t then the USMCA is going through if it hasn’t already and China will have to give in and then look out EU because that is when their pain will really begin. If Britain exits then it may become a conduit between US and EU trade. A way around the tariffs. If not?????? We live in interesting times for sure.

    • Gerry, England permalink
      September 10, 2019 1:44 pm

      That’s as maybe but the European Commission runs the show, not the parliament – that is to pretend there is any kind of democracy in the EU.

  4. Nancy & John Hultquist permalink
    September 9, 2019 7:38 pm

    Good to see that folks are finally catching up with “notalotofpeopleknowthat” !!

  5. September 9, 2019 7:55 pm

    Reblogged this on Climate Collections.

  6. September 9, 2019 9:56 pm

    Reblogged this on Climate-

  7. I_am_not_a_robot permalink
    September 9, 2019 10:54 pm

    Full marks to Bloomberg News for sheer audacity, in the past they have been enthusiastic advocates for renewables.

  8. Bruce of Newcastle permalink
    September 9, 2019 11:24 pm

    My comments to the German car industry and Volkswagen:

    1. If you get woke you’ll go broke.
    2. EVs suck, which is why people don’t buy them. They suck for unalterable physical and chemical reasons which do not allow them to ever compete with mass-market ICE cars.
    3. If you go all in on EVs you will go bankrupt.
    4. Ignore the Bundesrat and their ICE ban ideas. Voters will destroy any political party that takes away their cars.
    5. If you must believe in the catastrophic global warming hypothesis, which isn’t supported by the climate data, then pursue something that makes scientific sense, like methanol produced from CO2 and hydrogen. That way you can keep the advantages of the ICE, the current infrastructure, centralized fuel production and still be CO2 neutral.

  9. Athelstan. permalink
    September 9, 2019 11:58 pm

    One cannot help but snide, in sheer schadenfreude.

    There is, a very neat fitting irony in all of this, in that the great German economic miracle was if not entirely so, very dependent upon a large manufacturing base and particularly the auto vehicular industry.

    Therein, the single currency kept the de facto DM artificially low and so that the German auto industry surged. northern EU nations retail banks fell over themselves to lending to Club chump-sur-le-Med, accelerated the increases of the German auto industry – note but all done on tick – how’s that working out in the French and big German banks – deutshe bank notwithstanding – hint they’re all still totally strapped.

    it was a number of years ago now that, a EUactive ‘green future’ report recommending that, all of the EU should shift to electrically powered personal and public transport, by 2050. Booker noted it, though it seems to have fallen on deaf ears over in the German car manufacturing sector.

    Now that the green crows are coming to roost, gone half daft drunk on unending success German motor mafia is slowly coming to the very sobering realization that, actually instead of being part of the solution they are in for the big jump.

    I’d take someone with a heart of stone not to see the funny side of it.

  10. September 10, 2019 10:09 am

    When you’re in a hole, stop digging – but they won’t. Bound to end badly unless ideas change.

  11. September 10, 2019 12:29 pm

    Being caught by WVU engineers on cheating with emissions did not help either. It has cost them a large chunk of change. BTW, WVU was operating their program on a $50,000 grant.

  12. Vernon E permalink
    September 10, 2019 7:09 pm

    Its been said many times – be careful what you wish for.

  13. September 10, 2019 10:34 pm

    Germany is on an endless crusade to shoot itself in both feet and both arms and if they cannot turn themselves around, they will shoot themselves in the head too. But there is another possibility as soon brownouts and blackouts will be a regular feature of German life,. Coddled Germans are not used to this and will ask hard questions and even if the renewable industry manages to shift blame away in the beginning, the truth will breakthrough and Germans will be pissed. The German AFD party has one of the most reasonable climate policies I have ever seen in their political manifesto. And they are winning in every election. I am no fan of them but this is what Germany will be dominated by soon and then they will switch the nukes back on. And build new ones.

  14. Phoenix44 permalink
    September 11, 2019 7:46 am

    I doubt if it’s the young not buying expensive BMWs and Mercs new. I’m not buying a new car because it’s entirely unclear what it’s resale value (if any) would be. Nor am I buying an EV because they are expensive, impractical and the infrastructure doest support them.

    So guess what auto industry?

  15. Chaswarnertoo permalink
    September 11, 2019 8:12 am

    Oh dear, how sad, never mind. When does Great Britain leave the insane EUSSR?

  16. europeanonion permalink
    September 11, 2019 9:39 am

    Why should we worry about military intervention threatening our society when, with a few well placed words, support for climate enthusiasts, fake news, most of the west could become client states, debilitated, in very short order and without great expense on armaments.

  17. George Lawson permalink
    September 11, 2019 10:40 am

    Why cannot the Eco idiots, which includes the EU, recognise that nitrous oxide and other so called pollutants in the air are not killing people. We are all living longer and growing taller according to official records, so how can these people argue that we need to shut down the car and diesel industries to satisfy their bogus claims? The car industry across Europe and America should have the courage to collectively rise up against national parliaments which are made up of parliamentarians who cannot think for themselves and reject the arguments and lies put out by a ‘green’ charities’ and well paid researchers whose sole ambitions are to lie about pollution in order to promote their left-wing policies or line their pockets.? Volswagon Chief, Herbet Diess is right to speak out, and he needs to know that he is supported across the civilised world by millions of people who recognise the great dangers that the current eco madness creates. Let’s hope that all the other car and diesel manufactures will support him and rise to the challenge of trying to halt our ever increasing transit to Armageddon for all our industries and world economies. .

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