EURACTIV — 2023-03-06
This opinion piece was written by Alexandr Vondra. This opinion piece does not necessarily reflect the views of ECG
Electrification is a worthy goal, and the EU owes it to its citizens not to proceed recklessly by putting the cart before the horse. If it does, it will ultimately harm both European consumers and the Union as a whole.
Recently, the European Parliament approved a ban on diesel and petrol cars. The ban will come into effect in 2035, after which no new internal combustion engine cars (ICEs) will be allowed to be sold anywhere in the EU. While the stated goal of reducing emissions is admirable, the ban is the wrong way to go. If the ban becomes a reality, it is all but certain to prove a nightmare to European consumers and cause backlash against the climate transition.
Without petrol and diesel cars, consumers will be forced to rely on electric vehicles (EVs). For decades, proponents of EV have promised that these cars are soon to become affordable. Recent data, however, shows that the average price of an EV is rising fast. This trend is unfortunately not new. Nothing today indicates that the price gap between EVs and ICE cars will close, and certainly not in time to meet the 2035 deadline.
On the opposite, the International Energy Agency has warned that higher prices of lithium that are in turn caused by the increased demand from the EV sector will make EV batteries more expensive in the future. Banning ICE cars will artificially inflate the demand for electric vehicles and thus, in turn, for lithium, making it – and the EVs – even more expensive.
Subsidies are unlikely to solve this problem. There are almost 250m cars in use in the EU, only a small percentage of which are currently electric. With a price differential between electric vehicles and other vehicles frequently in the tens of thousands of euros, subsidizing the difference is unlikely to be a financially viable option, neither for the EU nor for the Member States. As prices for EVs increase, subsidies will become even less viable as a policy tool to achieve mass adoption.
Instead, most consumers looking to buy a car after 2035 will have to turn to the second hand market, where gas and diesel cars will still be allowed to be sold ever. Over time, with no new ICE cars produced and electric vehicles remaining unaffordable, the car fleet will inevitably grow older. Given that emissions increase as cars age, not allowing consumers to replace their old cars with new ones may actually serve to increase emissions. To make matters worse, older cars are more likely to be involved in accidents, as safety features break down over time. As the European car fleet ages, traffic accidents will no doubt increase. These will disproportionally occur among consumers with lower and fixed incomes, for whom electric vehicles are likely to remain unaffordable for the near future.
Even if we assume that all the above problems can be overcome, there remains the problem of the electric grid. Replacing petrol and diesel cars with electric vehicles will result in an increase in the demand for electricity. Absent an equivalent expansion of supply, this is sure to cause higher utility bills for European consumers, and in a worst case scenario could even cause outright shortages and blackouts. We have already seen during the past few years what can happen when supply is unable to keep up with demand, and just this week, 2023 March, Germany announced that it would allow its grid operators to throttle the supply of electricity to households with the very wall boxes that are used to charge EVs. One can only imagine how much worse this issue will be after 2035 if the ban on petrol and diesel cars is allowed to take effect. At the same time, we need to be clear: Expanding the energy supply to meet the additional demand posed even by hundreds of millions of EVs would not in and of itself be an issue, were it not for certain EU leaders’ and countries’ (including Germany) continued resistance towards nuclear power. Sadly, many of those cheerleading the transition towards a zero-emission car fleet are simultaneously opposing nuclear, even though it is vital to achieve electrification.
Neither my group nor I oppose electric vehicles, and we do believe that they are likely to play an important role in the future of transportation. However, until the EU has reached a consensus on the issue of nuclear power to ensure the stable and reliable production of the energy needed to power these vehicles, it should not mandate that consumers make the switch. Even before this ban, electricity consumption in Europe was predicted to increase by between 25 and 50 per cent by 2035 compared to 2020 levels.
Finally, even assuming EVs can be made affordable and that mass adoption can happen in a way that does not endanger the electric grid, there remains the problem of sourcing the materials necessary to produce batteries, in particular cobalt and lithium. Currently, the EU mainly imports lithium from Chile, but growing demand could necessitate imports from countries such as China, creating a dependency that, like with Russian gas, could backfire. Even if we can avoid importing lithium from China, the fact remains that China has a competitive advantage at manufacturing electric vehicles, producing 57.4% of the world’s total in 2021, whereas Europe has a competitive advantage at manufacturing ICE vehicles.
Banning ICE vehicles would wipe out an industry crucial to many EU countries, including the Czech Republic, Slovakia and Slovenia, which are the top three auto manufacturers in the world on a per capita basis. In addition to the 180 000 vehicle manufacturing jobs that would be threatened in Czechia alone, the domino effect from this act of economic self-mutilation would see shops closing in manufacturing towns, and families forced to uproot their lives and relocate. In total, half a million workers in Czechia are employed directly or indirectly by vehicle manufacturing – nearly 10% of the total labour force. The picture is similar in Slovenia and Slovakia. Moreover, the technological and scientific advantage that the EU has gained through its automotive industry, including the benefits of technology and knowledge spillovers, would be lost. The effects of the proposed ban would go far beyond the auto industry, decimating manufacturing-dependent regions and slowing technological progress in the overall European economy. Only China would stand to benefit from this. Why would we commit to giving up a competitive advantage we have over one of our great geopolitical rivals, especially now at the precise moment a Russian-Chinese alliance appears to be forming? So far, the Commission has failed to provide a reply.
Meanwhile, cobalt, another key mineral for battery production, is mainly mined in and imported from the Democratic Republic of Congo, a highly unstable country on which the EU should be wary of becoming dependent.
Electrification, both in the transport sector and elsewhere, is a worthwhile goal, and as such, the European Union owes it to its citizens not to proceed carelessly with the process to achieve it. By insisting on an unrealistic cut-off date after which no new combustion engine vehicles will be allowed to be sold, the EU risks creating backlash against the climate transition and ultimately, against the union itself. Before outlawing or setting a deadline to outlaw other vehicles, the EU needs to first ensure that the necessary infrastructure for the wide-scale adaption of EVs is in place, that sufficient energy can be produced, and that the minerals needed to produce batteries can be sourced from democratic, stable countries, and ideally from within the EU itself. Furthermore, long-range EVs must become affordable even for low- and middle income households. Only once these conditions have been met should a ban be discussed. The current approach puts the cart before the horse and will ultimately harm both European consumers and the Union as a whole.