European Central: BMW Warns EU Gas Vehicle Ban Is Too Soon
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Last year the European Union created a proposal to require a 100 percent decrease in carbon dioxide emissions by 2035. This month the European Parliament supported the proposal. This would mean that from 2035 on vehicles would no longer be sold that use fossil fuels. The decision is not definite however as the member states will have the potential to negotiate the law. There were attempts by some lawmakers to reduce emissions from vehicles by 90 percent by 2035 instead of 100 percent but this did not succeed. Cars are responsible for 12 percent of carbon dioxide emissions produced annually in the EU, while the transportation sector as a whole produces 25 percent of emissions. The inspiration for this proposal is the European Union’s goal of reducing Carbon Dioxide emissions by 55 percent by 2030 from the 1990 level. The European Union also hopes to become climate neutral by 2050. This would mean that the bloc’s economy would create net-zero emissions. This goal helps the EU honor its commitment to the Paris Agreement.
BMW, the famous German car manufacturer however has voiced its concern about the manner. The company’s opinion is that 2035 is too soon to ban vehicles that run on fossil fuels. Renault and Toyota are also opposed to a ban on fossil fuel vehicles starting in 2035. On the other hand, Ford and Volvo are supportive of the proposal. If car companies are unsuccessful at making electric vehicles more affordable for consumers, this may lead to an increase in the price of used cars produced before 2035 and still use gasoline or diesel. Jan Huitema, a Dutch member of the European Parliament who served as the lead negotiator of the deal believes that electric vehicles will become cheaper. The problem remains however is that economic convergence between member states is far from occurring. Workers in different member states earn significantly different wages which may leave citizens of some member states more burdened than others. In 2021, electric cars and hybrids that used electricity accounted for 18 percent of new cars sold within the European Union.
Lithium prices rose dramatically during the pandemic. The price of lithium carbonate went from $15,000 per ton in 2018 down to half of that in 2020 but has soared to over $40,000 earlier this year. This has led to an interest in mining for the mineral in Germany and Portugal. The price of Lithium has gone from Nickel and cobalt are also used in the production of batteries for electric cars and prices have increased over fears that supply would decrease from Russia. The minerals in the cathode of the battery are responsible for 51 percent of the cost of the batteries. There has not been a surge in the price of electric vehicles yet due as manufacturers have largely been able to absorb the increase in the price of minerals but nothing is ever certain. As a complete ban on cars powered by fossil fuels will certainly increase demand in Europe, it is hard to say what effect this proposal would have on the price of electric vehicles, ignoring a potential increase in demand elsewhere in the world.
The European Union may also want to look closer at how impactful electric vehicles will genuinely be on reducing carbon dioxide emissions by 55 percent by 2030 and the bloc’s goal of becoming climate neutral for emissions in 2050. While it appears that the current consensus is that electric vehicles are better for the environment, an issue is that the full benefit of these vehicles is not able to be reached to the current situation of power grids. Recently, not only in Europe but worldwide the majority of electricity is produced using fossil fuels. On average, 37.5 percent of electricity consumption in the EU during 2020 was produced from renewable energy. Looking at the best member state, Austria 78 percent of electricity came from renewable energy in Austria meanwhile only 9.5 percent did in Malta, the lowest percentage of all nations in the EU. Unless 100 percent of electricity is produced from renewable energy by 2035, then electric vehicles may still be using fossil fuels. If the bloc were to achieve this, the total cost would be 530 billion euros a year, 30 percent higher than if low carbon technology was utilized such as nuclear or carbon caption and storage. The later would cost 410 billion euros a year.
The European Union has been ambitious with its plans to decrease emissions. It remains to be seen whether the bloc will be successful in reaching its 2035 target and become net carbon neutral in 2050. Member states that have already dealt with difficult economic consequences of the pandemic may not be keen to commit to this proposal. On the contrary, member states may feel ambitious to ban cars that use fossil fuels by 2035 in order to motivate themselves to be completely energy independent from Russia. Gas prices have been soaring and member states may be eager to look at how to make energy produced by renewable sources more affordable.
