Boiling Point

Apocalypse now!

“The era of global warming has ended. The era of global boiling has arrived…The air is unbreathable; the heat is unbearable.”

So declared United Nations Secretary General António Guterres last week to an audience of notables who, thanks to air conditioning, happily did not all spontaneously combust. His remarks were a response to the heatwaves that raged in late July across the Mediterranean basin, the southern US states and parts of China simultaneously. In the early days of last week, thousands of tourists were evacuated from the Greek holiday destination of Rhodes – and there is nothing like the image of terrified tourists running for their lives in their swimwear to get the British red tops going, as well as world-class diplomats.

The BBC, in solidarity with the Secretary General, has also been issuing dire warnings about the “climate crisis” between weather bulletins featuring maps daubed with flaming red. Judging from the reportage, one might have supposed that the island of Rhodes had been entirely incinerated and was now uninhabitable. And yet this week, the tourists began to flock back there as if the fires had all been a bad dream. It transpired that just one hotel had burned down, and indeed the Greek authorities are now desperate to resume normal service in the economically vital tourist industry.

In fact, 2023 has not been a particularly unusual year in terms of the number of forest fires in Europe. According to the European Forest Fire Information System (EFFIS), this has been a pretty average year overall so far, although there was an unusually high incidence of fires in the spring. That was partly explained by low winter rainfall which left the ground unseasonably dry across much of the Mediterranean.

Moreover, Vassilis Kikilias, the Greek minister of climate crisis and civil protection, told The Guardian last Friday (28 July): “During this time 667 fires erupted, that is more than 60 fires a day, almost all over the country. Unfortunately, the majority were ignited by human hand, either by criminal negligence or intent.” There is also evidence of poor forest management practices, whereby piles of dead wood are permitted to accumulate at ground level to form a potential tinderbox. The frequency of forest fires is naturally influenced by temperature, but there are other variables in play too.

The unusual pattern of the jet stream in the northern hemisphere this year has condemned the Mediterranean to extreme (but not exceptional) heat; but it has also given the British Isles a perversely damp and cool summer – further to a damp and cold spring and just a few balmy days in May and June. So, the fires were probably largely man-made – but not necessarily as a result of the “climate crisis.”

State of Fear

Given the apocalyptic musings of Guterres, who echoes Greta Thunberg’s assertion that “the world is on fire,” and the constant drip-drip of media warnings of imminent (or even actual) climate catastrophe, it is not entirely surprising that a large number of children and young people live in a state of climate terror. A 2021 survey conducted by the University of Bath, of 10,000 16-to-25-year-olds around the world, found that 56 percent of youngsters agreed with the statement “Humanity is doomed.”

But if we are doomed, there is not much that we can do about it. It’s a bit like the Lutheran idea of predestination which took hold across northern Europe during the Reformation. You might try to be nice to people – but if you are not on the list, you are going to Hell anyway. (I simplify, though not by much). And it is interesting that ‘dark-green’ political parties are most prevalent in the now secular countries of northern Europe that were once overwhelmingly Lutheran, something about which someone should write a doctoral thesis.

A widely reported scientific paper in the journal Nature last month suggested that the Atlantic Ocean current system – which most of us know as the Gulf Stream – could “collapse” within two years with catastrophic consequences. The Met Office, which normally rides enthusiastically on the climate-catastrophe bandwagon, felt it necessary to issue a statement to the effect that this hypothesis was “overdramatised and simplistic.” It opined that such overblown catastrophising could undermine public support for the net zero agenda. A touch of almost Bertie Woosterish understatement there.

There is a kind of inflation underway in climate doom-saying. In his 2020 satirical novel about climate change, The Denial, Ross Clark imagines future governments renaming the relevant department as hysteria takes hold. The department of climate change becomes the department of climate crisis, which is then rebranded the department of climate emergency. That then becomes the department of climate cataclysm which is soon replaced by the department for the climate apocalypse, only to be succeeded by the department of climate armageddon.

Remember that at the Copenhagen conference of 2009 we were told that we had 500 days to prevent “climate chaos.” No doubt we are now at one minute to midnight – or is it 30 seconds? All this catastrophising really does not help.

Alleged Backpedalling On Net Zero

Just as the climate hype goes into overdrive, a vein of opinion within the UK government and across the Tory party at large is now trying to undo the two main planks of the UK net zero agenda: namely, the ban on the sale of new petrol and diesel-powered cars by 2030 and the bald commitment to net zero carbon emissions by 2050.

The spark that lit the flame of doubt was the Uxbridge by-election on 20 July. The Tories managed to hold onto the seat formerly held by Boris Johnson, despite a surging tide of support for Labour. Supposedly, this was because of widespread opposition to the expansion of the Ultra Low Emissions Zone (ULEZ) scheduled for 29 August at the behest of the (Labour) Mayor of London, Sadiq Khan. Note that elected city mayors in the UK, unlike in the US, have very limited powers except in the fields of policing and transport, which is why they become fixated by those two domains.

From 29 August, anyone driving a non-compliant vehicle into any of the 32 boroughs and two cities that make up Greater London will have to pay a charge of £12.50 a day. In practice, that means all diesel vans and most saloon cars more than 14 years old will be clobbered. So, imagine a self-employed plumber who lives in Essex and drives into London to work 160 days a year. That will cost him £1,875 in additional operating costs during a cost-of-living crisis. Of course, he could buy a Vauxhall Vivaro Electric van, but he would not get much change out of £45,000 – and the chances are that he does not have that kind of money.

That is why the ULEZ charge had been branded regressive. Middle class people already have compliant petrol cars or EVs; most tradesmen don’t. Moreover, people who live in Essex or the other home counties had no say in the formulation of this policy. And why £12.50 and not £6.25, which would have been punitive enough? In addition, the Essex man will not be eligible for the associated scrappage scheme, which is only available to Londoners.

The extension of ULEZ to the Greater London boundary is not directly related to the net zero-carbon agenda. It is principally about air quality. This has been high on the agenda since April 2021, when a death was attributed directly to traffic pollution for the first time, by the coroner at the inquest for the death of a child, Ella Kissi-Debrah. Remember that ULEZ was first imposed on core central-London boroughs by Johnson when he was mayor.

Other measures have been taken to reduce traffic pollution in London and other major cities, including 20-mile per hour speed-limit zones and “low-traffic neighbourhoods” (LTNs). The latter use bollards and planters to restrict access to certain streets. These have also proved controversial and have provoked claims of a “war on motorists.” In many cases, traffic congestion has just been displaced from one street to a neighbouring one.

Last weekend, the Prime Minister pronounced himself “on the side of motorists” – though what that means in practice remains to be seen. “Motorists” are an amorphous group. There are 33 million cars on the UK’s roads and probably more drivers. If Rishi Sunak were really the motorists’ friend, he would allocate funds to local authorities to fill the endless potholes in our roads.

More significantly, there is now an influential caucus of Tory MPs, led by former Business Secretary Sir Jacob Rees-Mogg, which wants to postpone the chop for new petrol and diesel-powered cars from 2030 to 2035. That would align the UK with the EU and others. The fear is that UK-based manufacturers will not have a sufficient breadth of EV models available by 2030. Although its announcement on 18 July was a huge boon for British manufacturing, the Tata Group EV-battery gigafactory at Bridgwater, Somerset, may not even be operational by 2030 – with the result that most EV batteries would have to imported from abroad, as they are now.

Then there is the fear that the Chinese will try to flood the UK market with cheap EVs before the 2030 deadline and will quickly establish a dominant market share. According to Professor Jim Saker, president of the Institute of the Motor Industry, Chinese EVs in the UK constitute a security risk. How do we know that they might not all be disabled by the click of a mouse in Beijing?

Meanwhile, those with an interest in rapid electrification have accused the government of going soft on the 2030 deadline and creating uncertainty. This includes companies involved in the rollout of EV charging stations.

Yet Mr Sunak affirmed last week that the 2030 deadline would stand. But it does seem likely that the government will water down the rules that are due to come into force next January when automotive manufacturers will have to ensure that at least 22 percent of all vehicles produced must be EVs.

Under the Zero Emissions Mandate (ZEM), a manufacturer will be fined £15,000 for any non-EV produced over the limit unless they can buy in the excess EV production of another manufacturer. (Though how such trading of quotas would work in practice is not clear). Toyota and Honda have been lobbying for the relaxation or postponement of the ZEM on the basis that they need more time to adapt to the new rules. Toyota employs 3,000 people in Britain and manufactures 100,000 cars a year here. Honda no longer manufactures cars in the UK but sells about 30,000 of its vehicles here every year.

My best guess is that the rigid stance on 2030 will slacken as the election approaches next year.

A Comeback For North Sea Oil

The big policy announcement this week was when Mr Sunak, on a visit to Aberdeen on Monday (31 July), announced that hundreds of new oil and gas exploration and extraction licences would be issued in the months to come. As he explained, so long as we continue to consume oil, it may as well be our own, rather than oil imported from abroad. He said that even after 2050, about one quarter of our energy needs will still come from hydrocarbons – something that must have been buried in the small print of the net zero by 2050 policy document issued in the last month of Mrs May’s premiership. I was certainly unaware of it.

The climate purists denounced this move as a death knell for the net zero agenda. But Sunak claims that this move is compatible with the aim of reducing net carbon emissions to zero by 2050. (Cakeism is back, the cynics will say). This will be made possible by the extensive use of carbon capture and storage (CCS) technology, whereby CO2 is extracted and pumped into huge caverns under the North Sea.

CCS technology has been around for years – I first wrote about it here four years ago. But governments have been slow to foster it, partly because it is perceived to be expensive. Just Stop Oil and its allies are vociferously opposed to CCS because they believe that it offers a ‘fig leaf’ for the oil majors to continue their nefarious business indefinitely. Interestingly, Labour has remained mute on CCS but has indicated that any new exploration licences will be respected when and if they come to power.

The US is ahead of Europe on CCS. In 2018, Congress passed the so-called 45Q legislation that increases tax credits for corporations which sequester CO2 and/or use it productively. As a result, some US oil companies have been pumping CO2 into wells when they extract oil, for years.

Adaptation

If we are truly condemned to live in a much warmer world henceforward we should devote more effort to planning how we can best adapt to it. There is reason to suppose that some temperate and cold zones may become more productive in terms of agriculture. (Something I would like to consider here soon). Higher densities of CO2 favour the growth of vegetation – thus, it may even be possible to reverse desertification in more arid zones in a process now known as global greening.

The UK will be threatened by rising sea levels – and that will require additional sea defences, something which seems to be well down the agenda right now. But a warmer, sunnier climate may actually be beneficial.

Facing up to reality

Over the last week or so the debate about the net zero agenda and its consequences has entered a new phase. There is now more focus on what achieving net zero will cost. The blithe notion that the rollout of renewable energy will pay for itself now looks fanciful. The realisation has dawned that the great British public – no more than their German counterpart – will not happily put their hands in their pockets to install air-source heat pumps to replace their gas and oil boilers. There will be a political price to pay for ill-thought-through policies which have a negative impact on people’s standard of living.

Even Sir Tony Blair, in an interview with the New Statesman, pointed out that the UK only accounts for about one percent of global carbon emissions and that if we reduced our emissions to zero tomorrow that would not make much difference in the global scheme of things. Our leadership on climate change will influence how other countries formulate top-down climate policy only at the margin. The net zero agenda, he said, could place a “huge burden” on living standards.

Former Chancellor Philip Hammond told the Daily Telegraph that successive Conservative prime ministers have been “systematically dishonest” with the public about the trillion pound cost of achieving net zero. He was particularly scathing about Boris Johnson, who, Lord Hammond said, imagined that there would be no cost to decarbonisation as more jobs would be created in the process. Lord Hammond believes that the cost of net zero will come out of consumption and that, accordingly, the economy will grow more slowly than otherwise.

At the same time, the catastrophists seize on every extreme weather event as “evidence” of a climate crisis which impels an immediate response. They want to bring the dawn of the zero-carbon age forward (and they don’t believe in the “net” part). Just Stop Oil! I do not know where to start unpacking the inanity of that campaign.

Green policies which are formulated to the tune sung by the catastrophists will be expensive and unworkable – and thus will be bound to fail. Everyone agrees that we need to reduce our carbon emissions – and indeed we have done so already. But to do so too rapidly will damage the economy irrevocably and will not halt climate change as developing countries continue to increase their carbon footprints.

The catastrophist-Lutheran-Puritan campaign to ban meat-eating, to force us to eat insects, to stop us going on holiday, to outlaw alcohol, to turn us all into Lycra-clad cyclists, to have us shiver in the dark – this must be challenged by all “pragmatists,” to use Sunak’s term. But do they have the nerve to do it?

Better to get it right too late than to get it wrong too early. The prevailing mantra should be: don’t panic! The British used to live by that dictum – but something has gone wrong with our national discourse.

Listed companies cited in this article which merit analysis:

  • Tata Motors Ltd. (BOM: 500570)
  • Toyota Motor Corp. (LON:TYT)
  • Honda Motor Co. Ltd. (TYO:7267)
Victor Hill: Victor is a financial economist, consultant, trainer and writer, with extensive experience in commercial and investment banking and fund management. His career includes stints at JP Morgan, Argyll Investment Management and World Bank IFC.