Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.

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Sunday, July 30, 2017

Give me virtue but not yet


The title of this post is a misquote of something St Augustine is reputed to have said.  But I am using it in the context of the decisions by France and the UK to ban the sales of new petrol- or diesel-powered cars by 2040.

It's easy to make pious protestations about how at some suitably distant future date we will be virtuous.  I will be thin by the end of this year.   We will pay off all our debts by 2030.   These pious declamations are just that.  Airware.  When the time comes round when we are supposed to have achieved these admirable goals, there will be excuses and insincere gnashing of teeth and new, equally pie-in-the-sky goals will be set.  That's just politicians trying to placate angry electorates.  Greenwashing.

Now the Chinese also have a target to end the sales of ICEs.  But theirs is one with teeth.  I've already mentioned it here and here.   Just to remind you, the targets for NEVs (new energy vehicles, which includes EVs, plug-in hybrids, and hydrogen-cell vehicles) were 8% for 2018, 10% for 2019, and 12% for 2020.   Even these targets caused conniptions with non-Chinese car manufacturers who tried to get them reduced.  And failed.  Now comes news that China is aiming even higher in 2025: at least 20% of new car sales must be plug-ins.  That is how you achieve goals.

Note that no car manufacturer has (in public) complained about the new French and British targets--because they aren't seen as serious.  I would find the French and British ambition to stop all ICE sales by 2040 much more convincing if they had steadily rising interim targets and a Californian or Chinese style ZEV tradable certificate market which incentivises the production and sale of EVs.

China produces and consumes more than a third of the world's car output, so it's not going to be an option for world car manufacturers to ignore it.  Meanwhile, the costs of EVS are plunging.  The beaut new Tesla Model 3 is going to make EVs normal and popular.  So, we will probably achieve  90% (or more) EV sales relative to total new car sales by 2040, even without the toothless British and French "targets".

Excuse the rant.  I despise greenwashing.  And I greatly dislike politicians who hold us in such contempt that they think they can lie to us and we can't see through their lies.  People are dying because of air pollution.  It's not enough to wring your hands and pray.  It's even worse to pretend something serious is being done when it isn't.

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