Top 5: The “Yellow Vests” Protest Higher Diesel Taxes in France

11.20.18 | Blog | By:

Hello friends! Here’s my monthly take on the five most interesting developments in future fuels and vehicles trends. Items I selected include:

  • Diesel & the Yellow Vests: Nearly 300,000 workers took to France’s streets this past Saturday to protest higher diesel taxation. What does this mean for other countries that are looking at setting carbon taxes? Meantime, ACEA has come out with new data showing that latest-generation diesel vehicles emit low pollutant emissions on the road under the EU’s real-world emissions testing regulations.
  • Pink Taxation: The ladies are paying more to get around New York (and elsewhere most likely) to keep themselves safer, according to a new study. I submit the same issue exists and will increase with ride sharing.
  • Renewable Energy: Post the mid-term election in the U.S., six states have bold plans to massively ramp up renewable energy. I show where the states stand now.
  • EVs in China: China spent over US$50 billion over the last 8 years or so to get to 5% EV sales in the country, a lot of it on buyer subsidies, according to CSIS.
  • GM’s national EV program proposal: Will either the Trump Administration or California bite?

1. The Washington Post: France’s Climate Change Commitments Trigger Rising Diesel Prices and Street Protests —  The Post reported that more than 282,700 people, many clad in yellow vests, took to the streets around the country this past weekend to protest rising diesel prices. Why are prices rising? Higher carbon and air pollution taxes. Diesel taxes have risen 6.2% per liter this year, and the working people, who feel the policy is an affront and insult to them, aren’t having it. Not one bit. Carbon taxes have been a priority for President Macron since the beginning of his term, with France raising its carbon tax from US$35 a ton in 2017 to US$51 a ton in 2018. The cost is slated to keep rising, eventually reaching US$98.50 a ton in 2022.

So imagine: if this is the reaction to carbon taxation in what I would consider a comparatively “green” country, what do you think the reaction is going to be elsewhere? But yet, carbon taxation is a cornerstone of global climate policy. If climate advocates and governments can’t figure out a way to appeal to and benefit the working people, we will see a lot more yellow vests around the world. And, this certainly shows the difficulty many European countries may have in trying to reduce and eliminate the taxation preference toward diesel.

Also last week, a large group of cities around Paris agreed to ban all diesel-fueled cars built before 2000 inside the A86 Beltway, starting in July 2019. In 2025, this will be upgraded to a ban on all diesel vehicles from before 2010, plus a ban on more polluting gasoline-powered cars built before 2006.

Meantime, new data released by the European Automobile Manufacturers Association (ACEA) says that the latest-generation diesel vehicles emit low pollutant emissions on the road, as shown in the figure below.  ACEA says that its data was measured in real-driving conditions by the drivers of various national type-approval authorities. They say that as governments clamp down on diesel sales, with measures such as increased taxes on new cars in the UK, the results of the study show that decisions penalizing new vehicles are more likely to damage the environment.

Source: ACEA, November 2018

According to ACEA, some 270 new types of diesel cars type-approved against the latest Euro 6d-TEMP standard were introduced on the European market over the past year. The new data shows that all of these diesel cars performed well below the NOx threshold of the real driving emissions (RDE) test, which applies to all new car types since September 2017. Most of these vehicles show results that are below the stricter NOx threshold that will be mandatory from January 2020. Future Fuel Outlook members can see the series I am currently producing on the future of diesel in Europe.

2. WIRED: The Pink Transit Tax: Women Spend More Than Men to Get Around NYC — Women in New York City spend an average $26 to $50 extra on transportation per month for safety reasons, and up to $100 each month if they are their family’s main caregiver—as much as $1,200 more than men each year. Those are the numbers from a report released by researchers at New York University’s Rudin Center for Transportation on the “pink tax”, or gender-based price discrimination etched into the city’s transportation system.

Seventy-five percent of female respondents in a survey for the report said they had experienced harassment or theft on public transportation, compared with 47% of men. And they responded differently: 29% of women said they don’t take public transportation late at night because of it, compared with 8% of male respondents. And they spent differently: 42% of women said they felt safest taking for-hire vehicles like an Uber or Lyft (which is almost always more expensive than a transit ticket) late at night. Just 15% said they felt best on public transit.

The study authors say this may be happening in other cities as well, though the results in New York may be amplified because so many residents depend on public transit. The question posed in the article is how many opportunities might women be foregoing because they don’t feel they can get around safely. But another issue occurred to me: is this situation also a problem with ride sharing? It’s one thing to get a ride from an Uber or Lyft driver (though there have been safety issues with these service as well). It’s another get a ride and share it with strangers you do not know. That’s a concern for me and other women I know. The safety issue was a question I posed to Lew Fulton in my podcast earlier this year about the University of California Davis’ Three Revolutions study. There won’t be three revolutions if women (and everyone, really) can’t feel safe.

3. Salon: The Election Cleared the Way for Bold Climate Policy in These 6 States — Those six states, according to Salon, are New Mexico, Colorado, Nevada, New York, Illinois and Maine, and some have announced the intention to push forward ambitious renewable energy mandates:

  • Colorado: 100% by 2040
  • Nevada: 50% by 2030
  • Illinois: 25% (from the previous 15%) by 2025
  • New York: 50% by 2030

Maine’s new governor announced intentions to reduce GHGs by 80% by 2030. Nevada’s new governor wants to export renewable energy to California. No doubt these actions are influenced by billionaire investor and climate activist (and maybe future presidential candidate) Tom Steyer.

Where do the states stand right now? The following map from Visual Capitalist released today summarizes:

The top five states renewable energy producing states are: Vermont (99.6%), Washington (85.5%), Idaho (81.8%), New Hampshire (77%) and Oregon (75.1%), mostly from hydro power.  The bottom five? Kentucky (6.9%), Indiana (6.2%), Rhode Island (4.8%), West Virginia (4.6%) and Delaware (1.6%).

4. CSIS: China’s Expensive Gamble on New-Energy Vehicles — This note from CSIS explores China’s New Energy Vehicle (NEV) policy program, noting the government has spared no expense to jump-start the industry over the last 10 years since it identified NEVs as a strategic emerging industry. It has been working ever since to position the country as a leader. But it hasn’t been cheap, as the figure below shows.

Chinese sales in 2018 may surpass a million vehicles, representing 5% of new car sales, but not without the heavy hand of government, CSIS says:

“But it is important to recognize that government intervention has not jump-started the NEV market so much as substituted for it. Yes, there are companies across the supply chain and transactions between buyers and sellers, but much of this commercial activity would not exist without the heavy, visible hand of the state. Government spending is equivalent to over 42 percent of all NEV sales, an unbelievably high figure for any industry, even in the People’s Republic.

 

Massive government support is having broader worrisome effects. With so many NEV makers, it will be nearly impossible for any of them—even the best among them—to be profitable in the near future. And with so many NEVs rolling off factory lines, the chances for massive overcapacity are extremely high. This year overall auto sales have stagnated, and it is certainly possible that the highly optimistic projections of NEV growth are exaggerated.”

The lesson here, CSIS says, is not that China should refrain from developing NEVs or other advanced technologies, but that it needs to be much more attentive to market signals and carefully consider the ramifications for other economies. My view is that US$56 billion is a lot for 5% of new car sales. To really scale up EVs much more of this kind of funding will be needed. And my research has showed that only a few governments have that capability.

5. Wall Street Journal: Government Motors is Back — This opinion by the editorial board, not surprisingly, takes GM to task over its proposal to EPA as part of its comment on the fuel economy (“SAFE”) proposed rule to initiate a national electric vehicle program. The editorial board notes:

“GM’s plan would provide credits for production based on factors like battery range that have no bearing on emissions. Credits are ripe for political manipulation, and, right on time, GM is trying to game the system. GM suggests awarding 1.5 times as many credits for heavier duty vehicles and six times as many for driverless cars…GM also proposes to replace the 200,000 per manufacturer cap for the federal $7,500 tax credit with an industry-wide phase-out once electric cars exceed 5% of the U.S. light-duty fleet.”

The plan also calls for financing workplace charging infrastructure and to invest in consumer education. I think the plan could be an interesting way to deal with federal tax subsidy phase out cap (which both Tesla and GM will hit this year), position the company advantageously in the market and perhaps moderate the stand-off between the Trump Administration and California over fuel economy. In other words, perhaps there would some relaxation of the standards, which the industry originally asked for, but not as much as the Trump Administration proposes. In exchange for that relaxation, the nationwide EV program. What if the Administration also backed off on the California waiver revocation as well? It will be interesting to see how this plays out.

Honorable Mentions

The Wall Street Journal has a fun, dynamic illustration of the bumps ahead for autonomous vehicles. Gautam Kalghati, whom I recently interviewed for the podcast, has written a new paper with colleagues on the future of transportation fuels. The EU Parliament approved heavy-duty fuel economy targets last week, and Future Fuel Outlook (FFO) members can read about it here. It also approved the Renewable Energy Directive (REDII) targets following trilogue negotiations. The IEA released its World Energy Outlook (WEO) 2018 last week, and I’ll be doing a deeper dive for FFO members next week. And finally, U.S. EPA launched the Cleaner Truck Initiative last week to reduce NOx and will update its emission standards. That’s good: one thing I have seen in my initial review of the WEO is that transport-related SO2 and PM2.5 are projected to decline precipitously by 2040, but NOx is still an issue.