Week 9: Less than 9% of Western firms have divested from Russia

In this issue: ▸ A deal is not a deal ▸ Germany and Italy stall EU ban on combustion engines ▸ The European car lobby ▸ Less than 9% of Western firms have divested from Russia ▸ And much more...

Dear all,

We have agreed and have an agreement. It is sealed. Promised. Signed. An agreement, you know. A real one. Negotiated. Done. And a law proposed on the top of that agreement!

You know that feeling when you walk away from a meeting or a call or a conversation where you have just agreed something with someone. It is a breathe-out moment. It has some kind of significance.

Most of us have some kind of relationship to the metal-aluminium-plastic-and-glass boxes that roll on four rubber wheels. Cars. But have you heard about e-fuels? No? It is magic. Carbon-neutral and all? Right? No?  

Sometimes I wonder if there is meaning in believing what our institutions are selling to us, since most of it is either damaged goods or recalled more of less on a regular basis. Who are these people we have selected to lead us? 

Do you remember that shiny moment when the EU decided, agreed, and proclaimed, with a steady voice, that combustion engines would be forbidden in Europe after 2035?

Well, you see, we are sheep.

Germany and Italy stall EU ban on combustion engines 🚗💨

Germany and Italy have now blown apart the EU plan to ban internal combustion engines by 2035, as the European car industry’s heartlands mount a fightback against ambitious carbon goals. The two countries, the homes of Volkswagen, Fiat and Ferrari, are demanding exemptions for cars that run on synthetic fuels, potentially cushioning the blow for established industries.

Italy’s deputy prime minister Matteo Salvini described the delay as “a great signal” that rewarded efforts by his hard-right League party. “The voice of millions of Italians has been heard,” he wrote on Twitter.

The setback for Brussels underlines the political clout of the car lobby across Europe and its fears that the green transition will be costly to jobs. Porsche, part owned by VW, has long called for clean fuels that would allow it to sell its engine-powered sports cars for years to come, while Italy’s Ferrari has refused to set an end date for making supercars with engines.

Germany’s Bosch, which supplies engine systems to carmakers all over the world and is regarded as a laggard in battery technology, has also lobbied for synthetic fuels to be considered “clean” technology by regulators.

This week Rome swung behind the German ministry of transport, which had requested the special provisions for so-called e-fuelled cars, bowing to mounting political pressure at home. E-fuels, which are produced using electricity from renewable hydrogen and other gases, are often considered “carbon neutral”. They can be used in normal combustion engines, thus prolonging the life of Germany’s traditional car manufacturing industry, which makes up about a fifth of the country’s industrial revenues. “We need e-fuels because there is no alternative to operating our existing fleet in a climate-neutral manner,” Volker Wissing, the German transport minister, told ARD broadcaster.

The change in position at such a late stage has prompted anger among other capitals, which see it as a threat to the EU’s credibility on green legislation. The law had been agreed among member states last year and was approved by the European parliament this month.

But what the hell is that agreement worth now? Failure to adopt the curbs on combustion engines could severely hamper the EU’s effort to reach climate neutrality by 2050. Poland has already said it plans to vote against the law, and Bulgaria will abstain.

Who cares about this? Apparently automotive industry lobby in Brussels, but certainly not “average Joe” in the EU. 

Read more here and here.

The European car lobby 😈 😈 😈

The car industry lobby is second only in size to the financial industry in lobbying the EU institutions, according to the transparency register. The sector’s influence on EU legislation for car emissions limits and testing has come into sharp focus since Volkswagen’s cheating was uncovered in the US yet went undetected in tests in Europe where diesel cars account for more than one in two cars sold.

Volkswagen itself is the biggest player in the Brussels corridors of power with 43 registered lobbyists, a report compiled by Corporate Europe Observatory (CEO) shows.

However, the official list is considered a low estimate, and the actual number of representatives is impossible to determine.

If you want to do a deep dive with a bottle of painkillers in your hand, you can do that here.

And if you want to understand what the markets looks like as well as how the projected growth looks like you can find it here.

VW is all-fuels in the EU, and all-electric in the US 🤢

Volkswagen is big in Brussels on lobbying against stringent rules on combustion engines and the rolling out of fossil driven cars by 2035. But in the US, oh, there VW is all for electrical vehicles! And now, thanks to the Bidens “US first” in relation to climate, VW is doing everything it can to become big in US too.

Volkswagen plans to open two new factories in North America to spearhead its push into the electric vehicle market, which the German carmaker says has become more appealing since US President Joe Biden unveiled more than $400bn in clean energy incentives. VW said on Friday that it would open an assembly plant in Columbia, South Carolina, to produce electric models for its revived Scout brand. It is also searching for a site for a new battery factory in North America.

North America offered “huge potential” for the company, VW’s finance chief Arno Antlitz said on Friday. “We are strong in Europe and China and want to keep that strength… but it is really important to increase that third pillar in the US.” 

To qualify fully for the subsidies, the law requires electric vehicles to be substantially made in the US and exclude materials from certain countries, including China. “We would have done that anyway,” said Antlitz, referring to its plans for the factories, as “the whole market in the US is transforming to electric, and we have the technology and the will to transform ourselves”. Intriguing… indeed.

The French push for nuclear ☢️

EU has never been united for real. It is an attempt. A vision, worthy fighting for, and sometimes when the cracks of that “unity” – large like the French ego and the German confidence – show themselves, then it becomes clear how big a circus EU really is!

France is making an aggressive push to promote nuclear power in the EU, seeking to rally allies for battles to come in a stand-off with Germany over the bloc’s energy policy. Paris on Tuesday persuaded 10 countries, including Hungary and Bulgaria, to join a “nuclear alliance” calling on Brussels to do more to back atomic energy, a move they argued would help meet climate goals while protecting the EU’s energy independence.

The establishment of the pro-nuclear group at a meeting in Stockholm, comes as France lobbies for concessions from the EU’s ambitious renewable power goals to obtain what would effectively be carve-outs for its nuclear industry, the mainstay of its electricity production. That has opened a rift with Germany and left other member states wondering if they will be forced to pick sides. The disagreements are bleeding into a host of EU energy reforms, from a planned overhaul of electricity markets to how to promote hydrogen energy and renewables. It also reflects how Germany and France have had trouble forging consensus on a range of issues since Russia’s invasion of Ukraine rattled the EU’s economic and political order.

At a Franco-German summit in January, the countries had appeared to agree in a joint declaration on giving a prominent role to “low carbon” technologies in EU plans to cut carbon emissions. Germany even pledged to join a project to build a hydrogen pipeline that France and Spain have championed, known as H2Med. But the agreement fell apart weeks later when the pair clashed again over the fine print of how nuclear should be treated in the so-called Red3 renewable energy directive, which is still being negotiated in Brussels and is expected to be adopted in a final vote in March. France wants to be given credit for already having a low-carbon nuclear industry by tweaking the formula that requires member states to build a certain amount of renewable capacity by certain deadlines. Germany opposes such a move.

“Red3 is supposed to promote the expansion of renewable energy,” a spokeswoman for Germany’s economy ministry said. “Nuclear energy or nuclear-based hydrogen is not a renewable energy. So allowing nuclear energy or nuclear-based hydrogen to count towards the goals for expanding renewable energy will reduce the level of ambition.”

Read more here.

Less than 9% of Western firms have divested from Russia

And we finish this newsletter with morals!

The People of Ukraine fight for their very survival. Our politicians, our leaders have pledged. They have badges with the Ukrainian flag. We stand with Ukraine! 

Yes, their cause if ours!  We sell or give away guns, ammunition, tanks, rockets.  And J.P. Morgan has even sent its senior banker team to Kiev to meet with president Zelenskyy to discuss how to rebuild the country. (This, if anything should be a warning signal, but never mind. All of the bankers wore bulletproof vests!)

But now I’m afraid we need to talk about something else, something very sensitive, very cheeky and very, very much… Us. 

Less than nine percent of Western firms have divested from Russia.

The Russian invasion of Ukraine in February 2022 and the corporate decisions that followed offer insights into the extent to which Western firms are willing and able to sever commercial ties with nations now viewed as geopolitical rivals by their governments.

The authors of this paper gathered extensive data on equity investments made by foreign companies headquartered in the European Union (EU) and G7 nations, and checked whether following the outbreak of armed conflict divestment of their Russian subsidiaries could be confirmed.

At the end of November 2022, analysis shows that 8.5% of EU and G7 companies had divested at least one of their Russian subsidiaries.

Please read the paper. With or without pain-killers you may find one or more companies you know…

And so…

A deal is not a deal. An agreement is not and an agreement. EU is not EU. US in not EU. EU is lobby-land more than union. Morals are B.S. Business has no borders. Indeed. 

Have a great agreement week! 

Best regards, 
Sasja