UK Prime Minister Rishi Sunak threw a figurative grenade into his country’s climate plans Wednesday. If you missed the news, he announced that UK will delay the ban on internal combustion engine cars for five years – from 2030 to 2035. From his speech:
“We seem to have defaulted to an approach [for UK climate goals] which will impose unacceptable costs on hard-pressed British families. Costs that no one was ever told about, and which may not actually be necessary to deliver the emissions reduction that we need… But we can do all this in a fairer, better way – and today I can set out the details of what our new approach will mean for people.
… it should be you the consumer that makes that choice [to buy EVs], not government forcing you to do it. Because the upfront cost is still high – especially for families struggling with the cost of living. Small businesses are worried about the practicalities. And we’ve got further to go to get that charging infrastructure truly nationwide…
So, to give us more time to prepare, I’m announcing today that we’re going to ease the transition to electric vehicles. You’ll still be able to buy petrol and diesel cars and vans until 2035.”
This policy change has major implications for not only consumers, but also auto manufacturers and the EV supply chain – both of which will face revenue shortfalls and stock pricing impacts. Which of course means investors – including pensions – will feel the pinch too. According to Financial Times:
“‘This U-turn will cause a huge headache for manufacturers, who are crying out for clarity and consistency,’ said Ian Plummer, a former Renault and Volkswagen executive who is commercial director at online marketplace AutoTrader. ‘And it is hardly going to encourage the vast majority of drivers who are yet to buy an electric car to make the switch.'”
I’m trying to figure out if this surprises me or not. On the one hand, this “in your face” policy reversal is startling. On the other hand, inflation’s impacts on his constituency should indeed be one of his primary concerns. On the other other hand, people and companies should be prepared to deal with threats that emerging inflationary pressures could have on climate policy, goals and targets. Sunak’s action demonstrates that perhaps even the most basic corporate climate assumptions need to be reassessed – nothing is certain.
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