France and Germany look set to squander a prime opportunity to trigger a green revolution in Europe’s industrial heartlands.
Berlin and Paris are under enormous pressure to save their airlines and carmakers from the coronavirus pandemic, but they are struggling to make their support for national champions contingent on green makeovers. Campaigners worry that many of those green strings aren’t very meaningful, or cover things companies were planning on doing anyway.
Henrike Hahn, a German Green lawmaker in the European Parliament, stressed that state bailouts give governments a rare chance to “influence climate issues” and shift transport away from planes and cars to greener trains and bikes.
France has announced a raft of big money measures aiming at supporting Air France (€7 billion) and Renault (€5 billion) while Germany is in negotiations with Lufthansa and its powerful car industry for multibillion-euro deals as well.
Senior politicians in the EU’s two biggest economies insist the recovery is the right time to chart a greener economic model post the coronavirus. German Chancellor Angela Merkel has called for “enhancing” climate protection and Environment Minister Svenja Schulze said Berlin would deliver a “climate-friendly” recovery.
French Economy Minister Bruno Le Maire also insists that he is attaching green strings to public help for Air France.
But environmental groups and politicians argue that these claims crumble under closer examination.
The likes of Lufthansa and Air France, Renault and Volkswagen have a very strong hand in pushing back on climate requirements.
Airlines and cars are strategic industries, employing millions of people. Politicians know the immediate stakes in the coronavirus crisis will be about headlines and job losses, rather than longer-term environmental targets.
Indeed, Le Maire hardly sounds like a man who is about to put the squeeze on France’s crown-jewel companies. Praising Renault, he called it an “industrial flagship that belongs to our culture, to our history. It represents 1 million jobs throughout our territory.”
When it comes to Air France, Le Maire said that France “had to save” the airline along with “the 350,000 direct and indirect jobs that go with it.” And behind Air France, there is plane manufacturer Airbus and its production ecosystem, representing more than 110,000 French jobs.
Still, he was at pains to say he “imposed conditions on Air France,” which now has to “become the most environmentally friendly airline in the world.”
The government said the flag carriers will have to lower domestic carbon emissions by 50 percent by 2024 compared with today, increasing the uptake of sustainable alternative fuels to 2 percent by 2025, and renew its fleet to more fuel-efficient aircraft. Air France will also have to reduce its short-haul capacity.
“As soon as there is a rail alternative to domestic flights with a duration of less than 2.5 hours, these domestic flights will have to be drastically reduced and, in fact, limited simply to transfers to a hub,” Le Maire told the French parliament last week.
A spokesperson for the French airline said the transformation plan would be finalized in the coming months. It would “have to strengthen its financial situation,” but also “contain an ambitious environmental roadmap.”
EU competition chief Margrethe Vestager cleared the Air France state aid and said it is “good” that Paris had attached green strings, though such conditionality had not been required by Brussels.
The plan’s credibility is under question, however.
“We want to know exactly how airlines like Air France-KLM will make a green transition when there is absolutely no constraint, no sanction,” said Greenpeace in a tweet.
Karima Delli, a Green EU lawmaker who chairs Parliament’s Transport and Tourism Committee, was also skeptical. “Where are the constraints and sanctions in case [Air France] doesn’t follow up on its commitments?”
She said renewing the airline’s fleet will have a “near zero” effect on reducing emissions because the planes will still be consuming fossil fuels. “It’s why [Air France] must go further.”
An Air France spokesperson said: “Staying the current course and schedule for fleet renewal is in itself a commitment (and a financial effort) from Air France. Many companies are canceling or postponing their orders to preserve their treasury, which will slow the reduction of their emissions.”
Boosting the use of sustainable fuels is nothing new; the government’s own aviation roadmap — announced in January — already does that.
There’s also less than meets the eye to the promise to cut domestic flights.
Only a third of Air France’s daily flights are domestic and they account for a smaller proportion of its emissions due to their short distances. Those flights have been squeezed by low-cost competitors and fast trains for years, prompting the company to announce a reduction in domestic air travel by 15 percent over two years in 2019.
“To be credible, climate conditions have to cover all emissions, not just domestic,” said Andrew Murphy, aviation manager at the campaign group Transport & Environment. “And fleet renewals won’t be sufficient so long as these international flights are fueled with untaxed fossil kerosene.”
In the case of Lufthansa, Berlin has not yet committed to impose green conditions in exchange for public help.
The airline is in talks with the German government for a €10 billion aid package that would see Berlin take a 25.1 percent stake in the carrier, according to Der Spiegel. However, the airline is resisting giving the government that level of control.
Lufthansa and the German government declined to comment.
Saving cars, no matter what
The car industry is just as reluctant to mix rescue cash with government interference.
Brussels last week approved a €5 billion state-backed guarantee for Renault, but the French government admits that the contingency arrangements won’t be like those for Air France. Because the carmaker won’t get direct aid, any environmental conditions “may differ,” a spokesperson for Le Maire said. Renault only committed not to campaign to weaken EU-mandated CO2 targets, rules it is on track to meet anyway this year.
A similar dynamic has emerged between Berlin and German carmakers.
So far, auto giants aren’t seeking direct state aid. Instead they are relying on government-funded wage schemes to help cover the cost of thousands of workers who were put on part-time hours during the crisis.
Volkswagen haughtily notes that Germany needs the car industry to restart the economy, rather than the reverse. Its boss Herbert Diess said cars are “probably the best way to boost the economy” during a television appearance last week.
Instead of seeking bailouts that would likely mean an end to shareholder dividends and manager bonuses, the industry wants to revive demand with a purchase subsidy scheme that would include both electric cars and internal combustion engine cars meeting the EU’s newest standards.
“One thing is clear: Should an additional purchase premium become necessary … this would also have to help support the sale of low-emission and climate-friendly vehicles as well as the long-term transformation of the automotive industry,” an official at the economics ministry said.
Although there would be larger subsidies for electric cars, giving money to buy ones powered by fossil fuels is quite different from earlier, greener, plans.
The final shape of any such program — and its green credentials — will come to a head on Tuesday, when German auto bosses will hold a teleconference with Merkel to discuss revival measures.
Then we’ll know how serious the green recovery really is.
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Aitor Hernández-Morales, Elisa Braun and Jakob Hanke contributed reporting.
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