Blinded by Ideology: How EU Companies Paid the Price for Ignoring Reality, While Korea’s Democracy Triumphs Over Anti-Market Law
Eco-Friendly Policies Backfire: A Cautionary Tale for Korea
The European Union’s (EU) “eco-idealism” policies have pushed leading companies into a corner, as governments cut or eliminate green subsidies due to fiscal deficits. Volkswagen Group, the world’s second-largest automaker, has decided to close some of its plants in Germany for the first time in its 87-year history. Volvo has also postponed its goal of becoming 100% electric by 2030.
The Consequences of Fluctuating Subsidy Policies
Volkswagen’s latest tough measures are due to the German government’s ‘fluctuating’ subsidy policy. Germany reduced its subsidies for electric vehicles from 5,625-9,000 euros to 4,500-6,750 euros last year. The subsidy system was abolished at the end of last year, about a year earlier than industry expectations, citing “budgetary shortages.”
A Global Trend: Eco-Friendly Policies in Retreat
In the US presidential race, both Democratic and Republican candidates are drawing a line on policies to expand the use of electric vehicles. Vice President Kamala Harris stated that she “does not support mandating electric vehicles.” Former President Donald Trump expressed pessimistic views on the expansion of electric vehicles, announcing a pledge to “abolish the current government’s electric vehicle mandate policy if I am elected.”
The Impact on Renewable Energy Companies
American green tech companies are increasingly going bankrupt as they struggle to raise funds. According to Bloomberg, among companies with more than $50 million in debt, four renewable energy companies have filed for bankruptcy so far this year, the highest number since 2014.
Lee Jae-myung’s Renewable Energy Investment Plan: A Cause for Concern
As eco-friendly policies, including electric vehicles, are actually holding back businesses, anxiety in the domestic political and business circles is growing over the remarks of Lee Jae-myung, the leader of the Democratic Party of Korea. Representative Lee emphasized the need to invest in ‘renewable energy’ like buying a straw hat in the middle of winter.
A Naive Idea: Finding a Breakthrough to Long-Term Low Growth through Renewable Energy
Due to extreme climate change, the need for investment in renewable energy is clearly a trend of the times. However, at this point in time when the negative effects of eco-friendly policies immersed in ‘idealism’ are being revealed, it is pointed out that finding a ‘breakthrough to long-term low growth’ through investment in renewable energy alone is a naive idea.
A Warning from the Financial Industry
A financial industry insider pointed out, “The previous Moon Jae-in administration focused on renewable energy such as nuclear phase-out, but at the time, there was a large wave of renewable energy conversion happening internationally… However, the Moon administration’s renewable energy policy was not successful.”
The Opposition Party’s Grain Law Card: A Populist Move
The opposition party has once again pulled out the Grain Law card that was abolished by the ‘exercise of veto’ in the 21st National Assembly. The grain law revision bill is based on having the government purchase excess production when rice prices plummet. Although it is somewhat more relaxed than the previous revision, there are growing concerns that it is populism focused on ’handing out cash’ rather than establishing fundamental measures for rural development.
A Call for Market-Based Policies
Professor Lee Byeong-tae of KAIST Business School pointed out that, “(The Democratic Party’s) populist bills and various bad regulatory laws will endanger the Republic of Korea,” and that, “(Both the ruling and opposition parties) must pursue policies based on a market economy.”