Thoughts from Pontevedra, Galicia, Spain: 15.7.21

Night’s candles are burnt out, and jocund day stands tiptoe on the misty mountain tops.

Spanish life is not always likeable but it is compellingly loveable.  

– Christopher Howse: ‘A Pilgrim in Spain’

Cosas de España/Galiza  

Covid: Spain’s overall incidence rate has jumped 470 per 100,000 inhabitants for the past 14 days – still well over the ‘extreme risk’ level of 250. The incidence rate is at its highest in Catalonia (1,068), Castilla y León (779) and Navarra (700). As of next week, we’ll be able to buy antigen tests in pharmacies without a prescription from our GP.

Some busting of traffic fine myths here.

Talking of travelling . . . Returning from a short Camino walk yesterday, I paid for our tickets on the train, as there was no office at the station. I offered my discount card and helpfully pointed out that I was the old one. The ticket-collector (el revisor) took our phone numbers, printed out a receipt and then insisted – with a laugh – that I look at it. He’d put me down as a child, which might have been even cheaper than the one I was entitled to. So we all had a good laugh.

The EU

AEP is once again unimpressed with an EU initiative: Europe picks a fight with the whole world by going for green protectionism. The EU’s carbon border tax plan is an attempt by the bloc to impose its political agenda on everybody by unilateral means. See below.


A surprise . . . More Americans Watched the Euro 2020 Soccer Final on TV Than the NBA Finals. The stat is a testament to soccer’s growing popularity in the United States, more than it is a knock on the NBA.

Quote of the Day

Kurt Vonnegut, Jr.: I say in speeches that a plausible mission of artists is to make people appreciate being alive at least a little bit. If I am then asked if I know of any artists who pulled that off. I reply, ‘The Beatles did’. Very true, both generally and specifically. There are other groups. 


For those Americans who wonder why Brits say ‘queue’ instead of ’line’ . . . Since being borrowed into English in the 1470s, ‘queue’ has had a lot of meanings: it could refer to a band of parchment, a line of dancers, a plait of hair, the long end of a string instrument, a cask, the bottom part of a lance, or the tail of a beast in heraldry. All of these definitions have something to do with length, and that last one is closest to their origin in Old French ‘coe’ or ‘cue’, meaning ‘tail’ (or, colloquially, ‘penis’).That’s from Latin ‘cauda’, meaning ‘tail’, and we can trace it back to Proto-Italic ‘kauda’ and Proto-Indo-European ‘khu’, meaning ‘cleaved’. Or ‘cloven’, I guess. 

Finally  . . , 

The sacred tortilla: The Guardian claims here that the with-onions-faction has finally won the age-old war against the without-onions faction. As if.

Note: If you’ve arrived here looking for info on Galicia or Pontevedra, go here.   


Europe picks a fight with the whole world by going for green protectionism: The EU’s carbon border tax plan is an attempt by the bloc to impose its political agenda on everybody by unilateral means: Ambrose Evans-Pritchard, Telegraph

The European Union has jumped the gun. It has charged ahead with plans for a carbon border tax before it has secured the necessary cooperation of key allies. 

It is attempting to impose the EU’s political agenda on everybody, by unilateral means, in the face of implacable opposition across the globe. 

The putative carbon fee on imports is the centre-piece of the European Commission’s climate plan, unveiled today with the tantalising moniker “Fit for 55” – meaning a 55pc cut in CO2 emissions from 1990 levels by the end of the decade. 

China deems it disguised economic warfare, a first step towards circumventing the World Trade Organization and excluding China, without having to admit the ulterior purpose. Tackling climate change should not become an excuse for geopolitics, or for attacking other countries with trade barriers,” said President Xi Jinping.

The BRICS quintet agree with him, even if some agree with him on nothing else. The EU is inadvertently burnishing Xi’s claim to leadership of the emerging world when Western interests would be better served by courting India, Brazil, and South Africa, (if not Russia).  

“The whole developing world sees this as self-serving protectionism. It throws gasoline on international trade tensions,” said Michael Liebriech, the founder of Bloomberg New Energy Finance and a key negotiator in global climate policy. “Think of the optics: the wealthy EU, levying a charge on manufacturers in the world’s poorest nations and using it to defray the costs of running the Berlaymont building,” he said. Mr Liebreich said the EU is up against a powerful coalition of countries that views this overreach as a form of latter day colonialism, dressed in green garb. “The risk is that these countries will say ‘if that is how you are going to treat us, count us out, we’ll trade with each other’. That way we will end up with a two-speed world and a meltdown in Glasgow.” 

US climate chief John Kerry pleaded with the EU not to press ahead with the border tax before the COP26 climate summit this autumn, fearing that it would undermine months of careful diplomacy, which has already led to net-zero commitments by countries making up 78pc of total emissions. The tax should be “a last resort, when you’ve exhausted the possibilities”, he said.

The decision to ignore Mr Kerry marks the definitive end of the post-Trump honeymoon, and probably the start of a fractious and chronic trade conflict that could have been avoided. It is certainly careless statecraft. 

Nobel economist William Nordhaus is the guiding mind behind the border tax, hoping it will evolve into a “carbon club” of like-minded green pioneers, although it takes more than one to form a club. The idea is that once Europe, America, and G7 allies have together established a broadly compatible carbon price, others will have to follow suit or face exclusion from the world’s biggest combined market. 

Prof Nordhaus starts from the premise that the United Nations’ COPs regime has reached a “dead end”. He is wrong about that. The 2015 Paris Agreement has proved to be an irreversible turning-point, coinciding with a sudden leap forward in green technology that renders fossil fuels obsolete on the forward curve. 

Big Money has switched sides, chastened by the prospect of a regulatory sledge hammer, but mostly seduced by the allure of fortunes to be made in more competitive sources of energy. Nobody wants to be stuck with stranded assets.  

There is a theoretical elegance to the Nordhaus carbon model. It uses the price mechanism to set signals, letting markets sort out the best technologies. A variant of his plan has reached the US Congress in the form of HR 763, with the backing of all former chairmen of the US Federal Reserve. “We’re heading down the road of using very ineffective, costly tools. We could reduce emissions much more efficiently with much less intervention and a much lighter hand on the economy,” he said. However, elegant theory is useless if decoupled from the realities of global geopolitics.  

You can see why the EU has ended up in this position. The price of emissions under its carbon trading scheme (ETS) has rocketed tenfold over the last three years to €52 a tonne as a result of rationing permits. This is generating lots of tax revenue. 

But the higher the EU carbon price, the greater the imperative for a border adjustment tax to level the playing field, and to avert ‘carbon leakage’ to free riders. This will become ever more necessary as the ETS scheme is extended over time from the power sector to a wide range of tradable industries. Most companies are currently shielded by free carbon credits.

The German chambers of industry and commerce (DIHK) said “politically-induced rises in CO2 prices are only sustainable if at the same time compensation is provided for hard-hit companies that are particularly affected.” It cited steel, aluminium, and cement producers, along with 900 mid-sized German contractors.

The EU logic is impeccable but how can the border tax be reconciled with countries such as the US that do not have a carbon price – though California and New England have permit schemes – and instead rely on other instruments to curb emissions?

The Biden administration is not hostile to the principle of a carbon border tax. The Democrat party platform last year called for a US version, leaving it no doubt that the target was Xi Jinping’s China. Treasury Secretary Janet Yellen has long favoured such an idea. But the White House has concluded that anything like a federal carbon tax is doomed in Congress. The administration is snookered.

Brussels has charged ahead anyway and risks turning what could be a cooperative Atlantic venture – a sort of trade Nato – into a fractious and chronic trade conflict. Could Liz Truss possibly proceed with her post-Brexit trade deals the UK went along with the EU plan as currently designed? Clearly she could not. So Brussels is inviting interminable friction with London as well. 

“This is going to cause a furore and bog us down in all sorts of problems for little purpose,” said Tom Burke from the green energy think tank E3G. He blamed France’s Emmanuel Macron for pushing the border tax to the top of the EU agenda.

How does one measure the relative national carbon content of an imported Washington machine in any case? It is nigh impossible, as one can see in “Counting Carbon”, a brave effort by the UK’s Overseas Development Institute. “The literature quickly disappears into a thicket of diagonalized vectors, final demand matrices and Leontief inverses,” said Mr Liebreich.

What is the CO2 footprint of a car made from parts in thirty countries and shipped criss-cross in Brownian motion, or the footprint of an Apple iPhone made with components from the US, China, Korea, Taiwan, Japan, the UK, France, Germany and Denmark? Even the great Wassily Leontief would struggle with this. 

“China can simply redirect its low carbon production to the EU and ship dirty production elsewhere,” said Michael Jacobs, Gordon Brown’s former climate adviser and now at Sheffield University. “The biggest impact is going to be on places like Turkey, Ukraine, or North Africa just outside the EU that produce cement and steel,” he said.

Does the energy and climate wing of Ursula von der Leyen’s commission talk to colleagues in the foreign policy and defence wing?

This opening salvo from the commission is the start of a long winding road. The European Parliament will want to make it tougher. East European states in the EU Council will want to make it weaker. Corporate lobbyists will fight tooth and claw to secure exemptions. 

You could say the EU’s negotiating tactic is already working: one reason why China is introducing its own carbon trading scheme is precisely because it fears border taxes by the Western axis.

But the risk of screwing up COP26 in Glasgow surely outweighs any advantage at this juncture if the objective is to fight climate change, while the refusal to heed the warnings of the Biden White House reduces Western leverage.

The EU has been admirably ambitious but it is also trying to impose its internal regulatory policy and methods on the world through trade policy as if it were the global hegemon. It is not the hegemon.