COP26 outcomes, "What Everyone Needs to Know" & Supercharged EV tax credits
A newsletter for independent thinkers on carbon and climate.
Issue No. 98
Welcome to the latest issue of Carbon Creed - a curated newsletter for independent thinkers on carbon and climate.
COP26 is done - what did it accomplish?
Whatever the outcome of the down-to-the-wire negotiations in Glasgow over an agreement to slow the rise in global temperatures, the United Nations climate conference known as COP26 has made some progress on key issues.
Below is a HIGH LEVEL summary of the key deals announced at the two-week talks (Shashank Bengali, NYT):
U.S. and China
The United States and China announced a joint agreement to do more to cut emissions this decade, and China committed for the first time to develop a plan to reduce methane, a potent greenhouse gas. The pact between the rivals, which are the world’s two biggest polluters, surprised delegates to the summit.
But the agreement was short on specifics. China did not commit to a new timetable for reducing emissions, nor did it set a ceiling for how much its emissions would rise before they started to fall. And while China agreed to “phase down” coal starting in 2026, it did not specify by how much or over what period of time.
Deforestation
Leaders of more than 100 countries, including Brazil, China, Russia and the United States, vowed to end deforestation by 2030. The landmark agreement covers about 85 percent of the world’s forests, which are crucial to absorbing carbon dioxide and slowing the pace of global warming.
Twelve governments committed $12 billion, and private companies pledged $7 billion, to protect and restore forests in a variety of ways, including $1.7 billion for Indigenous peoples. But some advocacy groups criticized the agreement as lacking teeth, noting that similar efforts have failed in the past.
Methane
More than 100 countries agreed to cut emissions of methane, a potent planet-warming gas, 30 percent by the end of this decade. The pledge was part of a push by the Biden administration, which also announced that the Environmental Protection Agency would limit the methane coming from about one million oil and gas rigs across the United States.
The countries that signed the Global Methane Pledge include half of the world’s top 30 methane-emitting countries, and U.S. officials said they expected the list to grow.
India
For the first time, India joined the growing chorus of nations pledging to reach “net zero” emissions, setting a 2070 deadline to stop adding greenhouse gases to the atmosphere.
One of the world’s largest consumers of coal, India also said that it would significantly expand the portion of its total energy mix that comes from renewable sources, and that half of its energy would come from sources other than fossil fuels by 2030.
Of all these outcomes, I’m most impressed by the “thaw” in US-China climate relations. No one can match the gravitas these two superpowers bring to the discussion. And so we wait for the details of the “joint agreement” to emerge.
We’ll keep you posted on the latest carbon policy and market insights as they happen.
If you have an opinion on any topic covered in this newsletter, please feel free to send me an email at mcleodwl@carboncreed.com.
Thank you for your viewpoint and the value of your time.
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QUOTES
Words that will inspire you…
“A transition to clean energy is about making an investment in our future.” - Gloria Reuben (Actress, Singer, Author)
“Our universe is a sea of energy – free, clean energy. It is all out there waiting for us to set sail upon it.” - Robert Adams (Author)
“As the saying goes, the Stone Age did not end because we ran out of stones; we transitioned to better solutions. The same opportunity lies before us with energy efficiency and clean energy.” - Steven Chu (fmr. U.S. Secretary of Energy)
BOOKS
Climate Change: What Everyone Needs to Know
By Joseph Romm
Written by Joseph Romm, Ph.D. (Chief Sicence Advisor for the Emmy Award-winning "Years of Living Dangerously" series) and now in an updated second edition, Climate Change: What Everyone Needs to Know presents straightforward answers to the most common (and politically charged) questions about the threat of man-made climate change
Climate change will have a bigger impact on humanity than the Internet has had. The last decade's spate of superstorms, wildfires, heat waves, and droughts has accelerated the public discourse on this topic and lent credence to climatologist Lonnie Thomson's 2010 statement that climate change represents a clear and present danger to civilization. In June 2015, the Pope declared that action on climate change is a moral issue.
Romm offers an up-to-date examination of climate change's foundational science, its implications for our future, and the core clean energy solutions. Alongside detailed but highly accessible descriptions of what is causing climate change, this entry in the What Everyone Needs to Know series answers questions about the practical implications of this growing force on our world:
- How will climate change impact you and your family in the coming decades?
- What are the future implications for owners of coastal property?
- Should you plan on retiring in South Florida or the U.S. Southwest or Southern Europe?
- What occupations and fields of study will be most in demand in a globally warmed world?
- What impact will climate change have on investments and the global economy?
As the world struggles to stem climate change and its effects, everyone will become a part of this story of the century.
Creed Comments: I don’t usually cover “series” books in this newsletter, but I thought this book contained valuable, practical information. The book is written in a question-and-answer format ideally suited for quick navigation and reference. New York Magazine called it “the best single-source primer on the state of climate change.” I agree. This is a great handbook for the climate vanguard.
TAX POLICY
(source: Doug Mills/The New York Times)
New supercharged EV tax credit would be $12,500 — and refundable.
President Joe Biden loves electric cars. Whether he’s zipping around a racetrack in Ford’s electric F-150 truck or promising that half of all cars sold in the U.S. will be electric or plug-in hybrids by 2030, the 46th president has made it clear that he wants to break the country’s addiction to gas-powered vehicles.
There’s a very solid reason for that: Today, less than 1 percent of the country’s 250 million cars, trucks, and vans are electric. If America is going to zero out its carbon emissions, that number has to go to 100 percent in just a few decades.
The good news is that Congress is poised to make it way, way easier for Americans to give up their gas cars for smooth, silent, all-electric ones. The White House has released a framework for the Build Back Better Act, the $1.85 trillion budget bill that will also be the largest climate measure in American history. And nestled in the framework is a gangbusters improvement to the nation’s EV tax credits that could nudge millions of Americans to swap out their 2005 Honda Civic for a brand-new Nissan Leaf.
America has had EV tax credits since the presidency of George W. Bush, though they came with some caveats. In the current system, purchasers of a new EV or plug-in hybrid car get up to $7,500 off of their income taxes, with the amount scaled based on the size of the car’s battery. But the credits are non-refundable, meaning that if you don’t have $7,500 in tax liability — i.e., if you make less than about $66,000 a year — you won’t get the full credit. That has resulted in quite a few disappointed and confused EV buyers. There are also only a set number of credits available for each automaker; Tesla and General Motors, for example, have already used up all their available credits.
If they pass, the new EV tax credits will make the old credits look stingy. For electric cars that are assembled in the U.S. with union labor and U.S.-made batteries, consumers will get up to $12,500 off their taxes. (If you buy a car not made in the U.S., you can still get up to $7,500 off.) And, for the first time, the credit will be refundable. Let’s say you only owe 10 grand in taxes, but qualify for the entire $12,500 tax credit: The Internal Revenue Service will give you the full $2,500 in cash back.
The credit will also be transferable — meaning that car companies could offer potential buyers the tax credit right at the dealership. No waiting for the following April to file taxes; a Chevy Bolt could be cut in price from $34,000 to $21,500, just like that. “That’s an absolutely tremendous provision,” said Jay Friedland, senior policy advisor at Plug In America, a nonprofit that advocates for EV drivers.
There are a few caveats that would keep the tax credit aimed at helping the middle-class, rather than the super rich. (The old EV benefit was largely claimed by people making over $100,000 a year.) According to the latest text of the bill, the new benefit could only be used on cars that cost up to $55,000, vans that cost up to $64,000, and pick-up trucks that cost up to $75,000. Those are about middle-of-the-road prices for current electric vehicles. And there are income limitations too — for individuals who make over $400,000, the credit shrinks progressively.
Some car companies are already up in arms about the requirement that vehicles be assembled in the U.S. with union labor. Last week, a group of ambassadors from the European Union, Germany, and Japan wrote to Congress protesting that the credit would violate international trade agreements. Detroit’s “Big Three” automakers — Ford, General Motors, and Chyrsler-parent Stellantis — are likely to benefit most from the provision.
Still, the revamped credit could lead to an enormous surge in Americans buying EVs. The average cost of a gas-powered car is around $35,000; the average cost of an EV is $55,000. (Most of that cost difference is ultimately canceled out, since EVs cost less to run, but people can still get sticker shock.) The benefit would cut that difference in more than half, and manufacturers would also be under pressure to make their cars cheaper to qualify for the credit. “I think across the board, you will see significant acceleration” in EVs purchased, Friedland said.
The fate of the new measure is tied to the reconciliation bill, which is still struggling through Congress. Moderate and progressive Democrats are still sparring over when, exactly, the bill will come to a vote, and how it will link up with its sister legislation, the bipartisan infrastructure plan.
If the bill succeeds, America will be well on its way to Biden’s 2030 EV goal.
[This post was adapted from the original written by Shannon Osaka for Grist]
Creed Comments: Just do it.
RESOURCES
The Keeling Curve a daily record of global atmospheric CO2 concentration.
Congressional Policy Tracker a summary of current federal energy legislation.
Click Clean your favorite apps and tech company clean power rankings.
Advancing Inclusion Through Clean Energy Jobs a report by the Brookings Institute.
Understanding ESG a series of ESG-focused thought leadership webinars for business and investors, presented by Baker McKenzie.
Matter of Fact, a weekly newsmagazine that focuses on socioeconomic and climate issues in America, hosted by veteran journalist Soledad O'Brien.
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