EPA gets Wiser, "The Blue Commons," & Buy or Lease an EV
The newsletter for independent thinkers on carbon and climate.
Issue No. 145
Welcome to the latest issue of Carbon Creed - a curated newsletter for independent thinkers on carbon and climate.
President Biden taps Jahi Wise to run historic $27B EPA climate fund
(source: E&E News)
Jahi Wise started at EPA last month with an unusual mandate — deciding who gets to spend $27 billion in federal climate dollars.
The money comes from the Inflation Reduction Act that President Joe Biden signed into law last summer, and its purpose is to help American communities — particularly those in low-income and disadvantaged areas — embrace efforts to fight global warming.
It’s up to Wise and EPA Administrator Michael Regan to come up with a plan for how to inject that capital into the economy in the way that does the most good.
The Greenhouse Gas Reduction Fund
About a quarter of the $27 billion Greenhouse Gas Reduction Fund, or $7 billion, is earmarked for state and local governments.
But the rest, or $20 billion, is still undecided. EPA’s Wise (and ultimately Regan) essentially will have three choices:
One option is to create a national green bank that would be in charge of dispersing the $20 billion to secondary recipients, such as local lending institutions and nonprofits. But critics say it might make it harder to ensure that disadvantaged communities see their fair share of the benefits.
Another option is to bypass the green bank idea and tap several intermediaries to get the job done. Skeptics say this approach could rule out investment in big projects of national scale that would produce game-changing results for the climate.
And a third option is to take a hybrid approach, in which some of the funding is deployed through a centralized national green bank while other pieces of it are made available to a wider universe of lenders.
Wise Resume
Jahi Wise is well acquainted with the ins and outs of the Inflation Reduction Act. As a White House climate policy adviser, he helped shape the legislative language on clean energy finance in what became the landmark climate law.
Before his stint at the White House Climate Policy Office working under domestic climate Czar Gina McCarthy, Wise directed policy at the Coalition for Green Capital, an umbrella group for state and regional green banks and long-time proponent of creating a national green bank. He also worked for BlocPower, a venture-capital-backed startup focused on helping small- and mid-sized buildings make energy-saving upgrades.
He holds a law degree and a Master of Business Administration from Yale University and a B.A. from Morehouse College, a historically black men’s liberal arts college in Atlanta.
Creed Thoughts: I cannot think of a better choice by President Biden to run this historic new fund. Green finance experts applauded Wise’s appointment. So does Carbon Creed. The low-to-moderate income (LMI) consumer and business owner is currently underserved by the clean tech industry, and this fund should change that significantly. We wish Jahi and Administrator Reagan great success in this new endeavor.
[This post was adapted from the original written by Jean Chemnick and Avery Ellfeldt for E&E News]
We’ll keep you posted on the latest carbon policy and market insights, [including the new EPA greenhouse gas reduction fund] 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.
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BOOKS
The Blue Commons
By Guy Standing
British economist Guy Standing offers a provocative diagnosis of the failure to protect the world’s oceans in The Blue Commons.
Standing sees the ecological destruction of the seas as the predictable result of 'rentier capitalism'. This is the economic system that privileges expansive property rights, financialization, and industrialized exploitation of "resources" over all else. Corporate interests working with governments like to call its rip-and-run practices "blue growth" -- but it is actually a story about the tragedy of the market.
Companies systematically attempt to "de-commons" coastal fishing communities, claim patents on deepsea lifeforms, and exploit offshore mineral deposits. The South African company De Beers Group, for examples, uses a fleet of specialized ships to scrape the sea bottom in search of diamonds, leaving deep scars and disruptions in marine ecosystems.
Standing offers lucid, readable chapters on the collusion between states and corporations in illegal fishing practices, and on the European Union's destructive Common Fisheries Policy and Brexit. He explains how aquaculture techniques could be a constructive answer, but how in the hands of corporate players aquaculture fisheries commodify and privatize blue commons communities rather than helping them.
The greatest contribution Standing makes in his book may be his proposals for commons-based solutions: empowering fishers and coastal communities, enacting new legal principles, and establishing trust funds to benefit commoners.
Standing names a number of legal principles that ought to prevail, such as a "right to subsistence" for fishers on coastal communities, which should override industrial fishing rights. There should also be a "right to habitat" and a "right to social memory" among such communities, and "intergenerational equity" principles.
Standing's Blue Commons agenda also offers up the idea of "commons capital funds." The idea is to charge levies on corporate uses of ports, gas extraction, access to fishing grounds, and "bycatch" (the catching of unintended marine species, which causes ecological harm).
Money from levies would be put into a commons fund managed as a stakeholder trust for the benefit of everyone. The fund would yield regular dividends paid to everyone, much as the Alaska Permanent Fund uses its equity fund of revenues from drilling on state lands to generate dividends for every household in Alaska.
"If a company uses land or the seabed that belong to all of us as commoners, and makes a profit in the process," said Standing, "then we as commoners should be compensated. That's the principle."
In this spirit, Standing thinks that mega-cruise liners should be charged a steep levy simply for their normal operations. They emit huge amounts of pollution into the oceans and diesel emissions when docked at harbors. Commercial users of huge coastal ports should pay commoners, too, he said. "There are 485 mega-ports across the world, and they're all privately owned by corporations and corporate chains, who make a phenomenal amount of money from our ports!"
Creed Comments: This monster of a book, which runs to nearly 600 pages, does not lack ideas to tackle the ocean problem. Chief among them is creation of a “blue commons fund” in every littoral nation, financed with levies on the commercial exploitation of ocean resources and used to redistribute money in the form of a basic income or “common dividend”. This idea is not far off from the concept of a carbon fee + dividend policy.
While I admire Standing’s effort to borrow from the Alaska Permanent Fund model, my sense is that the public would be more likely to support a carbon dividend over an ocean dividend. Still, this book perks my interest.
MARKETS
EV finance startups offer affordable leasing and subscription models
(source: Inside EVs)
With new federal tax credits, several companies are hoping drivers will lease or subscribe their way to an electric car.
Buying certain electric cars in the US just got cheaper, thanks to new tax credits meant to phase out gasoline-guzzlers. And a wave of startup companies that let wary drivers lease or subscribe their way to an electric vehicle are making the most out of the government carrots.
Zevvy, based in Hayward, California, offers six-month EV leases targeted at Uber drivers and others who spend considerable hours behind the wheel, giving them a different path into a Tesla, Chevy Bolt, or other electric model. The startup scraps the usual mileage caps in favor of a pay-per-mile price, which is designed to be cheaper than gasoline. After six months, customers can return the car, extend the lease or buy the car outright.
Octopus Energy Ltd., a green power provider that operates in Texas, started a car-leasing program this summer for customers that pay it for utilities. The company doesn’t let drivers buy cars after the loan ends, but it is offering a unique financing tool. After leasing, drivers let Octopus tell them when to plug in (usually during off-peak hours) or even let Octopus switch charging on and off remotely.
Signing up for this service, called EV Concierge, can cut a customer’s monthly energy bill by 20% to 30%. Octopus compared this to programs with smart thermostats where utilities will automatically tweak the heat inside homes depending on demand on the grid.
Autonomy, a startup based in Santa Monica, California, is treating an EV a bit like a Netflix account. The company offers new EVs as an open-ended month-to-month lease, what it calls a subscription plan. Chief Executive Officer Scott Painter says the company, which started in February 2022, is now leasing about 15 to 20 cars a day.
A few years ago, EV leases were cheap and plentiful. Carmakers set up special offers to get new models on the road. Most EV buyers were relatively wealthy, with good credit scores — prime lending targets. A $50,000 2017 luxury BMW i3 went for $54 a month.
Then the pandemic choked automotive supply chains, sending car prices up and the number of leases down. EVs in particular suffered from long delays and fluctuating prices. The share of new EVs financed via lease fell to 9.9% in the third quarter of last year, from 48.3 in 2017, according to credit-reporting company Experian. (For all cars, the lease share dropped to 18.5% from 30.5%.)
The trickiest question with EVs is determining the residual value — how much the car might be worth in a few years. Battery durability and consumer appetite for used EVs are still hard to predict. One fix for this would be getting more EVs in circulation. That’s the intent of President Joe Biden’s tax credits, which give consumers up to $7,500 tax credits toward 22 different models purchased after Jan 1, 2023.
In December, the government signaled that some imported EV models could qualify for the credits through commercial leases, a loophole that raised immediate political objections. The government has said it will finalize rules including battery content requirements in March that could shrink the number of eligible models.
Since the Biden tax credits are set for certain income levels and car prices, consumers may think they or their chosen car qualify when they don't. However, fleet managers like Autonomy can access the credits on all its vehicles, and pass the savings on to consumers. For example, Autonomy now offers a Tesla Model 3 for $450 a month with a $3,000 starting fee. Before the credits, the subscription plan cost $590 a month plus a $5,900 fee.
Zevvy will similarly pass savings from its EV purchases down with lower monthly lease rates. They also plan to help customers hunt for other government discounts and loopholes. In some places in California, the only state where Zevvy operates, local incentives added onto Biden’s plan can cut the price of a $30,000 EV by two-thirds. Likewise, Octopus fills out the paperwork itself for public perks, such as a Texas cash-rebate program, as part of its Concierge leasing package.
Creed Comments: This is the year to buy or lease an EV. Inventories will likely be high and costs should come down. When coupled with the Biden tax credits, consumers should see very attractive deals in 2023. I personally plan to buy or lease an EV in the next 12 months.
[This post was adapted from the original written by Mark Bergen for Bloomberg]
RESOURCES
The Science of Climate Change Explained: Facts, Evidence and Proof, published by the New York Times
Currents a podcast featuring in-depth discussions with experts on clean energy and sustainability, published by Norton Rose Fulbright.
Matter of Fact, a weekly newsmagazine that focuses on socioeconomic and climate issues in America, hosted by veteran journalist Soledad O'Brien.
Advancing Inclusion Through Clean Energy Jobs a report by the Brookings Institute.
Congressional Policy Tracker a summary of current federal energy legislation.
Click Clean your favorite apps and tech company clean power rankings.
The Keeling Curve a daily record of global atmospheric CO2 concentration.
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