Our 100th Issue! "Size & Scale" and the EU Global Carbon Tax
The newsletter for independent thinkers on carbon and climate.
Issue No. 100
Welcome to the latest issue of Carbon Creed - a curated newsletter for independent thinkers on carbon and climate.
Happy 100th Issue of Carbon Creed!
I want to thank you - the readers - for opening your inbox every week and supporting this newsletter. There are now more than 2,200 weekly readers of the Creed, for which I am grateful. Your candid feedback, heartfelt support during times of personal loss, and community embrace is what makes this work so rewarding.
It’s hard to believe that 2 years have passed since we started this journey. So much has changed in the carbon and climate sector during that time, and mostly for the better. Consider these findings from the recent Yale-George Mason climate communications survey, Climate Change in the American Mind (2021):
Americans who think global warming is happening outnumber those who think it is not happening by a ratio of more than 4 to 1 (70% versus 15%). Those who are “very” or “extremely” sure global warming is happening outnumber those who are “very” or “extremely” sure it is not by more than 5 to 1 (50% versus 9%).
More than half of Americans (57%) understand that global warming is mostly human-caused. Three in ten (30%) think it is due mostly to natural changes in the environment.
More than half of Americans (57%) understand that most scientists think global warming is happening. However, only about one in five (22%) understand how strong the level of consensus among scientists is (i.e., that more than 90% of climate scientists think human-caused global warming is happening).
A majority of Americans (64%) say they are at least “somewhat worried” about global warming. One in four (25%) are “very worried.”
More than four in ten Americans think people in the United States are being harmed by global warming “right now” (45%), and about four in ten say they have personally experienced the effects of global warming (42%).
More than four in ten Americans (45%) think they will be harmed by global warming, and nearly half think their family (48%) will be harmed. Half or more Americans think global warming will harm people in their community (50%), people in the U.S. (63%), people in developing countries (68%), the world’s poor (68%), future generations of people (71%), and plant and animal species (71%).
Nearly half of Americans (48%) say they hear about global warming in the media at least once a month. Fewer (20%) say they hear people they know talk about global warming at least once a month.
These data are instructive and heartening. They show how far we’ve come as a nation on climate change - and how far we have to go. My hope is that through this platform, we can play a small but effective role in solving the challenge of carbon addiction and climate change. Together, as individuals, companies, and governments, we can fix this problem. We must.
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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NOW, LET’S GO DEEP!
QUOTES
Words that will inspire you…
(source: The Conversation)
“One can see from space how the human race has changed the Earth. Nearly all of the available land has been cleared of forest and is now used for agriculture or urban development. The polar icecaps are shrinking and the desert areas are increasing. At night, the Earth is no longer dark, but large areas are lit up. All of this is evidence that human exploitation of the planet is reaching a critical limit. But human demands and expectations are ever-increasing. We cannot continue to pollute the atmosphere, poison the ocean and exhaust the land. There isn’t any more available.”
Stephen Hawking, Physicist & Author
"A good teacher does not teach facts, he or she teaches enthusiasm, open-mindedness and values."
Gian-Carlo Rota, Mathematician and philosopher
BOOKS
Speed & Scale
By John Doerr
To solve the seemingly-insurmountable climate crisis, we have to take collective action, drive societal change and accelerate the net zero economy using a plan of speed and scale. And we have to start now.
In Speed and Scale, award-winning author and investor John Doerr convenes the world's foremost change-makers to show us how we can, if we fully commit to a high-stakes action plan, cut carbon emissions in half by 2030 and reach Net Zero by 2050.
Inspiration
In 2006, John Doerr was moved by Al Gore’s An Inconvenient Truth and a challenge from his teenage daughter: “Dad, your generation created this problem. You better fix it.” Since then, Doerr has searched for solutions to this existential problem—as an investor, an advocate, and a philanthropist.
Fifteen years later, despite breakthroughs in batteries, electric vehicles, plant-based proteins, and solar and wind power, global warming continues to get worse. Its impact is all around us: droughts, floods, wildfires, the melting of the polar ice caps. Our world is squarely in a climate crisis and on the brink of a climate disaster.
Yet despite our state of emergency, climate change has yet to be tackled with the urgency and ambition it demands. More than ever, we need a clear course of action.
OKR Tools
What if the goal-setting techniques that powered the rise of today’s most innovative organizations were brought to bear on humanity’s greatest challenge? Fueled by a powerful tool called Objectives and Key Results (OKRs), Doerr offers an unprecedented global plan to cut greenhouse gas emissions before it’s too late. Used by Google, Bono’s ONE foundation, and thousands of startups the world over, OKRs have scaled ideas into achievements that changed the world. With clear-eyed realism and an engineer’s precision, Doerr identifies the measurable OKRs we need to reduce emissions across the board and to arrive by 2050 at net zero—the point where we are no longer adding to the heat-trapping carbon in the atmosphere.
Many Voices
By turns pragmatic and inspiring, Speed & Scale intersperses Doerr’s wide-ranging analysis with firsthand accounts from Jeff Bezos, Christiana Figueres, Al Gore, Mary Barra, Bill Gates, and other intrepid policy leaders, entrepreneurs, scientists, and activists. A launchpad for those who are ready to act now, this book is geared to leaders in every walk of life. With a definitive action plan, the latest science, and a rising climate movement on our side, we can still reach net zero before it is too late. But as Doerr reminds us, there is no more time to waste.
Creed Comments: Speed & Scale gives the reader a practical path in the fight against climate change. Doerr approaches the problem as a hard-nosed businessman who sees an opportunity, creates a plan, and organizes resources before moving ahead. His surgical approach is to craft a specific, comprehensible description of the elements that contribute to climate change and target what needs to be done.
If you are a Wizard leaning thinker (i.e., innovation first), then you will love Speed & Scale. I just started this book and so far, it’s living up to the hype.
INSIGHTS
Understanding the EU Global Carbon Tax
The European Union has a bold plan for a carbon border levy in an attempt to make sure its own strengthened pollution standards aren’t undermined by trading partners with weaker ones. The charge, officially called the Carbon Border Adjustment Mechanism (CBAM), is meant to combat so-called carbon leakage, which happens when companies shift production to places with laxer policies to reduce costs. The aim is to level the playing field and protect manufacturers while prodding other regions to follow the EU’s lead on taxing emissions. The plan, which needs to win support from EU nations, has already triggered a hostile reaction from trading partners, including Russia and China.
1. How will the carbon levy work?
The levy will initially target steel, aluminum, cement, fertilizers and electricity, all carbon-intensive goods. Under the plan proposed by the European Commission, the EU’s executive arm, the CBAM will start with a data-collection stage from 2023 to 2025, when importers monitor and report the number of metric tons of carbon dioxide released from making the goods they bring in from abroad. From 2026, importers will need to buy a new type of pollution certificate to reflect that discharge in line with prices on the bloc’s Emissions Trading System, its cap-and-trade market for permits. The fee could be at least partially waived if a carbon levy has already been paid in the country where the goods were produced. That’s important, because it prevents the plan from being considered an illegal tariff under regulations drawn up by the World Trade Organization.
2. How strict are EU pollution caps?
The 27-nation bloc, which sees itself as a pioneer on climate action, is tightening rules to meet a binding goal to be climate neutral by 2050 (meaning any greenhouse gas emissions are offset by removals). In July, it rolled out the biggest overhaul to date in its 16-year-old emissions market: Permits will be harder to come by and the program will be extended to include shipping. The moves helped send the price of permits on the ETS soaring, more than doubling in 2021 to reach a record of about 75 euros ($85) per ton in late November.
3. How serious is carbon leakage?
Only about a fifth of global emissions are currently subject to carbon pricing, according to the World Bank, and environmentalists say most of those levies aren’t high enough to change the behavior of polluters. In the EU, the risk of carbon leakage became a hot topic after emissions prices soared. The issue will become more challenging as free permits that manufacturers now get from governments are phased out.
4. What do critics say?
Trading partners resent Europe’s efforts to force them to match the bloc’s climate ambitions. The EU’s pioneering plans on reducing carbon emissions can be used “almost as a trade weapon,” Belgian Prime Minister Alexander De Croo said during the COP26 climate conference in November. China, the world’s biggest emitter of greenhouse gases, has attacked the CBAM as a trade barrier, though it’s also planning to broaden its own emissions trading market. Russia, the second-biggest exporter of steel to the EU, said the mechanism could drive up the price of key commodities such as rolled steel and aluminum. The threat of the CBAM has already pushed Turkey, the largest source of EU steel imports, to finally ratify the 2015 Paris Agreement on climate change.
5. Is the EU alone in this?
The U.S. has kicked around its own version of a border levy, potentially as part of a national carbon tax, which American businesses increasingly favor over new restrictions on emissions. So has Canada. Environmentalists and economists, including Nobel Prize winner William Nordhaus, have long advocated the approach because it allows countries to band together into a sort of “carbon club” to eliminate the problem of “free-riding” on the efforts of other nations. The EU’s plan is seen as a test of whether such a levy can be used to advance carbon pricing around the world. A local program is operating in California.
6. Could it be derailed?
EU leaders have rallied behind the plan, though there is more political work to do to win backing from the European Parliament and national governments. There are also technical challenges ahead, including measuring the amount of carbon embedded in a product and determining how to credit carbon fees paid in countries outside the bloc. The CBAM will end — or at least phase out — the free carbon allowances currently given to European industries seen as most likely to leave the bloc, potentially setting up a battle with its own steel and cement producers.
[This post was adapted from the original written by Ewa Krukowska for Bloomberg]
Creed Comments: As a reader of this newsletter, you know how passionate I am about a carbon fee and dividend policy in the U.S. and globally. At present, the Manchin Senate does not seem supportive of this proposal, so it may have to be initiated by the E.U. via a border tax. While generally supportive of the carbon border tax approach, it does not include the dividend component, which I think is critical for long term success and public acceptance.
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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