Reconciling carbon, "Saving Us", Toyota's big miss & SunPower raises the bar
The newsletter for independent thinkers on carbon and climate.
Issue No. 92
Welcome to the latest issue of Carbon Creed - a curated newsletter for independent thinkers on carbon and climate.
Reconciling a carbon tax and dividend is good for America and the climate.
Last week, The New York Times reported that in opposing corporate or individual income tax increases, Senator Kyrsten Sinema (D-AZ) has pushed other Senate Democrats, such as Senator Ron Wyden (D-OR), to consider a carbon tax to finance some of the infrastructure package. Clearly trillion dollar corporations and billionaires need to pay their fair taxes, but a carbon fee is truly smart fiscal policy.
Congressional lawmakers have to consider three main issues as they weigh whether to include a carbon tax in the reconciliation package: economic impact, revenue collection, and tax burden distribution. Economic theory suggests that the best way to deal with externalities (the negative side effects of certain activities) is to put a tax on such activity equal to the negative side effects. Given that carbon emissions contribute to climate change, it makes sense to place such a tax on carbon emissions.
Carbon taxes are economically efficient in the long run, as they deal with unpriced social costs. And evidence from existing examples of carbon taxes confirms their efficacy in reducing carbon emissions. Data from Sweden, Japan, and Canada, among other countries, shows that carbon taxes work.
In light of the Biden administration’s promise not to raise taxes on people earning less than $400,000 a year, policymakers are likely to consider a carbon tax-and-dividend approach, which would use some (or all) of the revenue generated by the carbon tax for a cash payment that would effectively wipe out the burden of a tax increase. That approach would ameliorate the distributional concerns but would reduce the revenue the tax would raise to pay for new spending programs in the reconciliation package.
Creed believes a carbon tax would be an efficient solution to address carbon emissions, enhancing the mix of green energy tax credits lawmakers are currently considering. Lawmakers may be concerned about the distributional impact, though choosing to offset the burden with a dividend-rebate would significantly pare back the net revenue a carbon tax could raise.
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
Climate quotes and sayings that will inspire you
“Earth provides enough to satisfy every man's needs, but not every man's greed.”
― Mahatma Gandhi (Lawyer, Anti-colonialist, Ethicist)
“Climate change is happening, humans are causing it, and I think this is perhaps the most serious environmental issue facing us.” – Bill Nye (Mechanical Engineer/Science Communicator)
“We never know the worth of water till the well is dry.” - Thomas Fuller, Gnomologia, 1732
BOOKS
Saving Us
By Katharine Hayhoe
Climate scientist Katharine Hayhoe is anti-panic. In a summer when smoke from western wildfires sullied DC skies and an unprecedented heat dome cooked mussels in their Canadian seabeds, she recognizes the dire fix we’re in but finds hope amid the starkest of trendlines.
Others, understandably, clang alarm bells over the latest Intergovernmental Panel on Climate Change report, which declares a “code red for humanity.” Yet Hayhoe chooses to emphasize the power of the document’s crystal-clear findings to spur action, writing that there’s “no more equivocation, no uncertainty for opponents to climate action to hide behind.”
Yet Hayhoe, widely esteemed as a climate communicator, is too savvy to believe data will silence most deniers. Host of the award-winning PBS series “Global Weirding,” professor at Texas Tech, and author of more than 100 peer-reviewed papers, her first solo book is Saving Us: A Climate Scientist’s Case for Hope and Healing in a Divided World. Based on a TED Talk with nearly 4 million views, it turns all her skills toward informing and galvanizing others to join her crusade.
Deeply aware of the situation’s urgency, she wastes no time with handy tips on switching light bulbs or ditching plastic straws. Instead, this heartfelt and empathetic book focuses on shared values — grounded in but not limited to her own evangelical Christian faith — to build essential bonds and the courage required for the work ahead.
She says that revealing herself, the daughter of missionaries and wife of a pastor, as a climate researcher felt like “coming out of the closet.” A non-confrontational style and warm smile have not protected her from heckling at pulpits and podiums, or harassment and death threats on social media and at home. Always forthright, she interprets Scripture as directing humans to take responsibility for their own actions, fossil-fuel consumption included. Nowhere does her Bible say churchgoers are exempt from the laws of physics.
[This post was adapted from the original review by Julie Dunlap for Washington Ind. Review]
Creed Comments. Katharine Hayhoe is a rare and unique voice in the climate science communications world. She approaches it from a multilayered science, faith, and human psychology perspective — and it works.
Saving Us seems very much aligned with my thinking as expressed in this newsletter - when it comes to changing hearts and minds, facts are only one part of the equation. We need to find shared values in order to connect our unique identities to collective action.
What I especially like is that this book is not another doomsday narrative about a planet on fire. Optimism and solutions are what we need, and Dr. Hayhoe promises to deliver. Check it out and let me know what you think.
INSIGHTS
Why Toyota has missed the electric vehicles revolution
(source: Toyota News)
Over the last few years, a war has been brewing between Toyota and battery electric vehicles, particularly those produced by Tesla. Toyota president Akio Toyoda (grandson of the company’s founder) has been openly vocal in his criticism of Tesla and its upstart nature compared to the traditional incumbents. Most recently, though, the rhetoric has taken a more desperate tone, and a much more worrying one for the future of the Japanese giant.
Akio Toyoda has now widened his criticism from Tesla to the whole plan surrounding the transition to electric vehicles as a means to reduce carbon emissions. His argument isn’t about the environment, however. It’s about how many jobs will be lost in the Japanese car manufacturing industry from a switch to BEVs. He seems to be basing this on what Toyota in particular manufactures – fossil fuel vehicles made a little greener with hybrid drivetrains. Battery-electric vehicles require fewer laborers to make and have fewer parts, so the third-party supplier ecosystem is smaller too. Also, Toyota hardly makes any of them.
It is a valid concern that the switch to BEVs can have a major impact on employment. German car companies have been having the same concerns. This has been worrying German auto labor unions and this is one reason cited for BMW’s hiccup in its plan towards electrification, which had started so well with the i3. But the growth in BEV sales worldwide, particularly in Europe and China, has convinced vehicle manufacturers in Germany and France that this is a bandwagon they need to be on for existential reasons, whatever the short-term costs. Toyota, in contrast, has only released one BEV so far, the Lexus UX300e, and merely teased further BEVs such as the bZ4X, with no clear launch date.
It’s worth remembering that Toyota did have a small stake in Tesla in the past – just 3% - but sold it at the end of 2016 (a decision the financial director might be regretting now looking at the value of Tesla shares). This came after a US Toyota senior executive, Bob Carter, attacked Tesla for only focusing on battery-electric vehicles in 2015. The comments could be seen as a reaction to Elon Musk calling hydrogen-powered cars “fool-cell vehicles”. Toyota has clearly made a massive bet against BEVs and on hybrids and FCEVs.
Back in 2015, battery electric cars must still have felt like novelty, with an uncertain future. Toyota luxury brand Lexus was running ads that lambasted plug-ins, and that doesn’t appear to have changed much with the current slew of Toyota “self-charging hybrids” ads. Incidentally, these must be ringing hollow in the UK as people finally realize their self-charging hybrids can’t charge without fossil fuel, which is currently in short supply. A more accurate description would be “fossil fuel-charging hybrids”, but I doubt Toyota would agree to that renaming.
Only the most ardent fanboy (of which Tesla admittedly does have a lot) really want Toyota to fail. The company’s hybrid technology has done a huge amount over the last 20 years to decarbonize transportation, and the world owes Toyota a debt of gratitude for that. But now Toyota seems to want to cling onto its former glory to protect Japanese jobs, at the expense of environmental needs.
Over the next 5-10 years, there will be some life left in the hybrid market. The BEV is still a lot more expensive than its fossil fuel equivalent. But that is changing, and in the UK BEVs now sell more than pure diesels. Plug-ins overtook diesels in Europe in August too. The decline in petrol / gasoline cars is slower, but it is clear. In the 26 countries now making up the European car market, 65% of car sales were gasoline in 2019, 58% in 2020, and now only 56% so far in 2021. It could well drop lower than that by the end of the year.
It’s all very well arguing that hybrids still have a part to play in decarbonization, as Akio Toyoda does. Yes, they do emit less carbon than a pure fossil fuel vehicle. But plug-ins, particularly BEVs, can emit no CO2 at all during operation. Hybrids might bridge the gap for many who aren’t quite ready to switch to BEVs yet due to charging infrastructure concerns, and the current high price of BEVs. But putting all your eggs in that basket and hoping that the dismal sales of fuel-cell electric vehicles will pick up soon to take over, doesn’t sound like a solid business plan.
Just as incumbent mobile phone manufacturers Nokia, Ericsson and Motorola missed the smartphone revolution that Apple and Samsung have ridden into the sunset, Toyota could well be shooting itself in the foot with its reluctance to put more (electric) energy behind pure BEVs.
[This post was adapted from the original written by James Morris for Forbes]
Creed Comments. Poor disillusioned Toyota. They have a very small window to convert and find BEV religion. If not, then add them to the heap of fading corporate titans no one will remember in 30 years.
CORPORATE LEADERSHIP
SunPower makes clean energy more accessible for historically marginalized communities
SunPower Corporation has raised the ESG bar with its new commitment to bring solar energy and job opportunities to marginalized communities. This new justice, equity, diversity, and inclusion (JEDI) initiative, SunPower 25X25, includes ambitious targets to achieve by 2025 – spanning workforce diversity, solar access expansion and dealer diversity programs.
"Distributed solar and battery storage offer tremendous benefit to our environment, are vital in building a resilient energy infrastructure, can provide lower-cost electricity, and create good, well-paying jobs," said Peter Faricy, CEO of SunPower. "We must use this moment-in-time to ensure the rapid deployment of this critical technology benefits all Americans."
SunPower's new commitments align with justice, diversity, equity and inclusion commitments made by the Biden administration, as well as the historic Justice40 Initiative, which commits 40 percent of the benefits of federal climate and clean energy investments to disadvantaged communities.
SunPower is committed to achieving the following targets by 2025:
Increasing workforce diversity: 40% of its workforce represented by women; 25% of its workforce represented by Black and Hispanic/Latinx people
Emphasis will be placed on workforce development programs for the company's growing residential installation teams across the country
Expanding access for customers: 25% of its U.S. residential customers made up by people who live in historically marginalized communities
Includes the development of a new program to provide low-income customers with no interest loans
Ensuring industry equity: 25% of the dealers and subcontractors it works with will be owned by women and people of color
Includes establishment of a new dealer diversity program and creation of new partnerships with minority-owned business organizations
These efforts build upon SunPower's diversity pledge and the company will report progress annually in its Environmental, Social and Governance report.
"Black professionals working in solar services have roots, relationships and experience in all communities, particularly those disproportionately impacted by climate change. If the solar industry is going to provide renewable energy access and equitable job opportunities, actively engaging black owned businesses is vital," said Walter McLeod, founding board member of BOSS. "We commend SunPower for committing to creating an intentionally diverse dealer and subcontractor network and raising the bar for others in the industry to do the same."
Creed Comments: This is what corporate leadership on climate equity looks like. SunPower has raised the bar for all of industry.
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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