the iCar cometh! States cap tailpipe emissions and EV battery prices plunge

The newsletter for people "woke" on carbon and climate

(source: cult of mac)

Issue No. 58

Welcome to the latest issue of Carbon Creed - a curated newsletter for people “woke” on carbon and climate. 

This is our last issue for 2020. Thanks for your ongoing support and readership.

Apple announces plans to build an electric car.

This was without question the biggest carbon and climate news of the week. Apple made public its plans to begin production of an electric car as soon as 2024.  A little backstory will help with context.

In 2014, Apple began working on its own car project, dubbed Project Titan, details of which emerged in early 2015. The project has gone through fits and starts over the years.

The Apple project is being headed up by Doug Field, a longtime Apple executive who left the company for about five years to work at Tesla, where he oversaw the development of the Model 3. He left in 2018 and returned to Apple, where he began work on the car project.

Now, the twist to the story - 2 years ago, Elon Musk says he attempted to sell Tesla to Apple.

“During the darkest days of the Model 3 program, I reached out to Tim Cook to discuss the possibility of Apple acquiring Tesla (for 1/10 of our current value),” Mr. Musk said in a tweet Tuesday. But the Apple CEO, he said, “refused to take the meeting.”


Mr. Musk revealed the detail as he questioned the seriousness of Apple’s plans to bring out an electric car of its own. On Twitter, Mr. Musk called the report “strange, if true.”

I am intrigued by the notion of an Apple electric vehicle. The brand could bring serious competition to Tesla. Both have “cult-like” followings. Both use an integrated hardware/software ecosystem to “enrapture” customers. Both have embraced the “beautiful design” orthodoxy.

I think a Tesla/Apple rivalry would be great for the EV market!

I believe 2021 will be the year of the electric car. This issue is devoted to the topic.

If you have an opinion on this or any other topic covered in this newsletter, please feel free to send me an email at mcleodwl@carboncreed.com. 

As always, we appreciate your viewpoint and the value of your time.

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NOW, LET’S GO DEEP!


GOVERNMENT

Eastern states adopt plan to “cap and trade” tailpipe emissions


(source: Seattle DOT)

An ambitious plan by Eastern states for a regional cap-and-trade program to curb greenhouse gas emissions from cars and trucks got off to a slow start Monday after just three states — Connecticut, Massachusetts and Rhode Island — plus Washington, D.C., formally agreed to adopt it.

The program’s backers had originally aimed for broader participation and expressed hope that more states might join later. Last year, 11 Northeastern and Mid-Atlantic States, making up a fifth of the United States population, signed on to a draft version of the plan, which would set a cap, to be lowered over time, on the total amount of carbon dioxide that can be released from vehicles that use gasoline or diesel for fuel.

But so far, only a few states have said they would begin implementing the policy. In a separate statement on Monday, eight other states left open the possibility of joining at a future date, but would not commit for now. Those states include Delaware, Maryland, New Jersey, New York, North Carolina, Pennsylvania, Vermont and Virginia.

Under the cap-and-trade program for cars and trucks, which would start in 2023, fuel companies would buy allowances from participating states, either directly or on a secondary market, for every ton of carbon dioxide their fuel will produce. The states would then invest the proceeds into efforts to reduce emissions from transportation, such as trains, buses or electric-vehicle charging infrastructure.

In its initial phase, the program aims to cut vehicle emissions 26 percent by 2032 in participating states. The plan’s backers estimated that it could increase gasoline prices by around 5 to 9 cents per gallon, while raising roughly $300 million per year in revenue over the next decade for Connecticut, Massachusetts, Rhode Island and Washington, D.C.

The new transportation initiative is modeled after a similar interstate cap-and-trade program that limits pollution from power plants, known as the Regional Greenhouse Gas Initiative. That plan got underway in 2005 with participation from just seven states, including Connecticut, Massachusetts and New York.

But 10 states have now adopted the power plant program, which has raised $3.7 billion to date for state efficiency and renewable programs. Other large emitters, including Virginia and Pennsylvania, have announced their intent to join.

Still, the idea of charging cars and trucks higher prices for their climate pollution remains contentious.

The transportation initiative’s backers say that the climate benefits of the program — as well as the health benefits from a reduction in vehicle exhaust — would outweigh the costs. One study from Harvard University’s T.H. Chan School of Public Health estimated that, if the plan were broadly implemented, it could help prevent up to 1,000 fewer premature deaths each year across the Northeast and mid-Atlantic regions.

Yet the plan has also come under criticism from some groups who say it doesn’t go far enough to help communities of color that disproportionately live near highways and suffer the effects of tailpipe pollution. While the states participating in the initiative have said they will devote at least 35 percent of new revenues toward underserved communities, that has not assuaged many critics.

The transportation initiative comes at a time when many state climate policymakers are shifting their attention from the electricity-generation sector — where emissions have fallen quickly as utilities retire coal plants in favor of cleaner and cheaper natural gas — to transportation, where gasoline and diesel engines remain ubiquitous.

Transportation is now responsible for one-third of the nation’s carbon dioxide emissions, the largest single sector, and experts say that many states are unlikely to meet their broader climate change goals without persuading people to shift to cleaner electric vehicles or alternative modes of travel like public transit or biking.

President-elect Joseph R. Biden, Jr., has vowed to pursue tougher federal standards on new cars and trucks that, if implemented, could help reduce gasoline use and make electric vehicles more financially attractive.

Still, the ultimate effects of the vehicle cap-and-trade program may hinge on how many states end up joining, analysts said. The four jurisdictions that joined on Monday account for less than 3 percent of the nation’s transportation emissions, while the eight states that are considering their options account for another 18 percent.

[This post was adapted from the original written by Brad Plumer  for The New York Times.] 

Creed Comments: The cap and trade model is a tried and proven approach to emissions reduction. The Acid Rain Program, a USEPA market-based cap and trade initiative, practically eliminated atmospheric levels of sulfur dioxide and nitrogen oxides, which cause acid rain. If the proposed northeast cap and trade program is designed properly, auto emissions can become a relic of the past - just like acid rain.

The hesitance by states to join the program launch is understandable. Right now many states are still focused on their Covid-19 responses and the economic recovery. However, as the economy improves, I predict full adoption by all 11 states over the next 4-5 years. This is welcome news going into 2021.


CLEAN TECH

Electric car batteries plunge 89% over the last 10 years

(source: My EV)

A decade ago, a lithium-ion battery pack used in an electric car cost around $1,110 per kilowatt-hour. By this year, according to a new survey, the cost had fallen 89%, to $137 per kilowatt-hour. And by 2023, the cost is likely to fall far enough that car companies can make and sell mass-market electric vehicles (EVs) at the same cost as cars running on fossil fuels.

“If you look at the remarkable cost reduction over the last decade, and what’s expected over the next few years, and pair that with escalating policy measures in Europe and expected in the U.S. and China, then you have this very powerful combination of factors to underpin EV uptake, starting now,” - Logan Goldie-Scot, Head of Clean Power, Bloomberg New Energy Finance

The report by Bloomberg New Energy found that some batteries, made for electric buses in China, have already fallen in price to around $100 per kilowatt-hour. That’s the cost that the analysts expect the market to reach broadly by 2023 or 2024.

“Within four years, major automakers should be able to produce and sell mass-market electric vehicles at the same price and with the same margin as internal combustion engine equivalents,” Goldie-Scot says.

After purchase, EVs are already cheaper to operate than traditional cars, both because they require less maintenance and because electricity is cheaper than fuel. Today, some luxury EVs are already at price parity with their luxury gas counterparts, but cheaper batteries will make that true more broadly without any subsidies. New innovations in battery technology will make costs drop even further.

Cost is a critical factor in getting more consumers to choose EVs, though other changes are also necessary. One issue is simply having a bigger range of vehicles for customers to choose from. It’s also important that electric charging infrastructure continues to expand.

“We’d love to see EV minivans, EV pickup trucks, EV subcompacts, all the way up to EV luxury vehicles, and we’re starting to see that.” - Haresh Kamath, Sr. Program Manager for Energy Storage, Electric Power Research Institute

From the perspective of climate change, it’s necessary to reach the tipping point on the price of electric cars quickly, because cars stay on the road for years. In the U.S., transportation is now the largest source of emissions. Even if 100% of vehicles sold were EVs, it would take over a decade to replace all the cars on the road, or even 50% of the cars on the road.

[This post was adapted from the original written by Adele Peters for Fast Company

Creed Comments: I believe that batteries are the holy grail of decarbonization. As the price of EV batteries drops, the rate of adoption will increase exponentially. This is what happened with solar and wind technology. It’s just Wright’s Law in action - for every cumulative doubling of units produced, costs will fall by a constant percentage. Affordable energy storage technology (i.e., batteries) is the key to a sustainable, low carbon economy - everything changes from there.


POLICY

Japan to phase out gasoline-powered cars by 2035, bucking Toyota

(source: ZME Science)

Japan has announced plans to phase out the sale of new gasoline-powered cars by 2035, bucking criticism by Toyota Motor Corp.’s chief that a rapid shift to electric vehicles could cripple the car industry.

The plan released Friday followed similar moves by the state of California and major European nations, but it has faced resistance from auto executives in a country that still makes millions of cars annually that run solely on gasoline engines.

Japan would still permit the sale of hybrid gas-electric cars after 2035 under the plan. Many models from Japan’s top car makers — Toyota, Honda Motor Co. and Nissan Motor Co. — come in both traditional and hybrid versions.

Earlier this month, Toyota President Akio Toyoda said that if Japan banned gasoline-powered cars and moved to electric vehicles too hastily, “the current business model of the car industry is going to collapse.”

Mr. Toyoda said the electricity grid couldn’t handle extra summer demand and observed that most of Japan’s electricity is generated by burning fossil fuels.

Japan’s move capped a year in which major economies around the world competed to outdo each other in setting targets for renewable energy and electric cars. That has added pressure on global auto makers to hasten their transition away from gasoline-powered vehicles, although for now many are getting their profits from U.S. consumers hungry for gasoline-powered trucks and sport-utility vehicles.

The Japanese government’s Christmas Day release, which also targets adding as much as 45 gigawatts of offshore wind-power capacity by 2040, calls for all new cars sold in the country from the mid-2030s onward to be electrified. That includes electric vehicles, hybrid gas-electric models and cars whose electricity is generated by hydrogen fuel cells. The plan says the cost of batteries should be reduced so that electric vehicles cost about the same as gasoline-powered vehicles a decade from now.

An outline of the plan released by the Ministry of Economy, Trade and Industry expressed concern that Europe and China were jumping ahead of Japan. It observed that sales of electric and plug-in hybrid vehicles more than tripled in the EU in the July-to-September quarter to around 270,000 units, while the equivalent figure for Japan was about 6,000.

Toyota and Honda have yet to release specific plans for mass-market electric vehicles in the U.S. and Japan, putting them behind the likes of Volkswagen AG , which plans to invest around $86 billion in developing electric vehicles and other new technologies over the next five years. Nissan says it will sell the Ariya, an electric crossover SUV, next year in the U.S. and other markets.

Major car companies are hustling to shift toward electric vehicles—and convince investors they can succeed—despite low consumer adoption. 

The announcement comes as the U.S. is poised to increase federal investment in electric vehicles under an energy plan President-elect Joe Biden aims to implement after taking office in January. He has pledged to create one million new jobs in the auto industry, including in the construction of electric-vehicle charging stations. His plan calls for a half-million new charging stations in the U.S.

The president-elect has said he hopes to use federal incentives—including tax, trade and investment policies as well as increased research and development—to make the U.S. the global leader in electric-vehicle manufacturing. Biden would offer rebates to consumers and incentives to manufacturing facilities that build parts for low-emissions vehicles, and he backs strengthening federal fuel-economy standards.

[This post was adapted from the original written by Peter Landers and Chieko Tsuneoka for the Wall Street Journal]

Creed Comments: The Japanese government is making a bold EV move by forcing the hand of the powerful auto industry. Toyota has been strangely resistant to EV technology. As the maker of the Hollywood favorite, virtue-signaling Prius, one would expect Toyota to be more progressive than other OEMs on clean tech. Even VW is eating their lunch on EV transition. I think Toyota’s focus on hydrogen fuel cell electric vehicles (FCEVs) has clouded their ability to see the epic shift to pure EVs. The Japanese government has decided otherwise - kudos to them.


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