In this episode of Cleantech Talk, Matthew Klippenstein and I tackle the stories on our own, with Kyle out for one week. We start off by discussing some interesting research Matthew pulled up on the choice between mandates & regulation versus carbon taxes for tackling global warming & climate change. We then dive into some of the highlights of Tesla’s most recent financials report & conference call.
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Fuel Switching Mandates as Impactful as High Carbon Taxes
The main thrust of the paper, Want an Effective Climate Policy? Heed the evidence, is that fuel switching mandates can have the same CO2 emissions reductions impacts as triple-digit carbon taxes. This is important, because in the near term, it’s much more politically viable for politicians to enact fuel switching mandates which have the impact of $100+/tonne CO2 carbon taxes, than to enact $100+/tonne CO2 carbon taxes.
We will need to price carbon at these levels, of course, but we’ll probably have to gradually build up to it. In the meanwhile, fuel switching offers the prospects of big “quick wins”.
Author Mark Jaccard explains how the province of Ontario’s decision to eliminate coal reduced the province’s emissions by 25 million tonnes of CO2 per year (25 MT, or megatonnes), a drop that would have required a carbon tax in the $100-$130/tonne range. As for directly pricing carbon, the government has only felt confident enough to sign up to $15/tonne, perhaps getting to $30 by 2025.
Counterintuitively, Jaccard thinks energy efficiency is a waste of time, due to his systems perspective. His findings have been that financial savings from energy efficiency result in financial spending elsewhere in the economy… which is predominantly fossil fueled… which means carbon emissions stay high. One can think of this as a systems-level version of Jevon’s Paradox, or the “rebound effect”, whereby efficiency tends to result in more use. The way to get around this is to fuel-switch the economy to renewables. That way, whether people are efficient or inefficient with their energy, it will all be clean.
As for Matthew’s stats, here in Vancouver, Canada, gasoline has gotten about 50 cents per litre cheaper in the past 18 months. If a government were to create a 50 cent/litre ($1.90/gallon) carbon tax , that would be equivalent to increasing the carbon price by:
$0.50/L gasoline x 1 L gasoline / 2.3 kg CO2 x 1000 kg CO2 / tonne CO2 = $220 / tonne CO2
Any government trying to do this, would probably get annihilated in the next election. And unfortunately, even when gasoline was 50 cents/litre more expensive up here, our electric vehicle adoption rates were much lower than California. This is why Jaccard strongly, strongly supports a California-style ZEV/PZEV mandate.
Zachary had referenced a comprehensive Simon Fraser University electric vehicle study; the CleanTechnica link is here, while Matthew’s write-up on GreenCarReports.com is here. For some reason, the charts aren’t appearing on the latter, so readers can navigate to www.tinyurl.com/BC-EV-incentives-stats for those.)
Tesla, Tesla, Tesla, Tesla, Tesla!
Zachary outdid himself in his coverage of the Tesla quarterly call – all the more impressive, since it was already the middle of the night in his time zone, when it started! Here are some explanatory tidbits:
Relating to Tesla’s full-year profitability target this year, two big reasons to be bullish on the company’s sales this year are the facts that it will have two models in full production – and that they still aren’t allowed to sell in all states. One has to imagine that at some point, Tesla will be allowed to sell their products in Texas, Michigan and elsewhere, which should mean an uptick in sales.
The biggest risk to sales would probably be if there’s a global recession; luxury vehicle sales do not do well during economic downturns, as this table of U.S. Mercedes S-class sales from goodcarbadcar.net shows. Check out the drop from 2007 to 2009. (Yikes!)
Zachary noted the Tesla Model S’s dominance of the U.S. large luxury vehicle segment, eclipsing Mercedes’ erstwhile-dominant S-class as the vehicle of choice among ubermensch. Sure, the S-class starts at a higher price point than the Model S (about $95,000 versus $75,000 prior to the US tax credit) – but Mercedes hasn’t had its brand vilified politically the way Tesla has, which immediately shrinks Tesla’s addressable market. Furthermore, Tesla has been effectively shut out from some important states by protectionist dealership lobbies.
Tesla’s 35% year-over-year Q4 sales growth helped mythbust – yet again – the notion that its sales are sensitive to gasoline prices, and the company is projecting 60-80% year-over-year sales growth for 2016. Lastly, Elon Musk directly addressed product reliability, perhaps to set the record straight that the reliability findings of early Tesla vehicles (whether by Plug-in America, Consumer Reports, or TrueDelta) is far below the level the company has achieved today, with the benefit of further manufacturing experience.
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