Even among those who accept that climate action is needed, rising numbers are unwilling or unable to shoulder additional expenses. Who can afford to go green? Hard-pressed consumers are pushing back Many people have seen their incomes eroded over the past 18 months by soaring food and energy bills and high borrowing costs. Even among those who accept that climate action is needed, rising numbers are unwilling or unable to shoulder additional expenses in these circumstances. https://www.wral.com/story/who-can-...-pressed-consumers-are-pushing-back/21170724/ “All the rich can afford a new car,” an elderly British woman commented at a recent protest in London against plans to expand a toll on older, polluting vehicles to outer suburbs of the city. “It’s affecting so many poor people… Everybody wants clean air but it’s all about money,” she told Times Radio. Her comments encapsulate growing resistance to pro-climate measures because of the costs they can impose on already stretched household budgets or the hassle they add to daily lives. Many people have seen their incomes eroded over the past 18 months by soaring food and energy bills and high borrowing costs. Even among those who accept that climate action is needed, rising numbers are unwilling or unable to shoulder additional expenses in these circumstances. “Across Europe, a backlash against net-zero policy is underway,” Brett Meyer and Tone Langengen at the Tony Blair Institute for Global Change, a think tank, wrote in August. Net-zero policy refers to measures to reduce planet-heating pollution. Scientists say greenhouse gas emissions must go down to zero by 2050 on a net basis — in other words, after accounting for emissions released into and removed from the atmosphere — to avoid catastrophic climate change. “While polls show that an overwhelming majority believe climate change is a problem and support policies to address it, that support starts to fall once green policies come into force and people begin to experience their costs,” Langengen and Meyer said. Why public attitudes matter Take two recent opinion polls. In a 2022 Pew survey covering 19 countries in North America, Europe and the Asia-Pacific region, climate change was named the top global threat. In Europe, more respondents said it was a threat to their country than at any time in the past two decades. “The results come as wildfires and extreme heat across Europe cause massive disruption to life,” the Pew researchers wrote in August last year, before another bout of deadly wildfires ravaged Greece this summer. Yet, in a survey earlier this year conducted in 29 countries by Ipsos, only 30% of respondents said they would be willing to pay more in taxes to help prevent climate change. Public attitudes “matter a lot” for reaching net-zero emissions because of the fundamental changes the transition will require, said Anna Valero, a distinguished policy fellow at the London School of Economics and Political Science (LSE). “What we’re talking about is large-scale structural change that will affect people’s lives,” she told CNN. From the way they heat their homes and the cars they drive, to the skills they need to do the jobs necessary for the transition, everything is in flux. Since citizens are voters, consumers and workers, they will “determine the feasibility of different things,” she added. “There’s a limit to what policymakers can do if the public don’t support their program. And there’s a limit to what businesses will do if the consumers won’t purchase those more environmentally sustainable options.” One of the most high-profile options is to switch to an electric car. But consumer demand is already waning. Earlier this month, the CEO of Volkswagen, Oliver Blume, cited a “sluggish ramp-up” of the electric vehicle (EV) market in Europe as a reason for the carmaker’s decision not to build additional battery factories for now, beyond the three plants it is already planning. “There is for the time being no business rationale for deciding on further sites,” he said in a statement. Sales data compiled by HSBC shows that carmakers in the United Kingdom, Germany and the United States are having to offer discounts and cheap financing to counter weaker-than-expected demand for EVs. “In the UK, not only are the discounts on the rise, the activity seems to be spreading to more brands,” the bank’s auto analysts wrote in a note last month. Backpedaling by policymakers doesn’t help. In September, UK Prime Minister Rishi Sunak watered down the government’s climate strategy, delaying a ban on the sale of new gas and diesel cars by five years among other changes. Ford (F), which had hoped the government’s earlier timeline would boost demand for EVs, was sharply critical of Sunak’s decision to push it out to 2035. Sustained discounting may be needed to encourage more motorists around the world to switch to EVs. For example, in the United States, going electric still means paying a premium over the typical gas-powered model: the average price of a new EV was $51,762 in October compared with $47,936 across all vehicles, according to auto research firm Kelley Blue Book. ‘There is no trade-off’ But high upfront costs mask the fact that climate-friendly products such as EVs and heat pumps will likely save consumers money down the line. The UK government’s own independent adviser on climate strategy, the Climate Change Committee, said delaying the ban on gas-guzzling cars is likely to increase motoring costs for households. “Electric vehicles will be significantly cheaper than petrol and diesel vehicles to own and operate over their lifetimes, so any undermining of their rollout will ultimately increase costs,” the committee wrote in a report last month. The same is true of heat pumps. These use electricity to transfer heat from a source, such as the air or ground, and are standard in Scandinavian countries including Norway and Sweden, which have bitter winters. Because of their energy efficiency, heat pumps would reduce the average UK household’s heating bill by 25% and slash the average home’s carbon emissions by 75%, according to Swedish heat pump firm Aira. “There is no trade-off between (installing a heat pump), saving the planet and at the same time saving the pockets of consumers,” CEO Martin Lewerth told CNN. A heat pump is around three to seven times more expensive than a typical boiler powered by natural gas when accounting for both its price and the installation cost. In Britain, even the more generous £7,500 ($9,400) government grant that Sunak unveiled in September won’t fully offset the difference in many cases. The limited number of engineers able to install and service heat pumps is another hindrance, and also adds to costs. “If you’re living outside Scandinavia and you want a heat pump, it’s not a hassle-free experience,” Lewerth acknowledged. To address these challenges, Aira, which launched in the UK Monday, is offering monthly payment plans. The firm is also opening “Aira Academies” across Europe to retrain gas boiler installers and turn them into “clean energy experts.” “Replacing one gas boiler with an electric heat pump will basically mean taking two (combustion engine) cars off the street,” Lewerth said. “Once people understand this is actually cheaper and a better solution… then it’s self-propelling.” The cost of delay Conversely, delaying the implementation of net-zero measures at a time when scientists say climate action needs to be accelerated will hit consumers’ pockets harder in the long run — and cost the planet dearly. “There is no scenario in which delay is the cheaper option with climate change,” said Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change and the Environment at the LSE. “The cost of the transition, while significant, is nowhere near the cost of dealing with the consequences (of climate change).” In the first six months of 2023, economic losses from natural disasters, which scientists say are becoming more frequent and severe as a result of climate change, amounted to $120 billion, according to insurer Swiss Re. That’s 46% above the first-half average over the previous 10 years. In the United States alone, extreme weather events cost the economy close to $150 billion a year and disproportionately affect poor and disadvantaged communities, according to the government. And that estimate doesn’t account for loss of life or health care-related costs. Beyond the economic damage from climate change, there is also a hefty price tag associated with continued dependence on fossil fuels, including natural gas — as was painfully demonstrated by the spike in European energy bills as a result of the war in Ukraine. “If we’d invested more in renewable energy… energy bills wouldn’t have gone up so much, which disproportionately impacted on poor households,” Valero at the LSE told CNN. In a similar vein, cleaner air can have economic benefits. A 2020 study by the Confederation of British Industry, a business lobby group, concluded that expanding London’s Ultra Low Emission Zone — the target of the recent protest in London — would meaningfully boost workforce participation and productivity by improving people’s health. So it’s clear that weaning economies off fossil fuels, while costly and disruptive in the short term, will deliver substantial returns in the long run. The job of governments, then, is to ensure that the upfront costs of reaching net zero do not fall on the poor, even if that means that “at some point rich people have to pay more,” according to Tim Jackson, the director of the Centre for the Understanding of Sustainable Prosperity at the University of Surrey in the UK. “We have to think about where the burden of that cost falls now,” he told CNN. “It’s clear it shouldn’t fall on the poorest. That means that if there are costs… even if these are investment costs with returns later on, then to some extent they should fall on people who can afford to pay them.”
Why No One Wants to Pay for the Green Transition Investors and consumers balk at costs of replacing fossil fuels with renewable energy, highlighting painful economics of climate mitigation By Greg Ip Updated Nov. 30, 2023 12:07 am ET Orsted, a Danish developer of wind farms, pulled out of two projects off New Jersey and took a $4 billion charge. Photo: Wayne Parry/Associated Press In the past few years, Washington and Wall Street started fantasizing that the transition to net-zero carbon emissions could be an economic bonanza. “When I think climate change, I think jobs,” President Biden said. When Wall Street heard green energy, it saw profits. As Ford Motor launched an electric Mustang and pickup truck, its market value topped $100 billion for the first time. This year the fantasy ended. With electric vehicle demand falling short of expectations, manufacturers are dialing back production and buying back stock instead. Offshore wind developers have canceled projects. The S&P Global Clean Energy Index has fallen 30% this year. Ford’s market cap is down to $42 billion. This doesn’t mean the transition to net zero is over. Officials meeting this week at the United Nations climate conference are just as worried about climate change. Renewable energy continues to expand. In the very long run, it is still the case that economic welfare will be higher with less global warming. But the economics of getting to net zero remain, fundamentally, dismal: Someone has to pay for it, and shareholders and consumers decided this year it wouldn’t be them. S&P 500Nasdaq Clean EdgeGreen Energy IndexS&P Global Clean EnergyIndex2021'23-60-50-40-30-20-10010203040% Politicians and the public tend to think all investment is good for growth, an error that leads to all sorts of muddled thinking about climate. Technological transformations are positive supply shocks: a new, more efficient technology comes along, and investment naturally gravitates toward this new technology because it is profitable. By contrast, the green transition is driven by public policy. It is “a negative supply shock, with an accompanying need to finance investments whose profitability cannot be taken for granted,” French economist Jean Pisani-Ferry wrote in a report commissioned by the French prime minister and released in English in November. “By putting a price—financial or implicit—on a free resource (the climate), the transition increases production costs, with no guarantee that the reduction in energy costs will eventually offset them, while the investments it calls for do not increase productive capacity but must nevertheless be financed.” Pisani-Ferry, who is affiliated with the Bruegel think tank in Europe and the Peterson Institute for International Economics in Washington, is an uncommonly clear thinker on this issue. He notes the transition involves hefty capital spending today to replace fossil-fuel consumption in the future. Pisani-Ferry estimates a middle-class French family would spend 44% of annual disposable income for a heat pump, and 120% for an electric car. These investments boost demand, but don’t leave families better off since they simply do the same thing as what they replace. And if taxes rise to pay for these investments, families will be worse off, financially. “It would take an incredible act of blindness to fail to recognize that climate change is happening, that it is—and will increasingly become—severely damaging,” he writes. “It would also be incredibly flippant to claim that this urgent and imperative action will have no economic cost by 2030.” The most efficient way to redirect consumption and investment from fossil fuels to zero-emissions energy is a carbon tax, or a cap-and-trade system. Europe has adopted such a system plus ever more stringent goals, especially after Russia cut off natural-gas supplies following its 2022 invasion of Ukraine. But as the cost has grown, so has public discontent, from France’s “yellow vest” protests in 2018 to last week’s first-place finish in Dutch elections by the far-right Freedom Party, which wants to ditch all climate regulations. U.S. leaders have rejected any federal tax or fee on carbon. Biden’s solution is to not ask consumers to pay for the green transition; his Inflation Reduction Act pours, by some estimates, roughly $1 trillion into electric vehicles, renewable energy, hydrogen and other zero-emissions technology. An assembly line for battery-powered F-150 Lightning trucks at Ford, which recently reduced production. Photo: jeff kowalsky/Agence France-Presse/Getty Images Subsidies can play a vital role by giving green energy time to scaleup and innovate until it is competitive with fossil fuels. But the IRA has been undermined by extraneous conditions such as made-in-America requirements, and by green tech inflation—a byproduct of the IRA itself, which helped fuel demand. Finally, Biden’s investment agenda was designed for the prepandemic era when low interest rates flattered the financial profile of renewable energy investment and federal budget deficits were less likely to crowd out private investment. Those assumptions no longer apply. For years, the cost of wind and solar plummeted, but since 2021 they have risen, according to investment bank Lazard. Interest rates are an important factor, which Lazard estimates affect offshore wind and solar more than natural gas. Many developers can no longer economically supply power at the rates previously agreed to. Denmark’s Orsted, the world’s largest wind developer, took a $4 billion charge in early November for pulling out of two projects off New Jersey. The company today is worth 75% less than in early 2021. ClearView Energy Partners estimates about 30% of state-contracted offshore wind capacity has been canceled, and another 25% may be rebid. ClearView analyst Timothy Fox noted lawmakers often mandate increased renewables, but utility regulators must approve the contracts, and one of their primary considerations is cost to ratepayers. “I am an unapologetic economic regulator,” Diane Burman, a member of the New York state Public Service Commission, said in October as the commission refused to pay wind developers more. Decarbonization and grid improvement must proceed “with costs in mind.” The financial appeal of EVs has similarly faded. Tesla proved making them can be profitable, but so far it looks like an outlier. Tesla captured the lion’s share of early adopters—drivers willing to put up with the cost and recharging hassle of an EV in return for performance and green credentials. For most drivers, the trade off still doesn’t work—even with subsidies. True, the IRA has spurred a boom in EV and battery factories. But a successful green transition requires that those factories be profitable, and Detroit’s automakers are still losing money on every EV they sell. EVs should eventually require less labor and thus be cheaper to build than gasoline-powered vehicles. But auto workers are no more willing to pay for the green transition than consumers or investors. In its recent strike, the United Auto Workers extracted commitments that make it even harder for Detroit to make money on EVs. In a sobering report this week, Morgan Stanley auto analysts estimated the average nonfinancial company in the S&P 500 spends its market cap in capital expenditure and research and development in about 50 years. GM and Ford spend theirs in 1.9 and 2.6 years, respectively. “This cannot continue, in our view.” The green transition remains critical, but its path will be fraught until someone agrees to pay for it. Write to Greg Ip at greg.ip@wsj.com Corrections & Amplifications The chart accompanying this article shows changes since Dec. 31, 2020. An earlier version incorrectly said the changes were since Dec. 31, 2000. (Corrected on Nov. 30). Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8 Appeared in the November 30, 2023, print edition as 'Who Will Pay for Green Transition?'. https://www.wsj.com/business/autos/...t=5t633kmupow4ins&reflink=article_email_share
Electric vehicles are becoming a harder sell. Not only do you have the worry about the short range and finding an electric charging station on a road trip -- the reality is that electric vehicles are much less reliable than gasoline vehicles. Consumer Reports: Electric vehicles less reliable, on average, than conventional cars and trucks https://www.wric.com/news/u-s-world...on-average-than-conventional-cars-and-trucks/
Let's hear what the leader of the COP28 Climate Conference has to say... Climate summit leader defends controversial comments that alarmed scientists and sent shockwaves through meeting Sultan Al Jaber, the oil executive who is leading the COP28 climate summit in Dubai, sent shockwaves through the gathering by claiming in the days before the UN-backed talks that there is “no science” that says phasing out fossil fuels is necessary to keep global warming under a critical threshold. https://www.cnn.com/2023/12/03/climate/cop28-al-jaber-fossil-fuel-phase-out?cid=ios_app
Of course he wasn't saying that staying below 1.5°C warming is now impossible (it is), he's trying to be an optimist. Which is foolish delay at this point.
How Mounting Demand for Rubber Is Driving Tropical Forest Loss The growing market for rubber is a major, but largely overlooked, cause of tropical deforestation, new analysis shows. Most of the rubber goes to produce tires, more than 2 billion a year, and experts warn the transition to electric vehicles could accelerate rubber use. By Fred Pearce • December 4, 2023 The elephants are gone. The trees are logged out. The Beng Per Wildlife Sanctuary in central Cambodia is largely destroyed, after being handed over by the government to a politically well-connected local plantation company to grow rubber. In West Africa, the Luxembourg-based plantations giant Socfin has been accused in recent weeks of deforestation and displacing Indigenous people around its rubber plantations in Nigeria and Ghana. Meanwhile, on the heavily deforested Indonesian island of Sumatra, tire multinational Michelin and a local forestry company raised $95 million worth of green investment bonds on the promise that they would reforest bare land with rubber trees. But the NGO Mighty Earth has found that much of the plantation went ahead on land from which natural forest had been removed as recently as a few months before by a subsidiary of the local company. These are just three examples among hundreds of one of the biggest, but least discussed, causes of tropical deforestation. The spread of rubber plantations is driven primarily by our demand for more than 2 billion new tires each year. The full devastating impact of this has been exposed by a new analysis of high-resolution satellite images that can, for the first time, distinguish rubber plantations from natural forests. Rubber as a crop is a worse deforester than coffee or cocoa and is now closing in on palm oil for the top spot. But even as the true environmental cost of the ubiquitous rubber tire is being exposed, the damage could be about to escalate sharply. The new culprit is electric vehicles. Being substantially heavier than conventional vehicles, they reduce the life of a tire by up to 30 percent, and so could raise demand for rubber by the same amount. Natural rubber is a milky latex harvested manually by tapping the bark of the Hevea brasiliensis, a tree originally from the Amazon that is now grown widely in plantations, especially in Southeast Asia. World demand has been rising by more than 3 percent a year. But with no sign of increased yields on plantations, that requires ever more land to keep pace. Yet there has been little outrage. While growers and processors of other tropical commodity crops, such as soy, beef, palm oil, cocoa, and coffee, are under ever greater pressure from both regulators and consumers to show their products are not grown on land deforested to accommodate them, rubber has escaped public attention. When did you last see deforestation-free rubber tires advertised? More...