I agree, I think this could be much bigger than Solar or EV's themselves. the application options are numerous. imagine the demand potential for an alternative to a diesel generator in residential applications... surely millions of homes have a back up generator. not only would solar and EV owners be interested but just about anyone wanting a back up generator, if the price was competitive and if it meant you could also sell during peak and charge during off peak for a profit.
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I agree, I think this could be much bigger than Solar or EV's themselves. the application options are numerous. imagine the demand potential for an alternative to a diesel generator in residential applications... surely millions of homes have a back up generator. not only would solar and EV owners be interested but just about anyone wanting a back up generator, if the price was competitive and if it meant you could also sell during peak and charge during off peak for a profit.
I think I should upgrade my response to this.
Previously I wrote on the Short Term Price Movements thread something to the effect that following the Q3 earnings announcement 'this was the dumbest sell-off in history'.
There is one over-arching catalyst for a rally: A realistic appraisal of Tesla's prospects for growth and profits.
In the short term, the TSLA price must be due for sudden (or creeping) relief from the complete BS that has dragged the price down.
1. Battery supply constraint! What? Unless one is genuinely worried that Tesla is constrained to produce only 300,000 ~ 400,000+ vehicles by 2017 under current cell supply contracts from a standing start of approx 20,000 vehicles, there is no cell supply constraint. Can the company grow at 100% annually for the next 4 years? Answer YES. There are idiots on the internet publishing valuations based on Tesla producing only 90,000 cars in 2017, or John Lovello of Bank of America tearing his clothes about the impossibility of Tesla producing 348,000 vehicles in 2020. Tesla is on course to blow these kinds of numbers out of the water (while remaining cash-flow positive throughout).
2. GAAP lease accounting means Tesla makes a loss selling cars. What a load of absolute rubbish. As soon as one understands that residuals always apply to a 3 month window following 3 years of exponential growth - a date where the numbers always pale into insignificance no matter what the residual value of the cars actually turns out to be - good bad or indifferent, although most likely good.
3. Safety of the new vehicle technology - most likely it was necessary to go through the superstition phase with the fire incidents before the Tesla Model S was accommodated into mainstream thinking as a powerful car with an onboard energy source demanding respect similar to a tank of gasoline, and not some kind of mysteriously benign magic carpet. I expect if the public at large can get used to the idea of not throwing lighted cigarettes into a gas tank, it is possible to get used to the idea of not shoving an iron bar through a battery pack. Just an initiation ceremony that needed to happen. The great thing about Tesla's reservation list is that a month or two of media hysteria will do nothing to interrupt sales, and the best informed (i.e. those in contact with Tesla regards purchasing a car) will have been the least concerned about this issue. Personally I prefer to have powerful tools that need to be respected.
So on the subject of catalysts, the post Q3 sell off was triggered by phantom negatives, and the effect of that garbage wearing off would no doubt see TSLA back on track to where it belongs in the $160 to $210 range.
JC
Seeking Alpha has twice deleted my posts with a link to Julian's article on Tesla FUD. The first time they said my post contained a blanket dismissal of ideas (I'd said an SA article contained lots of nonsense debunked before). My second post contained only the link, and SA deleted it saying it contained material unrelated to the topic under discussion, as if an anti-FUD article is unrelated to the FUD. Now SA is moderating my comments before posting.
I don't care much if I get banned from SA, but to all who post over there (JRP3 and others), be warned about SA's continued censoring of Julian's criticism of John Petersen.
I don't care much if I get banned from SA, but to all who post over there (JRP3 and others), be warned about SA's continued censoring of Julian's criticism of John Petersen.
JRP3
Hyperactive Member
PeterJA
Many thanks for your input.
OK I have discussed with Nigel M and Doug and they have kindly invited a space to present articles in the Investors discussion (and to up the character limit of a TMC blog post to make that possible):
Tesla Articles by Julian Cox
I am hopeful that this may be an early seed of a "peer-reviewed" article + comment format that works so well in theory for SA minus the financially and ethically questionable moderating bias shown by SA that has destroyed the credibility of Tesla commentary there.
My gratitude to the many expert commentators that makes TMC such a valuable resource.
JC
Many thanks for your input.
OK I have discussed with Nigel M and Doug and they have kindly invited a space to present articles in the Investors discussion (and to up the character limit of a TMC blog post to make that possible):
Tesla Articles by Julian Cox
I am hopeful that this may be an early seed of a "peer-reviewed" article + comment format that works so well in theory for SA minus the financially and ethically questionable moderating bias shown by SA that has destroyed the credibility of Tesla commentary there.
My gratitude to the many expert commentators that makes TMC such a valuable resource.
JC
Last edited:
Not wishing to harp on about Petersen, but to close the chapter: One of the most deeply offensive comments I have seen of late is Petersen taking about swapping his wife for a younger model and buying a Porsche but not expecting his neighbour to pay for it - as thought that was a smear on Tesla.
Good grief
Axion has apparently taken the state of Pennsylvania for $800,000 in Jan 2009 (just short of 57% of Axion's current Market Cap - and probably during J Petersen's tenure there) to get a technology with persistent self-discharge problems an inherent energy density problem to compete with lithium ion in the traction battery market for electric vehicles.
If you have not had enough of Petersen / Seeking Alpha already just read this page of the Axion Power International website. That ought to do it.
Press Releases
Good grief
Axion has apparently taken the state of Pennsylvania for $800,000 in Jan 2009 (just short of 57% of Axion's current Market Cap - and probably during J Petersen's tenure there) to get a technology with persistent self-discharge problems an inherent energy density problem to compete with lithium ion in the traction battery market for electric vehicles.
If you have not had enough of Petersen / Seeking Alpha already just read this page of the Axion Power International website. That ought to do it.
Press Releases
This one phrase from the Axion Power press release: "Revitalize Lead Acid batteries." Nothing in my mind sounds more environmentally unfriendly than "lead" and "acid" together. Oh, sure I could go on and on about the theoretical limits of the gravimetric charge densities of different battery chemistries and that lead acid is at the bottom of the list (unless you count potatoes or lemon juice batteries), but the fact of the matter is that my wife's 12-volt battery in her ICE is on its last legs, and those things are only good for apparently 3 years or so in an ICE. I don't understand how this guy got the cash, personally.
Thumper
Active Member
The Innovator's Dilemma was touched on in this thread so I thought I would post this here. It is a critique of the original book and seems to have good points. http://www.newyorker.com/reporting/2014/06/23/140623fa_fact_lepore?currentPage=all
A battery cell in a car performs almost exactly the same function as a cylinder, a piston and a piston rod. No valves and a full charge of fuel air mixture. If you could push on the piston back up to the top after it has been shoved out by the explosion and once it was squashed you had gasoline and air again instead of CO2 and H20 - you would have made a rechargeable mechanical battery that was mechanically rechargeable. Only real difference is the battery is electric in and out and the force on the push rod is Voltage that can turn an electro-mechanical device called a motor if you let it rather than a crank shaft. And of course it is electrically rechargeable.
The other big deal is that the gas air explosion is an irrecoverable thermal runaway which is a silly way to power a car with any kind of battery.
Hopefully it's an OMG moment for someone interested in understanding Tesla and where its core technology fits into the grand scheme of things in a way that makes actual sense rather than the nonsense of looking at batteries as a gasoline equivalent technology which it isn't. The Gasoline is an Anode material pulled up from a mine just like any battery Anode except the batteries made out of it with an Oxygen Cathode in a car last once before blowing up and the products of their thermal runaway dumped into the air. Most people would accept that making batteries on the ground in a Gigafactory was a better idea than making, wrecking and tossing them on the fly in a little mobile factory that can barely process 20 times its own weight in electro-mechanical battery cell contents despite numerous expensive downtime events for maintenance before it's also wrecked.
The other big deal is that the gas air explosion is an irrecoverable thermal runaway which is a silly way to power a car with any kind of battery.
Hopefully it's an OMG moment for someone interested in understanding Tesla and where its core technology fits into the grand scheme of things in a way that makes actual sense rather than the nonsense of looking at batteries as a gasoline equivalent technology which it isn't. The Gasoline is an Anode material pulled up from a mine just like any battery Anode except the batteries made out of it with an Oxygen Cathode in a car last once before blowing up and the products of their thermal runaway dumped into the air. Most people would accept that making batteries on the ground in a Gigafactory was a better idea than making, wrecking and tossing them on the fly in a little mobile factory that can barely process 20 times its own weight in electro-mechanical battery cell contents despite numerous expensive downtime events for maintenance before it's also wrecked.
Dear Elon Musk.
A First Principles Critique of a Revenue Neutral Carbon Tax.
From the perspective of a member of the deep thinking and sincerely environmentally concerned:
Despite all best of intentions, including the intentions of those of persons I greatly respect, shifting taxation from fuel inputs to emissions outputs appears upon thinking through unintended consequences as a fast track to environmental disaster.
The following is completely counter-intuitive and acknowledged to be controversial in environmentally supportive circles, but I think it stands to reason and I think that it is vital to acknowledge this openly. The reasoning stands on the axiom that the efficient elimination of waste is a vital service that is distinct and separate from vital services relating to energy, mobility, access to food and so on with their analogs in the biological condition of man. The existence of a fully recyclable electric vehicle operating in a closed loop with a fully recyclable generator positioned in a natural waterfall is proof of the fact that energy and mobility are in fact distinct from the value proposition of services relating to the elimination of waste.
It is also true that just as the sum of all untapped tides in the ocean offers potential to deliver energy that is distinct from the human economy so, sadly but truthfully, is the untapped potential of the atmosphere to absorb gaseous waste that is equally separate from the human economy as the tides. There is no ownership of either the tides nor the atmosphere regardless of its contents for better or worse that can legitimately be claimed by any party or entity including a government. Neither can it be sold to a third party for value. Just to drive that point home: A fine (financial penalty) for an oil slick is paid to cover the human labor, capital depreciation, material and energy cost efforts required for the clean up effort and in restitution for losses ideally including opportunity costs experienced by fishermen. Perhaps more besides in a bid to set an economy of due precautions at an advantage when compared to the risk of future fines. Despite $billions spent on oil slicks. Not a penny is paid for the sea itself. The sea is distinct from the human economy (as in truth are oil reserves in the ground hence their gross vulnerability to valuation write-off which would simply mean a reassessment that they belong to nature and not to the human economy just like the sea and the air).
While to some that count themselves environmentalists, this will be upsetting to deeply held beliefs. Yet to expose this topic in this way is even more troubling I would wager to the very long roster of oil and gas companies including BP, Exxon Mobil, Shell and many, many others that in fact have voiced their support for the institution of a Carbon Tax. This list including giant conglomerates that have in the past been censured repeatedly for deliberate deceptive anti environmental practices. Exposing this subject to scrutiny rather than mere assumption of benefits in the direction of Carbon reduction, I hope will assist in convincing them and those in a position of influence over them that actual cooperation in the interests of society is called for in the form of rapid divestment from GHG emissions-prone technology, and this deception too will not pass.
With the exception of fines levied to deter and to halt both criminal activity, regulatory transgressions and penalties for tort. Simply as a proposed component of the civil tax code, a Carbon Tax creates a totally novel and unique misalignment of a government's tax policy with the GDP of the nation it serves. This occurs because it seeks to substantially realign the interests of the treasury from a share in productivity (which is the normal case) to economic and environmental harm done (which is unique with respect to Carbon Tax proposals). To re-balance and to achieve revenue neutrality, a Revenue Neutral Carbon Tax seeks to provide partial relief for the classic sources of taxation: Such as tax relief on the benefits of economic wealth creation and environmental maintenance and improvements created by the nation's citizens and enterprises - such as income and corporation taxes on everything from supplying food and clothing to housing, energy, mobility and in the case of waste elimination: Garbage collection services or sewerage processing facilities and perhaps downstream still further to waste stream reprocessing and recycling. Nothing of no added value is taxed and cost items where that cost is felt by the purchaser very often attract tax relief, except as proposed by a Carbon tax.
No Carbon Tax yet proposed is intended to be a tax on carbon itself. Diamonds, Graphite and the balance of organic chemistry for industry and medicine - all carbon - are not the intended targets of punitive taxation. It can also be presumed that in principle that Carbon Capture and Sequestration (CCS) net of the effects of EOR (Enhanced Oil Recovery and subsequent burning) would create a tax exemption - that is assuming the proceeds of EOR were detected and taxed. No, a revenue Neutral Carbon Tax would be in part relief on ordinary taxation, and a Tax on Carbon Emissions. A tax on the cost of an "untaxed externality". Yet as previously discussed, this untaxed externality is valuless in and of itself. It is completely fungible with total abstinence in the eyes of the end user because there is no human requirement for pollution past the point of final elimination to the environment. As such, airborne pollution has no analog that is traded for value throughout the human economy unless by the mislabeling of cap and trade schemes where in fact the value traded are permits to sell goods and services that are frequently a prelude to emissions and not the emissions themselves.
In a world where rhetoric matters it is clearly wrong to regard the ability to pollute as an object of value and desire. A tax on pollution is very clearly a trade between a user and a government with nothing of value in exchange for money or just plain and simple: Money for nothing. In this way a Carbon Tax is a fine, except it is a fine for a transgression that is expected and required to reoccur repeatedly in order to fund a government. In other words literally a legalized government operated black market. As can be seen herafter, with all that this entails. If a Carbon Emissions Tax is a tax on cost to society then this tax on cost is a positive feedback loop in the negative direction that is inherently without checks and balances. If you don't want to pay any Carbon Tax, just buy an EV and a Solar Array and opt out altogether and the devil take the hindmost - which on the first pass sounds really, real great. A cascading and escalating tax penalty that chases down emitters to the last man that must carry the entire government on his shoulders beyond the level of the government's reduced income and corporation tax take. That is unless elected government officials feel brave enough to risk increasing income taxes to replace the non-emitters that have simply opted out of the Carbon Tax Base at risk of getting thrown out of office at the next election which tends to happen to governments that need to increase direct income taxation to balance a budget.
Except that it isn't all that great. Despite the fact that a Carbon Tax on emissions would be unique in all of the above terms and not just because it would have undesirable social justice effects for example passing the bulk of Carbon Taxation rapidly to those at the fringes of society for want of capital or credit needed for the equipment to opt out of the Carbon Tax (such as an EV and a Solar Array).
By far the gravest unintended consequence is implicitly and structurally embedded: An overwhelming implied incentive for evasion of a tax on getting caught, and for empowerment and institutionalization of corruption at the highest levels of government. Why? Because this is not a tax on the purchase and use of the value of fuels. It is a tax levied on either a presumption of guilt that the fuel you just bought or sold will become un-sequestered emissions or it is a tax on emissions inspected in accordance with an established protocol for inspection - in hacking terms - one that is overwhelmingly vulnerable to a protocol attack. There is absolutely no limit to how far the line of that protocol can be blurred and shifted under the influence of lobbyists, obfuscated and confused in public debate with a natural process or related to some other practice that is culturally acknowledged to be benign. At the limit it can be argued that the entire oil reserves of the world will at some point be exposed by natural plate tectonics and vulcanism at the surface and oxidized in air and that the rotting of plankton overwhelms the sum of all human endeavors to emit CO2. Result all can compromise on as in fact they have in the past: The exhaust pipe.
There is no need whatsoever to guess how this plays out in reality. CARB for example in California and the Zero Emissions Vehicle credit systems throughout many States in the USA measures emissions at the tailpipe of cars. This leaves the door deliberately wide open (or perhaps naively wide open on the stupendously misdirected assumption that emissions intensity will only get better) to Hydrogen produced by the fossil fuel and industrial gas industries from Natural Gas. Hydrogen from Natural Gas creates emissions in prodigious quantities but all entirely upstream of the presumptive Carbon Tax Inspection Protocol - the emissions presented at the tailpipe.
Not only that but the Natural Gas industry itself is currently able to self-report fugitive methane emissions to the US Environmental Protection Agency (the US EPA) which collates industry figures that are generally accepted in the light of independent studies by ground and air to be many times under-reported when compared with actual onshore emissions from both fracking fields and pipelines and throughout the pipework of cities. More than that the US Fracking industry is legally exempt in the USA (by what is known as the Halliburton Loophole) from protecting groundwater, even that used for human consumption as drinking water and the industry in certain States, perhaps nationally across the USA is legally exempt from disclosing the constituents of chemicals it injects into the ground even to first responders of its industrial accidents. This industry tends to flip flop under cross examination by the lawyers representing the parents of benzine and bromide poisoned children as to what is a fracking chemical and what is a component of gas drilling mud - including radio active horizontal drill-head tracers - or maybe a naturally occurring feature of the rock formation - so frequently detected such cases. In one instance I can recall, a town in the USA was successfully sued (or more accurately bludgeoned to defeat by the threat of exorbitant legal expenses) by the gas industry after its citizens voted not to permit fracking on its lands - literally denying the US Constitutional right of self defense and to life, liberty, justice and the pursuit of happiness to an entire community of men women and children on account of perversion of the rule of law.
In short we have the answer to what happens when a government and a polluting industry upon which its hopes rest combine to triage tax revenues, emissions and laws to protect grossly harmful malpractice from the objections of voting citizens and consumers. A Carbon Tax provides the incentive structure to its senior stakeholders, namely the government and the oil and gas industries to take this principle to a whole new level.
Where these worlds collide comes to into sharp focus in existing legislation surrounding for methane generated Hydrogen whose emissions are measured at the tailpipe (where they are not present) and with it the potential for Hydrogen Fuel Cells to mount a tax exempt assault upon wind, solar, hydro, wave, nuclear and anything else that is genuinely emissions free and seeks to put Hydrogen from methane instead of electricity at the head of the economic food chain when it comes to powering vehicles including the generation of electricity to power pure electrics. This is the much vaunted "Hydrogen Economy" laid bare. This is the utterly cynical and yet discretely rational underpinning of a multi $billion pursuit by very smart people of a self-evidently hopeless technology when viewed through the lens of emissions reduction and energy efficiency, even of power density sufficient ever to acceptably power a passenger vehicle. This is the why of Hydrogen.
The Hydrogen Economy means gas drilling, fracking and methane hydrates until the end of human civilization which would be extremely rapid should this attain its logical ends. SMR (Steam Methane Reforming) of methane to produce hydrogen is the fossil fuel industry's most carbon intensive activity. King of the hill, can't be beat. 16.58 Kg CO2e per Kg of Hydrogen with the same total energy as a gallon of gas that comes to 11.3Kg between extraction and consumption by the same metrics (both supplied by a leading Hydrogen advocate Dr CE (Sandy) Thomas - a consultant to Toyota).
By mass Hydrogen is of course even worse. 50 Million metric tons of hydrogen production in 2013, almost entirely fossil fuel methane derived (95% of US production derived this way) with some contributions from heavier liquid hydrocarbons from butane upwards as well as the worst case scenario: The gasification of coal. 50 Million metric tones was 1.1% as a percentage by mass of 2013 crude oil extraction totaling 4200 metric tons (4.2 Gigatons), and yet this 1.1% of the fossil fuel industry by mass was responsible for 10% of total vehicle emissions or 829 Million Metric Tons of CO2 and CO2e (GHG equivalent) emissions (.829 Gigatons out of 26.4 Gigatons of human emissions that year) by heavily muted official GHG equivalence standards and attributable to Hydrogen alone or 3% of all man made emissions that year from all activities from cement and hydrocracking for transport fuels to heat, light and industry. This was without more than the most negligible handful of experimental Fuel Cell Vehicles in existence. Perhaps twenty recognizable fuel cell vehicles in total or not far off that number, world wide. Hydrogen is unquestionably the very last industry on Earth one would wish to promote in the name of GHG emissions reduction and the very first sensible target for curtailment and mandated replacement with renewable production - the very most accessible and rapid method of de-carbonizing the entire road fleet. Yet proliferating this worst case scenario represents the key incentive for the fossil fuel industry to push for a Carbon Emissions Tax measured at the tailpipe - as distinct from a fuel tax measured at retail or wholesale as a carrier of energy input.
The horrific non-tailpipe emissions figures associated with Hydrogen production are presented above before the realistic risks associated with direct CO2, Methane, Hydrogen Sulfide, NOx and frequently mercury emissions to the atmosphere of extracting "produced" wellhead natural gas before it is stripped down to "Pipeline" Natural Gas for direct use as a fuel or as a feedstock for Hydrogen production. While onshore fracking of shales in the USA and world wide is only partially more GHG intensive than mining and burning coal after taking into account realistic fugitive methane emissions figures detected by independent studies at US fracking fields. One method of obtaining methane for hydrogen in particular practically guarantees human extinction in short order:
The Dredging and Drilling of undersea Methane Hydrates - or Clathrates. Fire Ice by its more approachable name. This is a low temperature latticework of congealed ice and methane that exists in vast quantities under loose silts on the seabed and under permafrost and ice sheets in many locations around the world. This substance represents the world's least familiar and yet most abundant identified deposits of hydrocarbons that exists on Earth and these eclipse all known oil and Natural Gas reserves combined. Why do they get so little press? Partially because they are considered too unstable to disturb without risking the release of Multi Megaton if not Multi Gigaton plumes of methane into the atmosphere thereby defeating the sum of all civilized and economic means to rein in the global warming potential of Earth's atmosphere short of seeking to blot out the sun by means of a deliberately triggered Nuclear Winter. So that said. This is Japan's plan - disturbing methane hydrates as feedstock for its ambitions of a Hydrogen Economy commencing this year, in 2016.
This is the bottom line of Japan's interest in promoting a hydrogen economy and the bottom line rationale for the Toyota Mirai. Methane Hydrates are the "Natural Resource" that Toyota promotes as as if it were a little footnote besides the sweeping hyperbole of concerning the atomic hydrogen content of water, plants and biomass and the potential to produce hydrogen with solar and wind energy. "The Fuel for the Next 100 years" according to Toyota's advertising, is Methane Hydrates. One hundred years worth of power for what was until recently the world's second largest economy after the USA is exactly how much Methane Hydrate Japan assesses that it has in its territorial waters and which haunts its dreams of freedom from dependency on foreign oil and gas - including from their perspective foreign Natural Gas from the USA - making Hydrogen the ultimate stupidity for the USA to encourage with subsidies, research grants and credits from any and every angle. And yet the above mentioned firms, Exxon, BP, Shell and so on and their fracking interests appear to eye Hydrogen under the cover of a Carbon Emissions Tax and a fundamentally false and decptive environmental narrative as the ultimate defense and opportunity to strike back at advances in renewable energy sustainable transportation.
Now I hate that this to be the bottom line of a Revenue Neutral Carbon Tax, although it would appear to be the case. If all Economists agree that such a tax is a good idea then I think it fair to say that is the preceding statement is correct, that all of them have been deceived - and that this is well worth a more critical look. Mr Musk, if you are in fact reading this, then in my view this is the only example I have seen of your abandoning a first principled work-up that has served you so exquisitely deferred to analogy, if not in fact the fallacy of argument from authority with respect to the aforementioned economists - at least on face value. If it was all just a hazing exercise before you lay down autonomy..... well then what can I say - and I yet I trust you will appreciate and forgive the fact that nobody of good conscience could think this through and say nothing about it on the off chance it had missed. Given the hit and miss of it all, taking a hit of this magnitude is not good.
Please note that simply raising fuel input taxes where the value that is being taxed is relative to the energy content of the fuel, perhaps scaled by some factor for wtw emissions intensity - this does not align incentives with corruption to anything like the same extent. If the argument goes that this is no different from a carbon tax. Then with all due respect, which is considerable, please consider using your voice to advocate for this and not that.
There are many better reasons for State and National governments to treat EV adoption favorably without threat of a bid for a Carbon Tax, if threat it is perceived to be. Balance of Trade is an obvious choice of benefits pertaining to EV use. Whether or not a nation produces Oil, an EV road fleet either increases export gains or reduces import losses while making the home environment incrementally more pleasant.
Finally, on the topic of Positive Feedback Loops as touched upon here in relation to the theoretical potential of a Carbon Tax spiraling down to the last emitter. There is of course a legitimate Positive Feedback Loop that will serve to rapidly extinguish demand for the Internal Combustion of Gasoline and Diesel, attract torrents of cash flow positive customer-capital and also end any possible economic lure for an Extinction Level Event folly with Hydrogen proliferation, Fracking and Methane Hydrates. That is this:
Customer / Provider Profit Sharing of Autonomous EV fleet services with a widely distributed capital purchase and ownership structure with respect to vehicles and a central OTA network service and billing provider dividing the proceeds between the asset owner and the service provider. This flips the concept of vehicle purchase as a depreciating cost item to an income and profit generating asset for its customers. The opposite sense of any ordinary sale of goods. The more a customer buys, large or small, from a single consumer to a car dealer wishing to allocate capital elsewhere than his lot to a major fleet owner - the more vehicles the customer buys, the richer he gets and more motivated he is to arrange the capital for a cash purchase which in combination with OTA service revenues would achieve vortex-acceleration of production capacity. I intend to lay this out more fully but this customer-profit-from-purchasing loop is of course beyond compounding and it also breaks no economic rules with regards to charging for a null or negative value proposition. Neither does it have the potential to set a government against its own people. The entire subject of Emissions is obviated by it and hence any need to contemplate a Carbon Tax of any description.
I trust that this effort has been helpful and that I might receive some feedback. Hopefully to that effect.
Thank you
Julian Cox.
Any question or comment that is not for republication, my PM function here is regarded by me as strictly private.
A First Principles Critique of a Revenue Neutral Carbon Tax.
From the perspective of a member of the deep thinking and sincerely environmentally concerned:
Despite all best of intentions, including the intentions of those of persons I greatly respect, shifting taxation from fuel inputs to emissions outputs appears upon thinking through unintended consequences as a fast track to environmental disaster.
The following is completely counter-intuitive and acknowledged to be controversial in environmentally supportive circles, but I think it stands to reason and I think that it is vital to acknowledge this openly. The reasoning stands on the axiom that the efficient elimination of waste is a vital service that is distinct and separate from vital services relating to energy, mobility, access to food and so on with their analogs in the biological condition of man. The existence of a fully recyclable electric vehicle operating in a closed loop with a fully recyclable generator positioned in a natural waterfall is proof of the fact that energy and mobility are in fact distinct from the value proposition of services relating to the elimination of waste.
It is also true that just as the sum of all untapped tides in the ocean offers potential to deliver energy that is distinct from the human economy so, sadly but truthfully, is the untapped potential of the atmosphere to absorb gaseous waste that is equally separate from the human economy as the tides. There is no ownership of either the tides nor the atmosphere regardless of its contents for better or worse that can legitimately be claimed by any party or entity including a government. Neither can it be sold to a third party for value. Just to drive that point home: A fine (financial penalty) for an oil slick is paid to cover the human labor, capital depreciation, material and energy cost efforts required for the clean up effort and in restitution for losses ideally including opportunity costs experienced by fishermen. Perhaps more besides in a bid to set an economy of due precautions at an advantage when compared to the risk of future fines. Despite $billions spent on oil slicks. Not a penny is paid for the sea itself. The sea is distinct from the human economy (as in truth are oil reserves in the ground hence their gross vulnerability to valuation write-off which would simply mean a reassessment that they belong to nature and not to the human economy just like the sea and the air).
While to some that count themselves environmentalists, this will be upsetting to deeply held beliefs. Yet to expose this topic in this way is even more troubling I would wager to the very long roster of oil and gas companies including BP, Exxon Mobil, Shell and many, many others that in fact have voiced their support for the institution of a Carbon Tax. This list including giant conglomerates that have in the past been censured repeatedly for deliberate deceptive anti environmental practices. Exposing this subject to scrutiny rather than mere assumption of benefits in the direction of Carbon reduction, I hope will assist in convincing them and those in a position of influence over them that actual cooperation in the interests of society is called for in the form of rapid divestment from GHG emissions-prone technology, and this deception too will not pass.
With the exception of fines levied to deter and to halt both criminal activity, regulatory transgressions and penalties for tort. Simply as a proposed component of the civil tax code, a Carbon Tax creates a totally novel and unique misalignment of a government's tax policy with the GDP of the nation it serves. This occurs because it seeks to substantially realign the interests of the treasury from a share in productivity (which is the normal case) to economic and environmental harm done (which is unique with respect to Carbon Tax proposals). To re-balance and to achieve revenue neutrality, a Revenue Neutral Carbon Tax seeks to provide partial relief for the classic sources of taxation: Such as tax relief on the benefits of economic wealth creation and environmental maintenance and improvements created by the nation's citizens and enterprises - such as income and corporation taxes on everything from supplying food and clothing to housing, energy, mobility and in the case of waste elimination: Garbage collection services or sewerage processing facilities and perhaps downstream still further to waste stream reprocessing and recycling. Nothing of no added value is taxed and cost items where that cost is felt by the purchaser very often attract tax relief, except as proposed by a Carbon tax.
No Carbon Tax yet proposed is intended to be a tax on carbon itself. Diamonds, Graphite and the balance of organic chemistry for industry and medicine - all carbon - are not the intended targets of punitive taxation. It can also be presumed that in principle that Carbon Capture and Sequestration (CCS) net of the effects of EOR (Enhanced Oil Recovery and subsequent burning) would create a tax exemption - that is assuming the proceeds of EOR were detected and taxed. No, a revenue Neutral Carbon Tax would be in part relief on ordinary taxation, and a Tax on Carbon Emissions. A tax on the cost of an "untaxed externality". Yet as previously discussed, this untaxed externality is valuless in and of itself. It is completely fungible with total abstinence in the eyes of the end user because there is no human requirement for pollution past the point of final elimination to the environment. As such, airborne pollution has no analog that is traded for value throughout the human economy unless by the mislabeling of cap and trade schemes where in fact the value traded are permits to sell goods and services that are frequently a prelude to emissions and not the emissions themselves.
In a world where rhetoric matters it is clearly wrong to regard the ability to pollute as an object of value and desire. A tax on pollution is very clearly a trade between a user and a government with nothing of value in exchange for money or just plain and simple: Money for nothing. In this way a Carbon Tax is a fine, except it is a fine for a transgression that is expected and required to reoccur repeatedly in order to fund a government. In other words literally a legalized government operated black market. As can be seen herafter, with all that this entails. If a Carbon Emissions Tax is a tax on cost to society then this tax on cost is a positive feedback loop in the negative direction that is inherently without checks and balances. If you don't want to pay any Carbon Tax, just buy an EV and a Solar Array and opt out altogether and the devil take the hindmost - which on the first pass sounds really, real great. A cascading and escalating tax penalty that chases down emitters to the last man that must carry the entire government on his shoulders beyond the level of the government's reduced income and corporation tax take. That is unless elected government officials feel brave enough to risk increasing income taxes to replace the non-emitters that have simply opted out of the Carbon Tax Base at risk of getting thrown out of office at the next election which tends to happen to governments that need to increase direct income taxation to balance a budget.
Except that it isn't all that great. Despite the fact that a Carbon Tax on emissions would be unique in all of the above terms and not just because it would have undesirable social justice effects for example passing the bulk of Carbon Taxation rapidly to those at the fringes of society for want of capital or credit needed for the equipment to opt out of the Carbon Tax (such as an EV and a Solar Array).
By far the gravest unintended consequence is implicitly and structurally embedded: An overwhelming implied incentive for evasion of a tax on getting caught, and for empowerment and institutionalization of corruption at the highest levels of government. Why? Because this is not a tax on the purchase and use of the value of fuels. It is a tax levied on either a presumption of guilt that the fuel you just bought or sold will become un-sequestered emissions or it is a tax on emissions inspected in accordance with an established protocol for inspection - in hacking terms - one that is overwhelmingly vulnerable to a protocol attack. There is absolutely no limit to how far the line of that protocol can be blurred and shifted under the influence of lobbyists, obfuscated and confused in public debate with a natural process or related to some other practice that is culturally acknowledged to be benign. At the limit it can be argued that the entire oil reserves of the world will at some point be exposed by natural plate tectonics and vulcanism at the surface and oxidized in air and that the rotting of plankton overwhelms the sum of all human endeavors to emit CO2. Result all can compromise on as in fact they have in the past: The exhaust pipe.
There is no need whatsoever to guess how this plays out in reality. CARB for example in California and the Zero Emissions Vehicle credit systems throughout many States in the USA measures emissions at the tailpipe of cars. This leaves the door deliberately wide open (or perhaps naively wide open on the stupendously misdirected assumption that emissions intensity will only get better) to Hydrogen produced by the fossil fuel and industrial gas industries from Natural Gas. Hydrogen from Natural Gas creates emissions in prodigious quantities but all entirely upstream of the presumptive Carbon Tax Inspection Protocol - the emissions presented at the tailpipe.
Not only that but the Natural Gas industry itself is currently able to self-report fugitive methane emissions to the US Environmental Protection Agency (the US EPA) which collates industry figures that are generally accepted in the light of independent studies by ground and air to be many times under-reported when compared with actual onshore emissions from both fracking fields and pipelines and throughout the pipework of cities. More than that the US Fracking industry is legally exempt in the USA (by what is known as the Halliburton Loophole) from protecting groundwater, even that used for human consumption as drinking water and the industry in certain States, perhaps nationally across the USA is legally exempt from disclosing the constituents of chemicals it injects into the ground even to first responders of its industrial accidents. This industry tends to flip flop under cross examination by the lawyers representing the parents of benzine and bromide poisoned children as to what is a fracking chemical and what is a component of gas drilling mud - including radio active horizontal drill-head tracers - or maybe a naturally occurring feature of the rock formation - so frequently detected such cases. In one instance I can recall, a town in the USA was successfully sued (or more accurately bludgeoned to defeat by the threat of exorbitant legal expenses) by the gas industry after its citizens voted not to permit fracking on its lands - literally denying the US Constitutional right of self defense and to life, liberty, justice and the pursuit of happiness to an entire community of men women and children on account of perversion of the rule of law.
In short we have the answer to what happens when a government and a polluting industry upon which its hopes rest combine to triage tax revenues, emissions and laws to protect grossly harmful malpractice from the objections of voting citizens and consumers. A Carbon Tax provides the incentive structure to its senior stakeholders, namely the government and the oil and gas industries to take this principle to a whole new level.
Where these worlds collide comes to into sharp focus in existing legislation surrounding for methane generated Hydrogen whose emissions are measured at the tailpipe (where they are not present) and with it the potential for Hydrogen Fuel Cells to mount a tax exempt assault upon wind, solar, hydro, wave, nuclear and anything else that is genuinely emissions free and seeks to put Hydrogen from methane instead of electricity at the head of the economic food chain when it comes to powering vehicles including the generation of electricity to power pure electrics. This is the much vaunted "Hydrogen Economy" laid bare. This is the utterly cynical and yet discretely rational underpinning of a multi $billion pursuit by very smart people of a self-evidently hopeless technology when viewed through the lens of emissions reduction and energy efficiency, even of power density sufficient ever to acceptably power a passenger vehicle. This is the why of Hydrogen.
The Hydrogen Economy means gas drilling, fracking and methane hydrates until the end of human civilization which would be extremely rapid should this attain its logical ends. SMR (Steam Methane Reforming) of methane to produce hydrogen is the fossil fuel industry's most carbon intensive activity. King of the hill, can't be beat. 16.58 Kg CO2e per Kg of Hydrogen with the same total energy as a gallon of gas that comes to 11.3Kg between extraction and consumption by the same metrics (both supplied by a leading Hydrogen advocate Dr CE (Sandy) Thomas - a consultant to Toyota).
By mass Hydrogen is of course even worse. 50 Million metric tons of hydrogen production in 2013, almost entirely fossil fuel methane derived (95% of US production derived this way) with some contributions from heavier liquid hydrocarbons from butane upwards as well as the worst case scenario: The gasification of coal. 50 Million metric tones was 1.1% as a percentage by mass of 2013 crude oil extraction totaling 4200 metric tons (4.2 Gigatons), and yet this 1.1% of the fossil fuel industry by mass was responsible for 10% of total vehicle emissions or 829 Million Metric Tons of CO2 and CO2e (GHG equivalent) emissions (.829 Gigatons out of 26.4 Gigatons of human emissions that year) by heavily muted official GHG equivalence standards and attributable to Hydrogen alone or 3% of all man made emissions that year from all activities from cement and hydrocracking for transport fuels to heat, light and industry. This was without more than the most negligible handful of experimental Fuel Cell Vehicles in existence. Perhaps twenty recognizable fuel cell vehicles in total or not far off that number, world wide. Hydrogen is unquestionably the very last industry on Earth one would wish to promote in the name of GHG emissions reduction and the very first sensible target for curtailment and mandated replacement with renewable production - the very most accessible and rapid method of de-carbonizing the entire road fleet. Yet proliferating this worst case scenario represents the key incentive for the fossil fuel industry to push for a Carbon Emissions Tax measured at the tailpipe - as distinct from a fuel tax measured at retail or wholesale as a carrier of energy input.
The horrific non-tailpipe emissions figures associated with Hydrogen production are presented above before the realistic risks associated with direct CO2, Methane, Hydrogen Sulfide, NOx and frequently mercury emissions to the atmosphere of extracting "produced" wellhead natural gas before it is stripped down to "Pipeline" Natural Gas for direct use as a fuel or as a feedstock for Hydrogen production. While onshore fracking of shales in the USA and world wide is only partially more GHG intensive than mining and burning coal after taking into account realistic fugitive methane emissions figures detected by independent studies at US fracking fields. One method of obtaining methane for hydrogen in particular practically guarantees human extinction in short order:
The Dredging and Drilling of undersea Methane Hydrates - or Clathrates. Fire Ice by its more approachable name. This is a low temperature latticework of congealed ice and methane that exists in vast quantities under loose silts on the seabed and under permafrost and ice sheets in many locations around the world. This substance represents the world's least familiar and yet most abundant identified deposits of hydrocarbons that exists on Earth and these eclipse all known oil and Natural Gas reserves combined. Why do they get so little press? Partially because they are considered too unstable to disturb without risking the release of Multi Megaton if not Multi Gigaton plumes of methane into the atmosphere thereby defeating the sum of all civilized and economic means to rein in the global warming potential of Earth's atmosphere short of seeking to blot out the sun by means of a deliberately triggered Nuclear Winter. So that said. This is Japan's plan - disturbing methane hydrates as feedstock for its ambitions of a Hydrogen Economy commencing this year, in 2016.
This is the bottom line of Japan's interest in promoting a hydrogen economy and the bottom line rationale for the Toyota Mirai. Methane Hydrates are the "Natural Resource" that Toyota promotes as as if it were a little footnote besides the sweeping hyperbole of concerning the atomic hydrogen content of water, plants and biomass and the potential to produce hydrogen with solar and wind energy. "The Fuel for the Next 100 years" according to Toyota's advertising, is Methane Hydrates. One hundred years worth of power for what was until recently the world's second largest economy after the USA is exactly how much Methane Hydrate Japan assesses that it has in its territorial waters and which haunts its dreams of freedom from dependency on foreign oil and gas - including from their perspective foreign Natural Gas from the USA - making Hydrogen the ultimate stupidity for the USA to encourage with subsidies, research grants and credits from any and every angle. And yet the above mentioned firms, Exxon, BP, Shell and so on and their fracking interests appear to eye Hydrogen under the cover of a Carbon Emissions Tax and a fundamentally false and decptive environmental narrative as the ultimate defense and opportunity to strike back at advances in renewable energy sustainable transportation.
Now I hate that this to be the bottom line of a Revenue Neutral Carbon Tax, although it would appear to be the case. If all Economists agree that such a tax is a good idea then I think it fair to say that is the preceding statement is correct, that all of them have been deceived - and that this is well worth a more critical look. Mr Musk, if you are in fact reading this, then in my view this is the only example I have seen of your abandoning a first principled work-up that has served you so exquisitely deferred to analogy, if not in fact the fallacy of argument from authority with respect to the aforementioned economists - at least on face value. If it was all just a hazing exercise before you lay down autonomy..... well then what can I say - and I yet I trust you will appreciate and forgive the fact that nobody of good conscience could think this through and say nothing about it on the off chance it had missed. Given the hit and miss of it all, taking a hit of this magnitude is not good.
Please note that simply raising fuel input taxes where the value that is being taxed is relative to the energy content of the fuel, perhaps scaled by some factor for wtw emissions intensity - this does not align incentives with corruption to anything like the same extent. If the argument goes that this is no different from a carbon tax. Then with all due respect, which is considerable, please consider using your voice to advocate for this and not that.
There are many better reasons for State and National governments to treat EV adoption favorably without threat of a bid for a Carbon Tax, if threat it is perceived to be. Balance of Trade is an obvious choice of benefits pertaining to EV use. Whether or not a nation produces Oil, an EV road fleet either increases export gains or reduces import losses while making the home environment incrementally more pleasant.
Finally, on the topic of Positive Feedback Loops as touched upon here in relation to the theoretical potential of a Carbon Tax spiraling down to the last emitter. There is of course a legitimate Positive Feedback Loop that will serve to rapidly extinguish demand for the Internal Combustion of Gasoline and Diesel, attract torrents of cash flow positive customer-capital and also end any possible economic lure for an Extinction Level Event folly with Hydrogen proliferation, Fracking and Methane Hydrates. That is this:
Customer / Provider Profit Sharing of Autonomous EV fleet services with a widely distributed capital purchase and ownership structure with respect to vehicles and a central OTA network service and billing provider dividing the proceeds between the asset owner and the service provider. This flips the concept of vehicle purchase as a depreciating cost item to an income and profit generating asset for its customers. The opposite sense of any ordinary sale of goods. The more a customer buys, large or small, from a single consumer to a car dealer wishing to allocate capital elsewhere than his lot to a major fleet owner - the more vehicles the customer buys, the richer he gets and more motivated he is to arrange the capital for a cash purchase which in combination with OTA service revenues would achieve vortex-acceleration of production capacity. I intend to lay this out more fully but this customer-profit-from-purchasing loop is of course beyond compounding and it also breaks no economic rules with regards to charging for a null or negative value proposition. Neither does it have the potential to set a government against its own people. The entire subject of Emissions is obviated by it and hence any need to contemplate a Carbon Tax of any description.
I trust that this effort has been helpful and that I might receive some feedback. Hopefully to that effect.
Thank you
Julian Cox.
Any question or comment that is not for republication, my PM function here is regarded by me as strictly private.
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