Tag: technology

Report calls on Washington to regulate CO2-removal industry

A report by the Carbon Removal Alliance, a non-profit representing the industry, outlined ways to improve monitoring, reporting and verification in the U.S.

This article was written by Isabella O’Malley and was published in the Toronto Star on October 24, 2024.

The unregulated carbon dioxide removal industry is calling on the U.S. government to implement standards and regulations to boost transparency and confidence in the sector that’s been flooded with billions of dollars in federal funding and private investment.

A report Wednesday by the Carbon Removal Alliance, a non-profit representing the industry, outlined recommendations to improve monitoring, reporting and verification. Currently the only regulations in the U.S. are related to safety of these projects. Some of the biggest industry players, including Heirloom and Climeworks, are alliance members.

“I think it’s rare for an industry to call for regulation of itself and I think that is a signal of why this is so important,” said Giana Amador, executive director of the alliance. Amador said monitoring, reporting and verification are like “climate receipts” that confirm the amount of carbon removed as well as how long it can actually be stored underground.

Without federal regulation, she said “it really hurts competition and it forces these companies into sort of a marketing arms race instead of being able to focus their efforts on making sure that there really is a demonstrable climate impact.”

The non-profit defines carbon removal as any solution that captures carbon dioxide from the atmosphere and stores it permanently. One of the most popular technologies is direct air capture, which filters air, extracts carbon dioxide and puts it underground.

The Inflation Reduction Act and the Bipartisan Infrastructure Law have provided around $12 billion (U.S.) for carbon management projects in the U.S. Some of this funding supports the development of four Regional Direct Air Capture Hubs at commercial scale that will capture at least one million tons of carbon dioxide annually.

Some climate scientists say direct air capture is too expensive, far from being scaled and can be used as an excuse by the oil and gas industry to keep polluting.

Gernot Wagner, a climate economist at Columbia Business School at Columbia University, said this is the “moral hazard” of direct air capture — removing carbon from the atmosphere could be utilized by the oil and gas industry to continue polluting.

“It does not mean that the underlying technology is not a good thing,” Wagner said.

Direct air capture “decreases emissions, but in the long run also extends the life of any one particular coal plant or gas plant.”

Jonathan Foley, executive director of Project Drawdown, doesn’t consider removal technologies to be a true climate solution.

“I do welcome at least some interventions from the federal government to monitor and verify and evaluate the performance of these proposed carbon removal schemes, because it’s kind of the Wild West out there,” Foley said. “But considering it can cost 10 to 100 times more to try to remove a ton of carbon rather than prevent it, how is that even remotely conscionable to spend public dollars on this kind of stuff ?” he said.

The future of the car remains all-electric

This opinion was written by David Olive and was published in the Toronto Star on October 19, 2024.

The end game is battery electric vehicles, and not just because prices will come down with ever-improving technology and reduced range concerns with expanded charging networks, David Olive writes.

Don’t believe the hype about hybrid gas-electric vehicles. It won’t last. All-electric vehicles are the future.

Worldwide sales of new cars running purely on batteries (battery electric vehicles, or BEVs) outsold plug-in hybrid electric vehicles (PHEVs) by more than two to one last year.

But PHEVs have been closing the gap. In the first seven months of 2024, global PHEV sales jumped by almost 50 per cent year over year, while BEV sales increased by just eight per cent.

During a global economic slowdown, and with high borrowing costs, strong sales for hybrids priced lower than BEVs were to be expected.

And for the many car buyers still worried about range between charging stations, a PHEV with two powertrains, one gas and one electric, keep the vehicle running after its battery-powered engine runs out of juice.

In July, the average price for a new BEV was $74,043 compared with the $65,590 average for all new cars, according to Autotrader, an online marketplace for vehicles.

Ford Motor forecasts that it will lose about $7 billion on its electricvehicle production this year as demand for BEVs has waned.

BEVs cost more because of their much larger and more expensive batteries than PHEVs.

BEVs with about 640 kilometres of range achieve parity with the median range of gas-powered vehicles. A typical PHEV’s small battery provides about 60 km of range.

In fairness to the Western legacy carmakers, China’s BYD, the world’s biggest maker of electric vehicles, had a head start of more than two decades in making BEVs.

So did Tesla, the second-largest maker of all-electric vehicles, which has been developing only BEVs since its inception in 2003.

It wasn’t until the late 2010s that GM, Ford, Volkswagen and other legacy automakers began to commit to electric vehicles.

The legacy automakers have relied on the expedient of outsourcing software and other electric-vehicle components to third-party suppliers. By contrast, Tesla and BYD have kept their supply chains largely in-house.

The result for legacy firms has been delays in new products due to technological challenges not easily solved when you don’t fully control your supply chain.

Several legacy automakers have scaled back their electric-vehicle ambitions this year, including GM, Ford, Mercedes-Benz and Volvo.

But the end game is BEVs, and not just because prices will come down with ever-improving battery technology and reduced range concerns with expanded charging networks.

Prices of BEVs are falling faster than the average for all cars. In July, the average BEV price dropped almost 15 per cent over the previous year, while the decline in the average price for all new cars declined by just 0.7 per cent.

And Canada’s charging network grew by about 30 per cent last year, to 27,181 chargers at 11,077 locations across the country.

Analysis of real-world driving conditions shows that PHEVs consume between 46 per cent and 67 per cent more gasoline than advertised, according to the International Council on Clean Transportation (ICCT), a Washington think tank.

And “PHEVs cannot deliver the same climate benefits as BEVs,” the ICCT says.

“No matter the latest headlines, the future of the American car remains fully electric.”

What most threatens future sales growth of PHEVs is government mandates requiring automakers to transition to fully electric vehicles.

Canada is targeting 100 per cent zero-emission light-duty cars and trucks by 2035, with interim targets of at least 20 per cent by 2026 and at least 60 per cent by 2030.

Led by California, the market that most influences global automakers, 17 U.S. states have mandated that only 20 per cent of new-vehicles sales can be PHEVs by 2035. The rest must be all-electric by that time.

And the European Union (EU), like Canada, will ban the sale of all gas-powered vehicles, including hybrids, by 2035.

With that phaseout of PHEVs on the horizon, automakers have incentive to apply almost all their financial and technological resources to making better and more affordable BEVs.

Given the lengthy development cycle for new vehicles, automakers are risking their future the longer they wait to go all-electric.

French automaker Renault isn’t taking that chance, recently announcing plans for new BEVs priced lower than its current models.

The apparent retreat from BEVs is actually a pause.

For example, Volvo isn’t scrapping its plans to go all-electric. Instead, it has pushed back its target for doing so to 2030 from 2025.

Ford has similarly delayed production of electric SUVs at its Oakville assembly plant by two years to 2027.

Finally, governments and automakers have invested so heavily in BEVs that there’s no turning back.

In North America alone, more than $300 billion has been committed to an electric-vehicle supply chain. By 2027, it will be capable of turning out more than six million electric vehicles per year.

That promises to be a good investment, not least for the higher air quality and quieter city streets it will yield.

GM still committed to EV transition: CEO

This article was written by Jack Ewing and was published in the Globe & Mail on October 18, 2024.

General Motors CEO Mary Barra visited a Spring Hill, Tenn., factory this month to show that the company is serious about electric vehicles.

Automaker is keeping its pledge to phase out sales of gas-powered cars in the U.S. by 2035, Mary Barra says

Electric vehicles have had a hard year. Sales have been disappointing. Former U.S. president Donald Trump has regularly disparaged them. And even many environmentally conscious car buyers have been choosing hybrids instead.

Yet the chief executive officer of General Motors Co., Mary Barra, says the company is still committed to doing away with combustion-engine cars in the United States by 2035 – and she may have good reason for her optimism.

GM says it will start making money on battery-powered models by the end of the year – becoming the only U.S. automaker aside from Tesla Inc. to achieve that feat. Sales of GM’s electric vehicles are starting to take off. And the company just introduced a model that sells for less than US$30,000 after a federal tax credit.

GM and other manufacturers have delayed investment in electric-vehicle projects. But in an interview, Ms. Barra rebuffed the notion that the transition from internal combustion has run out of juice. She said GM was determined to uphold its 2021 pledge to phase out sales of gasoline cars by 2035 in the U.S.

“That is the plan we’re still executing,” she said.

Her expression of resolve comes at a critical moment. Without GM, the largest U.S. carmaker, it is unlikely that the country can move away from internal combustion engines and the greenhouse gases they emit.

Tesla has largely driven the growth of electric vehicles. But lately, the company’s sales have slowed, and its CEO, Elon Musk, has sought to focus the company on long-shot plans to build autonomous taxis and humanoid robots while saying little about new consumer models.

Ms. Barra went to Spring Hill, Tenn., south of Nashville, this month to show that GM was serious about electric vehicles and to reassure investors that they could make money on them.

GM has retooled a plant in Spring Hill to produce electric Cadillacs and has built an enormous battery factory nearby. It has invested more than US$4-billion as part of a plan to build electric vehicles in numbers that will drive down sticker prices while increasing profit margins.

The latest GM electric cars and trucks can travel more than 480 kilometres on a charge, and one – the Chevrolet Equinox – lists at US$35,000 before a US$7,500 federal tax break.

In 2022, two years into the pandemic, new electric vehicles were quickly snapped up. That is no longer true, but U.S. sales of such cars and trucks still grew about 11 per cent in the third quarter from a year earlier. Electric vehicles now account for 9 per cent of the new-car market, according to Kelley Blue Book, and some analysts expect them to hit 10 per cent by the end of the year, up from 8 per cent in 2023, as the Equinox and other affordable models reach showrooms.

GM did especially well during the third quarter, registering a 60per-cent increase in electric-vehicle sales largely because of new models such as the Equinox and an electric Chevrolet Blazer. One in five Cadillacs sold in the U.S. from July through September was electric.

Tesla still sells five times as many electric vehicles as GM does. But given the early stage of this new technology, analysts said, Ms. Barra’s main competition is Ford, Hyundai and other established automakers that are competing for the same customers as GM.

“They don’t have to beat Tesla,” said Tom Narayan, an analyst at RBC Capital Markets who follows the auto industry. “They just have to beat everybody else.”

Ms. Barra’s personal commitment to electric vehicles was on display late last year when problems manufacturing a key battery component stalled production.

Earlier in her career, all of it spent at GM, Ms. Barra oversaw all the company’s production machinery. She drew on that expertise, spending “many days,” she said, alongside engineers in a Detroit factory who were trying to fix an assembly line critical to battery manufacturing. Ms. Barra said she wanted to “understand the situation – ask questions and then get them the support they needed.”

Once that problem, which involved packaging battery cells into modules, was solved, GM swiftly increased production at battery factories in Spring Hill and in Warren, Ohio. Both those factories, and a third under construction in Lansing, Mich., are part of a joint venture with LG Energy Solution of South Korea. GM is planning a fourth battery factory, in New Carlisle, Ind., with Samsung Electronics Ltd., another Korean manufacturer.

GM has recruited several senior executives from Silicon Valley for technology expertise. In June, the company hired David Richardson from Apple Inc. to lead software development, an area where most carmakers have struggled. Kurt Kelty, a former high-ranking executive at Tesla and Panasonic Holdings Corp., a big battery supplier to Tesla, joined GM in February as vicepresident in charge of batteries.

GM has also locked in a steady domestic supply of lithium, a metal critical to batteries, by investing in a Nevada lithium mine called Thacker Pass.

Big car companies such as GM have struggled to move as quickly as Tesla, and some industry observers remain skeptical.

The United States, where GM is strongest, accounts for only 11 per cent of global sales of electric vehicles. China, where GM has struggled, accounts for 69 per cent. Even if GM makes gains in EVs in the U.S., “they are going to be leading sales in a market that is still moving slowly,” said Karl Brauer, executive analyst at iSeeCars, a used-car website.

Strong sales of gasoline and diesel vehicles have helped GM ride out fluctuations in electricvehicle demand, Mr. Kelty noted. “Maybe I shouldn’t say that,” he said, “but it’s bringing in a lot of profits that enable us to do some really creative things and really invest in the future.”

The Spring Hill battery plant, with automated assembly lines overseen by workers dressed in grey full-body suits to protect the sensitive machines from contamination, has allowed GM and LG to become one of the biggest makers of batteries in the U.S. That puts the company in a position to reap cost savings that come with mass production.

Ontario taken to court over lax recycling enforcement

Provincial regulator calls Environmental 360 Solutions’ action ‘misguided’

This article was written by Ana Pereira and was published in the Toronto Star on October 4, 2024.

A worker loads tires at the Environmental 360 Solutions tire recycling plant in Barrie, Ont. The company helps manufacturers, brands, importers and retailers fulfil recycling requirements.

The province’s largest recycler of tires and batteries is asking the Ontario Superior Court to order the government and its recycling regulator to enforce their own laws against giant manufacturers who are failing to meet green obligations.

Environmental 360 Solutions, a producer responsibility organization (PRO) that helps manufacturers, brands, importers and retailers fulfil recycling requirements, says the industry regulator’s “unwillingness” to enforce the law is putting the entire recycling system — and the environment — at risk, according to a notice of application filed in late September.

It maintains the government needs to overhaul management of the Resource Productivity and Recovery Authority (RPRA), which oversees Ontario’s recycling laws.

In an emailed statement to the Star, a RPRA spokesperson called the court action “misguided,” adding that “none of E360S’ legal maneuverings will distract us from continuing to enforce the legal requirements set out in Ontario’s regulatory framework for recycling.”

The Ontario Ministry of the Environment, Conservation and Parks said it is reviewing the notice, but refused to comment further as the matter is before the court.

None of the allegations have been proven in court.

But Environmental 360 Solutions is already reducing shifts and laying off employees at its tire recycling plant in Barrie due to a decline in recycling activity in the province, says company vice-president Andrew Horsman. Soon it might have no option but to shut down the facility for good.

For Ontarians, “the real consequence here of this failure to enforce is that not only are we not advancing” on the recycling front, said Horsman, “we’re moving backwards.”

Ontario’s recycling programs have been in turmoil since the Ford government implemented new rules for tires in 2019 and batteries in 2020, making producers of the materials responsible for operating and paying for such programs, and becoming the first province to abandon a government-run oneprogram model for waste management.

Ever since, the biggest producers of tires have fallen short of annual collection targets, according to RPRA data. Producers are required by law to retrieve 85 per cent of the weight of tires they supply to the market, or roughly all tires supplied assuming they become lighter after use. In 2022, the latest year for which RPRA data is available, the collection rate was 81 per cent.

Meanwhile, certain battery producers failed to make “best efforts” to meet their minimum management requirements in 2022, according to the RPRA. In fact, PROs reported retrieving 12 per cent of the supply for single-use batteries and 13 per cent for rechargeable ones, versus the RPRA’s 40 per cent target for both categories.

Under both tires and batteries regulations, producers that don’t meet their targets can purchase credits from those that over-collect and recycle to comply with the law. Environmental 360 Solutions says it generates more credits than its producer clients need. But without enforcement, the recycler says it is facing financial harm because other PROs have no incentive to purchase the extra credits.

“We are collecting tires, collecting batteries, bringing them back to our facilities, processing them, and, under a properly functioning market, we would then sell the surplus activity,” Horsman said.

But now, without the “obligation to make sure recycling happens, nobody’s prepared to pay for those recycling services,” he added.

Most producers of tires and batteries in the province have partnered with two main PROs: eTracks Tire Management Systems, for tires, and Call2Recycle, for batteries. Both companies control the majority of market share for recycling management of those materials.

Call2Recycle declined to comment for this story.

Steve Meldrum, CEO of non-profit eTracks, said the company had routinely purchased credits with Environmental 360 Solutions until 2023. But since January, he said the PROs haven’t been able to agree on a price for the credits.

“We want to do the right thing and buy every credit that’s available,” Meldrum said. “This is the first year that a PRO has gone out … to overcollect and then try and force the sale back.”

Meldrum said Environmental 360 Solutions’ pricing is roughly double of what the other three PROs agreed to charge eTracks.

Horsman, however, said Environmental 360 Solutions’ service costs as the province’s largest PRO and recycler have indeed increased, mainly because it now has to move tires out of province due to declining recycling capacity in Ontario.

In August, eTracks wrote a letter to Environment Minister Andrea Khanjin along with General Motors, Ford, Pirelli, Michelin and others. The letter obtained by the Star urges Minister Khanjin to amend the tire regulation by 2025 to prevent “unintended marketplace behaviour that benefits neither the environment, nor Ontarians.”

The government is currently conducting public consultation as part of the larger process of amending the tires and batteries recycling regulations.

Maury Shnier, founder and president of Mobius PRO, agrees that the regulation as it stands creates a lot of uncertainty for everyone involved and needs to be clearer.

“How it impacts consumers in Ontario is, the intended regulations are meant to create a competitive marketplace. But … the marketplace is not terribly competitive,” he said. “It’s not a real hospitable place to invest.”

EV MARKET GETS A JOLT

This article was written by Jack Ewing and Neal E. Boudette, and was published in the Globe & Mail on October 3, 2024.

Tesla said Wednesday that it delivered 463,000 vehicles from July through September, up from 435,000 a year earlier. Slumping EV sales have prompted some car makers to scale back their investments.

Tesla has posted its first quarterly increase in global sales this year, a possible sign that demand for electric vehicles may be recovering

Automaker has lost market share as rivals increase offerings, but still saw global sales rise 6.4% in the third quarter

Tesla Inc. said Wednesday that its global sales of cars and trucks rose 6.4 per cent in the third quarter, the first quarterly increase the company has reported this year and a sign that demand for electric cars may be recovering as interest rates fall.

The automaker delivered 463,000 vehicles from July through September, up from 435,000 a year earlier, offering hope to investors that the company’s sales have stabilized after falling in the first half of the year.

The sales data were just below the expectations of Wall Street analysts, and Tesla’s share price was down about 3.5 per cent on Wednesday.

Tesla boosted sales in part by offering 2.5-per-cent financing to qualified buyers in the United States, well below the market interest rate. It will be easier for the company, which is led by Elon Musk, to offer cheaper financing after the Federal Reserve cut interest rates by half a percentage point in September, the first of what is expected to be a series of cuts. Central banks in Europe, China and elsewhere have also been lowering rates.

Interest rates determine the size of monthly car payments and are often more important to buyers than sticker prices. That’s why many analysts think car sales in the U.S. in particular could rise as the Fed cuts rates more.

“There is a contingent of folks who are going to say, ‘Now is not the right time to commit $50,000 to a new vehicle,’ ” said Charles Chesbrough, a senior economist at Cox Automotive, a research firm. “They may just decide to wait a few months until after the election, until after the Middle East calms down, until they see if the Fed cuts rates further.”

Tesla’s share of electric-car sales has fallen as rivals such as General Motors Co., Hyundai, Ford Motor Co. and BMW have offered more battery-powered models. But Tesla still accounts for almost half of electric-car sales in the U.S. and sets the tone for the market there and in other countries.

Sales of electric cars, while still growing, have fallen short of expectations and prompted GM, Ford, Volvo and others to scale back or slow down investment in electric-vehicle production. A rebound in Tesla’s sales could signal faster growth of electric models, a pillar of efforts by the Biden administration to fight climate change.

On Tuesday, GM said sales of its electric models in the United States in the third quarter jumped 60 per cent from a year earlier, to more than 32,000. The company’s U.S. sales of all vehicles fell about 2 per cent in the quarter.

On Wednesday, Ford reported a 12-per-cent increase in U.S. electric-vehicle sales in the third quarter, to about 23,500, and a 0.7-per-cent gain in overall car and truck sales.

Tesla still faces significant challenges and questions about its strategy. The company’s sales have recovered in China, the largest car market in the world. But the Chinese auto market is very competitive, and many automakers are losing money or earning meagre profits there.

In Europe, electric-vehicle sales are slumping after Germany slashed subsidies for buyers. Tesla remains reliant on just two cars – the Model Y sport-utility vehicle and the Model 3 sedan – for most of its sales, while rivals such as GM and Hyundai-Kia offer more choices, newer designs and often lower prices.

GM’s bestselling battery-powered model is a new electric version of the Chevrolet Equinox SUV. GM sold more than 9,700 in the third quarter, and this week started selling an entry-level model of that car that starts at US$35,000 before federal and state breaks. The cheapest Tesla Model Y sells for about US$45,000 before tax incentives.

In addition to selling cars that are more expensive, Tesla appears to be struggling because Mr. Musk has alienated many potential buyers with his provocative statements on X, the socialmedia site he owns, and his vocal support of former U.S. president Donald Trump and conservative causes. Centrist and left-leaning consumers are much more likely than conservatives to buy electric cars.

Mr. Musk has staked the future of Tesla on autonomous driving, while saying little about plans for new models.

On Oct. 10, the company plans to unveil a self-driving taxi, but analysts are skeptical that Tesla is as close as Mr. Musk says to developing a vehicle that can navigate without human intervention.

There is speculation that Tesla will also unveil a cheaper passenger car on the same day, expanding the number of people who can afford a Tesla. The company has said it is working on a such a product, but it has not confirmed that it will show the vehicle this month or when it might go on sale.

Tesla boosted sales in part by offering 2.5-per-cent financing to qualified buyers in the United States, well below the market interest rate.

A new challenge: Profiting off the energy transition

This article was written by Clyde Russell and was published in the Globe & Mail on September 26, 2024.

There’s no clear choice, and no real consensus on where the best opportunities lie

Mining investment conferences have a great track record of pointing to the next growth area for commodities, as they bring together early stage investors and junior miners seeking to get projects off the ground.

A decade ago lithium was the popular metal, five years ago it was the turn of gold and more recently copper has been the flavour of the month at these events across Asia.

But at the 121 Mining and Energy Investment conference this week in Singapore there was no clear choice, and no real consensus on where the best opportunities lie.

If there was a broad theme, it was that the energy transition is real and happening, even if it will take place at varying speeds and in different forms across Asia, the world’s most populous region and the engine room of global economic growth.

But how best to leverage the energy transition into profitable investments is turning into a vexing challenge for both those with cash to splash and those seeking to develop projects aimed at accelerating the change to cleaner fuels and power systems.

One of the surprising metals on the radar screen at the conference was lithium. It went out of favour in recent years after a surge in investment took the market into surplus, resulting in a collapse of prices, which have dropped some 88percentsincereachingarecord high in December, 2022.

The thinking is that while the lithium market is currently oversupplied, and this may persist into 2025, there is a wave of new demand coming.

Much of the bearishness surrounding lithium has been about the slower-than-expected uptake of electric vehicles in the developed world.

But while sales may have been disappointing, lithium demand is set for strong increases in the next few years as electric heavy vehicles enter service, and as battery storagetofirmrenewablessuchas wind and solar become more widespread.

It’s this demand for lithium that will end up trumping any weakness in EV car sales, and it’s set to accelerate strongly by 2030, which is coincidently around the time a mining company may be able to bring on new production assuming they started development soon.

Another out-of-favour commodityiscoal, buttherewasinterest expressed in metallurgical, or coking coal, the higher quality fuel used mainly to make steel.

In effect this is an India play, with the expectation that as it continues its massive infrastructure build out, the South Asian nation will also produce more steel, and thus need to import coking coal given the lack of domestic resources.

While coal is the bogeyman of climate change, the view among some investors is that given the energytransitionreliesheavilyon steel, coking coal can be acceptable given its role in producing steel.

Steel can be de-carbonized by upgrading iron ore using green hydrogen and then using electric arc furnaces, but the view is that this will take several decades to reach the scale needed, and in the meantime the coal-intensive, traditional basic oxygen furnace method will dominate in India, as it does in China.

Another part of the commodity complex attracting investor interest is the midstream sector, where raw materials are processed into intermediate goods.

The desire of Western countries to diversify away from China’s dominance of metal processing is unlocking opportunities, such as the capital available from the U.S. Inflation Reduction Act.

The trick is navigating the bureaucratic processes behind the various global legislations, and even if the money can be accessed, it still may not be enough to overcome China’s economies of scale and first mover advantages.

For example, setting up a lithium processing plant in Australia, the world’s biggest producer of thebatterymetal, islikelytocome in at up to eight times the capital and operating cost of a similar operation in China.

Accessing capital remains an ongoingstruggle, withbothinvestors and miners saying the pools of available capital are shrinking, especially if Chinese money is deemed politically unacceptable.

The bottom line is that the energy transition is viewed as offering huge opportunities to miners, traders and investors, but it remains plagued by uncertainty over which technologies will emerge as the leaders, and also the lack of co-ordinated government policies such as incentives and carbon pricing.