Climate policy expert says subsidies for Tesla and other EV companies "one of the worst ways to cut carbon emissions"

Mar. 17, 2021 5:40 PM ETTesla, Inc. (TSLA)By: David Jackson, SA News Editor1.13K Comments

• Dr. Bjorn Lomborg has been speaking and writing about climate science for almost 20 years. His specialty is not climate science itself, but the policies to address global warming and other problems. He is president of the Copenhagen Consensus Center, visiting fellow at the Hoover Institution at Stanford University, and visiting professor at Copenhagen Business School.
• According to Wikipedia, "He became internationally known for his best-selling and controversial book, The Skeptical Environmentalist (2001), in which he argues that many of the costly measures and actions adopted by scientists and policy makers to meet the challenges of global warming will ultimately have minimal impact on the world's rising temperature... His issue is not with the reality of climate change, but rather with the economic and political approaches being taken (or not taken) to meet the challenges of that climate change."
• Here's what Dr. Lomborg said about electric vehicles in a recent interview, edited for clarity:
• "Electric cars are this icon of us doing something about global warming. Now remember, electric cars are actually good for the environment. They emit less CO2 on average -- even if they charge from a coal-fired power plant -- but not by very much, because you still have to build them. Much of their batteries are incredibly energy intensive, typically done in China with lots of coal-fired power. So the reality is that these cars will typically, over their lifetime, cut maybe 10 tons of CO2. Now, to most people that doesn't mean anything. But actually, on the standard marketplaces for CO2 emissions in the U.S, you could cut a similar amount for $60 right now. So spending $7,500 on subsidies to get that amount over even ten years is a really bad idea. Again, it's not to say that the intention is not good but it's a very, very poor incentive. It's one of the worst ways to try to cut carbon emissions."
• "They [electric vehicles] will have fairly little impact [on climate], certainly over the next 10, 20, 30 years. They will eventually take over a significant part of personal mobility -- and that's great. There are lots of benefits to an electric car, but only once they've gotten cheaper. And that of course goes to GM's point. Mary Barra, the CEO of GM, is basically saying "Yes, I'd love to sell a lot of [electric] cars for Biden, especially if he's going to give me $7,500 [in subsidies] for every car I sell and even more maybe." Look, there's clearly a lot of private incentive if there's all this subsidy money out there. But we have to be realistic."
• "The electric vehicle is a very, very rich world phenomenon. It's very much rich people in a rich world who are thinking "Oh, I have a house and I can just recharge my electric car in my garage." What do all the people who live in apartments or in cities do? That's much, much harder. And then finally, of course, it's very costly right now. Electric cars are typically much more costly. That's why you need the subsidy. And so it's extra grating when you hear that this is going to help the world's poor or just the poor in the U.S. The reality, of course, is that most green subsidies go to the rich."
• "By far the biggest amount of subsidies from electric cars go to the very richest in the U.S, because they're the only ones who could consider buying an incredibly expensive Tesla. They then get a lot of subsidy from both the American state and from the Californian state, and also get the chance to drive in the carpool lane and everything."
• "People love to emphasize Norway, because in Norway, of new cars, more than half are now electric. People are saying "See, they're leading the way." The reality is that Norway is giving so much in subsidies, both in direct subsidies and that they don't tax these cars, and that they [the owners] get  both carpool lanes, they get cheaper parking, they get cheaper ferry [transport], which is a big thing in Norway. So if you add all of that up, it turns out that for a car that costs $30,000, you possibly get around $26,000 in subsidies. So sure, it makes sense for anyone who could possibly want an electric car to buy an electric car in Norway. But obviously most people who are not Norwegian, possibly even the Norwegians, can't afford this in the long run. And also, almost all of the people in Norway who buy an electric car already have a gasoline car for when they actually need to drive long distances. But then they can do the shopping in the electric car and feel virtuous. Let's just think about Norway. The reason why they can afford all this is because they get rich from North Sea oil."
• Related stocks: Tesla (NASDAQ:TSLA), NIO (NYSE:NIO), Nikola (NASDAQ:NKLA), Ford (NYSE:F), GM (NYSE:GM), Toyota (NYSE:TM), Honda (NYSE:HMC), Li Auto (NASDAQ:LI), Plug Power (NASDAQ:PLUG), FuelCell Energy (NASDAQ:FCEL), Ballard Power Systems (NASDAQ:BLDP), FuelCell Energy (OTCPK:FCELB), Workhorse Group (NASDAQ:WKHS).
• Related ETFs: VanEck Vectors Low Carbon Energy ETF (NYSEARCA:SMOG), iShares S&P Global Clean Energy Index ETF (NASDAQ:ICLN), ALPS Clean Energy ETF (BATS:ACES), First Trust NASDAQ Clean Edge Green Energy Index ETF (NASDAQ:QCLN), Invesco WilderHill Clean Energy Portfolio ETF (NYSEARCA:PBW).
• Related: President Biden recently reiterated his plan to replace all federal vehicle fleets with electric vehicles.