While many large companies are working on plans to reduce their carbon emissions, one of the darlings of Green Investing is working to increase its emissions footprint.
You read that right. Thanks to its explosive expansion in China and a planned car plant in India, Tesla Inc. It is in the process of increasing the total amount of its emissions — the most inevitable consequence of growth in our current carbonized world — increasing the amount of pollution each of its vehicles also produces.
Car manufacturers’ emissions are not just a product of the energy they consume in their factories — they are the result of pollution, which they send around their products. Thanks to all the gasoline and diesel burned during the lifetime of the cars they sell, the Volkswagen AG oil producer is responsible for more greenhouse gases than Total SE. Toyota Motor Corporation’s footprint is higher than BP PLC. And Cummins Inc., which makes engines for commercial vehicles, owns more than ExxonMobilCorp.
Electric vehicles sold by Tesla have a significant advantage over that front. As my colleagues Liam Denning and Elaine wrote, they are very effective at converting the energy they produce into vehicle energy, even on coal-heavy grids like China, which are more efficient than their gasoline counterparts.
However, the differences from one country to another are significant.
Take the life cycle emission calculator produced by Transport & Environment, a European non-profit organization dedicated to zero-carbon transportation. The current-model large car with the average EU country-produced and charged battery emits 88 grams of carbon dioxide per kilometer, compared to the equivalent of 284 grams of petrol-powered. In a country with a low carbon grid, such as Sweden or France, it drops to 50 grams or less.
If you use a proxy for a high-emission grid like China or India, the picture will change significantly. A car made in China and charged in Poland, it contains two-thirds of the coal in the electric mix, as in China and India, at 193 grams per kilometer.
An important aspect of the weather potential of electric vehicles is that they will be able to switch to low-carbon fuels during their lifetime, as heavily emitted power plants will be disconnected from the grid and replaced with renewable energy. That process is likely to happen much faster in developed countries — but in two countries where Tesla hopes to catch up with China and India, it will be unusually slow.
As a result, Tesla sells more cars in China and India, increasing its emissions intensity-to-vehicle emissions or dollar revenue.
Maybe it doesn’t matter. Any electric vehicle sold anywhere in the world can be an alternative to those that run on petrol or diesel. Weather requirements are to increase the market share of battery-powered vehicles to the traditional ones. That means it still sells a lot in markets where the immediate greenhouse benefits are lower than those in the US and Western Europe, which is still balanced.
However, this is information that climate-focused investors who drive Tesla’s stock prices so much should give, so they can make their own decisions about how their shareholders will reflect their own emission-reduction commitments.
Not so at Tesla. This not only exposes Scope 3 emissions (the dominance of emissions from the cars it sells), it also does not expose Scope 1 (from on-site electricity consumption) or Scope 2 (from purchased electricity). It does not even reveal its power consumption, and its behavior indicates, for all rhetoric, that it is certainly not a priority. Four years after production began at the Gigafactory battery plant in Nevada, solar panels are still being gradually added to cover its roof and help it remain independent of Nevada’s gas-fired grid.
Companies that make products to speed up the transition to clean energy while providing their own carbon footprint documentation may be better than substitutes — they offer idealistic historical statements, but only vague guarantees of how their net-zero commitments are going to be fulfilled.
However, a clean-energy business with a market cap equivalent to the S&P 500’s total oil and gas sub-index must have the ability to generate information that will help investors raise their minds. Tesla’s slapdash emissions stain on otherwise impressive record. A company that promotes solar energy should not hide the footprint of its own activities in the shade.
David Fickling is a Bloomberg opinion columnist who covers industrial as well as consumer and consumer organizations.