I got into this debate, related to Global Warming, on the “Amazon is sometimes referred to as the Lungs of the world.”
Here’s a very readable discussion in Newsweek on how much oxygen comes from the Amazon: https://www.newsweek.com/how-much-oxygen-amazon-rain-forest-1456274
Much like Global Freezing, I don’t know that I have ever heard/seen an actual scientist say this, but the Lungs of the World is still a pretty well circulated myth. Some times it says 20% of the oxygen in the world is produced by the Amazon Rain Forest. Actually, this is probably true, however the rainforest consumes most of the oxygen it produces. Plants (decomposition) consume it, animals in the forest, not so much so. Oxygen in the atmosphere is about 21% (20.95%, actually). And that’s not going to change much, even if the Amazon was burned to the ground… Carbon Dioxide (CO2) on the other hand, that’s not so pretty.
There’s massive amounts of carbon stored in the trees and peat. That would all get moved from a stored state into the active environment (air and ocean). Same as chopping down 500 year-old native trees and burning them without replanting the same. Same as digging up coal that took 500m years to form and burning it (except that there’s no way to return the coal in coal back to the sync from whence it came).
So, when the amazon is converted to grassland and ranching, the original carbon store is released into the atmosphere and the ability to store carbon (sync) is broken. Yes, grass is green, but it does a horrible job related to carbon sequestering compared to trees. Plus cows have a habit of belching and farting that releases a wicked amount of methane (32 to 64 times as potent a greenhouse gas as CO2).
Of course, there horrific impact on the environment. You could easily call this a crime against humanity and against the environment when native populations are killed and displaced and the rainforest with all it inhabitants of plants and animals are killed and destroyed forever.
National Geographic talks about the same issue, but follows on to discuss biodiversity: Why the Amazon doesn’t really produce 20% of the world’s oxygen: Of the many important reasons to worry about the thousands of fires raging in the world’s largest rainforest, oxygen supply is not one of them.
Author: SustainMe
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Amazon? Lungs of the world? Sinking feeling?
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EV on SB2020
EVs, aka Electric Vehicles, were the big winners of the
Super Bowl 2020. Everybody had an electric car for the occasion. Audi and even
a new EV version of the gas-guzzling Hummer.Imagine the king of EVs, Tesla,
jumping $130 per share on Super Monday! TSLA popped 20% up to almost $800 per
share, nearing a $150B market cap firmly – 3 times the value of GM. Then on
Super Tuesday, Tesla jumps another $100 to reach over $900 (to $164B market
cap). Arguably, there are a few extra factors making Tesla’s stock pop: an
upgrade and short squeeze. Maybe a little overpriced?Tesla has a market share of about
1.5%, so… it does have room to run. But only if you believe that we have
reached an inflection point where a shift to most or all cars will be electric.
Fortunately, the charging stations are now pretty will established.But, the average age of cars on
the road today are 11 years old. Even if we move to 50% EV in 10 years, it will
take decades for half of the cars on the road to be electric. Longer, of course,
for trucks because they are just now starting to ship.Still, the trend toward EVs is
definitive. Everyone has a few. Some auto manufactures are no longer
introducing new gas or diesel models.You would think that the drop of
oil prices (down to $50 for WTI) this week on the corona virus scare might be a
boost to gas models?Related to market cap, remember
that Tesla bought sister company Solar City so it does solar systems and
battery banks (PowerWall). Tesla GigaFactories crank out batteries (with
partner Panasonic). With the cost of batteries dropping, both EV and storage
become more and more affordable. The big thing to look for in battery
technology is the move to safer and/or more powerful technology. Big break
throughs in battery tech – cheaper, better, lighter – will be game changing.
Tesla stands to win in every case, old lithium or new whatever.I could not bring myself to buy
Tesla stock at $200 in June; over $900 is nose-bleed levels today. But, it does
suggest a momentum shift to EVs in our future. -
Opportunity Lost by Waiting until 2020 for Solar Investment
[UPDATE: 30% Investment Tax Credit on renewables in the
IRA Act 2022. See our Blog post here. This makes all the financial discussions
below much more profitable. Also, higher inflation and higher power inflation.]The Renewable Investment Tax Credit, which is currently in
2019 at 30% of the qualifying investment, is a wonderful incentive to put in
renewable power including solar, wind and qualifying battery backup. The ITC
will drop down by 4% in 2020 and then again by 4% in 2021. After 2021, the ITC
drops off a cliff, to 10% for businesses and zero (0%) for residential. Here is
the stepdown in Solar Investment Tax Credit (ITC): https://seia.org/initiatives/solar-investment-tax-credit-itc
You can still get your foot in the door on the tax credits
in December. The “Safe Harbor” on ITC pertains to launching the investment in
the current year and locking in that higher level of tax credit. The safe
harbor allows businesses to take advantage of the current ITC rate even though
they didn’t allow enough time to fully install this year. Generally, figure 5%
or more down payment in the current year and continuous progress toward the
finished project. One reason for the safe harbor, in general, is that someone
might want to launch in 2020, but there is such an end-of-year demand for solar
panels that it is not possible to get them before January 1st.
Winter storms, trade storms, government permits during holidays, etc., might
delay the full installation before the year ends.Safe Harbor requires continuous progress on the solar project,
and there is a fixed deadline when the system must be completed to maintain the
qualification for the higher tax credit. Here are some details on when the
investment must start, and finalize, in order to be eligible for the higher
ITC: https://www.foley.com/en/insights/publications/2019/09/solar-renewable-energy-investment-tax-credits
Solar Example in December of 2019
So let’s work an example for a business that has a $100,000
solar investment in consideration in 2019. (See the table below.)First there’s the $30k tax credit that reduces the business tax
liabilities, dollar for dollar. This is money that you simply do not pay out to
the IRS. Then there’s the possibility of 100% depreciation of an asset in the
first year, so the tax shield is based on the reduction in net income based on
depreciation. (The tax shield is equal to the tax rate times the amount of
depreciation; the asset basis is reduced by half of the ITC, or 33% of $85k in
this example.) Therefore, the actual investment is only about 42% of the solar
system costs, once all the tax benefits of the investment are considered. If
the savings are $7,200 yearly (assuming no increases in power costs), then
there’s a 17% return on investment each year. Simple payback is less than 6
years!
That is crazy profitable for a long-term investment. It is especially
profitable when considering that the business is already committing to paying
for power indefinitely from the power company. So, taking a loan of say 15
years could result in loan payments that are lower than the payments for power,
especially when considering that the power company raises rates (you should
figure at least the rate of CPI inflation). At 2% power inflation, the net
present value (NPV) of the investment jumps to $108k from about $75k (30 years
at 4.5% loan rate).So the investment is profitable. Very profitable. But what
if you want to do the investment next year? What is the cost of waiting? I’m
glad you asked!With the safe harbor on Solar ITC you can lock in the ITC
savings this year. You will need to put 5% down in 2019 and starting progress
on the system. Here’s what your cashflow would look like for 2019: $30k ITC
savings in taxes less the $5k deposit on the solar system. That’s a positive
$25k cash flow this year.
Since the investment tax credit drops by 4% (to 26% in 2020)
the lost ITC is $4,000 if you buy the solar system and take the tax credit in
2020. The $4,000 opportunity loss, compared to the $5,000 deposit in 2019 is only
$1,000 difference. If you plan to do the solar system anyway, then the costs of delay are relatively large, especially when adding a year of power savings. The delay for a year could easily be a loss of $10k or
more in opportunity lost.Solar is a Different Kind of Investment
There are two major points, however, that make this
different from most typical investment analyses. (Three, really, if you were to
discuss the environmental savings, but that’s for another article.) First, the
money your spending is committed money for power as long as the business is
open and operating. Taking a loan to buy the solar system might prove to be
cash positive indefinitely. Take $100,000 loan; pay interest only of $4,500
(4.5%) for first year or two until you realize the tax benefits of the solar
ITC and depreciation; apply the tax savings to the loan; and then make payments
on the loan for 8 years. The loan payments could be about $1,000 less per year
than what you would have paid in electric bills, especially as the cost of
power from the utility company increase over time. Once the loan is paid off,
the price of power that you generate for yourself is pure profit!Speaking of profit, here is the second point. Every dollar
you reduce your power bill is pure profit. Things like smart thermostats, insulation,
weather stripping, adjusting habits/processes, etc. might result in reducing
the power bill by 5% to 25% at little or no out-of-pocket costs. That could
result in a perpetuity of savings. If the firm’s cost of capital is, let’s say 8%,
then the present value of the perpetuity of savings of $1,200 per year
($100/mo) would be $15,000 in present value terms. Plus, being more energy
efficient means that a smaller system is required when going solar.An even more interesting concept related to energy savings
is looking at the sales volume required to equal the $7,200 savings annually.
If the firm has a 10% profit margin, the sales to cover the power bill is
$72,000 per year (once the loan is payed off). In the current loan example,
cash flows (savings really) are positive every year and go up based on power
inflation. When the loan is payed off in year 11 you start to realize huge
savings (profits).By the way, someone buying this property would pay more for
the business because it comes with “free” electricity. A Lawrence-Berkley study
found that some properties would appreciate by 20 times the annual electric
savings. Therefore, the property might be worth about $144k more based on 20
times the $7,200 annual savings. Since the net investment after taxes is about
$42k, the property could appreciate about $102k over the solar investment.
That’s a property appreciation of almost 3.5 times the net investment.In short, the investment in solar power can be crazy
profitable. After January, it is not quite so crazy profitable. But, if you are
planning to go solar in 2020, you need to seriously consider launching the
project in 2019 and reaping the additional tax savings (and energy) savings.About SBP.
Strategic Business Planning Company has been working on various telework, solar
and energy efficiency projects. There are several factors that we consider in a
more comprehensive analysis of a Solar investment that are not represented
here. We also enjoy doing the planning associated with Intellectual Property
(Patents) ventures; look for our Perpetual
Innovation™ line of books on patent commercialization. -
Sustainability at “the Costco”
Costco wholesale club continues to impress. While many other retailers are struggling to stay alive and relevant, Costco keeps chugging along at a 7% sales growth and an impressive 36 Price/Earnings ratio (32 PE based on foretasted earnings), a PE ratio reserved for rapid growing tech companies not the single digit PE where most retailers find themselves. Investors like this safe, rather counter-cyclical, recession-resistant steady growth company(NASDAQ: COST). Note the huge 4.7 PEG rate (multiple of PE to 5-year growth rate) suggesting an over-priced stock. But the company itself is impressive. At $300 per share and a market cap of $132B Costco continues to push all time highs.
Costco is also a big proponent of sustainability. In terms of paper and wood products (and the related requirements for their suppliers and Kirkland-branded products). Read about Sustainable forest products in November 2019 Costco Connection. As a wholesaler/retailer, Costco has to work through their supply chain, especially with the Kirkland-branded products. As it pertains to wood/paper/tissue, they are working through the certification organizations for trees, forest, etc.
“We believe that the best first step is to source these products from
responsibly managed and certified forests. To achieve this, we employ
forest management certifications through three leading groups: the
Forest Stewardship Council (FSC), the Sustainable Forestry Initiative
(SFI) and the Programme for the Endorsement of Forest Certification
(PEFC), with a preference for FSC. Products that have these
certifications have met strict standards to support sustainable forests.”Costco continues to push for better, more sustainable products. You don’t have to go to the “organic” section of the store. Because of their buying power, you don’t have to pay the Whole Foods’ prices to get quality, organic foods. Each year, you find more and more shelves with the only options being “organic”, “sustainably sourced”, etc. You can spend less time reading the labels and more time packing your cart to the rafters!
The consumer has a cost-benefit and consumer-responsibility consideration. Is the special trip to Costco worth the extra time, and is buying a 5-year supply of something — say toilet paper — really the right way to purchase. We often car-pool and share. We don’t need an entire box of printer paper, but dividing the box among 2 or 3 people works great. Kind of leaverage our buying power, while minimizing our footprint.
One thing that you gotta love about Costco, Starbuck’s and other sustainably minded companies is their open statement about trying to figure it out together: “We do not have all of the answers, are learning as we go and seek continuous improvement.“
[Costco’s] Sustainability Principles- For Costco to thrive, the world needs to thrive. We are committed to doing our part to help.
- We focus on issues related to our business and to where we can contribute to real, results-driven positive impact.
- We do not have all of the answers, are learning as we go and seek continuous improvement.
[Costco’s] Sustainability Responsibilities- Take care of our employees.
- Support the communities where our employees and members live and work.
- Operate efficiently and in an environmentally responsible manner.
- Strategically source our merchandise in a sustainable manner.
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Those Sneaky Climate Alarmists
A video came cycling around to me that provided gleeful evidence that the Climate Alarmists use sneaky methods to distort the information and make everyone shake in their boots because the world will end in less than 12 years. This guy, Tony Heller (aka Steven Goddard), even went so far as to create a tool to find the best point in any trend graph for best (mis)representing data.
As with many such reports, I would always like to find myself wrong, and to discover that I’ve become a Climate Alarmist for nothing. All that lost sleep, spending time developing business ideas and models that are both sustainable, politically viable, and profitable.
Sadly, Heller is simply a fraud. He used his own tool to make fun of activists, and to distract people from facts. Here is a great video by Mallan Baker that takes on a couple of Heller’s debunk graphs to debunks the junk.
Why is Heller talking Continental US and pointing at specific US cities when we are talking GLOBAL warming. The US had some wicked hot years during the Dust Bowl, for example.Wikipedia can be the best overview source for highly active and rapidly updated pages like these: Global Warming, Climate Change, Sustainability in general, and Climate Change Denial.
By now you know that everyone knows that there’s global warming. Thermometers tend not to lie.
But I keep finding people who have been convinced that warming is not very much, or that it is a natural cycle to earth, or that humans are only responsible for a fraction of the warming we are experiencing.
Even the oil companies now acknowledge that there’s global warming, but their business model is not conducive to any of the logical approaches to deal with the issue aggressively. In fact, according to internal documents, the oil companies have know for half a century that global warming was a byproduct of their product and hidden this from the public in order to protect their business-as-usual profits.With current technology, we can easily measure the energy that comes from the sun, and the amount that is reflected back into space. All evidence shows global warming is happening, and at an accelerating pace. You can use lots of good data sources related to land, ocean, air, ice coverage, etc. Statistically, solar flares, volcanoes, El Nino and other major factors can be isolated; warming can easily be primarily attributed to human factors.
We don’t have time to debunk the deniers, people and lobbyists who are paid by deep fossil interests. We need to go about becoming more sustainable, like as if our collective lives depend on it. Business-as-usual (oil, gas, coal) is unsustainable. Being unsustainable is something that must change, sooner or later. Being unsustainable has a way of becoming more and more expensive, and coming to an ungraceful end.
Fortunately, we will actually save money (i.e., more profits) from doing smart and sustainable things. Solar and Wind are now far cheaper than fossil fuels in most locations (even when combined with battery). Renewable energy is especially cheaper when considering all the externality costs of fossil fuels (pollution, health, national security).
Energy efficiency offers a perpetuity of savings. The greenest gallon of gas is the one never pumped, refined, shipped and burned. The greenest electricity is the negawatt. We also like Teleworking, the greenest commute is zero-distance which consumes no time.
Let’s all start with those things that can be done immediately (within weeks or a few months) and those that offer a perpetuity of savings. We need to start putting the magic of compounding to our advantage, not toward more non-sustainable practices.
< * Notes & References * >
Wikipedia is a great source on Climate Change. Start with the Global Warming Book.
An excellent source for fact/fiction/myth is: SkepticalScience.com (I’ve never seen anything there that was not supported with sources and provable with current data.)The log entry for Baker video:
A few days ago, noted Climate Change commentator Tony Heller released a
new video with some killer facts that completely exposes the conspiracy
over climate change.Or does it?
Let’s discuss.
The Mallen Baker Show is aimed at all people who see themselves as
change makers, with commentary on issues and change movements with a
particular focus on climate change and environment, social issues, free
speech and corporate social responsibility.
References in this video:
Tony Heller’s original video
https://www.youtube.com/watch?v=8455K…
The National Climate Assessment Report
https://nca2018.globalchange.gov/down…
Extreme heat and cold graphs
https://www.epa.gov/climate-indicator…
Wildfires analysis
https://andthentheresphysics.wordpres…
Interview with Dr Ottmar Endenhofer, IPCC (in German)
https://www.nzz.ch/klimapolitik_verte…Integrated sea ice graph
https://web.archive.org/web/201905241…
Piecing together the arctic sea ice history
https://www.carbonbrief.org/guest-pos…