Tesla, Hyperloop, Impossible Foods, Climeworks : “fake industries” in ecology.

by Clément Fournier Clément Fournier

Tesla, Climeworks, Impossible Foods: and if all the companies supposedly revolutionizing ecology were actually fake industries, unable to be viable in the long run and solve our ecological problems? Explanations.

In recent years, a real craze has attracted start-ups in the field of ecology. The number of companies that offer a product or service with the idea of serving ecological interests, most often based on high technology, innovation, and business models that are more or less ambitious, is now countless. Their promise to all: revolutionize their sector, “uberize” it, be disruptive, all with a product that is supposed to really change the ecological or environmental framework. And who knows, maybe even solve our environmental problems.

There are now dozens of examples: Climeworks, the producer of “CO2 vacuums”, which supposedly capture CO2 from the atmosphere and turn it into fertilizer, Solar Impulse, which promises carbon-free aviation with solar planes, New Wind, which produces urban wind turbines, Tesla and its electric sedans and batteries, Hyperloop and its trains of the future, Space X and its space programs, Impossible Foods which proposes in vitro meat to reduce the impact on livestock, as well as Ehang and its autonomous taxi-drones…

In reading the adventures of these entrepreneurs of the future, everything promises us a bright future. However, in examining reality, it seems that these companies face a number of very difficult challenges. First of all, there are ecological efficiency challenges: most of these companies base their business model on attractive advertising for the media, but the effectiveness in terms of reducing the ecological impact is often very relative. Then there are the economic and social challenges. In fact, some use the term “fake industries”1 because of their inability to develop products that are realistically adapted to environmental markets and realities. In short: they will not save the world. Explanations.

The myth of a high-tech pseudo-ecology

The main problem of many of these companies is that they keep using the myth of high-tech ecology as the answer to all our environmental challenges. Take Climeworks for example. On paper, storytelling seems tantalizing: a machine that sucks CO2 from the atmosphere, stores it in filters, and releases it into greenhouses where it would be useful for agriculture or other industrial processes (to carbonate soft drinks for example). Except that it’s not that simple: for this to work, Climeworks’s Direct Air Capture (DAC) machines require energy and resources (lots of metals, electrical infrastructure), not to mention all the pollution generated by the construction of the infrastructure. A study published by the journal Nature in 2016 estimated that this type of DAC technology would require 12 gJ of energy per ton of CO2 stored if the entire life cycle was taken into account: the energy required to extract the resources needed to build the factory, the energy needed to store this energy, the energy needed to release the CO2 from the filters, transport it, and then use it. All of this equals to more than 3,300 kWh per ton of CO2 stored… Knowing that 3300 kWh of electricity emits about 1.3 tons of CO2 in Europe (more in the rest of the world), this means 1 ton of CO2 stored for 1.3 tons of CO2 emitted: meh.

The same can be said of Tesla for example. In theory, the Tesla model is fascinating: developing 100% electric cars to decarbonize our transport. But is the electric car really environmentally friendly ? Not necessarily! The environmental impact of batteries and the environmental costs of producing cars the size of the Model S for example are high. In addition, Tesla develops sedans, big cars with high energy needs. As a result, an American study showed thata Tesla could in some cases emit more CO2 than a small economy oil car, especially if the energy mix feeding its battery was not decarbonated. This does not mean that electric vehicles pollute more than thermal vehicles, on the contrary. Overall, in the overwhelming majority of cases, electric vehicles emit less CO2. But what is important to remember is that a big car that is very powerful and requires lot of energy (like the current Tesla) is not necessarily the most desirable model for ecological mobility.

Same thing for Hyperloop, boasted everywhere as the future of rail transport: most experts indicate that the energy costs and those of the infrastructures necessary for its construction would render Hyperloop ineffective from an environmental point of view. So, a study that sought to quantify the environmental impacts of Hyperloop in Germany had shown that it would save only 140,000 tons of CO2 per year… The equivalent of 0.018% of the country’s emissions… All at the cost of significant resource consumption for solar panels, infrastructure, energy consumption, and all the while, alternatives already exist within the present rail network. Admittedly, the study is highly speculative (after all, Hyperloop does not exist yet, so it is difficult to know what its real impacts will be), but it allows to relativize certain announcements: in the end, we would reduce German CO2 emissions by 0.018% … only to increase them in other countries (those that produce lithium and solar panels). The balance sheet would be zero or even negative.

Producing meat in a laboratory? The idea is somewhat seducing, but what about the (financial and ecological) costs of producing meat in the laboratory? Would it not be simpler, and more ecological, to rethink livestock management in order to emit less CO2 while reducing our meat consumption to levels that would be both better for the planet and for our health? Traveling by flying taxi, why not, but would not it be better to invest in efficient public transport, which will always be more environmentally friendly than an individual means of transport that costs a lot of energy? Beyond the advertising effect, these questions remain unanswered. In the end, these technological responses are rarely adapted because they require a lot of energy, resources, and materials.

A non-inclusive business model, a niche market

The other question asked by these “fake industries” is that of their economic model, which is far from being inclusive. To be effective, ecology needs to be adapted by all or by the greatest number. Most of these companies offer products or services that are only accessible to an extremely small minority of the population.

Tesla for example, with some models starting at 80,000 euros, are not likely to be adopted by a majority of the population. They will probably remain, for a long time, toys for the richest: the cheapest model available at Tesla is sold for 35,000 euros. That’s over 4 times more expensive than the new best-selling car in France (Dacia Sandero). Same thing for the “F * cking big rockets” of SpaceX (another Elon Musk project) supposedly able to connect Paris to New York, which probably will never be done at a commercially acceptable (financial and ecological) cost. Experts also believe that this project could be a real logistical disaster. In addition, it does not solve any of the most pressing challenges in the transport sector. Nearly a quarter of French emissions, for example, come from daily personal transport (going to work and going shopping): this is the issue that must be tackled first, not the issue of intercontinental journeys that represent less than 3% of global CO2 emissions. For Hyperloop, many experts believe that the costs advanced by Elon Musk do not take into account the reality of the markets. They would actually be at least 10 times higher, which would make its financial feasibility questionable.

If many of these companies are therefore in the media for their “revolutionary” products or services, their commercialization would probably be extremely complicated, particularly for price reasons. Who will be able to pay for CO2 extraction technologies at costs exceeding 100 euros per ton in the years to come? Who will be able to afford meat raised in the laboratory while its costs are now prohibitive (250,000 euros for less than 150 grams) because of complex processes and high needs in resources and manpower?

Of course, we could argue that prices may fall, as has been the case for solar panels in the last 20 or 30 years, notably thanks to innovation. But nothing guarantees it. Current data tends to suggest the opposite. For example, global lithium reserves are limited, it is likely that the price of this material will increase. This could increase the production costs of Tesla batteries, if the company manages to overcome the bottlenecks it is already experiencing on the production line of its batteries. The price of oil and energy could also rise rapidly in the coming years in the face of rising demand and increasingly expensive production. This increase will inevitably have an impact on the costs of infrastructure production, as well as on the cost of resources. All of this could also help curb innovation.

An unsustainable, perhaps even unrealistic development model?

In the long term, there is no guarantee that the development model of these companies can become viable one day. This is based on too many assumptions: that of significant (and impossible to anticipate) technical progress, lower costs (unlikely), a widening of the market, the maintenance of global energy and economic stability… But these hypotheses are far from being assured, some are even unrealistic. It is possible, but not guaranteed.

The problem is that by thinking that these innovations have been achieved, these companies end up basing their activities on unsustainable speculation and economic models. Tesla, for example, can no longer deliver its cars: while Elon Musk announced that the company would deliver 5,000 Model 3 cars per week before the end of 2017, the company has only delivered 222 in the whole of the 3rd quarter… Tesla has suffered record losses for several months: $671 million lost in the third quarter of 2017, after $336 million lost in the second quarter. Gigafactory had suffered many blockages and has not been able to meet the production targets. The company fired several hundred people in November. The company Climeworks can not cover its costs despite the fact that it is selling the CO2 it currently stores. New Wind and its urban wind turbine were liquidated because of the scale of their losses.

And all this is done by counting that these companies currently benefit from easy financing: they are subsidized by the State, they benefit from easily granted loans and external financers thanks to the media effect. Elon Musk, with all of his businesses, would have received nearly $5 billion in subsidies, tax rebates, allowances, and preferential loans in the United States alone. In the markets, his rating is higher than that of giants like General Motors, Ford, or Toyota, yet Tesla has never been profitable. Without subsidies, its market collapses. In 2015, Tesla sold 2,738 cars in Denmark. In 2016, when the government stops subsidizing electric vehicles, its sales dropped to 176 cars sold in the year. That’s a 94% drop.

False solutions to real problems

In fact, all these examples have one thing in common: they offer false solutions to real ecological problems.

In terms of the environmental impact of transport, the solution is not found in the production of big electric cars with the performance as those of racing cars. It is in the production of public transport rather than individual transport, and light cars, that requires little energy and few resources. It is not in the production of energy-intensive high-tech trains, but in the rehabilitation of the current rail network and its full integration into global intermodality. If Tesla has been able to develop advanced technologies in the electric vehicle thanks to its current economic model, would not it be better for it to put this innovation at the service of infrastructures that serve the majority of the population (for example, equipping city buses with electric technologies)?

In terms of climate change, the real solution is not in the production of CO2 capture devices (which would barely absorb 1% of what we emit), but in reducing our emissions through the reduction of energy waste and the transition to renewable energies.

In terms of the overall environmental impact of our lifestyles, the solution is not to consume more and invent new needs and new technical advances (which make us question if they still really improve our lives). It is in the adoption of a more sober, less energy and resource greedy, more egalitarian lifestyle.

But today, these “fake industries” make us ask serious questions: if we know that their solutions are not sustainable (or are unlikely to be viable) in the long term, why continue to finance them while alternatives, that have less attractive media but are more viable, exist but lack funding? Why rush into these technological disruptions when we know that ultimately they are destined for niches, and that they pose perhaps as many problems that they can not solve? The question remains unanswered. In the meantime, the stock prices of these companies and their media coverage continue to reach new heights.

1 : The term “fake industries” is a term used in particular by climate-skeptical columnist Lawrence Solomon in his columns of the Financial Post. His argument, which frequently refers to the negation of environmental and climatic problems, is not developed in this article. We wish to use this occasion to reaffirm the reality and seriousness of global warming and ecological problems.

Image credits : Tesla by Serguey Kohl on Shutterstock

News shared by

E-CSR newsletter