Summary
If the proposed carbon taxes get implemented, the costs will be way more than being preached. Just ask Kyoto signatories who would like to get out of it now. As one who is active is fuel saving programs, SmartWay and carbon reduction, we need to keep it simple.
Analysis
I am all for cleaner air and lowering our carbon footprint - regardless of my feelings on mankind’s influence on GHG. Ever since I worked for Cummins in the 70’s-80’s plus the 20-years in our current business, we have been helping clients lower their fuel usage. Therein lays the basis for reducing our costs and carbon footprint - and the EPA SmartWay Program for the transport industry.
Getting an assessment of one’s carbon footprint is actually pretty easy. If the fuel is carbon-based like coal and oil, it’s going to be taxed. Therefore, most vehicles (commercial & personal) and electricity from coal will get hit.
Per EPA, diesel contains 22 pounds of carbon per gallon. Carbon is trading today on the Chicago Climate Exchange for $0.25 per Ton and on the European Climate Exchange for $15 per metric ton. In a nutshell for all practical purposes, Chicago is more of a voluntary market and Europe is certified. So today the cost would be minimal - (CO2=$0.25x22lbs/2000=$0.003) i.e. three-tenths of a cent per gallon. If carbon goes to $100 as projected, it’s $1.10 per gallon. It will be another surcharge to pass on.
A dirty little secret is that trucking companies won’t be able generate credits to trade. While there are numerous reasons, the main one is that they could not afford the certification costs.
For those of us who have been through a Life Cycle Analysis (LCA), it’s not simple. We did for a Ghana project at Zenergy Biofuel - a company I partner in - where it is not only costly, but requires a lot of follow-up. Additionally, there is a whole associated bureaucracy that adds costs - and who knows where the money goes.
At $20 per ton carbon, that is $0.035 per mile. That’s the average profitability of a trucking company today! Let’s save money from fuel / energy savings and reduce our carbon footprint - and help educate our business partners and employees to do the same. That is what smart folks and 2000+ SmartWay private and for-hire participants like Walmart, YRC Worldwide, UPS, Con-way, Schneider, Swift Transportation, Ryder, Penske, grocery chains, and hundreds of other large and smaller companies are doing anyway.
Getting an assessment of one’s carbon footprint is actually pretty easy. If the fuel is carbon-based like coal and oil, it’s going to be taxed. Therefore, most vehicles (commercial & personal) and electricity from coal will get hit.
Per EPA, diesel contains 22 pounds of carbon per gallon. Carbon is trading today on the Chicago Climate Exchange for $0.25 per Ton and on the European Climate Exchange for $15 per metric ton. In a nutshell for all practical purposes, Chicago is more of a voluntary market and Europe is certified. So today the cost would be minimal - (CO2=$0.25x22lbs/2000=$0.003) i.e. three-tenths of a cent per gallon. If carbon goes to $100 as projected, it’s $1.10 per gallon. It will be another surcharge to pass on.
A dirty little secret is that trucking companies won’t be able generate credits to trade. While there are numerous reasons, the main one is that they could not afford the certification costs.
For those of us who have been through a Life Cycle Analysis (LCA), it’s not simple. We did for a Ghana project at Zenergy Biofuel - a company I partner in - where it is not only costly, but requires a lot of follow-up. Additionally, there is a whole associated bureaucracy that adds costs - and who knows where the money goes.
At $20 per ton carbon, that is $0.035 per mile. That’s the average profitability of a trucking company today! Let’s save money from fuel / energy savings and reduce our carbon footprint - and help educate our business partners and employees to do the same. That is what smart folks and 2000+ SmartWay private and for-hire participants like Walmart, YRC Worldwide, UPS, Con-way, Schneider, Swift Transportation, Ryder, Penske, grocery chains, and hundreds of other large and smaller companies are doing anyway.
Jay Thompson consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
