Sustainable Consumption & Behavioural Change

In previous posts, it was argued that personal mobility remains unsustainable and that the regulator has an important role to play. In this post, we will explore some of the factors that continue to contribute to unsustainable consumption when considering personal mobility and why it is so difficult to change people’s consumption behaviour. We will look at it through the lens of disinformation (by companies), lack of fundamental understanding (by the consumer), and ineffective policies (by the regulator). We will use Tesla as an example where all three dimensions of unsustainable consumption are stimulated.

Disinformation by the company (Tesla). Tesla is the unquestionable master of being a spin-doctor, who tries to control the way something is described to the public in order to influence what people think about it. Most people now believe that Tesla’s products are based on disruptive innovation and that they are much more sustainable forms of personal mobility compared to the average sedan, minivan or SUV. While it is true that no CO2 emissions are coming out of the tailpipe of a Model S (there is no tailpipe to begin with), they forget to highlight the fact that electricity is not a primary energy form and that electricity needs to be generated and stored for future consumption. Most of the electricity around the world is generated from fossil fuels, and several of Tesla’s supercharger stations have diesel-powered backup generators, which are considered among the worst ways to generate electricity from an efficiency and environmental point of view. Recent articles in both the Harvard Business Review and MIT Technology Review conclude, based on Clayton Christensen’s theory of disruptive innovation, that Tesla’s cars are not really disruptive.

There are two additional fundamental sustainability challenges when considering any of the Tesla electric cars: 1) the use of lithium for the production of batteries. Lithium needs to be mined and processed for use in batteries. Lithium is flammable and highly reactive and has been linked by the Environmental Protection Agency (EPA) to cancer and neurological problems. In addition, according to the Guardian, the mining and production is an energy intensive and soil polluting activity, and 2) all Teslas have an aluminium body and chassis to reduce weight. Unfortunately, smelting aluminium requires almost 10 times the energy to smelt steel. A 2012 article in the Journal of Industrial Ecology concludes that when all these factors are incorporated, the environmental footprint – over the entire lifecycle of the Tesla Model S – is higher than that of most large American SUVs. Nobody at Tesla will ever tell you this. And ultimately, misinformation by companies of course affects the (mis)understanding of consumers and is reflected in consumer behaviour.

Porsche, on the other hand, is launching a full-electric sports car (which outperforms any Tesla on all dimensions), which has a carbon-fibre body (which has a significantly lower environmental footprint compared to aluminium) and is largely 3D printed (which is a more energy efficient production process and generates far less waste in the process) and uses a different type of battery (which is only 20% of the weight of the battery used in Tesla Model S). Not truly a surprise given that Porsche has the know-how and expertise to design and build remarkable sports cars.

Lack of fundamental understanding by the consumer. I have two very smart Ivy League educated friends who fundamentally believe that cold fusion will solve all our energy problems and that home battery packs will make consumers independent from being grid connected. Cold fusion, a nuclear reaction at room temperature, is theoretically not possible. Nuclear fusion is a nuclear reaction in which two or more atomic nuclei form a new nucleus, and is the same process that happens in stars, including the sun at a temperature of 14 million degrees Kelvin. This is the kind of thing that National Geographic suggests ‘not to try at home’. Also, home battery packs have not been designed to be off-grid. While theoretically feasible, it is practical nonsense. The objective of distributed power generation and storage is that everybody in the community becomes an energy producer and consumer and that the role of the grid is to balance loads.

The media tends to play a very misleading role when it pertains to potential new technologies because they are often overhyped and not fact tested. Even for the well-educated person, it is not easy to make the distinction between fact and fiction.

Ineffective policies by the regulator. In my previous blogs, I have highlighted some effective policies to stimulate more sustainable consumption and behaviour. At times, however, the regulator gets it completely wrong. Subsidies, whether these are grants or tax concessions, are very often poorly designed and lead to unsustainable behaviour. Germany and Belgium made excessive use of feed-in tariffs to stimulate the uptake of rooftop solar PV. These feed-in tariffs and the resulting short payback period, led to unsustainable consumption. The World Energy Council ranks Belgium 41st and Germany 44th out of 130 countries in terms of the environmental sustainability of energy systems. This makes Germany the least environmental sustainable country in the OECD, while also having one of the most expensive energy consumer prices in the world. There are several reasons for this: 1) both Belgium and Germany are bad locations for solar power because of low solar irradiation, 2) the supply variability of solar power, i.e., it is not possible to ramp alternative power plants as fast as solar swings up and down every, and 3) it displaces the wrong type of power, such as nuclear.

Regulators are now doing the same for electric vehicles – providing financial incentives for people to buy and drive environmentally-unfriendly cars. City- states, such as Singapore and Hong Kong, may improve local air quality by letting people purchase electric vehicles without tax, but they in fact dramatically negatively affect the environmental footprint in other parts of the world where the raw materials are mined and processed, and where the cars are decommissioned and parts are recycled. As a consumer, I would be inclined to benefit from the tax concessions provided by the regulator, but from a life-cycle perspective they are unsustainable. But regulations change and in California they are currently revisiting regulation and take into account some of the externalities.

There is also some concern that regulatory policies (and thus, Tesla) are helping fuel inequality. Tax credits for electric vehicles fuel inequality because the benefits are only available to the upper middle class. In the US, a Tesla Model S can earn the buyer a $7,500 tax credit depending on the battery pack size. Given the high purchase price, only wealthier Americans benefit from this tax credit, while the average American, who cannot afford a $75,000+ car, does not benefit from a tax credit. The same applies in other countries where feed-in tariffs only apply to expensive and not very sustainable electric vehicles.

If we could improve these three dimensions – disinformation by companies, lack of understanding by the consumer, and effective policies by the regulator – consumption would become substantially more sustainable because it would change consumer behaviour.