Elon Musk Left Trump’s Advisory Group Following Pull Out from Paris Accords. Why? Money.
Elon Musk, the multibillion-dollar entrepreneur, was not pleased with Donald Trump’s pull out from the Paris Accords most probably because it will potentially cost him a chance to make money.
And he’s built those companies with the help of billions in government subsidies.
The owner of Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, has built his empire almost entirely on the back of American taxpayers, via government subsidies, receiving an estimated $4.9 billion in government support, according to data compiled by The LA Times.
His Tesla business actively engages in selling these environmental credits.
As reported by the Times,
Tesla and SolarCity continue to report net losses after a decade in business, but the stocks of both companies have soared on their potential; Musk’s stake in the firms alone is worth about $10 billion.
Musk and his companies’ investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost.
The “payoff” for the public – pollution reduction. This is of course assuming that solar panels and electric cars break through as viable mass-market products, which seems remote.
One of Musk’s biggest potential money making opportunities though would have come as a result of the Paris Accords.
His Palo Alto based company has collected more than $517 million from competing automakers by selling environmental credits. This is a regulatory system in which automakers must buy the credits if they fail to sell enough zero-emissions cars to meet mandates. His monetary haul includes some federal environmental credits as well.
This carbon tax credit system works essentially like this. A carbon credit is a financial instrument allowing the holder to emit one ton of carbon dioxide. They are awarded to countries or groups that have reduced their greenhouse gases below their emission quota, and can be legally traded in the international market at their current market price.
Companies like those owned by Musk are always flush with credits to sell.
The Accords were basically the starting point for the development of an international carbon market.
If the U.S. had remained in the Accords, then there would have been increased pressure brought to bear nationally to decrease CO2 emissions even more than we already have been and this, through the trading of credits – the transfer of funds to underdeveloped countries who could purchase those credits from the U.S.
In this marketplace clean development emission reduction projects in developing countries would generate credits, and developed nations who had negative balance sheets would buy those credits from them. Who would stand to benefit from this deal, well, aside from the planet? Companies who helped sponsor such green developments in those countries.
This would basically be like what Musk has taken advantage of in California, only on steroids.
He recently showcased a new development that he was moving into: batteries for energy storage. No doubt he was counting on the U.S. commitment to the Paris Accords.
At this showcase, Musk laid out a vision of affordable clean energy in the remote villages of underdeveloped countries and homeowners in industrial nations severing themselves from utility grids. His Nevada factories are already building these batteries alongside their Tesla cars.
With President Trump’s pull out from the Accords, it would seem that Elon Musk’s departure from his business advocacy council has less to do with caring about the planet, and everything to do with the hit it gives to his future business plans, though in his view the two are synonymous.
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