Why Do We Have a ‘Carbon Credits’ Policy?

Now here’s a headline that makes me scratch my head: “Tesla loses Toyota and Stellantis from its EU CO2 pool, taking billions with them.”

Somehow, I thought the whole purpose of renewable energy was to reduce our carbon footprint. Having already missed the deadline that scientists claim we need to meet to survive as a species, I got it in my head that prioritizing wind, solar, geothermal, and even nuclear was the last possible chance to keep humanity from roasting.

Foolish me.

If Americans are good at anything, it’s turning a profit on whatever raises its head above ground level, and a great deal below even that. I imagine bookmakers will give you odds on the day the last human turns out the lights, although who would survive to collect remains a question.

Tesla, as you may know, is an electric car manufacturer. What you may not know is that because of their light energy footprint, they are rewarded with something called carbon credits. In one of the many governmental misdeeds, for both political and economic reasons, these credits are worth money. Probably, a major reason that Elon Musk is the world’s richest man (by about twice), is he fact that his automobiles are discounted by a major ($7,500 subsidy) and blessed with saleable carbon credits.

Each of those windfalls work against cooling the climate, but I’ll get to that in a moment.

The environmental hucksters and Wall Street crooks would have you believe that the theory behind carbon credits is rooted in a simple economic idea: put a price on pollution so the market has an incentive to reduce it.

Which is bullshit in a pile so high that it heats the earth in equal thermal units.

Carbon credits encourage polluters to buy their way out of jail. Instead of Charles Dickens’ Tale of Two Cities, it’s the very dickens of a governmental scam more properly called a Tale of Two Profits. Tesla (reaped in its share) to the tune of $2.76 billion from credits in 2024, revenue that dropped straight to the bottom line with essentially zero cost.

So, that’s two thousand, seven hundred sixty million dollars Tesla no longer earns, and an equal amount automakers Toyota and Stellantis will have to pony up in expenses.

If Donald Trump saddled the world with misbegotten tariffs, only God could have invented the carbon credits fraud.

Thus, it’s small wonder Musk essentially decided to walk away from automobiles and put the Tesla marbles mostly in the questionable future of human-styled robots. He’ll no doubt dream up some government funded scam for covering their costs as well.

Worldwide, one can only speculate on the future cost of replacing your elderly Buick. Private automobiles have become so expensive that banks are now offering eight-year loans to make the monthly payments tolerable. Most cars today are leased, for the very same reason. It’s an American truth that we seldom worry about total cost, so long as we can choke down the monthly payment.

During my business career, I ‘owned’ 35 new cars, because they were a steady $250 monthly business expense, and who wants to drive a beater if a bank makes that possible? Now, in retirement, my Subaru is 31 years old.

Bottom line.

Electric vehicles are still the future, but batteries are nearly half their cost. So, battery technology is the current defining goal and, once that’s solved, charging stations will follow, first in existing gas stations and then pretty much everywhere (shopping centers, city streets, and private homes).

Battery technology follows needs, as does all industrial progress, and the need here is immediate. Fortunately, progress is moving along substantially in graphene and sodium-ion batteries. Graphene is (so far) difficult to manufacture in quantity.

But, sodium eliminates the need for both lithium and cobalt, two minerals that have volatile prices and considerable geopolitical complications. It performs better in cold weather and has safety advantages in that it’s generally more thermally stable, with less complex cooling systems. Sodium is abundant, widely available and (potentially) 30–40% cheaper.

So, there’s hope. 30-40% is a gamechanger.

The downside for America is that hope, for the most part, resides in China. They are far ahead in both design and technology, as well as favored by lower labor costs and an internal market that outsizes Europe and the United States combined.

In 2025, China absorbed 10–11 million fully electric vehicles, and about 5-6 million hybrids in their huge (700 million) and growing middle class. These cars are now available in Europe and will soon be banging on the door in America. BYD (a Chinese maker) currently dominates the electric bus market in America. Trucks will no doubt follow, as Tesla drops that ball.

It may well be that we are entering the Chinese Century.

I have felt that coming for a long while lately…