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        All Those Green New Deals: Good Intentions Collide with Unintended Consequences Part Two

        October 5, 2019 By Beth Davis-Sramek

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        “If climate change is indeed the biggest existential threat facing humanity, why are the details of a Green New Dean so difficult for the candidates to define and explain?”

        The slate of 2020 Democratic presidential candidates have all promised aggressive policy action on climate change, yet the first rounds of debates gave the issue very little attention. While CNN’s seven hours of primetime programming on this topic last month confirmed each candidate’s support for some version of a Green New Deal, few details emerged. And oddly, these proposals failed to warrant even a single mention in the most recent debate.

        If climate change is indeed the biggest existential threat facing humanity, why are the details of a Green New Deal so difficult for the candidates to define and explain?

        To borrow a colloquialism from Democratic presidential hopeful Cory Booker – maybe they are “dipping into the Kool-Aid and don’t even know the flavor.”  Part One of All Those Green New Deals outlined possible crippling economic implications of overly aggressive Green New Deal legislation for the trucking industry.  But there are other unintended consequences to consider when debating the efficacy of climate policy proposals for vehicle electrification.  

        The PEV manufacturing supply chain

        Reaching a net zero emissions economy – as promised by the 2020 candidates – requires a mandate for auto manufacturers to quickly phase out production of gas- and diesel- powered vehicles and replace them with passenger electric vehicles (PEVs) that run on an “electrified” battery. Make no mistake, the transportation sector offers ripe opportunity to address climate change. Transportation surpasses energy production as the biggest contributor of greenhouse gas emissions, and passenger vehicles are responsible for 60% of the transportation sector’s emissions footprint.

        batterySo, although mandates to compel auto manufacturers to produce PEVs make sense on the surface, the nature of global supply chains create problematic issues that lawmakers should consider. To put this in context, it is important to note that any passenger vehicle is the result of a complex supply chain process that begins with raw materials. These raw materials are combined and converted into sub-components, then further transformed and assembled over a network of companies until vehicles are finally sold through dealerships. While many cars sold in the U.S. may be assembled here, most of the parts, sub-components and raw materials originate in factories, refineries and mines in other parts of the world.

        In tracing the supply chain of a PEV’s battery to its raw materials, core metals must be included in production, such as graphite, nickel, lithium, and cobalt – none of these essential metals required for PEV production come from the U.S. Even if some supply could come from new U.S. based operations, extraction involves extensive land use and mining that require massive amounts of energy, water and toxic chemical run-off.

        “While we might enjoy the benefits of net zero emissions here at home, it comes with a tremendous cost to people in other parts of the world who suffer at the expense of our rush to electrification.”

        China has been the largest producer of graphite, and the pollution and health hazards from graphite mining operations there are well documented. Nickel is mined in several countries, but these mining operations have a notorious reputation for generating toxic dust that creates an environmental and health nightmare. Lithium extraction can come from brine production or hard rock mining, the former affecting water supplies and the latter requiring extensive land, energy and chemical use.   

        Cobalt – perhaps the most controversial of the metals needed for a PEV battery – is required because it prevents the battery from overheating. While there is significant effort to reduce the use of cobalt in batteries, as of now, there is no viable substitute. Why such effort? Because in In 2017, 60% of the cobalt produced was mined in the in the Democratic Republic of Congo. Beyond the environmental cost, the human cost of extracting this metal from the earth is even more devastating. An Amnesty International report detailed horrific human rights violations in the DRC’s cobalt mines, including the exploitation of child labor.

        So, the very good intention to mandate accelerated production of PEVs via all those Green New Deals is highly dependent on many damaging practices further back in the global supply chain. A critical question must be asked: How are these proposed policies not just simply shifting pollution-generating mining operations and responsibility for human rights elsewhere? While we might enjoy the benefits of net zero emissions here at home, it comes with a tremendous cost to people in other parts of the world who suffer at the expense of our rush to electrification. Even more critical, it could be reckless to enact legislation that requires auto companies to rely heavily on a handful of unstable countries to meet raw material supply requirements for production.

        The 2020 candidates acknowledge that climate change is a global phenomenon, but the Kool-Aid they are dipping into could have a bitter flavor. Crafting effective climate policy requires deep understanding of complex supply chains and a comprehensive assessment of environmental, human and market realities on a global scale. The candidates pushing policies to ramp up PEV production to reach a net zero emissions goal could bring with them incredible market uncertainty, environmental damage elsewhere, and tremendous supply risk for auto manufacturers.

        Next up: The impact of Green New Deal legislation on end-of-life EV battery disposal, as the law of unintended consequences continues. Look for that soon. This is the second in a series. The first explored how the proposed legislation might impact the trucking industry.

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        beth davis Beth Davis-Sramek serves as the Gayle Parks Forehand Professor in Supply Chain Management at Auburn University’s Harbert College of Business where she teaches classes on sustainable supply chain management. She is a co-editor of the Journal of Business Logistics and her research on logistics and global supply chains has been published in the field’s top academic journals. She has been interviewed by the New York Times, Axios and NPR and has given talks and written commentary on the business case for social and environmental sustainability.

         

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