What’s nature worth? — Lucid CEO talks gas-guzzling EVs — Insurers

By Catherine Boudreau and Lorraine Woellert

Harvesting palm oil in Kuala Lumpur. | Vincent Thian/AP Photo

WHAT’S NATURE WORTH? — Biodiversity is setting up to be the next big fight in sustainable investing, as financial companies, regulators and environmentalists act to protect natural landscapes on a global scale.

Following in the footsteps of greenhouse gas activism, which has countries and corporations mapping carbon footprints and trying to put the brakes on global warming, global leaders are redoubling efforts to stem plant and animal extinction that could upset ecosystems vital to clean air, water and raw materials.

While world attention is laser-focused on November’s climate meeting in Glasgow, Scotland, G-7 climate and environment ministers are planning a big push for biodiversity at a summit in China in October, with a 10-year goal of conserving at least 30 percent of the world’s land and oceans.

It took business leaders decades to join the climate fight, but now that they’re on board with clean air, it might be easier to bring them on board with biodiversity protections.

“We are where climate was five to six years ago,” said Chris Hart , a senior sustainable finance associate at environmental group Global Canopy. “People are seeing connections between the destruction of nature and how that might have a material impact on investments and lending. How do we measure that? This is where we run up against a dead end.”

France’s BNP Paribas Asset Management is partnering with reporting alliance CDP to develop biodiversity disclosure metrics for corporations. And the Taskforce on Nature-Related Financial Disclosures, or TNFD, a group that organized last June with the backing of the U.N., is aiming to put a value on nature so capital can be channeled to companies and investments that protect it.

Biodiversity isn’t a new thing. What’s new is the attention being paid. World leaders set goals a decade ago under the Convention on Biological Diversity, or CBD, but none were met by the deadline of 2020.

The pandemic has underscored the problem’s urgency. Biodiversity loss and climate change are interlinked crises that have made humans more vulnerable to emerging diseases such Covid-19, scientists say.

Any new framework will need strong accountability measures to track countries that are or aren’t making progress in industries driving biodiversity loss, such as fishing, agriculture, mining and construction.

“What the CBD lacks is implementation and resources, as in finance and capacity building and human resources,” said Li Shuo, a climate and energy campaigner at Greenpeace China. “It tells the world where it needs to be, but without answering how we actually get there.”

Li wants China to take the lead on thorny political issues, such as helping persuade wealthy countries to help biodiversity efforts in developing nations such as Brazil and Argentina.

A rights-based approach for indigenous peoples who manage much of the world’s forests and waterways also is key, said Guido Broekhoven, head of policy research and development at the nonprofit World Wildlife Fund.

But the U.S. isn't a party to the Convention on Biological Diversity. Congress never ratified it. A State Department official said the U.S. is “very engaged” and working closely with Canada, Japan, Australia, New Zealand, Norway and other allies.

President Joe Biden’s plan to conserve 30 percent of U.S. land and water by 2030 is the administration’s way of showing commitment to biodiversity, the official said.

While negotiators negotiate, analysts are getting ahead of policy. They want to pinpoint private-sector contributions to biodiversity loss and how it could affect profits. It’s a nascent effort.

The 17-year cicadas are giving Washington a little taste of biodiversity this spring. What else is happening out there? Write us at lwoellert@politico.com and cboudreau@politico.com. We’re on Twitter at @ceboudreau and @Woellert. FOMO? Subscribe to The Long Game.

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Lucid Motors CEO Peter Rawlinson. | Lucid Motors

TAX BREAKS AND GAS-GUZZLING EVS — It’s a punchy ride (zero to 60 in 2.5 seconds) with a range of more than 500 miles per charge. With a price tag of $135,000 after tax credits, the battery-powered Lucid Air Grand Touring sedan will have a limited audience when it hits the market this year, but it might have the potential to commoditize electric vehicles.

The Air will be the fastest-charging EV offered and promises 4.5 miles per kilowatt hour. Learn that metric. Miles-per-kWh is the new miles-per-hour and an important tool for enabling the mass production of electric cars. More efficient batteries deliver range in smaller packages, saving cost, weight and space.

Lucid Motors CEO Peter Rawlinson said his ultimate goal is to mass-industrialize the electric car.

“I can't emphasize this enough that the electric car hasn't been fully accomplished yet,” he said. “It was impossible back in 1935 to see where it would be with air bags and technology and crumple zones and seat belts. The EV is not done, it's not commoditized yet.”

The Air began production in Arizona this year and will range in price from $69,900 to more than $161,500 after tax credits. Rawlinson was in Washington last week, where he gave Sen. Joe Manchin (D-W.Va.) a spin in the Air and spoke to The Long Game about what’s next.

Here are highlights, edited for length and clarity.

LG: You’ve said you want to license your technology. Why?

PR: The greatest paradox is this is a super-expensive car, but we've got very affordable technology in it. That's the last thing anyone would expect. ... I have been approached by a number of car companies just this year, and we are in discussions. I don't know if they're going to lead anywhere. … They're asking me, “Is it real? It sounds fantastic.” Oh, it is real.

LG: Unlike your old company, Tesla, which uses a proprietary charging network, Lucid uses the combined charging system, or CCS, the high-speed standard.

PR: Imagine if you've got a gasoline car, and you can only fill it at certain gas stations. How infuriating that would be, that is completely nutty. … We've partnered with Electrify America. That network is 1,000 volts, compared with Tesla's 400 volts, which is based upon 2010 technology. That network goes up to 350-kilowatt fast charge and our car can use 300 kilowatts.

LG: Biden wants to build out the charging network. What do you want from policymakers in this space?

PR: I do think there's a psychological barrier about fast charging. You really only need fast charging when you're on an extended trip. Most charging is done at home overnight, 90 percent or more, but that is still an issue, because many people don't have access to a garage. They live in an urban environment. ... So I do think that there's perhaps an over-emphasis on the fast charging stations. ... What about street charging? I think that's really important to really accelerate the growth. That's going to have to come from municipal, local governments and maybe there's got to be federal oversight.

LG: There’s lots of talk about where to go next with EV tax incentives. The Senate Finance Committee just approved a bill to increase the tax credit, but only for certain vehicles that cost less than $80,000.

PR : Suppose we went back 120 years and most people are riding horses, and this new automobile comes along. We want to incentivize people into gasoline cars, but gasoline is a very scarce and valuable commodity of national significance. How would we incentivize the uptake of those gasoline cars? ... We want to efficiently incentivize efficient gasoline cars, not gas guzzlers.

So now we've got a car which has a high-end price point. But it's super-efficient, it does 4.5 miles per kilowatt hour. There are other cars which are lower technology, which are more affordable, which don't do as much. ... Instead of the construct of the $80,000 cutoff for that incentive, the much more noble construct would be if the car is inefficient, you don't get your incentive, independent of the cost.

LG: That could divide the auto lobby.

PR: We tend to grade gasoline cars. ... But we tend to then group all EVs together. Psychologically, oh, they're all good. They’re not. I've got to cite the Humvee as an example. ... It has a 350-mile range and its battery pack is 200 kilowatt hours. That thing does 1.75 miles per kilowatt hour, whereas the Lucid Air will do 4.5 miles per kilowatt hour.

You could say, well, that doesn't matter because the energy is being sustainably harvested from wind turbines, hydroelectric, solar. But it's not. A percentage of that is going to come on the grid from coal-burning power stations. You can have a gas-guzzling, CO2-emitting electric car because that's using so much more energy.

INSURANCE WATCH — A report from the nonprofit group ShareAction found that many of the world's biggest insurers aren’t tackling ESG risks and gave almost half of the world’s 70 largest insurance firms a failing grade.

U.S. and Asian companies did worse than those based in Europe, where the European Commission’s Sustainable Finance Disclosure Regulation requires certain companies to report on ESG risk.

ShareAction for the first time asked insurers about biodiversity. Only a third said they engage with their portfolio companies on the subject, and even fewer raise nature-related concerns with clients. None have published a comprehensive strategy for measuring impact and dependency on biodiversity.

OIL’S NO GOOD, VERY BAD WEEK, PART 2 — U.S. gasoline prices surged going into the Memorial Day weekend as shareholders put Big Oil on the ropes. But for the first time in decades, companies aren’t rushing to increase production to chase rising prices, World Oil reports . U.S. crude production has flatlined since July 2020. “We see a shift from stigmatization toward criminalization of investing in higher oil production,” said Bob McNally, president of consultant Rapidan Energy Group and a former White House official.

A MINIMUM GLOBAL TAX — It could really be a thing. Finance ministers from G-7 countries will meet in London this week to hammer out a global taxation framework that could pave the way for a political deal to be reached at the G20 in Venice in July.

Global talks on harmonized global taxation of multinationals and tech giants accelerated this spring, when the Biden administration proposed that the world’s largest 100 companies — those with revenues of at least $20 billion — pay taxes in countries where they sell their goods or services. The minimum corporate tax rate could be fixed at 15 percent.

THE DREADED K — The OECD’s latest economic report has good news for the global recovery — it’s coming on stronger than first expected — but the bad news is it’s here for only some of us.

The 38-nation think tank expects global GDP to grow at 5.8 percent this year, compared with the 4.2 percent it projected in December, an improvement led by stimulus spending in the U.S. and rising vaccination rates.

But increased debt and slow vaccine rollouts, especially in emerging economies, means the recovery will be uneven.

“It is very disturbing that not enough vaccines are reaching emerging and low-income economies,” the OECD writes. “This is exposing these economies to a fundamental threat because they have less policy capacity to support activity than advanced economies.”

— China will allow couples to have three children. An aging population is putting the country’s economic ambitions at risk. AP has the story.

— President Vladimir Putin is spending more than $10 billion on railroad upgrades to boost coal exports. And he’ll use prisoners to do it. The ultimate ESG fail. Mining Weekly has the details via Bloomberg.

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Catherine Boudreau @ceboudreau Lorraine Woellert @Woellert

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