Tuesday, November 29, 2022
A Typology of the New Right
Slow Self-Driving Car Progress Tests Investors’ Patience
Slow Self-Driving Car Progress Tests Investors’ Patience
Tim Higgins — Read time: 5 minutes
https://www.wsj.com/articles/investors-are-losing-patience-with-slow-pace-of-driverless-cars-11669576382
Updated Nov. 28, 2022 1:10 pm ET
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After years of ambitious targets and bold promises, investors are growing impatient with the pace of driverless-car development, applying pressure on an industry that had become accustomed to latitude and piles of cash from investors.
Auto makers in recent weeks scaled back plans for the technology amid new pressure to curb expenses during an economic slowdown. An influential hedge fund also has questioned Google-parent Alphabet Inc.’s GOOG -1.38%decrease; red down pointing triangle yearslong effort to advance self-driving technology, an endeavor that has proven thornier than many experts predicted just a few years ago.
Activist investor TCI Fund Management this month sent a letter to Alphabet questioning the company’s continued spending on its self-driving unit, Waymo.
“Waymo has not justified its excessive investments, and its losses should be reduced dramatically,” Christopher Hohn, TCI managing director, wrote in the letter. Waymo declined to comment.
Waymo has benefited from the patience of Alphabet, which began work on driverless cars more than a decade ago. The unit began raising money from outside investors in 2020—a move that sparked speculation that Waymo was preparing a spinoff as a stand-alone company.
Waymo operates driverless cars in a ride-hailing service for paying customers in the Phoenix metro area, and is expanding into San Francisco and Los Angeles. Last month, Waymo Co-Chief Executive Officer Tekedra Mawakana talked about the challenges of safely deploying the new technology.
“This really is about being patient in the learning but being precise in our execution,” Ms. Mawakana said. “This is a really long-term opportunity.”
Intel Corp. INTC -2.10%decrease; red down pointing triangle last month took its Mobileye car-tech unit public in an initial public offering that valued the company at $23 billion on the first day of trading—well below the $50 billion its leaders had initially targeted.
Ford Motor Co. F -2.49%decrease; red down pointing triangle and Volkswagen AG also recently retrenched on their autonomous-vehicle efforts, in late October pulling the plug on their joint investment in driverless-car firm Argo ARGO -1.83%decrease; red down pointing triangle AI.
The two rival car companies had invested billions of dollars in the startup late last decade, when both had fully robotic cars at the core of their plans for future services and revenue streams. Each company said it plans to redeploy resources to technology considered more viable in the near-term, such as driver-assistance systems and automated approaches that allow vehicles to pilot themselves in limited situations with a human driver engaged.
“It’s become very clear that profitable, fully autonomous vehicles at scale are still a long way off,” said John Lawler, Ford’s chief financial officer.
Meanwhile, a driverless-delivery startup, Nuro Inc., this month disclosed it would reduce staff by about 20%, citing difficulties raising new funds.
The shift in sentiment is a change from a few years earlier, when a wide assortment of companies from the Motor City to Silicon Valley were betting on self-driving technology to disrupt the car industry and unlock billions of dollars in new revenue.
A $1 billion deal by General Motors Co. GM -2.67%decrease; red down pointing triangle to acquire an autonomous-vehicle startup called Cruise was one of many such efforts, as companies competed to lock in talent and assure investors they were preparing for the future.
Tesla Inc. TSLA 0.03%increase; green up pointing triangle CEO Elon Musk promised in 2016 to demonstrate a vehicle traveling in fully autonomous mode from Los Angeles to New York by the end of 2017—a date that came and passed without such a public display. His vision and promises for driverless vehicles have helped bolster Tesla’s stock to make it the world’s most valuable auto maker.
The industry’s enthusiasm began to waver in 2018, after a test vehicle being used by Uber Technologies Inc. UBER -2.60%decrease; red down pointing triangle struck and killed a pedestrian. The incident led to more scrutiny of the technology and highlighted the safety challenges involved in turning a vehicle over to a robot.
As some companies move from demos to deployment, it is clear that for now, a complex and costly back end of maintenance and operations is required to run these networks of vehicles.
Morgan Stanley analyst Adam Jonas said in October he was no longer assigning any value to GM’s Cruise driverless-car business in his valuation of the auto maker’s enterprise value.
He told investors he expected GM’s losses on the unit—which he currently estimated at $2 billion a year—to possibly double in the next few years. “We believe GM might realize that their investment in Cruise is a ‘sunk cost’ and should move on,” he wrote.
Even amid the pessimism, many analysts say that autonomous technology still holds great potential, creating difficult decisions for car makers weighing future needs, particularly for electric-vehicle development.
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GM remains bullish on driverless cars, and has said that long-term, sustained investment is needed to make them a commercial success. Earlier this year, GM deepened its support of Cruise, spending $3.45 billion to buy out SoftBank Vision Fund L.P.’s stake and provide its self-driving car division with additional capital.
A spokesman for GM said the company disagrees with Mr. Jonas’s assessment, pointing to recent comments from General Motors CEO Mary Barra, saying she believes Cruise is now a leader in autonomous vehicles.
“Every car maker will need an autonomy strategy, just like they all need an EV strategy,” said Gene Munster, managing partner at Loup Ventures, a venture-capital firm specializing in tech research. “We are likely five years away from an inflection point, and companies that want to reap the benefits need to be aggressively investing in that tech today.”
—Mike Colias contributed to this article.
Appeared in the November 29, 2022, print edition as 'Investors Lose Patience With Driverless Cars'.
Elon Musk’s Boring Company Ghosts Cities Across America
Elon Musk’s Boring Company Ghosts Cities Across America
Ted Mann and Julie Bykowicz — Read time: 11 minutes
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Elon Musk’s Boring Company Ghosts Cities Across America
The tunnel venture has repeatedly teased local officials with a pledge to ‘solve soul-destroying traffic,’ only to back out
ONTARIO, Calif.—The unsolicited proposal from Elon Musk’s tunnel-building venture arrived in January 2020. To the local transportation authority, it felt like finding Willy Wonka’s golden ticket.
Officials had started planning for a street-level rail connection between booming Ontario International Airport and a commuter train station 4 miles away, with an estimated cost north of $1 billion. For just $45 million, Mr. Musk’s Boring Co. offered to instead build an underground tunnel through which travelers could zip back and forth in autonomous electric vehicles.
Dazzled by Boring’s boasts that it had revolutionized tunneling, and the cachet of working with the billionaire head of EV maker Tesla Inc., TSLA 0.03%increase; green up pointing triangle the San Bernardino County Transportation Authority dumped plans for a traditional light rail and embraced the futuristic tunnel.
When it came time to formalize the partnership and get to work, Boring itself went underground—just as it has done in Maryland, Chicago and Los Angeles. Boring didn’t submit a bid for Ontario by the January 2022 deadline.
The six-year-old company has repeatedly teased cities with a pledge to “solve soul-destroying traffic,” only to pull out when confronted with the realities of building public infrastructure, according to former executives and local, state and federal government officials who have worked with Mr. Musk’s Boring. The company has struggled with common bureaucratic hurdles like securing permits and conducting environmental reviews, the people said.
“Every time I see him on TV with a new project, or whatever, I’m like: Oh, I remember that bullet train to Chicago O’Hare,” said Chicago Alderman Scott Waguespack. Boring had backed away from its proposal for a high-speed tunnel link to the airport there.
Mr. Musk and Steve Davis, president of Boring, didn’t respond to requests for comment.
Boring’s only tunnel open to the public is a 1.6-mile “loop experience” under the Las Vegas Convention Center. There, Teslas with hired drivers ferry convention-goers through neon-lit white tunnels at speeds of about 30 miles an hour.
Boring has yet to make good on its most ambitious pitch: that it can design tunnel-boring machines that are so fast to operate that they will drive down costs and shake up the industry. Tunneling industry veterans question some of Mr. Musk’s claims.
The company has believers. This spring, tech-focused venture-capital firms Sequoia Capital and Vy Capital led a $675 million fundraising round that valued Boring at $5.7 billion. Major real-estate firms including Brookfield, Lennar and Tishman Speyer are among the investors.
“Their technology is now past the state-of-the-art, and improving at an exponential rate,” Sequoia partner Shaun Maguire wrote in a post on the firm’s website, announcing the round.
Mr. Maguire declined to comment and the other investors didn’t respond to detailed requests for comment.
Mr. Musk has frequently criticized government regulation, calling it an impediment to building new infrastructure. At a WSJ CEO Council event in 2020, he said he had moved from California to Texas, where Tesla was building a new factory, in part because of government regulations. Government should “just get out of the way,” he said.
The Boring Co., based in Pflugerville, Texas, occupies an odd place in Mr. Musk’s business empire, which includes Tesla, Space Exploration Technologies Corp., or SpaceX, and most recently Twitter Inc. He launched the tunneling venture with a tweet in December 2016 that many took as a joke. “Traffic is driving me nuts. Am going to build a tunnel boring machine and just start digging…” Mr. Musk wrote.
“I am actually going to do this,” he added in a second tweet.
At Boring’s helm is Mr. Davis, a longtime lieutenant to Mr. Musk who came from SpaceX. Some of the space contractor’s investors have complained about Boring soaking up SpaceX’s resources, including employees and equipment purchased with SpaceX funds.
Mr. Musk’s leadership style—he recently told his Twitter employees they must be “extremely hardcore” or resign—pervades Boring, too, several former senior executives said. Boring employees work long hours and weekends, and the company has struggled to retain employees, particularly in technical positions such as engineering, they said.
For years, the San Bernardino County Transportation Authority had sought a solution to an enviable problem: Freight-focused Ontario International was steadily gaining passengers. Airport officials decided a link to a nearby commuter rail station would help it grow even more.
The authority issued a request for proposals for a light rail line, estimated to cost between $1 billion and $1.5 billion, when Boring’s pitch showed up.
The authority struck a preliminary deal with Boring in February 2021 for a narrow-diameter tunnel filled with autonomous EVs for $45 million.
“When I went to the public and shared this, the enthusiasm was overwhelming, just for something new and different,” said Janice Rutherford, a county supervisor and transportation authority board member. “And it’s the Boring Company, so Elon Musk brings that kind of sexiness to it, if you will.”
Over time, the company and the transportation authority dropped references to autonomous vehicles. By late 2021, cost projections rose to almost $500 million, agency documents show.
The authority asked for a third-party environmental review, required by state law, of the Boring proposal’s impact, records show. That’s when the process came to a halt.
“We tried to reach agreement with them,” said Carrie Schindler, the authority’s deputy executive director. “We went through the standard request for proposal process. And ultimately at the end of that process, they decided not to propose.”
Boring had powerful boosters from the time Mr. Musk declared his war on traffic in late 2016. Trump administration officials counseled the billionaire on how to pursue his stated goal of building an underground Hyperloop from New York to Washington. The Hyperloop, a concept Mr. Musk revived based on a proposal from the 1970s, calls for moving passengers through vacuum tubes at around 700 miles an hour. Despite an influx of investor interest, no commercial system has ever been constructed.
Mr. Musk tweeted in July 2017 that he had “verbal govt approval” for Boring to begin building the Hyperloop. Besieged by calls from the media and government officials, White House staff helped come up with a follow-up tweet, according to former government officials. “Still a lot of work needed to receive formal approval, but am optimistic that will occur rapidly,” Mr. Musk later tweeted.
That fall, Maryland Gov. Larry Hogan was standing at a fenced-off site affixed with Boring signs near Fort Meade and telling a videographer to “get ready” for a high-speed train from Baltimore to Washington. Mr. Hogan declined to comment.
An aide to Mr. Hogan toured a parking-lot test site at the company’s then-headquarters near Los Angeles International Airport, getting a look at a tunnel-boring machine the company purchased secondhand. Boring named it Godot, the title character in Samuel Beckett’s play about a man who never shows up.
The Republican Hogan administration sped up the bureaucratic process for Boring, granting a conditional permit in October 2017 and an environmental permit a few months later.
All Boring had to do was bring its machine and start digging, former Maryland officials said. But months, and then years, passed. Maryland was waiting for Godot.
Boring deleted the Maryland project from its website last year.
The company also captured the attention of Chicago’s then-Mayor Rahm Emanuel, who wanted a high-speed rail link between O’Hare International Airport and the downtown business district.
In 2017, Mr. Musk proposed a Hyperloop-like solution, in which 16-passenger pods would be propelled through an underground tunnel on electric “skates” moving up to 125 miles an hour. Mr. Musk said he could do it for less than $1 billion, and that Boring would finance the job and keep the fare revenue for itself.
Mr. Emanuel’s Democratic administration selected Boring to develop the system. At a press conference with Mr. Musk, the mayor dismissed “doubters,” who he said also would have questioned other landmark projects, like the 1900 reversal of the flow of the Chicago River.
Mr. Waguespack, the alderman, and other elected officials challenged the cost estimates as absurdly low, warning that taxpayers would be on the hook if Boring couldn’t build as cheaply as it proposed. “It was a lot of flash and dash and not any kind of public discussion about whether it was even necessary or not,” Mr. Waguespack said.
Mr. Emanuel said in an interview that the company had promised to assume financial risk for building the proposed tunnel. The proposal didn’t go any further after Mr. Emanuel decided not to seek a third term.
Other Boring projects announced with fanfare, including a 3.6-mile underground high-speed transportation link from the Hollywood subway line to Dodger Stadium in Los Angeles, also have failed to materialize.
Some sites where Boring once courted public attention are now abandoned. The entrance to its first demonstration tunnel sits behind a chain-link fence in a lot near SpaceX’s headquarters in Hawthorne, Calif. In the California desert town of Adelanto, where city leaders once hailed the arrival of a Boring research operation, stacks of concrete lining segments sit alongside a short U-shaped section of tunnel partially blocked off with plywood amid rattlesnake warning signs.
For the past year, Boring has been directing potential clients to its work in Las Vegas as a showcase for what systems in their cities could look like.
“We’re fans of the Boring Company,” said Steve Hill, chief executive of the Las Vegas Convention and Visitors Authority. “We’re fans of clean transportation systems that are great. So we want to help.”
The convention authority paid Boring about $50 million to build two 0.8-mile single-direction tunnels connecting different wings of the sprawling convention center. It opened in the spring of 2021. This year, Boring completed a short offshoot between the facility and Resorts World casino and hotel.
The Clark County and Las Vegas city government councils have approved a 34-mile loop of tunnels that Boring will finance. Private casino and resort owners are being asked to pay for stations. The company plans to break ground soon on segments, Mr. Hill said.
Boring signed a 50-year contract to operate the Vegas loop and will collect revenue from ticket sales, sharing a small percentage with the city and county after crossing a quarterly revenue threshold.
To get a permit to begin operating the convention loop, Boring had to run a demonstration showing that it could move 4,400 passengers an hour.
Boring passed the test and received its permit, in a category called ATS, for Amusement and Transportation Systems—the same one that local officials award to roller coasters.
Crowds strain the network of individually driven cars far more than mass transit like light rail, according to some of the former executives. In social media postings, visitors have documented the loop’s Teslas sitting, underground, in traffic. The fleet of required accredited drivers adds to labor and administrative costs.
At the convention’s jam-packed auto products show this month, visitors queued in 10 lines in a subterranean station, waiting to hop into Teslas that drivers steered through a pair of tunnels just inches wider than the sedans themselves.
Boring employees directed attendees into cars. Mr. Davis, in a safety-orange sweatshirt, paced among them and talked to convention officials who later said he often manages operations on site. When approached by a reporter, he declined to comment.
Mr. Musk has lately tweeted videos of a Boring-designed machine, nicknamed Prufrock after the title character of the T.S. Eliot poem, digging test holes in the Texas dirt. Boring says Prufrock is designed to dig at one mile a week, and that a succeeding version will be able to dig 7 miles a day.
Boring says it can improve tunneling speeds with fully electrified machines and by digging continuously, rather than stopping to assemble sections of the tunnel wall. The company also says angling machines in from ground level will help avoid the cost of first digging a shaft to launch the machine.
Veterans of the tunneling industry note that tunnel-boring machines have been electrified for decades, and that neither continuous construction of the tunnel lining nor digging in from aboveground is new.
Boring’s speed claims are “totally unrealistic,” said Lok Home, president of the Robbins Co., a leading maker of tunnel-boring machines. “There’ll be improvements here, for sure, but there’s not going to be a revolution.”
Industry veterans said that in terms of cost, factors like property acquisition, permitting and engineering work, and the sheer complexity of digging through rock or soil matter far more than tunneling speed.
As for most of the tunneling Boring has done, in the desert soils of Las Vegas, Mr. Home said, “That’s about as easy as it gets.”
Public officials across the country remain eager to land Boring projects, and some are eyeing the roughly $1 trillion federal infrastructure law as a source of potential funding.
In Fort Lauderdale, Democratic Mayor Dean Trantalis is pointing to the availability of the funding as he tries to sell the public on a $100 million pair of Boring-built tunnels that would ferry beachgoers back and forth from downtown. Mr. Trantalis said that he was awe-struck by Boring’s Las Vegas project, which he toured last year.
North Miami Beach officials want to use federal infrastructure money to pay Boring for a tunnel project to reduce traffic.
On a lark, Vice Mayor Michael Joseph tweeted at Boring and Mr. Musk in February 2021. Company officials quickly expressed interest. “They just called me out of nowhere and said, ‘Hey, this is Boring,’ ” Mr. Joseph said. “I was very surprised they responded to my tweet.”
In Ontario, the San Bernardino County Transportation Authority hasn’t abandoned its tunnel dream. The authority is seeking bids from other construction companies to build tunnels, and from operators to run electric vehicles inside.
Ms. Schindler credited Boring with introducing local officials to the possibility of subterranean transportation that might cost less than more conventional aboveground systems.
“While I’m disappointed we’re not in design at this point and headed towards construction, I’m grateful for the disruption that I think got us going in a really viable direction,” she said.
The authority said it would still welcome a bid from the Boring Co.
Write to Ted Mann at ted.mann@wsj.com and Julie Bykowicz at julie.bykowicz@wsj.com
Appeared in the November 29, 2022, print edition as 'Musk’s Boring Co. Has Cities Waiting'.
Elon Musk’s Boring Company Ghosts Cities Across America
The Wall Street Journal
ted mann
julie bykowicz
michelle goldberg
casey newton
jonathan weisman
Monday, November 28, 2022
Cities shouldn't reject growth in the name of climate mitigation By Matthew Yglesias
Cities shouldn't reject growth in the name of climate mitigation
By Matthew Yglesias
Building housing and transit is good despite construction emissions
In the United States, spending on mass transit is normally opposed by the political right, which is suspicious of spending money in general and has ideological and lifestyle objections to spending on mass transit in particular.
And beyond political opposition, American political institutions struggle to identify and fund projects that are cost-effective in terms of ridership. That’s in part because our construction costs are structurally very high, so even a project that would clearly generate large ridership (like Phase 2 of the Second Avenue Subway) has astronomical costs. And it’s partly because we have a land use paradigm that’s very hostile to transit usage, so we get things like Los Angeles building out a subway network without upzoning along the corridors.
In Germany, the cost situation is better and the historic land use patterns are different, so a city like Berlin has plenty of opportunities to pluck relatively low-hanging transit fruit.
Sadly, Alon Levy reports that in Berlin, opposition to this kind of expansion comes not from the political right (which is relatively unimportant in big city politics anyway) but from the left, especially the Green Party which has developed the view that U-Bahn expansion is bad for climate change. The logic is that expanding the U-Bahn involves pouring a lot of concrete, the embedded emissions in concrete are relatively high, and even a well-used mass transit project won’t necessarily displace a large enough number of car trips for the carbon math to pencil out.
Levy argues narrowly that the Greens are just miscalculating the emissions benefits of mass transit, offering the cross-sectional argument that “the scale of the difference in emissions between cities with and without extensive subway systems is too large for this to be possibly true.” Per capita emissions in New York, for example, are much lower than the American average. And Germany, which has much more extensive transit in its mid-sized cities than we do, has lower per capita emissions than the United States. Even within Germany, Berlin’s emissions are much lower than the national average.
I think that’s all correct, but it also doesn’t really get at a core issue here.
The Greens’ point is that concrete involves high emissions. So if you could get everyone to just stop building new stuff, that would achieve a lot of emissions reduction. The problem with this vision is that the impact on global living standards of nobody pouring any new concrete ever would be quite bleak. And very few people around the world are prepared to embrace the kind of degrowth ideology that would underwrite the idea that “don’t build any new stuff ever” is a reasonable solution to climate change. Instead, we see a selective application of degrowth ideology imposed not on the world writ large, but on arbitrary sub-sections of it in rich countries where environmentalists happen to have unusual amounts of political clout. And sometimes the result, as with blocking Berlin transit expansion, is environmentally perverse. Other times it’s economically tragic. But either way, it’s bad in a big-picture ideological sense, not just in a picky project-by-project sense.
The Berlin transit situation
Let’s start with Berlin. The city obviously has an unusual history, with its growth trajectory derailed by the Cold War situation. Among other things, that’s left it with a transit system that is a little underdeveloped in some slightly boring ways.
The neighborhood of Märkisches Viertel near the edge of the city, for example, has a big social housing development of 17,000 apartments that were built in the 1960s. And the development is kind of close to the Wittenau station where Line 1 of the S-Bahn stops and intersects with the terminus of Line 8 of the U-Bahn. But the station doesn’t genuinely serve the neighborhood. A very short extension of U8 would be easy to build, connect a dense neighborhood to a very high-quality mass transit network, and do a lot of good.
The presence of a good number of this kind of small opportunity distinguishes Berlin from D.C., where I live.
All of WMATA’s existing lines already terminate in fairly low-density suburban areas. You could extend these lines further, but that would only generate meaningful ridership if you paired it with significant land use changes. And in almost all cases, if you wanted to increase ridership by changing land use rules near suburban Metro stations, you could do that near the stations that already exist. Good WMATA expansion projects involve things that are relatively difficult and expensive, like new tunnels through the center of the city. I’d love to see that stuff happen, but it’s a different ballgame than Germany’s opportunity to extend existing lines into dense urban neighborhoods. Berlin also has the opportunity to do some short expansions that would have significant network benefits.
For example, U1 and U3 terminate at Warschauer Strasse in a very dense area. Building a 0.8-mile extension to Frankfurter Tor with one stop in the middle wouldn’t revolutionize transit access in the neighborhood, but it would create a lot of new opportunities to make useful transfers and take advantage of the city’s full network.
U3 in the southwest of the city, similarly, could benefit from a very short extension that would link it up with an S-Bahn line. Connections like these would let some people get around town faster, relieve some pressure on central city infrastructure, and ultimately increase system-wide capacity.
The point is that there are a bunch of projects in Berlin that have relatively large transportation benefits per unit of concrete poured.
Levy says that supporting growth — and particularly transit growth — in an already transit-rich city is worth the environmental cost of pouring that concrete. I think that is absolutely true. It’s only true, though, if you accept that in general growth is good, in which case the climate lens leads us to ask “what kind of new infrastructure is best for sustainability?” But if you talk yourself into the idea that maybe everyone will just give up on growth, then things look different.
Small, poor places have low emissions
While it’s true that Berlin has relatively low emissions compared to the rest of Germany, there’s a sense in which Germany as a whole is a catastrophic climate failure compared to places like Mexico, Indonesia, and Kenya.
Normal people don’t think this way — Indonesia hasn’t achieved lower emissions than Germany thanks to some clean energy revolution. Jakarta is making some belated investments in mass transit, but its system certainly isn’t better than Berlin’s. The secret to Indonesia’s emissions success is just that Indonesia is poor.
Per capita emissions are important for understanding the structure of national economies, but of course the atmosphere doesn’t care about per capita. And in terms of raw emissions, Germany’s big problem is that it’s not only rich, but it’s also a pretty large country.
This is just to say that if you’re monomaniacally obsessed with climate change rather than seeing it as one issue among several, the solution is clear: you want as few people as possible and you want them to be poor.
Despite a certain amount of rhetoric to the contrary, I think very few people actually are emissions monomaniacs. But the sporadic application of this line of thinking is an important trend in environmentalism. It’s given rise to the intellectual fad around degrowth, which is prominent enough to be a permanent fixture on op-ed pages, even if it doesn’t wield political influence. And, as we see in Berlin, it supports the notion that the left should apply degrowth logic to specific geographies where it wields an unusually large amount of political power.
The right way to look at Berlin is to say that Berlin is a good example of a relatively low-emissions place for a big, rich city, and if there are ways to grow Berlin’s population and economy while reinforcing its low-emissions characteristics, the city should embrace those opportunities. Small, high-value U-Bahn and S-Bahn expansions absolutely fit the bill, even though pouring concrete results in emissions. But a big part of the reason that’s the right answer in climate terms is that even if Berlin opts out of growth, the world isn’t going to. People who otherwise might live in Berlin and enjoy a convenient transit commute will live in the suburbs and enjoy the convenience of driving instead.
Some ideas that aren’t politically feasible on a global basis should be tried locally where the politics are different. American cities and states should try to move ahead with preschool for four-year-olds and child allowances for families, even if Build Back Better is dead in Congress. These are good policies on their own terms, and implementing them and making them work could have a politically useful demonstration effect. But “we can’t convince everyone to stop pouring concrete so we’ll just stop pouring concrete in our city” doesn’t have this quality. The concrete goes elsewhere — to worse projects — if you refuse to use it for good ones.
We need to try to solve the industrial emissions problem
Now all that said, the Berlin Greens are getting something important right — it’s a big problem for the dream of a net zero world that the greenhouse gas emissions associated with pouring concrete are so large.
It’s tempting to focus on the pieces of the emissions puzzle that have well-understood solutions and pretend that all we need is more political will. That’s how you get people throwing cans of soup in art museums and portraying the climate issue as one pitting narrow special interests against the will of the people. There are absolutely apsects of climate change that can be addressed with the application of willpower. We know that riding a metro has fewer emissions than driving your car, which is why cheap metro expansions that generate high ridership are a win. It’s also why liberalizing land use in places where there is abundant transit capacity is an easy win.
But we just do not currently have a feasible means of creating large amounts of zero-emissions concrete. And “just don’t do construction projects” isn’t an acceptable answer. A better answer, I think, is that with regulatory changes, we could use mass timber instead in many situations.
There are plenty of other promising lines of research in terms of industrial decarbonization. A British group has an idea about using waste heat from steel production to make cement, for example. There’s also the notion that you could burn pure hydrogen instead of hydrocarbons to generate industrial heat. Right now the economically dominant way of making hydrogen is to burn natural gas (“blue hydrogen”), but optimists think that if the installation costs of wind and solar power keep falling, it should be cheaper and cheaper to make hydrogen via electrolysis with the renewables as the source for the electricity. Then you could use “green hydrogen” in industrial processes.
There’s a concatenation of ifs there, but if it all worked out, this would be a way to in effect store the extra energy generated by wind/solar during peak production periods in order to solve other decarbonization programs. Will that pan out? I don’t know. The other big lines of research that I’m aware of are from a Swedish facility that’s at the leading edge of using carbon capture technology at the source to create a net zero plant. But in part precisely because it’s unclear whether any of this will ever pan out, I think it’s important to keep supporting direct air capture projects, which right now are too expensive to be commercially appealing at mass scale but which could cut some Gordian knots around these things.
Rather than “don’t build low-carbon transportation infrastructure because building things causes emissions,” the right answer is “yes, build low-carbon transportation infrastructure while also continuing to work on industrial decarbonization.”
Partial equilibrium doom
Just in advance of Thanksgiving, the New York Times published a profile of Les Knight, who is apparently an advocate for human extinction.
If I were to try to explain the difference between “media institutions have an ideological bias toward the left” and “media institutions are inverse versions of Fox News in terms of partisanship,” I think this story would be Exhibit A. The Times is clearly interested in platforming fringy and absurd leftist ideas in a way they’re not for the right. But at the same time, this platforming does no favors to the actually existing Democratic Party, which is led by a Biden administration that is focused on addressing climate change through industrial policy, technology-neutral innovation, and other growth-oriented strategies.
I myself didn’t know how to respond to the profile. If I’d seen lots of people praising Knight, I’d have argued with them. But I mostly just saw people dunking on him in one of those social media frenzies whereby everyone gets mad and it’s not clear if the thing they’re getting mad about is even important.
The main thing I think I’d say is that Knight-style ideas have basically no sway over any significant political domain, and it’s okay to not worry about them. But what’s true is that somewhat arbitrary splinters of anti-humanism lodge in little corners of the climate debate — like entertaining the hypothesis that maybe nobody should ever do any large-scale transportation projects and that’s why Berlin shouldn’t expand the U-Bahn. In America, the parallel error is that when D.C. adopts climate goals for the city, it focuses on reducing aggregate emissions rather than acknowledging that anything that increases D.C.’s population would reduce American emissions.
In other words, it’s not that anyone is actually adopting human extinction or degrowth as a climate strategy. But the leading-edge climate jurisdictions are declining to acknowledge that they care more about climate than most places, so anything they do to voluntarily curb local growth won’t solve the global climate issue and may not even be helpful. Adding people to a rich country’s transit-oriented cities and improving their transportation networks is very good climate policy if you take a global view of the situation and keep in mind that those cities are the places where the electorate is most interested in climate change. But that means making progress requires tuning out the eco-doomers and human extinction advocates — the world is going to keep growing whatever people who care about climate change say and do. By rejecting partial equilibrium doomer views, we can ensure it grows faster and greener than it otherwise might.
Twitter’s $5bn-a-year business hit as Elon Musk clashes with advertisers
Twitter’s $5bn-a-year business hit as Elon Musk clashes with advertisers
Top brands abandon social media platform as billionaire owner berates chief executives who have curbed spending
Montage of Elon Musk and various corporate logos
A top advertising agency executive said of Elon Musk, pictured: ‘He seems to put off even those advertisers who wanted him to succeed’ © FT Montage/Bloomberg/AFP via Getty Images
Twitter’s $5bn-a-year business hit as Elon Musk clashes with advertisers on twitter (opens in a new window)
Hannah Murphy in San Francisco, Alex Barker and Arjun Neil Alim in London
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Elon Musk’s tumultuous reign at Twitter has led to a damaging rift with top brands and marketers, with the social media company’s $5bn-a-year advertising business hit by tensions over content moderation and resources.
Multiple top advertising agencies and media buyers told the Financial Times that nearly all of the big brands they represent have paused spending on the social media platform, citing alarm at Musk’s ad hoc approach to policing content and decision to axe many of its ad sales team.
Musk, meanwhile, has sought to personally call chief executives of some brands that have curbed advertising in order to berate them, according to one senior industry figure, leading others to instead reduce their spend to the bare minimum required so as to avoid further confrontation with the billionaire entrepreneur.
After several waves of job cuts and departures, Twitter’s ads business team has shrunk so much that many agencies no longer have any point of contact at the company and have received little to no communication in recent weeks, according to four industry insiders.
Some brands have been unable to get feedback on how previous campaigns have performed because of the staffing shortages, one media buyer said. Others are complaining Twitter’s ads systems have also become buggy, making it difficult or even impossible to run campaigns.
“It is quite unique. The turmoil, the damage, nothing of this magnitude has happened before. Never,” said a senior executive at a big four advertising agency.
“He seems to put off even those advertisers who wanted him to succeed,” another top advertising agency executive said.
Musk is under pressure to draw revenues from Twitter, as he faces $1bn in annual interest payments after loading the company with $13bn of debt to help fund his acquisition of the business.
On October 27, the day he closed his $44bn deal to buy Twitter, the Tesla and SpaceX chief executive sought to reassure marketers that the platform would not become a “free-for-all hellscape” despite his plans to relax content moderation restrictions.
Soon after, he conducted rounds of calls and meetings to reassure top ads agencies and brands. One email, sent in early November and seen by the Financial Times, said of Musk: “He’s one of the greatest innovators in the world, and he understands our platform and product at a level that few people do. He wants to ship exciting things, and he wants to do it quickly.”
In the meetings, Musk appeared across all the details of how the platform is run, two agency executives said, impressing brands with his knowledge. “He knows more than [former chief executive] Jack Dorsey ever did. He has immersed himself very deeply in the business,” a senior executive at a top advertising agency said.
However, the relationship soon soured after Musk laid off more than half of the company’s 7,500 workforce, upending Twitter’s ads sales team and trust and safety team, and heightening concerns that misinformation and hate speech could proliferate on the platform.
Groups such as General Motors, Volkswagen, Carlsberg and General Mills have announced they would be pausing spending on the platform given the moderation concerns.
Many in the advertising industry have struggled to keep track of the changes. Robin Wheeler, who started heading up Twitter’s ads sales business under Musk after the former chief Sarah Personette resigned, left the company last week. Bloomberg reported that Wheeler was fired by Musk after refusing to sack more people in the ad sales team. Twitter and Musk did not respond to requests for comment.
To the team and my clients….you were always my first and only priority. 🫡
— Robin Wheeler (@robinw) November 19, 2022
Musk’s own use of Twitter — including reposting conspiracy theories and interacting with controversial accounts — has also unnerved brands who fear their content being placed next to toxic posts.
The self-described “free speech absolutist” has further irked advertisers when he relaunched Twitter’s premium subscription service, Twitter Blue, as its “blue tick” feature was abused by impersonators, targeting politicians and brands such as Eli Lilly and Lockheed Martin. He initially paused the rollout of the service until there is a “high confidence of stopping impersonation”, saying on Friday that he would aim to launch it the following Friday.
Last week, Musk also began to reverse certain permanent bans of high-profile figures, such as former US president Donald Trump, despite previously pledging not to do so until he had convened a content moderation council of experts.
When asked on Tuesday why he reversed the bans without setting up the council as promised, Musk said “a large coalition of political/social activist groups agreed not to try to kill Twitter by starving us of advertising revenue if I agreed to this condition”. He added: “They broke the deal.” Several left-leaning groups have been pressuring brands to pull their spending.
The shake-up appears to have had a knock-on effect on Twitter’s advertising technology. Gabby Krite, head of digital operations at The Kite Factory, which used to spend “hundreds of thousands” of dollars per year on the platform, said she was experiencing technical difficulties in placing or changing advertising campaigns. “Tech issues on campaign management . . . mean it’s completely unreliable as a platform to use,” she said.
Analysis by left-leaning non-profit Media Matters suggested 50 of the top 100 advertisers — accounting for $750mn in advertising in 2022 — had paused or announced their intention to pause spending since Musk took the helm, and a further seven had reduced spending to a trickle. Those 50 advertisers accounted for $317mn of Twitter’s $5bn in revenues in 2021, Media Matters said.
Agencies too have put out directives. In mid-November, Omnicom Media Group recommended clients pause spending on the platform, according to three people familiar with the move, following a similar recommendation from Interpublic. Last week WPP’s GroupM raised their assessment of the risk of advertising on the platform to “high risk”, two people familiar with the situation said.
Omnicom declined to comment. Interpublic and GroupM did not immediately respond to a request for comment.
It is unclear if and when brands will return. “It’s hard to have criteria [for returning to the platform] when Musk manages by tweet and something changes on the platform every day that causes advertisers concern,” said an executive at another advertising agency.
“Musk’s best chance of bringing advertisers back to Twitter is to appoint a new CEO,” said Darren Savage, chief strategy officer at Tribal Worldwide. “Particularly, one who understands what Twitter is, has the credibility with advertisers, and users — and is then left alone to do their job.”