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In the rush to swap gas for batteries on everything from cars and delivery trucks to boats and golf carts, lawn mowers don't get much attention. But the traditional gas-powered versions that many people will soon use to get their yards ready for summer can actually be worse for the environment than cars. Running the top-selling traditional gas-powered lawn mower for an hour releases as much smog-forming pollution as driving a 2016 Toyota Camry from Los Angeles to Las Vegas, according to the California Air Resources Board, a state agency formed in 1967 to work on ways to protect communities from air pollution. Operating the most popular leaf blower for an hour is roughly equivalent to taking a 1,100-mile jaunt to Denver from L.A. — a 15 hour-plus journey.
The main culprit with lawn mowers and leaf blowers is particulate matter — essentially unburnt fuel that’s ejected into the air and inhaled by humans, potentially causing breathing problems, heart attacks and cancer. But traditional gas-powered lawn and garden equipment also throws off meaningful amounts of carbon monoxide and volatile organic compounds. Small engines such as the ones used in yard tools are currently on track to generate more than twice as much pollution as cars in California’s South Coast Air Basin by 2031, according to the air resources board. That forecast partly reflects improvements in vehicle emissions, but it also points to how smaller engines haven’t necessarily been easier to electrify.
Leaf blowers, for example, need to be carried around, sometimes for hours at a time. They can’t be weighed down with heavy batteries and cords are annoying. Economics are another factor, said Rob Wertheimer, founding partner and machinery analyst at Melius Research. When the heavy-duty truck industry came under pressure to curb its particulate pollution in the mid-2000s, the price of an engine effectively doubled because of the additional components and emissions technology that had to be tacked on to satisfy new requirements, he said. The average consumer is less willing to pay up like that to get a more environmentally friendly version of their lawn mower when their current one works just fine.
Lawn and garden equipment emit more particulate matter than cars and about half as much carbon monoxide
Source: Melius Research analysis of EPA data
Historically, many lawn and garden tools relied on a two-stroke engine — so named because the power cycle is completed with just two movements of the piston. It’s a notoriously noisy and dirty system, but it’s also lightweight and easy to maneuver. That explains why it has lingered despite numerous entities calling for its demise. Essentially, batteries had to evolve to the point where they could deliver comparable power without a lot of extra bulk and expense, Wertheimer said.
The good news is that’s now happening. While about 60% of lawn and garden equipment sales are still linked to gas-powered tools, electric is the fastest growing category, John Wyatt, president of Stanley Black & Decker Inc.’s outdoor products business, said in an interview. In addition to its namesake Black & Decker tools, Stanley sells electric equipment under the Dewalt and Craftsman brands and collaborates with MTD Products Inc., a lawn-mower maker in which it owns a 20% stake and is expected to purchase outright this year. About half of all handheld tools sold today — think chain saws and trimmers — and a quarter of manual push mowers are now electric, Wyatt said. Ride-on mowers used for golf courses, municipal parks and other large grassy spaces are further behind, with electric models accounting for only 2% of the market. Their distance and charging needs are more comparable to cars, but the technology there is getting better, too.
Nationwide, about 35% of the small engine market is now electrified, with hand-held tools leading the way.
Source: A 2020 report from the California Air Resources Board, citing 2018 Freedonia Group data.
Wyatt sees a path to electrifying 75% of push mowers by 2025 to 2027 and 50% of the ride-on market between 2027 to 2030. By comparison, less than 1% of the 250 million passenger vehicles on America’s roads today are electric and analysts expect that to rise to 13% by 2035, according to a New York Times analysis.
The average American 15 and older spends more than 60 hours a year on lawn and garden care. That's more than the time spent on volunteering or religious services.
Source: Bureau of Labor Statistics' American Time Use Survey
One reason the electrification trend may move faster with lawn and garden equipment is noise ordinances. Leaf blowers and lawn mowers are loud — a fact many us are even more cognizant of after working from home for 14 months during the pandemic. The roar of today’s average gas-powered blower can reach 80 decibels, whereas a cordless, electric version is more in the ballpark of 60 to 70 decibels, Wyatt said. For context, that’s the difference between the din of city traffic and the less cacophonous sounds heard in a normal office environment (if you can remember what those were like from pre-Covid times). At least 170 U.S. communities have restricted the use of gas-powered leaf blowers, according to a 2018 study published in the Journal of Environmental and Toxicological Studies. Certain municipalities — such as Berkley, Carmel and Malibu in California and Aspen in Colorado — have banned them completely, according to HD Supply data. As electric options become more commonplace, more local governments may feel empowered to enact similar rules or extend restrictions to other landscaping equipment, effectively forcing people to junk pollution-spewing tools sooner rather than later.
This turnover represents a big opportunity for lawn and garden equipment makers in general and Stanley in particular. The company has invested for years in electrification technology and is in a prime position to capitalize on the trend, Wertheimer of Melius Research said. He estimates that Stanley’s core revenue could get as much as a 3 percentage-point boost over the next decade from sales of electric lawn and garden equipment. That's effectively double the normal growth rate for a typical manufacturer and works out to roughly $4 billion of additional revenue.
Source: Stanley Black & Decker
The other benefit of going electric is that it opens up the opportunity for cool new features, Wyatt said. For example, Stanley recently launched a new cordless weed trimmer under its Dewalt brand that can fold in half, reducing the amount of storage space required in a landscapers’ truck. That never would have been possible before because the gas tank would have gotten in the way, Wyatt said. The company has also launched a robotic mower — basically a Roomba for your yard that can be programmed and scheduled via a smartphone app. A lawn tool that's good for the environment and lets you be lazy? That's something we can all get behind.
Elsewhere in sustainability, I recently had the opportunity to sit down with United Airlines Holdings Inc. Chief Executive Officer Scott Kirby and talk about the company’s environmental initiatives for Bloomberg Businessweek’s “How-To” issue. United pledged in December to eliminate its greenhouse-gas emissions by 2050 through a combination of sustainable aviation fuels wrought from things such as used cooking oils and technology that captures carbon from the air and buries it underground. Noticeably absent from that list is carbon offsets, or the practice of paying someone to plant trees or maybe just to not cut them down, which Kirby calls a mere “marketing exercise.” He acknowledges that sustainable aviation fuels and carbon capture aren't economically viable solutions on a large scale today but points out that wind and solar energy were also considered too expensive not all that long ago. “Ultimately, it’s going to require some kind of government scheme — sticks and carrots — because it will never get to the point where it’s economically the right answer unless there's a price on carbon,” he said. Companies also need to do their part, though. United made a $30 million investment in alternative-fuels developer Fulcrum Bioenergy Inc. in 2015 and announced a multimillion-dollar investment in Occidental Petroleum Corp.’s 1PointFive carbon capture partnership. It’s also backed electric air-taxi startup Archer. “My dream job would actually be to be the Secretary of Energy — if I was allowed to go solve this problem” of climate change, Kirby said. “Because it’s a solvable problem.”
Interestingly, despite the frenzy around environmental, social and governance investing, Kirby said he hasn’t heard from a single shareholder who viewed the company’s sustainability stance as a driving factor in their investment decision-making, one way or the other. “People don’t even appreciate how catastrophic some of the impacts of climate change can be and how irreversible some of them can be,” he said. “It’s the right thing to do. I do think in the long term it will pay dividends with customers, with employees, with our brand image. But that’s not the reason.” In the more immediate term, United is still dealing with the fallout from the global pandemic. “We can see the light at the end of the tunnel, but it’s a little ways to go before we’re all the way through the tunnel,” Kirby said in a separate conversation. Domestic leisure travel demand is now above 2019 levels but U.S. business trips are still down about 75% to 80%, he said. With Europe only recently moving to reopen and Asia further away, a meaningful international recovery is likely more of a 2022 event, he said. International and business tickets tend to go for premium prices. So without a resurgence in that demand, Kirby said air fares are still about 15% below 2019 levels, despite a record month-over-month pop in ticket prices in the U.S. April inflation report.
Deals, Activists and Corporate Governance
Kansas City Southern officially agreed to a more than $30 billion takeover proposal from Canadian National Railway Co. after its initial suitor, Canadian Pacific Railway Ltd., declined to raise its bid. Canadian Pacific had argued that its offer was still superior because it faces an easier path to antitrust approval, but the multibillion-dollar valuation gap between the two bids was seemingly too wide for Kansas City Southern to pass up without at least letting Canadian National try to convince regulators to approve its transaction. The Surface Transportation Board said this week that it would review a Canadian National-Kansas City Southern tie-up under tougher merger rules adopted in 2001 that require the buyer to prove a deal is in the public interest and enhances competition. That’s a contrast to its decision to apply a more lenient antitrust standard to the Canadian Pacific deal. While Canadian Pacific and Kansas City Southern don’t overlap, Canadian National does have some duplication, primarily in Louisiana. But the outcome of this battle hinges more on the STB’s opinion of the voting trust Canadian National intends to use to close the Kansas City Southern transaction on a financial basis ahead of formal regulatory approval. The regulator declined to sign off on Canadian National’s right to use the mechanism earlier this week but that was something of a procedural issue because the railroad had filed the petition without a signed merger agreement. Kansas City Southern has made clear that a voting trust is a condition of any deal and the STB has already approved Canadian Pacific’s use of the structure. There’s a risk that Canadian Pacific has miscalculated and the STB will end up approving a Canadian National voting trust as well. But in the meantime, it’s smart to not throw more money after a target it may not have actually lost yet. Plus, it gets a $700 million breakup fee, funded by Canadian National.
Delta Air Lines Inc. hired a General Electric Co. executive to be its new chief financial officer. Dan Janki, who previously served as head of business transformation at GE and became CEO of the company’s power portfolio and chairman of its legacy insurance business only in October, will make the jump to the airline in July. He will receive a $1.5 million cash signing bonus and Delta shares worth $4.5 million, according to a regulatory filing. His starting salary is $650,000. It’s interesting to see GE executives becoming in-demand hires again. Former CEO Jack Welch once described the company as “the greatest people factory in the world,” but that reputation has taken a significant hit in recent years as GE struggled with a poor track record on acquisitions and near catastrophic missteps in its gas-turbine and insurance operations. The fact that a prominent company like Delta would tap a GE executive for a top job is a testament to CEO Larry Culp’s efforts to bring the industrial giant back from the brink and refocus on operating basics. GE said that Scott Strazik, who oversees its main gas-turbine business, will assume Janki’s oversight responsibilities for the power portfolio. This is a bit awkward because one of Culp’s first major actions as CEO was to internally separate gas turbines from other assets such as steam and nuclear to provide greater transparency and accountability on the turnaround effort. But GE says it’s far enough along in that process to have just one executive in charge. Elsewhere in airline CFOs, Steve Priest is leaving that role at JetBlue Airways Corp. to take the same job at EBay Inc.
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