Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

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The geopolitical fallout from Russia's unprovoked invasion of Ukraine is on display at the ongoing G7 meeting in Germany, where climate change is a key topic of conversation Monday.

State of play: In the bucolic Bavarian Alps, world leaders are wrestling with how to alleviate short-term worries about securing adequate energy supplies and lowering energy prices without tanking efforts to limit the severity of climate change.

There is a tug of war between how much G7 nations will emphasize burning more fossil fuels in the short-term with the transition to clean energy in the long run.

This stands in stark contrast to last year's G7 meeting in Cornwall, England, where climate change was a top priority heading into the Glasgow Climate Summit.

The question then was how far and fast some of the world's biggest emitters would go to slash emissions. Now these questions have taken on more of an "if" quality to them.

Why it matters: With the price of oil, gasoline and natural gas at painful levels in Europe and the U.S., the balance that leaders strike will help determine whether the Paris Agreement's targets are met.

Zoom in: Germany, which is hosting the G7 and is the most reliant on Russian energy imports, is reportedly seeking to delay a phaseout on funding overseas fossil fuel projects.

The U.S. is facing record-high gasoline prices, which is an albatross for President Joe Biden and the Democrats heading into the midterm elections. Biden has called for oil companies to boost their domestic production and refining output. 

Germany has announced the restart of some of its shuttered coal-fired power plants, which use the most carbon-intensive fuel source, in order to help build up natural gas stocks for next winter. Other European countries are making similar moves.

The big picture: The U.S. and nations in the Middle East and possibly Africa are taking on new importance as natural gas exporters to Europe, with several new terminals for liquified natural gas already approved for the continent.

U.S. LNG exports to Europe have nearly tripled since March, according to a joint statement Monday from Biden and European Commission President Ursula von der Leyen.

Climate activists and scientists have warned that building infrastructure that could be used for the next few decades could lock in enough emissions to nullify the Paris targets.

Yes, but: The imperative of providing relief from high energy prices now may cause the G7 to back away from implementing some of its most recent climate commitments.

These include the curtailment in overseas fossil fuel funding, an "eventual" coal phaseout as well as a push to generate electricity from a grid that is "predominantly decarbonized" by 2035.

Fatih Birol, the head of the International Energy Agency, is participating in today's G7 meetings and urging countries to take steps aligned with a transition to clean energy, per IEA.

A potential price cap on Russian oil, which is also being discussed, might allow Europe to import Russian oil but at a predetermined, artificially low price. Proponents say this could lower gasoline prices while also reducing oil revenue going to Putin's regime.

But it could also boost demand for gasoline, leading to more fossil fuel consumption and higher emissions.

What they're saying: "We’re in a moment of massive disruption due to the invasion, and that’s either a big risk or it’s a big opening on the climate," Jennifer Morgan, Germany's ambassador at large for climate change, told the NYT.

What we're watching: How the G7 communique threads the needle between short and long-term priorities.

G7 leaders stare down energy and climate tug of war

Short-term pressures to cut energy costs may yield a less climate friendly G7 outcome.

Illustration of a tug of war rope looped around a piece of coal with hands pulling on either end.

Group of 7 (G7)

Climate change

Oil companies

Climate scientists are now able to tell whether climate change fuels temperature extremes in real-time, and even ahead of time, using forecast models, historical data and peer-reviewed scientific research.

Why it matters: Presented in a compelling visual format accessible to the lay public and TV meteorologists alike, a new product known as the "Climate Shift Index," or CSI, was unveiled this week by Climate Central, a nonprofit research and journalism organization. The product signals a shift in thinking about the ties between daily weather and long-term climate change.

Driving the news: Climate scientists have made great strides during the past decade in teasing out the role human-caused global warming plays in worsening or setting off extreme weather events, such as heat waves and extreme rainfall. 

These studies, known as extreme event attribution, have taken place after a disaster, and involve sifting through complex historical data and computer model simulations.

Climate Central's real-time effort is currently limited to just one important parameter: temperature, though the intention is to expand it as science permits.

Based on methods recently published in a peer-reviewed journal, the organization is using a weather model combined with other sources to place daily high and low temperatures in a climate change context.

The CSI tool, as designed by Climate Central's researchers along with outside attribution experts, gives a number to indicate the influence of climate change on daily high and low temperatures.

Specifically, the CSI indicates how frequently certain temperatures now occur in a warming world.

Climate Shift Index showing climate change's influence on a day's temperatures in the U.S.

Map of the Climate Shift Index for overnight low temperatures on June 23, 2022. (Climate Central)

Zoom in: If the CSI level is above zero, human-caused climate change has made a day's temperature more common. A below zero reading would indicate climate change has made that day's temperature more rare compared to a climate without human-caused warming.

The scale is a categorical one going from minus-5 to positive 5 and is available from the prior day out to three days ahead of time.

A CSI value of 2 means the day's temperature was made at least twice as likely to occur compared to a world without human-caused global warming, and a CSI level of 5 means local temperatures were at least five times as likely.

During the testing phase last year, Climate Central found that 99% of the daily high temperatures in the U.S. had a CSI ranging from minus-4 to 4.

How it works: The CSI may seem intuitive, but behind it lies years of slowly advancing work in determining how climate change is stacking the deck in favor of more heat records and fewer cold extremes.

To compute it, Climate Central uses two methods that it averages together. One utilizes 22 climate models, which are run with and without added greenhouse gases from human activities.

The researchers also examine observational data going back 30 years to determine the frequency of observed or forecasted temperatures, and this is used to determine how a location's temperatures change in response to shifting global average temperatures.

The end result is a CSI that incorporates real-world data and simulations of the global climate system.

Yes, but: In the past, scientists tended to be reluctant to attribute individual extreme weather events to climate change, citing uncertainties. However, that is no longer the case for many types of extremes, owing to scientific advances and increasingly obvious climate signals.

For example, recent studies found the 2021 Pacific Northwest heat wave was "virtually impossible" without the influence of human-caused climate change, and the heat wave in India and Pakistan this spring was made 30 times more likely as well as about 1°C more severe.

What they're saying: "When extreme weather occurs, we talk about climate change — when it hits us in the face. But climate change is affecting weather every day, temperatures most strongly, with consequences we haven’t even started to think about, let alone calculate and prevent," said Friederike Otto, a climate researcher at Imperial College London who co-authored the Climate Central paper underlying the CSI, in a statement.

Otto co-leads the World Weather Attribution Project, which is a global effort on extreme event attribution.

"This is a big step forward for operationalized event attribution," Noah Diffenbaugh, a climate scientist at Stanford University who was not involved in the Climate Central effort, told Axios via email.

Other outside scientists told Axios the new product is both methodologically sound and is likely to be useful for climate change communications.

The era of real-time climate change attribution is here

The new Climate Central "Climate Shift Index" could change the climate conversation.

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Illustration of a live video symbol with a blinking sun.

Extreme weather

A look at the scientific breakthroughs changing the world, explorations in space and in worlds beyond our own and the threats posed to us by our own planet, both out of our control and of our own making.

Science

Several Republicans who've bashed President Biden's calls for a three-month federal gas tax suspension have previously supported a state or federal gas tax holiday. 

Why it matters: It suggests that historically, support for suspending or reducing the gas tax as a means of providing relief for American consumers has not fallen neatly along partisan lines. 

The big picture: Some of the most prominent Republicans — who have called Biden's plan to suspend the federal gas tax "stupid," "treacherous," and "a complete gimmick" — have proposed, supported and even signed into law their own gas tax relief legislation. 

Driving the news: Senate Minority Whip John Thune (R-S.D.), who on Thursday called measures proposed by the administration "gimmicky" and "short term," introduced legislation in 2006 that would lift the very same federal gas tax.

In March, House Minority Leader Kevin McCarthy (R-Calif.) signed a letter calling on California Governor Gavin Newsom to suspend the gas tax for six months. 

In 2018, Sens. Ted Cruz (R-Texas), Mike Lee (R-Utah) and Marco Rubio (R-Fla.) introduced a bill that would cut the federal fuel tax from 18.4 cents per gallon to 3.7 cents per gallon between 2021 and 2025. 

McCarthy donated $300,000 to a California proposition aimed at repealing the California gas tax, Roll Call reported.  House Minority Whip Steve Scalise (R-La.) donated $25,000.

While Rubio accused the Biden administration of "rolling out more gimmicks," he proposed a plan when he ran for president in 2015 to reduce the federal gas tax by 80%.

In 2008, Sens. Richard Burr (R-N.C.), Lindsey Graham (R-S.C.), and Roger Wicker (R-Miss.) co-sponsored the late Sen. John McCain's (R-Ariz.) legislation that would suspend the gas and diesel taxes from May to September 2008.

What they're saying: "The proposal Sen. Thune supported in 2006 required full reimbursement to the Highway Trust Fund, which helps maintain our nation’s roads and bridges," Thune's communications director Ryan Wrasse told Axios.  "The Democrats’ proposal would leave a massive hole in it."

"In 2006, the energy technology landscape was completely different than it is today, and it wasn’t being stifled by the administration. And, most notably, Republicans weren’t abandoning American energy producers or going hat in hand to other countries begging for foreign oil," Wrasse added.

"Sen. Thune called it a gimmick because it is a gimmick — and based on their public comments over the last 24 hours, Democrats know it too."

Cruz told Axios in a statement, "The reason why gas prices are so high is because of Biden’s continued war on American energy. While I’ll vote to cut or eliminate just about any tax, a gas tax holiday is a drop in the bucket when it comes to skyrocketing prices due to Biden."

White House deputy press secretary Andrew Bates urged Republicans "to put families first, not subject them to more hardship for the sake of political games," per a statement to Axios.

"It’s unfortunate that Republicans, including many who’ve supported this exact policy before, claim on TV that they’ve never met a tax cut they didn’t like are suddenly opposed to a significant tax benefit for working people that will spare them financial pain at the pump." 

The intrigue: Florida Gov. Ron DeSantis (R), who has yet to publicly comment on Biden's gas tax holiday plans, signed a $1.2 billion tax relief bill in May that includes a one-month fuel tax holiday.

The other side: In 2008, former President Obama dismissed the idea as a political "gimmick" designed purely to win votes. 

"The easiest thing in the world for a politician to do is to tell you exactly what you want to hear," Obama said in April 2008.

At the time, it was championed by McCain and Hillary Clinton. 

GOP's gas tax flip-flop

Several Republicans who've bashed Biden's calls for a gas tax holiday have backed similar state or federal moves previously.

Illustration of two gas pump nozzles facing and crossing each other. 

Gas prices

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Alaska is experiencing its worst start to the wildfire season, with more than 1 million acres of land already burned.

Why it matters: Tremendous amounts of carbon and other greenhouse gases are locked away in Alaska's permafrost, but warming temperatures and increased fire activity may be freeing more of these gases by melting this frozen layer.

A screenshot of an NWS tweet on a new temperature record set at Alaska's Kodiak Airport on Wednesday of 75 degrees.

Screenshot: National Weather Service/Twitter

Alaska reached the milestone of 1 million acres over the weekend — earlier than any previous summer.

By the numbers: More than 300 wildfires have raged across Alaska in recent weeks and over 100 are still raging, including 30 large fires, as the state faces unusually warm, dry conditions — with temperatures forecast to be "pushing to near 80 degrees" in some parts by Saturday, per the National Weather Service. 

The big picture: Most of the fires so far have been in sparsely populated areas south of the Arctic Circle, though officials said Thursday firefighters were battling a blaze in the woods in Anchorage that has burned 13.1 acres and was 30% contained.

The Alaska Fire Service "noted that an estimated 500-acre fire north of the Arctic Circle has forced the evacuation of the Arctic Circle campground" earlier this week, Alaska's News Source reports.

And dozens of people in the Indigenous Yup'ik villages on the Yukon River had to evacuate after a blaze that threatened their homes earlier this month.

Meanwhile, an air quality advisory was in effect for the southwest and Aleutians as well as the central and eastern interior of the state due to the fires, as of Friday morning.  

"Fires in the southwest will see increased activity through the weekend, smoke from these fires will impact air quality in the region," the Alaska Department of Environmental Conservation said in an alert that's effective through Monday.

Context: Human-caused climate change is increasing the risk of wildfires along with warmer, drier conditions.

"Over the past 20 years, Alaska has experienced a clear shift toward more frequent large fire seasons with millions of acres burned," the International Arctic Research Center notes. 

"From 2001–2020, wildfire in Alaska burned 31.4 million acres. Over 2.5 times more acres burned than during the previous two decades."

Go deeper: "Zombie fires" detected in Alaska and Canada, set to increase as climate warms

Historic wildfires rage across Alaska

Over 1 million acres has already been razed — earlier than any previous summer.

A NASA satellite image captures smoke from Alaska's wildfires on Wednesday.

A satellite image captures smoke from Alaska's wildfires on June 22. Photo: NASA Worldview

Alaska

Salesforce and AT&T are teaming up to cut greenhouse gas emissions from Internet of Things (IoT) connected devices, such as construction equipment and transportation infrastructure.

Driving the news: AT&T said it's joining Salesforce's Net Zero Cloud, which allows users to track their carbon emissions.

Why it matters: The partnership could bring AT&T closer to fulfilling its Connected Climate Initiative, it said. The telecom's goal is to slash greenhouse gas emissions by 1 billion metric tons by 2035 using connectivity-based solutions.

The big picture: AT&T focuses its emissions tracking work on sectors that have large carbon footprints, such as manufacturing, energy and transportation, according to a company statement.

Heavy machinery equipment outfitted with AT&T's IoT devices allows companies to obtain data on their performance, such as engine hours, fuel consumption, and increasingly, emissions as well, the company said. 

Such data can now be funneled into the Net Zero Cloud, allowing emissions to be calculated and tracked, it said.

What they're saying: Patrick Flynn, global head of sustainability at Salesforce, told Axios in an interview that the partnership will get “better-trusted data” to customers, “so they can use their purchasing power even more effectively to provide a tailwind for decarbonization strategies."

Context: Salesforce built its Net Zero Cloud to keep tabs on its own emissions, but now it is marketed to others, Flynn said. 

This makes it a deep-pocketed competitor to carbon accounting companies attracting venture funding, such as Sweep, Persefoni and Arcadia. 

First Look: Salesforce teams up with AT&T to cut IoT emissions

Salesforce's "Net Zero Cloud" is competing with the crop of climate software startups.

Illustration of an earth app icon with a notifications symbol that says "$"

Salesforce

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

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Data: U.S. Department of Energy, FactSet; Chart: Axios Visuals 

Crack spreads — a proxy for the profits oil refiners pocket — have soared this year as gasoline demand outstrips supply, 

The big picture: These spreads measure the gap between the cost of crude oil and the prices of refined products like gasoline — and are a key contributor to both profits at oil refiners and to the prices we pay at the pump. 

Crack spreads could come under pressure as the Biden administration does everything in its power to push gas prices lower.

State of play: Shares for major oil refiners got clobbered yesterday, ahead of a meeting between Energy Secretary Jennifer Granholm and top industry executives at the White House Thursday. 

Marathon Oil fell 7%, Phillips 66 dropped 6%, and ConocoPhillips tumbled 6%. Chevron and Exxon both fell about 4%. 

President Biden publicly urged an increase in gas production, saying bluntly, "I'm calling on the industry to refine more oil into gasoline and to bring down gas prices."

Yes, but: Earlier this year, as crack spreads soared, so did the stock prices of major American refining companies. They're up an astonishing 38% since January, even as the overall market entered bear territory. 

The chart above shows the so-called 3:2:1 crack spread, thought to be the best benchmark of margins at refineries (it assumes three barrels of crude are turned into 2 barrels of gasoline and one barrel of diesel, or jet fuel). 

The intrigue: While surging margins for gasoline makers opens the industry up to charges of gouging, industry officials argue that they are producing as much gas as possible. 

Industry capacity utilization is running at roughly 94% currently, the highest since 2018 when it hit 97%.   

A recent government report also showed overall refining capacity has fallen in the last two years. In fact, it's now back down to where it was in 2014, meaning that supply would remain strained even if refineries were running at 100%.  

The bottom line: With little chance of bringing new sources of gasoline online anytime soon, the administration's best chance to lower prices will likely come from leaning on refiners to accept smaller profit margins.

That's an unpleasant prospect for shareholders and the source of some consternation for investors in oil companies.

Oil refiner execs head to White House amid soaring profits, record gas prices

Surging margins expose the industry to charges of gouging, but officials say they’re producing as much gas as possible.

The White House is showing a renewed focus on hammering down gasoline prices — including calling oil company executives to Washington for face-to-face talks Thursday.

Why it matters: Prices at the pump have become a central focus for increasingly cranky consumers, and a ubiquitous reminder of the administration's fecklessness on inflation, their top concern.

The executives will likely get an earful from Energy Secretary Jennifer Granholm, though it remains unclear what combination of carrots and sticks could coax the industry into pumping more crude and selling it more cheaply.  

State of play: The risk that runaway gas prices pose politically has prompted a flurry of activity. 

President Biden Wednesday called for Congress to suspend the Federal gas tax (though that could be counterproductive). 

Administration officials are not ruling out restrictions on energy exports (tricky in light of the need to help supply European allies facing the loss of Russian supplies).

And next month, Biden is expected to travel to Saudi Arabia — a country he once vowed to make "a pariah" on the world stage — to try to cajole more crude out of the kingdom. 

What they're saying: "With the world now focused on the risks for high and rising energy inflation, the likelihood of policy correction is rising," wrote Goldman Sachs analysts in a client note this week, referring to government efforts to stimulate oil production. 

Rising production out of Saudi Arabia and Russia — amid falling political will globally to blackball purchases from both — could help lower prices, per Goldman.

The impact: Market prices for wholesale crude oil and gasoline have started to roll over.

U.S. benchmark West Texas Crude is down about 8% this month, to just above $105 per barrel. 

It's down about 14% from its recent peak of $122. 

Yes, but: This isn't just about what the administration is doing. Much of the decline is also related to the growing odds that the Federal Reserve's rate hikes could push the country into a recession over the next year to 18 months, which would mean lower demand for oil.

Continued weakness in China — including a new lockdown in Shenzhen this week — is expected to be a drag on global growth. 

The bottom line: Soaring gas prices are a killer for politicians. It only makes sense that the administration is trying to do something about them.

White House shows renewed focus on gas prices

It's unclear what combination of carrots and sticks could coax the oil industry into pumping more crude and selling it more cheaply.

Illustration of a gas pump with the hose forming a descending stock trend line. 

White House

The Biden administration needs gas prices to come down fast. But that could require supporting greater oil and gas production over the long term — the opposite of what it wants to do to fight climate change.

Why it matters: The result so far has been mixed messages and rising tensions with the energy industry, whose help the White House needs to bring gas prices down.

The relationship between the industry and the White House has real world ramifications, since when it is contentious and frayed, it can be harder to bring relief at the pump.

And for consumers, gas prices will likely stay high for the foreseeable future, despite a proposed gas tax holiday.

The big picture: The Biden administration has asked the oil industry to boost production and refinery output in the near term, while the White House remains committed to shifting away from fossil fuels over the long term to reduce the severity of climate change.

"We can deal with this immediate crisis of high gas prices and still seize the clean energy future," Biden said Wednesday.

To oil industry officials, this doesn't signal any willingness to put in place policies that would encourage companies to spend money on new drilling or refining capacity — which is what they say it will take to increase supply enough to bring prices down.

The industry has not been subtle about its asks: More drilling permits on public lands, pipeline approvals, and taking other steps — while refraining from certain regulatory moves, to encourage putting more money into energy infrastructure. 

Bob McNally, founder and president of Rapidan Energy, said the White House's view is that "I need more oil right now. I need more refining capacity right now," without "blessing new, long-term infrastructure" due to the need to move toward clean energy sources. 

"That's where the disconnect comes in," he told Axios in an interview.

Zoom in: In addition, the industry is skittish about spending money now to pump more oil, given the stress of recent boom-bust cycles. It wasn't that long ago that oil prices plunged during the first coronavirus lockdowns.

"When the industry sees oil prices go up like a moonshot," McNally said, "the next thing they think of is the other side" — the next steep drop in prices.

Last week, Biden sent a letter to CEOs of the largest oil refiners in the U.S., urging them to produce more gasoline. However, most refineries are already operating at or near maximum capacity. Energy Secretary Jennifer Granholm is slated to meet with these CEOs on Thursday. 

The intrigue: The industry is locked in a war of words with the White House, which has been on full display this week. The friction was apparent, for example, in Chevron CEO Mike Wirth's written response to Biden's letter to refiners.

"Addressing this situation requires thoughtful action and a willingness to work together, not political rhetoric," Wirth wrote.

McNally says the Biden administration doesn't seem to understand that the oil industry can't turn on the spigot one day, and off the next, given the timelines, capital investment, and supply chain issues involved. 

Oil production has been increasing slowly, which the industry says is based in part on their investors' calls for spending restraint.

Some of the friction may stem from Biden's lack of personal engagement with industry leaders, with meetings that have been sparse compared to the time he has spent with executives in other sectors.

The bottom line: McNally said the industry would be more comfortable with the policies and rhetoric of the Obama-Biden era, when the White House was publicly in favor of an "all of the above" energy strategy. 

Instead, the Biden administration is intent on pivoting away from fossil fuels, an evolution driven in part by new and more urgent climate science warnings and deadly climate change-related extreme weather events, along with efforts to implement the Paris Agreement.

"We can walk and chew gum at the same time," a senior administration official told reporters Tuesday night. "We still have the climate imperative, in fact the climate science is only getting worse and worse on that front and we do need to accelerate the clean energy transition."

Why Biden is stuck on gas prices

Its conflicting goals are resulting in mixed messages and rising tensions with the energy industry.

Illustration of gas prices reflected in aviator sunglasses. 

Tesla's new plants in Texas and Germany are "losing billions of dollars" as the electric car maker struggles with production due to supply chain disruptions and battery shortages, Elon Musk said in an interview released Wednesday. 

What he's saying: "Both Berlin and Austin factories are gigantic money furnaces right now," Musk said in the interview with Tesla Owners of Silicon Valley, an official Tesla-recognized club, recorded on May 31. "It's really like a giant roaring sound, which is the sound of money on fire."

Why it matters: Musk told Bloomberg earlier this week that supply constraints are the biggest threat to growth for Tesla as he confirmed job cuts of up to 3.5%.

The big picture: Musk said in his interview with the Tesla Owners of Silicon Valley that pandemic-related shutdowns in China this year had proven "very, very difficult" for both Tesla's Shanghai factory and other plants elsewhere.

The Austin factory in particular was "losing insane money" as it faced challenges producing Tesla's new 4680 batteries, and "the tooling necessary" for making its conventional 2170 batteries "is stuck in China," Musk said.

"Overwhelmingly our concern is, how do we keep the factories operating so we can pay people and not go bankrupt?" he said.

Our thought bubble, via Axios' Joann Muller: Musk has often complained about how hard manufacturing is. Now, with the current economic situation, he's being reminded yet again.

Austin

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Elon Musk says new Tesla factories are "losing billions of dollars"

The Austin factory is "losing insane money" as it faces battery challenges, he said.

Elon Musk arrives for the 2022 Met Gala at the Metropolitan Museum of Art on May 2, 2022, in New York. 

Elon Musk at the Metropolitan Museum of Art in New York  in May. Photo: Angela Weiss/AFP via Getty Images

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