National

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.

Energy & Environment

Axios Generate

A rat-tat-tat burst of events Wednesday could mark a turning point in pressure against Big Oil to act more aggressively on global warming.

Catch up fast: In a span of hours, ExxonMobil shareholders voted to add at least two new board members nominated by activist investors (a third nominee's vote is outstanding).

Chevron shareholders backed a resolution urging emissions cuts from use of its products in the economy, called Scope 3.

Royal Dutch Shell was ordered by a Dutch court to slash emissions well beyond current plans.

Why it matters: The investor votes, especially after Exxon's intense fight against the activist slate, make crystal clear that mainstream finance wants stronger steps on climate. 

In one sign of this trend, asset management giant BlackRock voted for three of the four insurgent directors nominated by the investment group Engine No. 1.

Meanwhile, the Dutch court decision is the first to order a major oil company to make its emissions plans more consistent with the Paris Climate agreement targets.

It could spur legal action against other oil and gas firms, but also other industrial giants too.

“This case does open the door for challenges to other energy-intensive sectors,” Liz Hypes, an analyst with the consultancy Verisk Maplecroft, tells the Wall Street Journal.

What they're saying: Energy experts tell Axios the court ruling and Exxon votes illustrate what could be a significant shift.

They "reflect the growing societal expectations that oil firms be able to demonstrate their business strategies are aligned with our long-term climate goals and resilient to climate risk," says Jason Bordoff, who heads a Columbia University energy think tank.

"The era of 'always be drilling' oil major capex has clearly come to an end with today's events. Investors are betting there are profitable ways for legacy energy companies to transform themselves in alignment with the net zero [emissions] imperative," says climate finance expert Daniel Firger, managing director at Great Circle Capital Advisors.

Yes, but: The substantive effects of Wednesday's action won't be known for a long time.

It's impossible to say, for now, how much influence Exxon's small share of new board members will have on the company's direction.

Shell said it would appeal the decision in a statement that also touted its existing near-term targets and its plan to become a "net-zero" emitter by 2050.

Here's a little more from Bordoff, who was an energy aide in the Obama White House, on the rising climate pressure on oil majors:

"It is important to note that if the response is for companies to sell oil assets in order to reduce emissions from the oil they produce, global emissions will not decline if others just buy those assets and produce the oil, which is why it is urgent that policy and technology start to curb oil use that is still rising year after year."

Go deeper: Biden administration backs Trump-era Alaska oil drilling plans

Big Oil's climate earthquake

A burst of events could mark a turning point in pressure against Big Oil to act on global warming.

Big Oil

Oil companies

Over the past few weeks, how often have you discussed the need for action on global climate change?

Data: Pew Research Center; Chart: Will Chase/Axios

Americans are talking about the need for action on climate change.

Why it matters: Texas Tech climate scientist Katharine Hayhoe says simply talking about climate change is among the most powerful things individuals can do to address it.

Context: A new Pew survey released Wednesday finds that a majority of Americans — 56% — have talked about climate change at least sometimes in recent weeks. (Perhaps not surprisingly, younger Americans are more likely to discuss climate action.)

By the numbers: The poll found that during the past few weeks, 18% of U.S. adults said they’ve discussed the need for action on climate change at least a few times, and another 38% said they’ve discussed this once or twice. 

43% said they never discussed this topic. 

Interestingly, 26% of U.S. adults said a friend or family member has encouraged them to get more involved with efforts to combat climate change, while fewer said they'd been discouraged to take action. 

When it comes to age range, 24% of Gen Z adults (born after 1996) said they had talked about climate action at least a few times each week, compared with just 14% of baby boomer and older adults.

Democrats were also more likely than Republicans to be talking about this topic, which is in keeping with the partisan divide on the issue. 

Of note: The poll was taken from April 20-29 of this year. The margin of error is ±1.4%.

Americans are talking about climate action

Talking about climate change is a powerful step to tackling it.

Climate change

A new directive will require pipeline operators to report confirmed and potential cybersecurity incidents to the Cybersecurity and Infrastructure Security Agency, the Department of Homeland Security announced Thursday.

Why it matters: It's the first set of new regulations for the pipeline industry since the Colonial hack, which hampered part of the East Coast's fuel supply. The new rules will help "to better identify, protect against, and respond to threats to critical companies in the pipeline sector," DHS said in a statement.

Details: Pipeline operators will be required to designate a cybersecurity coordinator to be available 24/7, DHS said.

They will also have to review their practices "to identify any gaps and related remediation measures to address cyber-related risks," and report the results to the Transportation Security Agency and CISA within 30 days. 

What to watch: DHS said it's considering implementing further measures to better protect pipelines and "strengthen the public-private partnership so critical to the cybersecurity of our homeland."

What they're saying: “The cybersecurity landscape is constantly evolving and we must adapt to address new and emerging threats,” said Secretary of Homeland Security Alejandro Mayorkas.  

“The recent ransomware attack on a major petroleum pipeline demonstrates that the cybersecurity of pipeline systems is critical to our homeland security."

"DHS will continue to work closely with our private sector partners to support their operations and increase the resilience of our nation’s critical infrastructure.”

DHS issues new cyber requirements for pipelines following Colonial hack

The Biden administration issued a new set of regulations.

Colonial Pipeline

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

The Biden administration on Wednesday defended in the U.S. District Court for Alaska a massive ConocoPhillips oil and gas project approved during the Trump-era, per the New York Times.

Why it matters: President Biden has pledged to move away from fossil fuels. But the project has the backing of officials including Sen. Lisa Murkowski (R-Alaska) — who's viewed as a potential ally for Biden in his attempts to push through policies in an evenly divided Senate, NYT notes.

Driving the news: Some tribal leaders and unions also back the project, but environmental groups say the Trump administration didn't consider the effects the Willow drilling project in part of the National Petroleum Reserve would have on wildlife and climate-change, according to Reuters. 

A judge temporarily blocked the project in May after the environmental groups filed a lawsuit.

What they're saying: The Biden administration didn't clarify how its stance fit with climate policies, but it said in the filing sufficient considerations had been made in regards to greenhouse gas emissions and the effects the project would have on "fish, caribou and polar bear habitat," the Times reports.

The filing noted that Conoco has "valid lease rights" and can "develop its leases 'subject to reasonable regulation,'" per the NYT.

An Interior Department spokesperson said in an emailed statement to Axios that the filing by the Justice Department "continues to defend a 2020 Record of Decision for the Willow Project in the National Petroleum Reserve – Alaska (NPR-A)." 

"The filing maintains that the decision complied with NEPA [National Environmental Policy Act] standards in place at the time, and that the plaintiffs did not challenge the Record of Decision within the time limitations associated with environmental review for projects in the NPR-A."

Editor's note: This article has been updated with comment from the Interior Department.

Biden administration backs Trump-era Alaska oil drilling plans

Biden has pledged to move away from fossil fuels, but Sen. Lisa Murkowski is among those backing the project.

Aerial view of Nuiqsut, AK on May 28, 2019. 

An aerial view of Nuiqsut, Alaska, near the oil drilling project. Photo: Bonnie Jo Mount/The Washington Post via Getty Images

The world is increasingly likely to see a year in which global average surface temperatures meet or exceed the Paris Agreement's ambitious temperature target of 1.5°C (2.7°F) above preindustrial levels, a new report predicts. 

Why it matters: Limiting warming to 1.5°C is an existential matter for small island states, which could be swamped by rising sea levels if temperatures climb higher. While a single year would not indicate the treaty's 1.5-degree target has been exceeded permanently, it would be a significant milestone.    

The report serves as another indication that the world is running out of time to limit global warming to levels that society and natural systems can tolerate. 

Based on recent emissions trends, temperatures are on course to reach or possibly exceed 3°C (5.4°F) above preindustrial levels by 2100. 

Yes, but: When it comes to taking stock of global warming, what matters are  trends over decades, not individual years. 

Still, optics nonetheless matter with these climate thresholds, and even temporarily reaching or exceeding the 1.5-degree target would likely be seen as an indication of the urgency for action to slash emissions of planet-warming greenhouse gases.

The big picture: Studies have shown that limiting global warming to 1.5°C above preindustrial levels would have a much greater chance of avoiding potentially disastrous outcomes. These include the widespread loss of coral reefs and triggering runaway feedback loops, such as the collapse of large parts of the Antarctic Ice Sheet. 

Details: The report, led by the U.K. Met Office with the participation of scientists from the U.S. and other nations and distributed via the U.N.'s World Meteorological Organization (WMO), says there is a 40% chance that the 1.5-degree target will be temporarily reached in at least one of the next five years.

By the numbers: The analysis pegs the likelihood at 90% that at least one year during the 2021-2025 period will be the warmest on record, knocking 2016 and 2020 out of the top spot (the two years were virtually tied). 

The chance of temporarily bumping up against the 1.5°C temperature anomaly "has roughly doubled" compared to last year's predictions, the report says — an indication that time is quickly running out to avoid hitting or exceeding the target over a longer time period.

However, it's unlikely 2021 will be the one to set the next warmest-year record, given the lingering influence of a waning La Niña episode in the tropical Pacific Ocean.

The report, known as the "Global Annual to Decadal Climate Update," finds that the annual global average temperature is likely to be at least 1°C (1.8°F) above preindustrial levels (defined as the 1850-1900 average) during each of the coming five years, ranging from 0.9°C to 1.8°C. 

Of note: For now, the report finds, it's "very unlikely" that the five-year period will have an overall average temperature departure from average of 1.5°C or higher. 

What they're saying: "This study shows, with a high level of scientific skill, that we are getting measurably and inexorably closer to the lower target of the Paris Agreement on Climate Change," said WMO secretary-general Petteri Taalas in a statement. 

"It is yet another wakeup call that the world needs to fast-track commitments to slash greenhouse gas emissions and achieve carbon neutrality," he said.

Report: Earth may temporarily hit Paris climate limit in next 5 years

The 1.5-degree guardrail is an existential issue for small island nations in particular.

Boat dock sitting on dry land says "No Fishing."

Boat slips on a dried lake bed at Folsom Lake Marina during a drought in El Dorado Hills, California, on May 25. Photo: David Paul Morris/Bloomberg via Getty Images.

Exxon shareholders, bucking company management, voted to install at least two new members to the oil giant's board in a push to make Exxon more aggressive on addressing climate change and more disciplined in its oil investments.

Why it matters: Exxon management campaigned strongly against the entire slate of four people nominated by Engine No. 1, the activist investment group whose campaign was backed by several major pension funds.

The election of two of the four would avoid what could have been a categorical rebuke of the oil giant's strategy, but it still represents significant investor dissent.

The vote in favor of the two new board members shows that many investors see Exxon, which has had a rocky financial performance in recent years, as poorly positioned for the future. 

Driving the news: Shareholders voted to add Gregory Goff and Kaisa Hietala at the oil giant's annual meeting Wednesday, Exxon said at the conclusion of voting. Tabulations on other candidates are still pending, though one of the Engine No. 1 candidates was voted down, Exxon stated in a press release. It's possible that one other activist candidate will still prevail.

Hietala is a a former renewables executive with the refining company Neste and Goff is the former CEO of the refiner Andeavor.

What they're saying: Charlie Penner, one of Engine No. 1's leaders, told shareholders at the meeting that Exxon management is "determined to fight off the future for as long as possible," but added: "change is coming."

The big picture: The battle over replacing members of Exxon's 13-person board comes amid increasing pressure on oil majors to do more on climate change.

European-based multinational giants are diversifying more widely and vowing long-term transformations to "net-zero" emissions companies by 2050.

Engine No. 1 also says Exxon lacks "any serious diversification efforts" that will prepare it to thrive in a low-carbon world. The group says Exxon needs a more cautious investment approach around oil and gas.

Engine No. 1's candidates won the backing of some of the company's largest shareholders, including BlackRock, Vanguard, and State Street.

Yes, but: Exxon says it's in step with the evolving energy mix, citing growing emphasis on carbon capture and large market opportunities there, and efforts on hydrogen and biofuels.

Exxon also argues its adjusted capital strategy will deliver strong returns in oil and gas, which it notes will remain huge markets for decades despite low-carbon energy growth.

The company recently set new near- and medium-term targets to cut emissions intensity (that is, emissions per unit of output), but has eschewed the long-term carbon neutrality vows of its European peers.

“ExxonMobil is in a strong position to create differentiating value throughout the energy transition,” CEO Darren Woods said, touting Exxon's oil-and-gas portfolio and its investment in climate technologies.

"We welcome the new directors Gregory Goff in Kaisha Hietala to the board and look forward to working with them constructively and collectively on behalf of all shareholders," Woods said.

Go deeper: The intensifying battle for Exxon's future

In blow to Exxon management, climate activists install two new board members

The board election is a major victory for climate activists and a stinging defeat for Exxon.

Photo Illustration: Igor Golovniov/SOPA Images/LightRocket via Getty Images

Energy

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

In a precedent-setting ruling, a Dutch court ruled Wednesday in favor of environmentalists and more than 17,000 residents of the Netherlands, by ordering Royal Dutch Shell to cut its emissions of greenhouse gases. 

Why it matters: It’s the first court ruling that orders a major oil company to make its emissions plans more consistent with Paris Climate Agreement targets, and it could spur legal action against other oil and gas firms.

Driving the news: The case was brought in April 2019 by Dutch citizens who alleged that Shell's continued oil and gas exploration threatens their human rights by robbing them of a more stable climate. Environmental groups such as Greenpeace and Friends of the Earth also participated in the lawsuit. 

Details: The Dutch district court in the Hague ordered Shell to cut its carbon emissions by 45% by 2030 relative to 2019 levels. The court ruled that the energy company's existing emissions reduction plans, calling for a reduction of emissions intensity of 20% by 2030, were insufficient, and could result in human rights violations. 

The ruling includes so-called Scope 3 emissions, which are the greenhouse gases released when Shell's oil and gas is burned for generating energy.

While many court cases have been brought in the U.S. and elsewhere against governments for not acting to rein in planet-warming greenhouse gases, the Shell ruling is part of a wave of challenges from climate activists that target oil and gas companies. 

Shell "fully intends to appeal the ruling," the company stated.

Between the lines: Shell has established a more aggressive emissions reduction strategy than many other major oil and gas companies, with the goal of reaching net zero "absolute emissions" in 2050. 

What they're saying: "This is a monumental victory for our planet, for our children, and is a stop towards a livable future for everyone," said Donald Pols, director of Friends of the Earth Netherlands, in a statement.

“Urgent action is needed on climate change which is why we have accelerated our efforts to become a net-zero emissions energy company by 2050, in step with society, with short-term targets to track our progress," Shell said in a statement.

We are investing billions of dollars in low-carbon energy, including electric vehicle charging, hydrogen, renewables and biofuels. We want to grow demand for these products and scale up our new energy businesses even more quickly. We will continue to focus on these efforts and fully expect to appeal today’s disappointing court decision,” the company stated.

Go deeper:  Shell CEO: You need us on climate change

Dutch court orders Shell to cut its emissions in landmark ruling

The ruling is the first to go against a multinational oil and gas company.

Sign saying "Shell" in front of an oil refinery.

A Royal Dutch Shell Plc logo on a fence at the Shell Pernis refinery in Rotterdam, Netherlands, on Tuesday, April 27, 2021. Shell reports first quarter earnings on April 29. (Peter Boer/Bloomberg via Getty Images)

Ford announced Wednesday plans to invest $30 billion in vehicle electrification efforts by 2025, and the company said it anticipates that 40% of its global sales by 2030 will be fully electric vehicles, per a news release.

Why it matters: Ford CEO Jim Farley said the new initiative — called "Ford+" — is the company's largest opportunity for growth since "Henry Ford started to scale the Model T," signaling just how lucrative Ford leaders think the electric vehicle market will become.

As part of the initiative, Ford plans to invest in battery technology and infrastructure that would allow it to manufacture its own batteries.

It would include the creation of Ford Ion Park, "a global center of battery excellence comprising more than 150 experts in battery chemistries, testing, manufacturing and value-chain management who will boost battery range and lower costs to customers and Ford," the company said.

Context: Ford previously announced that it would invest $22 billion in electrification efforts by 2025.

What they're saying: “I’m excited about what Ford+ means for our customers, who will get new and better experiences by pairing our iconic, world-class vehicles with connected technology that constantly gets better over time,” Ford CEO  said.

“We will deliver lower costs, stronger loyalty and greater returns across all our customers. This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T, and we’re grabbing it with both hands," he added.

The big picture: The announcement comes a week after the company unveiled the Ford F-150 Lightning, an all-electric version of America's most popular vehicle model, the Ford F-series pickup truck.

The company said it expects the bulk of its electric vehicle sales by 2030 will come from the F-150 Lightning, the Mustang Mach-E and E-Transit commercial vans.

Go deeper: Ford's electric F-150 reveal is a pivotal EV moment

Ford says it will invest $30 billion in electric vehicles by 2025

"This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T."

Ford's new electric F-150 Lightning outside of its headquarters in Dearborn, Michigan on May 19.

Ford's new electric F-150 Lightning outside of its headquarters in Dearborn, Michigan on May 19. Photo: Jeff Kowalsky/AFP via Getty Images

Ford Motor Company

Electric vehicles

Bills aimed at trapping industrial carbon emissions or pulling CO2 directly from the atmosphere are piling up in Congress  — and instead of the usual gridlock, some of them may actually gain momentum.

Why it matters: Scientists say that these emerging technologies, neither of which is economically available at scale, are going to be needed in potentially large amounts in order for the U.S. to go from the second-largest emitter of greenhouse gases, to a nation that absorbs more carbon than it releases. 

Driving the news: Sens. Michael Bennet (D-Colo.) and Rob Portman (R-Ohio)  introduced on Wednesday morning the Carbon Capture Improvement Act to help power plants and industrial facilities to finance carbon capture and storage equipment as well as more unproven direct air capture projects. 

How it works: The bill would permit businesses to use private activity bonds, which local and state governments currently have access to, in order to finance a carbon capture project. 

These bonds have tax advantages over other financing mechanisms, and have previously been used for installing pollution control systems at power plants, according to a summary from the lawmakers. 

The bill would also allow facilities to use an existing tax credit, known as 45Q, for capturing industrial emissions. 

“Carbon capture and direct air capture are common-sense technologies that will allow states like Ohio to continue to utilize our natural resources while protecting our environment at the same time," Portman said in a statement.

State of play: In addition to these new technologies, climate resilience measures are also gaining bipartisan support. On Tuesday, Bennet introduced a bill called the "Shelter Act," along with Sen. Bill Cassidy (R-La.), that would create a disaster mitigation tax credit for Americans to help make their home or business more resilient to extreme weather events. 

Due to human-caused climate change, certain types of extreme events, such as heavy precipitation events, heat waves, wildfires and hurricanes are becoming more intense and destructive. 

In an interview with Axios Tuesday, Bennet said both bills are about "common sense." 

"I'm glad that it's bipartisan," he said of the Shelter Act. "But what's also interesting to me about it is how we how different the regions are here. Bill is doing it because he's freaked out about floods. And I'm doing it because I'm freaked out about fires." 

The big picture: Bennet says new technologies like direct air capture, which may include everything from synthetic trees to enhancing the ability of natural systems to soak up carbon, are drawing bipartisan interest because they address both climate change and jobs. 

"If you believe that climate change is real, that's a reason you want to address it," Bennet said. 

"And if you're worried about the potential dislocation of people" working in fossil fuel sectors, that's another reason you want to address it," he added.

Context: The Bennet-Portman bill joins a list of pending bills to remove impediments standing in the way of developing new technologies to capture and store carbon or encourage new technologies to enable direct air capture to work.

Also on Tuesday, a bipartisan group of House members introduced a bill known as the the Catch Act, which would make changes to the 45Q tax credits in order to make them available to new types of projects. The bill would also boost the credit levels available. 

Another bill with bipartisan backing is the Scale Act, introduced in March by Sens. Chris Coons (D-Del.) and Cassidy and Reps. Marc Veasy (D-Texas) and David McKinley (R-W. Va.) — which would help support the buildout of more comprehensive carbon capture infrastructure, to include transporting carbon dioxide from where it is captured to where it could be stored or used in manufacturing. 

Be smart: Providing incentives for carbon capture has a recent track record, with 45Q in place since 2018. They also don't stir up the same GOP opposition as emissions mandates do.

Yes, but: Betting the under on the passage of any particular bipartisan climate legislation is usually a smart play, despite some recent action on super-greenhouse gases in late 2020 and 45Q.  

This time around, though, an infrastructure package could become a vehicle for moving some of these bills. 

Rare climate bipartisanship emerges on carbon storage, air capture

Tax credits for carbon capture and storage, "direct air capture," and climate resilience are all seeing gains.

 Sen. Michael Bennet, D-Colo., and Sen. Rob Portman, R-Ohio, arrive in the Capitol oDec. 4, 2014. 

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

More than a dozen Republican state treasurers are threatening to pull assets from large financial institutions if they agree to decarbonize their lending and investment portfolios, Axios has learned.

Why it matters: The Biden administration — led by special presidential climate envoy John Kerry — has leaned on the banks to help reduce U.S. carbon emissions. That's prompted GOP lawmakers to criticize efforts to "de-bank" fossil fuel firms. The treasurers collectively control hundreds of billions worth of assets.

Fifteen of them, led by coal-heavy West Virginia, say they're prepared to use this financial muscle to push back.

The effort includes treasurers from other states with large energy industry presences such as North Dakota, Kentucky, Pennsylvania and Oklahoma.

What's happening: The state officials sent a letter on Tuesday to Kerry, who's leading the administration's efforts to enlist banks in its climate policy fight.

"We intend to put banks and financial institutions on notice of our position, as we urge them not to give in to pressure from the Biden administration to refuse to lend to or invest in coal, oil and natural gas companies," the officials wrote.

In an interview with Axios, West Virginia state Treasurer Riley Moore said he was prepared to terminate contracts with banks that pull back their fossil fuel industry lending in response to administration pressure.

"Frankly, it is not fair for the people of West Virginia to allow a bank to handle our money when they're diametrically opposed to our way of life," Moore said.

What they're saying: Moore called the issue "a matter of life and death for my people."

He said coal and gas operators in his state have reported difficulties obtaining financing from banks blaming pressure from the Biden administration to try to "green" their portfolios.

"If you just cut these guys off at the knees — gas and coal in a state like West Virginia — and they can no longer conduct their business ... it is going to destroy us," Moore said. He cited the industries' heavy jobs footprint and contributions to the state's tax base.

"At no point has Secretary Kerry pressured financial institutions into making commitments," a State Department spokesperson said in an emailed statement. "On the contrary, many financial institutions have reached out to Secretary Kerry to initiate conversations regarding the financial risks and potential opportunities related to climate change."

Between the lines: The state officials signing the letter collectively manage more than $600 billion in assets in state treasuries, pension funds and other government accounts, according to publicly available financials and information provided by the state treasurer offices.

Those states work with large financial institutions to invest and grow those funds, to support state spending and retirement payments to former workers.

Even for sizable investment banks, such funds can be some of their largest accounts.

Editor's note: This story has been updated with comments from the State Department.

Scoop: States warn banks — Drop coal, and we drop you

The Biden administration has leaned on the banks to help reduce U.S. carbon emissions.

Illustration of a business person's feet shackled to a large piece of coal

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