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Illustration: Eniola Odetunde/Axios

The corporate and geopolitical winners in a world that gets serious about cutting carbon emissions aren't easy to predict.

Driving the news: A new Moody's Investors Service report looks at how "energy transition" creates risks and opportunities for state-owned oil-and-gas companies like Saudi Aramco, Russia's Gazprom and China's CNPC.

The big picture: State-owned players' "exposure to carbon transition risk will vary," they find, and overall they're not well prepared and "lag behind" investor-owned oil majors.

  • Some will change strategies for business reasons or to align with government climate efforts."[T]he ability of others to make the transition to less carbon-intensive models is constrained by fiscal obligations to or the social objectives of their sponsoring governments."
  • If energy transition and lower demand mean lower prices, that's a problem for countries, including Persian Gulf states, reliant on petro-exports. But some of these same players enjoy low production costs and state-protected market positions.

Why it matters: It's part of the wider puzzle covered in a new Foreign Policy essay headlined, "Everything you think about the geopolitics of climate change is wrong."

  • Jason Bordoff, head of a Columbia University energy think tank, makes a few points:

1. He cautions against assuming China's huge investments in producing clean energy tech like batteries and solar panels (and harvesting the critical minerals to make them) means they'll be become a Saudi-like force.

  • A huge footprint in those markets simply doesn't convey the same influence that petrostates once had and to a degree still do.
  • For instance, restricting battery shipments might temporarily raise car prices and delay new EVs.
  • But that's not the same thing as cutting off oil-and-gas supplies, which can quickly "stymie mobility, trigger price spikes, or lead to people freezing in their homes."

2. He warns against pre-writing the obit for big Middle Eastern producers.

Yes, they'll eventually face declining crude demand in a CO2-constrained world that they have not prepared for by adequately diversifying their economies.

  • But during oil's decades-long exit as a dominant fuel, it's the lowest-cost producers — that also have comparatively low per-barrel emissions — that are best positioned.
  • Even as demand shrinks, "OPEC’s share of global production could rise as a result of its members’ lower costs and emissions, strengthening the cartel’s grip on a market that will remain sizable for some time."
  • Also, he notes, supply may decline even faster than demand, which would raise prices and boost oil-state coffers.

3. Another dynamic: "[S]ome of today’s petrostates may be tomorrow’s electrostates."

  • The essay notes the ability of states like Saudi Arabia and Chile to send clean power and hydrogen across borders.
  • Russia's big role as a nuclear tech supplier will also become more important as countries look to electrify transportation and buildings in order to cut CO2 emissions.

Go deeper

Amy Harder, author of Generate
Jan 14, 2021 - Energy & Environment

VC investments into climate change technology reach record high

Expand chart
Data: PitchBook; Chart: Axios Visuals

Venture capital investment into technologies aimed at combating climate change reached a record high in 2020, according to PitchBook, a private-market data firm.

Why it matters: Clean-energy technologies must increase substantially to drastically reduce greenhouse gas emissions over the next 30 years. It’s also notable that the pandemic didn’t dampen the trend.

Ben Geman, author of Generate
Jan 14, 2021 - Energy & Environment

Oil majors deepen push into offshore wind

Illustration: Eniola Odetunde/Axios

This week brought new signs of multinational oil majors' deepening push into offshore wind.

Driving the news: France's Total is teaming up with Spain-based global power giant Iberdrola to develop what they say will be one of the world's largest offshore wind farms off Denmark's coast.

Caitlin Owens, author of Vitals
1 hour ago - Health

Who benefits from Biden's move to reopen ACA enrollment

Photo: Chip Somodevilla/Getty Images

Nearly 15 million Americans who are currently uninsured are eligible for coverage on the Affordable Care Act marketplaces, and more than half of them would qualify for subsidies, according to a new Kaiser Family Foundation brief.

Why it matters: President Biden is expected to announce today that he'll be reopening the marketplaces for a special enrollment period from Feb. 15 to May 15, but getting a significant number of people to sign up for coverage will likely require targeted outreach.