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Big oil ramps up carbon tax support

My Axios colleague Amy Harder reports on the shifting plates of carbon tax advocacy:

Strange bedfellows: The Climate Leadership Council today announced its founding members, which include four of the world's biggest oil and natural gas producers, two environmental groups, and political leaders. The group plans to launch a unified push urging Congress to enact a carbon tax to address climate change.

Why it matters: The support of oil-and-gas majors — Exxon, Shell, Total, and BP — will be needed to get Republicans to back a policy that remains politically toxic. The coalition, which launched in February with the backing of conservative leaders from earlier GOP administrations, represents the most diverse set of interests pushing Washington on climate policy in a decade.

"We expect that when the moment is right, the companies will lend their lobbying weight to our plan," executive director Ted Halstead said.

Reality check: Big oil backing is a prerequisite, but it may not be enough with strong conservative opposition to a carbon tax from powerful groups like Americans for Tax Reform and Competitive Enterprise Institute. Plus, almost no elected Republicans back a tax.

More details:

  • Besides the major oil companies, its founding members include: General Motors, Schneider Electric, two NGOs, and influential policy and political leaders. Click here for the full list.
  • The groups states its rough action plan involves: a CO2 tax, returning the payments to the public via carbon dividend payments, rolling back emissions regulations that are "no longer necessary," and, trade measures known as border carbon adjustments.
  • A Washington Post op-ed says: "The carbon dividend approach is best for the environment."

Click here for Amy's story.

The battle over deep decarbonization


Let's spend a little more time with the idea that creating a carbon-free power system with renewables alone isn't practically or economically feasible, as we discussed yesterday in a story about a new paper published by a suite of prominent energy researchers.

  • ICYMI: The study argues that deep decarbonization likely requires technology options that will include nuclear and fossil fuels with carbon capture.
  • It strongly rebuts — and criticizes — claims by Stanford's Mark Jacobson that a renewables-only system is affordable by mid-century.

Policy impact: This piece in MIT Technology Review explores how the Jacobson-led analyses have become a rallying point for some climate activists — and why that may be a problem.

What they're saying: The University of California's David Victor, a co-author of the paper, tells MIT Technology that he fears "wildly unrealistic expectations" and the "seeds of backlash" as advocates and even some lawmakers rely on Jacobson's work.

  • Jacobson, meanwhile, is bashing the new paper with some powerful language, calling it "intentionally scientifically fraudulent" on Twitter.

Go deeper: Chris Nelder's latest Energy Transition Show podcast that dropped yesterday explores the controversy with Christopher Clack, an author of the new study.

In the tanks: Swaying the DOE budget fight

Third Way

Here's some food for thought as Energy secretary Rick Perry testifies about the White House budget plan at several hearings starting today.

No substitute: The centrist think tank Third Way has a new post explaining why the private sector wouldn't replace President Trump's proposed pullback in funding for innovative energy tech.

  • "Very few private sector investors have the risk appetite or capacity to invest in a promising but unproven technology with high upfront costs and no immediate revenues," writes senior fellow Fahad Siddiqui. That's especially true when there are bigger and faster returns available in other sectors, notably IT, where startups pull in vastly more VC money.

Existing energy companies, meanwhile, devote a pretty small share of their own money to R&D...

  • "[F]rankly because the end customer for an energy product can't tell whether the electrons flowing to their TV or the fuel molecules in their tank were produced in some innovative way," Siddiqui says. Check out the chart above.

It's the economy: The American Energy Innovation Council — a group of CEOs (plus Bill Gates) that works through the centrist Bipartisan Policy Center — is out with a detailed report today making the economic case for robust federal support for energy innovation programs.

AEIC recommendations include: Investing $16 billion per year in advanced energy innovation; funding the Advanced Research Projects Agency-Energy at $1 billion per year; and, creating a federal "New Energy Challenge Program."

Programming note: I'll be moderating a panel this afternoon at their event on Capitol Hill that features keynote remarks by GOP Sen. Lamar Alexander, who heads the Appropriations subcommittee on energy.

Listening notes

Big oil: Wood Mackenzie's latest podcast explores Exxon's big announcement that it's moving ahead with production in the massive Liza field off Guyana's coast

  • "This goes to show that projects with compelling economics will still move forward, even in the current environment," says Wood Mackenzie's Tom Ellacott. He notes that the breakeven costs for the project "rank alongside some of the best tight oil plays."
  • Really big: While Exxon's phase one plan calls for production of about 120,000 barrels per day, the company also announced good results from a well that could eventually drive production in the field much higher.
  • "We think that this could drive gross production up to 330,000 barrels per day by the mid 2020s," Ellacott said.
Technology: S&P Global Platts latest Brussels to Beijing podcast explores how big European utilities are beginning to use blockchain technology for trading and why it's "completely new territory" for regulators.

Quoteable: The latest episode of the Columbia Energy Exchange has a wide-ranging conversation with Iain Conn, CEO of British energy giant Centrica.

Sizing up OPEC's positioning, Conn notes that the cartel's moves for market share are driven by a realization that "we are in the foothills of the endgame for oil."

Generate readers: I'm looking for recommendations on energy- and climate-themed podcasts. Please drop me a line at and tell me what you like.

On my screen: huge gas deal, ‘fracklog,’ and a lonely appliance

Energy Information Administration

Oil: Bloomberg looks at the "fracklog" that could put further downward pressure on crude prices. "There were 5,946 drilled-but-uncompleted wells in the nation's oilfields at the end of May, the most in at least three years," they report, citing Energy Information Administration estimates.

Appliances: The EIA has published a look at Americans' use of dishwashers, which are less common in U.S. households than some other appliances (see above).

  • Why it matters: As EIA notes, dishwashers save water and energy compared to hand-washing. Lower-income households are more likely to have older and unused dishwashers, the report notes.

Natural gas: Forbes lays out the scope of EQT Corp.'s $6.7 billion deal to acquire Rice Energy, creating a Marcellus and Utica shale powerhouse.

  • "The deal vaults EQT past ExxonMobil and Chesapeake Energy to make it the nation's biggest natural gas producer with more than 3 billion cubic feet per day of production — responsible for about 5% of America's gas supply. Analyst Tim Rezvan at Mizuho called the deal 'empire building' for EQT," the Forbes piece notes.


First GOP health care bill fails, with many more votes to come


The Senate GOP's Affordable Care Act replacement plan did a face plant on Tuesday night, with nine Republicans and all Democrats voting against it. But it was only the first vote of what's sure to be a long process, and its failure wasn't a surprise.

Why this matters: This was the Senate's best attempt at an ACA replacement, after about two and a half months of closed-door meetings attempting to find something that could bridge the caucus' deep divides. Its failure suggests Senate Republicans won't be able to come together on a replacement plan without Democrats in the future, no matter what happens next.

What's next: A vote on a bill that repeals the Affordable Care Act's subsidies, taxes and Medicaid expansion but leaves in place its regulations. It's expected to be tomorrow at noon.

The version of the bill, the Better Care Reconciliation Act, that the Senate voted down tonight included an agreement by Sens. Ted Cruz and Rob Portman that added $100 billion to help low-income people transitioning off of Medicaid, as well as Cruz's proposal to let insurers sell health plans that don't meet ACA requirements as long as they also sell plans that do.

Since neither of these were scored by the Congressional Budget Office, the BCRA amendment needed 60 votes to pass, meaning it was doomed from the start as Democrats were never going to support it.

Republicans who voted against the bill: Mike Lee, Susan Collins, Bob Corker, Lindsey Graham, Rand Paul, Dean Heller, Jerry Moran, Lisa Murkowski, Tom Cotton.


Trump rallies in Ohio

Carolyn Kaster / AP

President Trump slipped into campaign mode Tuesday evening before an enthusiastic crowd in Youngstown, Ohio. He repeated his claim that he's accomplished more than almost any other president during his first six months in office, getting some of his biggest cheers of the night by comparing himself to the greats:

  • "With the exception of the late great Abraham Lincoln, I can be more presidential than any president that's ever held this office."
  • "I'd ask whether or not you think someday I should be on Mount Rushmore, but here's the problem — if I did it jokingly, having fun, the fake news media would say he believes he should be on Mount Rushmore, so I won't say it, I won't say it."

Sessions issues new guidelines on sanctuary cities

Andrew Harnik / AP

Attorney General Jeff Sessions rolled out a new strategy to push back against sanctuary cities today, adding two new conditions for cities to obtain popular grants for local law enforcement from the Department of Justice:

  • Federal immigration authorities must be granted access to local detention facilities.
  • The federal government must receive 48 hours notice before a local authority can release an illegal immigrant in custody who is wanted by federal authorities.

Why it matters: Even as Trump hints at firing his attorney general both publicly and privately, Sessions is continuing to implement DOJ policy that's perfect red meat for Trump's base — and, indeed, Trump himself.


House votes 419-3 for new Russia sanctions

Evan Vucci / AP

The House passed a bill Tuesday that would place new sanctions on Russia, Iran and North Korea by a 419-3 vote. The Senate passed a similar bill in June, by a 98-2 margin.

Speaker Paul Ryan released a statement saying: "The bill we just passed with overwhelming bipartisan support is one of the most expansive sanctions packages in history. It tightens the screws on our most dangerous adversaries in order to keep Americans safe."

The House bill requires congressional review of any actions President Trump wishes to take to relieve the sanctions, and the administration has argued that would limit Trump's ability to deal with Russia. But the wide margins mean Trump will have to either sign the bill, or risk an override of his veto.

What's next: This version of the bill heads to the Senate for approval.


SEC concludes that "initial coin offerings" may be securities

BTC Keychain / Flickr CC

After an investigation, the Securities and Exchange Commission has concluded that organizations offering or selling digital assets using blockchains or distributed ledgers may be subject to securities laws, depending on the circumstances. This includes "initial coin offerings" (ICOs), a recently popularized crowdfunding method by which an organization issues virtual currencies or tokens.

Why it matters: ICOs are becoming increasingly popular among some circles of technologists. So far, hundreds of millions of dollars have been raised through ICOs, including the most recent record-breaker, Tezos, which brought in $232 million earlier this month.

Top concern: The SEC says that its main concern is ensuring that investors partake in these offerings and sales with full knowledge of the risks. By making these sales subject to securities laws, organizations will have to comply with disclosure requirements.

"Investors need the essential facts behind any investment opportunity so they can make fully informed decisions, and today's report confirms that sponsors of offerings conducted through the use of distributed ledger or blockchain technology must comply with the securities laws," said William Hinman, director of the division of corporation finance, in a statement.

Origin: The SEC's investigation stems from an inquiry into The DAO, a decentralized organization that intended to operate as an investment fund managed by shareholders and raised its funds through an ICO. However, in June 2016, it was hacked and some of its funds were syphoned. The SEC has concluded that it doesn't qualify as a broker-dealer or crowdfunding portal, though the commission won't pursue charges in this case — instead choosing to simply issue guidance to the industry.

More investor info: The SEC also issued an investors' guide in handling ICOs and similar digital asset sales.


Trump promises three new "big, big, big" Apple plants in U.S.

Trump is seated between Apple CEO Tim Cook and Microsoft CEO Satya Nadella, in the State Dinning Room during yesterday's tech summit (AP's Alex Brandon)

Apple is declining to comment on any plans to expand domestic manufacturing after President Trump told the Wall Street Journal that the iPhone maker was planning three "big, beautiful plants" in the U.S.

Trump didn't say where the plants would be, but did add that they would be "big, big, big."

Worth noting: Apple uses contract manufacturers, mostly in Asia, to assemble nearly all its products, while a number of its suppliers have operations in the U.S. Thus, any domestic expansion is likely to come in conjunction with a supplier or contract manufacturer. Apple has also committed to investing another $1 billion in US manufacturers through an advanced manufacturing fund and is taking a $1 billion stake in SoftBank's $100 billion Vision Fund, which plans to make investments in US-based manufacturing.

Trump's hand: In the interview, Trump said he told Apple CEO Tim Cook that he wouldn't consider his administration's economic efforts a success if Apple didn't shift some work to the U.S.


Timeline shortens on North Korea's nuclear strike capabilities

Wong Maye-E / AP

North Korea is on the course to be able to field a reliable, nuclear-capable intercontinental ballistic missile (ICBM) as early as next year, according to a confidential report from the Defense Intelligence Agency, per The Washington Post. This prediction now matches more closely the revised estimations coming from South Korea.

Why it matters: That jumps the timeline forward by two full years and ramps up the pressure on the U.S. and regional allies to halt North Korean progress. Kent Boydston, a research analyst at the Petersen Institute for International Economics, told Axios this will likely make the U.S. calls for isolating North Korea financially stronger. Boydston added that this will "make any kind of South Korea to North Korea engagement increasingly unlikely."

Why the change: As Tom Karako, senior fellow on the Missile Defense Project at CSIS, told Axios, "the activity of the last few years has been especially intense. It's not really a surprise that they're getting a closer to no-kidding ICBM deployment." Pyongyang has advanced its fuel and missile capabilities beyond what experts anticipated was possible, and its July 4 test of a missile capable of hitting parts of Alaska showed U.S. officials just how close the North Korean threat is according to Scott Bray, ODNI manager for East Asia.

What to watch:

  • North Korea does not yet have the capability to use reentry vehicles, which would allow warheads to survive reentry into the atmosphere despite high pressures and speeds. The Washington Post reports North Korea might be testing a new reentry vehicle around this Thursday, a North Korean national holiday. U.S. spy agencies have detected activity indicating a test is in the works.
  • There is also a submarine making erratic maneuvers, which could foreshadow a test launch from a sub, which would also indicate an important technological development, given how complex it is to launch a missile through layers of water.
  • "This is why we have long had operational plans to strike, defeat, and defend against missile threats like this, of both longer and shorter range varieties," Karako said. Read more on Axios about whether the U.S. is ready for an attack, here.

The DIA and ODNI declined to comment on classified assessments.


More Senate health bill provisions violate budget rules

J. Scott Applewhite / AP

The Senate parliamentarian has ruled that more provisions of the Better Care Reconciliation Act — the Senate's Affordable Care Act replacement bill — don't comply with budget rules, meaning they'd need 60 votes to pass. These include a provision allowing insurers to charge older people more in premiums than under current law — the provision AARP has called an "age tax" — and the provision allowing small businesses to sell "association health plans," an important GOP priority.

However, the provision allowing states to choose to receive a Medicaid block grant, rather than a per-person funding cap, does comply with budget rules, meaning it only needs 50 votes like the rest of the bill. A provision broadening the ACA's state innovation waivers to include more of the law's regulations is still pending review.

Why it matters: The Senate bill was already struggling to win support among enough Republicans, and shedding more big pieces isn't going to help.


AT&T's Internet TV service nears 500K users as traditional video business weakens

Mike Mozart / Flickr Creative Commons

AT&T said Tuesday that it now has nearly 500,000 subscribers in its Internet-based DirecTV Now video service. That comes amid continued losses in its traditional DirecTV video service.

DirecTV Now also faces a host of Internet-based competition, including Hulu, Dish Networks' Sling, Sony's PlayStation Vue and Google's YouTube TV. Sling leads the back, according to Ad Age, with an estimated 1.7 million subscribers, while Sony has around 450,000. Nielsen said earlier today it plans to start counting Hulu and YouTube TV along with the other leading TV services.

Earnings up, Revenue down: Overall, AT&T posted per-share earnings 79 cents, a nickel ahead of expectation and up nearly 10 percent from the prior year. Revenues, though were down a bit from a year-ago, to $39.8 billion amid weakness in both wireline and consumer wireless.

Phone business tough: AT&T said it added 2.3 million wireless customers in the U.S., but as has been the case for a couple years now, nearly all the gains came from connected cars and other non-phone devices.


Dems call for protests as GOP moves forward on health care bill

Cliff Owen / AP

Senate Majority Leader Mitch McConnell told reporters he looks forward to finalizing the health care bill through an open amendment process by the end of the week. But "this is just the beginning. We're not out here to spike the football," he said.

Majority Whip John Cornyn nodded to Sen. John McCain's speech calling for bipartisan cooperation. Open debate "could well be the beginning of that healing process for this institution."

Meanwhile, Senate Democrats took to the capital steps with a bull horn.

  • Sen. Chris Murphy: "There are 51 senators who need to hear from you."
  • Sen. Jeff Merkley: "How about if we fill the streets outside every Republican office across America? That's the kind of action we need."
  • Sen. Elizabeth Warren: "Make no mistake, we have lost an important battle today. But we have not yet lost this war."