Jul 2, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning. Today's Smart Brevity count: 1,220 words, 4.6 minutes.

Heads up: Axios' Amy Harder is joining a webinar today at noon ET along with Nathaniel Bullard, chief content officer at BloombergNEF, to discuss transportation in the post-pandemic world. RSVP here.

Heads up II: We're taking tomorrow off, so Generate will return to your inbox on Monday. Have a nice holiday!

🎸And this weekend, Robbie Robertson of The Band will celebrate a birthday, so one of their songs he penned is today's intro tune...

1 big thing: CO2 emissions may have peaked — but that's not enough
Reproduced from DNV GL; Chart: Axios Visuals

More analysts are making the case that COVID-19 could be an inflection point for oil use and carbon emissions. But it's hardly one that puts the world on a sustainable ecological path.

Driving the news: The risk advisory firm DNV GL, citing the pandemic's long-term effects on energy consumption, projects in a new analysis that global CO2 emissions "most likely" peaked in 2019. DNV GL's emissions projections, which are pretty optimistic, are captured in the chart above.

  • And, per Reuters, the firm also argues that the pandemic has accelerated the global oil demand peak by several years, which they now believe also occurred in 2019.
  • Separately, Bloomberg reports on a new Citigroup group analysis which finds: "Oil product demand growth will falter significantly, change its contours and never return to pre-COVID-19 rates of growth."

Why it matters: These new reports are the latest to take stock of the pandemic's unprecedented shock to the energy system and the lasting effects.

But it's also a reminder that the demand reduction and carbon emissions decline that's happening for tragic reasons is not even close to enough to hold warming significantly in check.

Threat level: "Even with peak emissions behind us, and flat energy demand through to 2050, the energy transition we forecast is still nowhere near fast enough to deliver the Paris ambition of keeping global warming well below 2°C above pre-industrial levels," the DNV GL analysis states.

"To reach 1.5-degree target, we would need to repeat the decline we’re experiencing in 2020 every year from now on."

The intrigue: The idea that either oil demand, carbon emissions, or both have peaked is nowhere near a consensus view among analysts and it's even a little contrarian. And needless to say, the number of variables is massive.

The climate scientist Zeke Hausfather sees the odds that emissions peaked last year at around 50-50, and notes that projections of a 2019 peak assume it would have happened anyway in the mid-2020s.

The bottom line: "[I]t's always important to emphasize that peaking emissions does not stop the world from continuing to warm," Hausfather, who is affiliated with the Breakthrough Institute and the research group Berkeley Earth, tells me via email.

"CO2 accumulates in the atmosphere, so to stop warming we need to get emissions down to net-zero. Peaking is just the first (and easiest) step on the long road to zero emissions," he said.

Go deeper: Coronavirus leaves experts pondering if the planet already hit peak oil demand

Why going electric makes sense for ride-hailing

Illustration: Sarah Grillo/Axios

Deploying electric vehicles instead of gasoline-powered models for services like Uber and Lyft provides outsized climate benefits compared to emissions cuts from EVs for only personal use, a new analysis finds.

Why it matters: The peer-reviewed study in Nature Energy, which is based on California data, follows explosive growth in ride-hailing in recent years — and evidence that it's cannibalizing more climate-friendly mass transit.

The study is based on data provided by Uber and Lyft as well as charging providers, which together provide a detailed look at how the limited number of EVs in the ride-hailing fleets actually operate in the real world.

The big picture: "[T]he potential environmental and emission reduction benefits are approximately three times higher for electric vehicles being used in ride-hailing compared with those of regular vehicle usage in California," finds the paper by Alan Jenn.

He's with the Institute of Transportation Studies at the University of California, Davis.

How it works: There's a couple of big reasons expanding what's now a small number of EVs in ride-sharing is helpful from an emissions standpoint.

  • One is that ride-hailing vehicles log lots of miles, so the comparative advantage of a zero-emissions vehicle becomes proportionately higher.
  • And the charging profile of the ride-hailing vehicle is different than cars used only for personal needs. The ride-hailing cars tend to charge during the day when solar penetration on the grid is higher.

Where it stands: The paper comes as California regulators and ride-hailing companies are seeking to increase the amount of EVs used in the industry.

  • Most recently, Lyft announced a goal in June to have 100% electric vehicles (or other zero-emissions models) on its platform by 2030.
  • But the plan assumes significant help from state and federal policymakers.
  • EV adoption in ride-hailing is challenging because the vast majority of vehicles are driver-owned and EVs currently have higher up-front costs.
A new warning on energy innovation

Illustration: Sarah Grillo/Axios

Via Axios' Amy Harder...Most technologies necessary to aggressively tackle climate change are not yet ready to deploy on a mass scale, and the coronavirus is likely to delay development, according to a new International Energy Agency report.

Driving the news: The IEA analysis released Thursday arrives ahead of a meeting of top government officials next week to discuss clean-energy innovation and how to incorporate it into economic recovery plans.

The big picture: Three-quarters of the cumulative emissions reductions needed to put the world on a sustainable path come from technologies that are in early stages of development, the IEA found.

The agency is calling on governments to keep and eventually increase research and development budgets and incorporate additional provisions into whatever policies they’re passing to recover from pandemic-induced recessions.

How it works: The IEA, an intergovernmental research organization, said technologies exist today to reach goals of net-zero carbon emissions within 30 years, but the scale of development is too slow. The fastest examples of technologies maturing are things like LED lights and lithium-ion batteries, which took 10 to 30 years to reach mass scale.

  • The IEA studied the readiness of some 400 technologies and put them into four main categories, including electrification of heating and transport, carbon capture, low-carbon hydrogen and bioenergy, energy derived from organic material.
  • While wind and solar electricity are growing rapidly, technologies to clean up other sectors, like manufacturing and transport, are lagging.

What they’re saying: “When we look at those, we come up with the conclusion that in the absence of much faster clean energy innovation, achieving our international climate goals will be all but impossible,” Fatih Birol, International Energy Agency executive director, told Axios Wednesday in an interview.

The intrigue: In one model achieving net-zero emissions by 2050, the IEA found an average of two hydrogen-based steel plants would have to begin operating every month for the next 30 years. Today, such technology only exists at the prototype stage.

Bonus: The link between COVID-19 and biofuels
Giphy

The Financial Times spotted an interesting connection laid out in the IEA report on energy innovation.

"Will coronavirus boost the biofuels sector? It may sound far-fetched, but here’s how it could work. As labs race to find a vaccine for Covid-19, algae and genetically engineered plants could be used to produce a vaccine (once it is discovered) in large quantities," the FT reports this morning.

"This could benefit biofuels by bringing about advances in genetic engineering or new ways to extract products like oil from biomass feedstock," the piece adds.

Catch up fast: OPEC, Congress, PG&E

Oil-and-gas: "Saudi Arabia has threatened to ignite an oil-price war unless fellow OPEC members make up for their failure to abide by the cartel’s recent production cuts, delegates said." (Wall Street Journal)

Capitol Hill: "The House passed a $1.5 trillion 'green' infrastructure package on a partisan basis Wednesday by a 233-188 vote, as Democrats signaled their commitment to combating climate change through multiple avenues, a key issue for their voting base." (Washington Examiner)

Renewables: "The North American arm of European energy giant Engie SA and climate-focused investor Hannon Armstrong announced Thursday they will partner on a 2.3-gigawatt portfolio of U.S. wind and solar projects slated for completion this year." (Greentech Media)

Utilities: "Pacific Gas & Electric, California’s largest utility, emerged from bankruptcy on Wednesday and put $5.4 billion in cash and 22.19 percent of its stock into a trust for victims of wildfires caused by the utility’s equipment." (New York Times)

Ben GemanAmy Harder