Feb 22, 2019

Axios Generate

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ICYMI: The White House yesterday said out loud what's become increasingly clear — there won't be a deal with California on vehicle emissions and mileage rules that federal officials are moving to weaken. The LA Times has more here, and Axios writes on California's wider battle with President Trump here.

And, this week marked a pair of Steely Dan milestones: the Feb. 20 birthday of the late Walter Becker and the 45-year anniversary of the release of "Pretzel Logic," which provides today's intro track...

1 big thing: The Australian region that kicked coal

Illustration: Sarah Grillo/Axios

CANBERRA, Australia — A decade ago, coal supplied 90% of this national capital region’s electricity. By next year, it will be 0%, and renewable energy will be 100%, Axios' Amy Harder reports.

Why it matters: It’s a rare example of a region traditionally dependent upon coal weaning itself off the fuel. The key lesson: Big pivots in energy systems are possible with stable government leadership, instead of windshield-wiper policies that voters from Australia to America have been accustomed to in recent years.

“We’ve had the same parties in power, that same leadership over a 10-year period. We’ve been able to steadily roll out policies and provide industry certainty.”
— Shane Rattenbury, climate change and sustainability minister, Australian Capital Territory

The big picture: Despite its big environmental footprint, coal has traditionally been the world’s cheapest form of electricity. As concerns about air pollution and climate change grow, renewable energy is increasingly competing with coal, buoyed by government policies like the kind this region implemented.

  • In many parts of the world, natural gas is emerging as the top form of power because it’s plentiful and burns cleaner than coal, but here in Australia that fuel is mostly exported.

Details: Australia’s economy is particularly dependent upon coal. This nation is the world’s largest coal exporter, and nearly 75% of its electricity is coal-fired.

  • The country's capital region, known as the Australian Capital Territory (ACT), is barred by the nation's constitution from implementing a price on carbon dioxide emissions.
  • Instead, it pursued changes to electricity-market policies to favor wind and solar over coal, such as reverse auctions where companies compete to offer low-cost renewable electricity.
  • The region stands in contrast to Australia’s federal policy, which has been mostly absent.

Yes, but: The capital region faces limitations.

  • The government’s electricity won’t be independently renewable energy. Most efforts to get 100% renewable energy aren’t due to the nature of electricity grids and variable wind and solar resources.
  • Instead, it has procured renewable energy — mostly wind farms — from within its region but also across Australia to equal its power demand.

Go deeper

2. FERC chief sees LNG breakthrough

Last night the Federal Energy Regulatory Commission approved Venture Global LNG's multibillion dollar Calcasieu Pass export facility in Louisiana in a 3-1 decision.

Why it matters: FERC Chairman Neil Chatterjee called the green-light — the first in 2 years — a breakthrough that could enable action on other projects.

  • "I anticipate we’ll be able to use the framework developed in this order to evaluate the other LNG certificates that the Commission is considering," Chatterjee said in a statement.
  • ClearView Energy Partners, in a note, estimates FERC could approve up to 5 more projects in the first half of 2019.

Where it stands: The decision came after 3 commissioners reached agreement comparing the project's greenhouse gas emissions to total national emissions.

  • However, Democrat Cheryl LaFleur, in a concurring statement alongside her yes vote, called it "only the first step to assist the Commission in ascribing significance to a given rate or volume of GHG emissions as part of our climate change analysis."

The big picture: Growing exports are enabling the U.S. to become a bigger player in global markets amid record domestic production.

  • Dan Brouilette, the Energy Department's deputy secretary, told Bloomberg that FERC's decision and subsequent approvals can help European countries cut reliance on Russia.

My thought bubble: It's unclear if the U.S. will become a major European supplier. These are commercial decisions and Asian markets have been more attractive.

  • But the existence of alternative supplies are giving European countries more leverage with Gazprom.

Go deeper: Read the Washington Examiner's piece on the "breakthrough approval."

3. New worries for Tesla and Ford

Tesla: Consumer Reports says it will no longer recommend the Tesla Model 3 based on complaints from car owners, news that helped send Tesla stock down by 3.74% yesterday.

  • "[Consumer Reports] members say they’ve identified a number of problems with their cars, including issues with its body hardware, as well as paint and trim," the publication reported.
  • Why it matters: It's a PR hit for the hot-selling Model 3 and signals more than just isolated problems.
  • Yes, but: The Model 3 nonetheless tops Consumer Report's customer satisfaction survey. And, as Axios' Joann Muller notes, problems with the electronics and body fit-and-finish are typical for new models, and not surprising given CEO Elon Musk's description of "production hell" last year.
  • What they're saying: “The vast majority of these issues have already been corrected through design and manufacturing improvements, and we are already seeing a significant improvement in our field data,” Tesla tells Consumer Reports.

Ford: Via the Wall Street Journal, "Ford Motor Co. said Thursday that it would investigate its process for certifying vehicles to meet U.S. fuel-economy standards, after a group of employees raised concerns about the company’s testing methods."

  • Why it matters: Federal fines and customer lawsuits could await "if its mileage ratings or emissions compliance are found to be faulty," WSJ reports.
  • Go deeper: Ford's announcement is here.
4. New crude oil records and more petro-notes


This week brought 2 more milestones in the U.S. oil boom.

For the record: The Energy Information Administration said crude production averaged 12 million barrels per day last week for the first time. And crude exports averaged 3.6 million bpd, the highest on record by some margin, per their latest weekly report.

Why it matters: Yes, the weekly data is always preliminary and export levels bounce around. But the trends are clear and the data help show the scale of the U.S. emergence as the world's largest producer and a growing exporter too.

* * *

Saudi Arabia: Via Reuters, "State-owned Saudi Aramco has signed an agreement to form a joint venture with Chinese conglomerate Norinco to develop a refining and petrochemical complex in Panjin city, saying the project is worth more than $10 billion."

The world: 2019 should bring a surge in industry approval of new projects, according to the consultancy Rystad Energy in a Friday note.

  • This year could see final investment decisions on projects with total combined volumes of over 46 billion barrels of oil equivalent, more than triple last year's level, they said.
  • The amount does not include shale projects.
  • Go deeper: Oil and gas groups set to revive spending on new production (Financial Times)
5. Mapping global nitrogen dioxide
Expand chart
Data: Descartes Labs via ESA; Map: Harry Stevens/Axios

This map shows a two-month average of the abundance of nitrogen dioxide (NO2) in the air, as sensed from space by the new Sentinel-5P satellite from the European Space Agency, Axios' Andrew Freedman reports.

Why it matters: Nitrogen dioxide is part of a group of gases referred to as nitrogen oxides, or NOx.

  • NOx is a key contributor to smog and a major health hazard, so monitoring it — with tools like this imaging from the space data analysis firm Descartes Labs — will help track major sources.

The big picture: NOx comes from fossil-fueled power plants and vehicles, burning biomass, industrial plants and elsewhere.

  • NOx has a short atmospheric lifetime, on the scale of hours, so satellite sensors can give a near-real-time picture of combustion worldwide, from the cars leading to L.A. smog to biomass burning in vast forests of Indonesia and South America.

Where it stands: A lot of point sources visible in the image are to be expected, such as major cities and oil production hubs.

  • However, the hazy bands of NOx over the Amazon and sub-Saharan Africa may be clues to different sources, and the satellite is even able to show typically used shipping routes.

But, but, but: EPA data shows that U.S. NOx emissions have fallen sharply in recent decades to less than half their 1990 levels, and the decline from power plants has been even steeper.

Read more

6. One 2020 climate thing

Thursday brought the rollout of a super PAC that will support Washington State Gov. Jay Inslee if he moves ahead with plans for a climate-focused presidential run.

Why it matters: Announcement of the Act Now On Climate super PAC is another sign that global warming, long a second-tier (at best) topic in national elections, could be more prominent in this cycle.

The intrigue: Corey Platt, a senior adviser to the group, tells Politico that the PAC plans to be active even if Inslee doesn't run.

"If he doesn’t, we will continue to work to make sure Democratic presidential candidates make this issue the priority," he said.