Nov 19, 2019

Axios Generate

Good morning! Today's Smart Brevity count: 1,169 words, ~ 4.4 minutes.

I joined the Axios Pro Rata podcast to discuss the latest on Saudi Aramco's IPO.

More on the listening front: Friday brings the birthday of the great Tina Weymouth of Talking Heads and the Tom Tom Club, who have today's intro tune...

1 big thing: The climate war over cars intensifies

Illustration: Sarah Grillo/Axios

The high-stakes fight over vehicle emissions and mileage rules is getting more intense and drawing in new combatants.

Driving the news, part 1: California Gov. Gavin Newsom said the state government would only buy cars from automakers that reached a deal with the state on increasing emissions standards for their national fleets.

  • Ford, VW, Honda and BMW struck a deal with the state last summer that bucks the White House effort to roll back Obama-era standards for vehicles built through the mid-2020s.
  • "Carmakers that have chosen to be on the wrong side of history will be on the losing end of California’s buying power," Newsom said in a statement on the policy first reported Friday by the site CalMatters.
  • That means ending purchases from GM, Fiat Chrysler, Toyota and others siding with the administration in litigation over federal efforts to curb California's power to set rules that roughly a dozen other states follow.
  • The important numbers: Per Reuters, California bought nearly $59 million in vehicles from GM in 2016-2018 and nearly $56 million from Fiat Chrysler in the same period.
  • Quick take: This is increasingly a game of hardball. Remember the Justice Department recently opened an antitrust inquiry into the four companies that reached the deal with California.

Driving the news, part 2: Electric vehicle makers Tesla and Rivian are joining the fray.

  • They're members of the National Coalition for Advanced Transportation — a group that also includes several power and EV charging companies — that has joined litigation on the matter.
  • That group filed a motion Friday to intervene in cases filed by California and the Environmental Defense Fund challenging a Transportation Department finding that its purview over fuel economy preempts state tailpipe CO2 rules.
  • The group supports maintaining California's standards and zero-emissions vehicles program, and the motion lays out the parties' interests — including Tesla's ability to keep earning valuable compliance credits under the current rules.
  • Bloomberg Environment has more.

Where it stands: Those lawsuits, by the way, are two of a growing number in the administration tussle with California.

On Friday, California and a suite of other states filed suit against EPA for yanking the state's Clean Air Act waiver to set standards that go beyond federal rules.

Why it matters: It's one of the most intense and consequential regulatory battles of the Trump era.

  • Transportation is the nation's largest carbon emissions source. And new Energy Department data shows those emissions rose again last year (more on that below).
  • Meanwhile, automakers want a single set of national rules as they make billion-dollar bets on their future fleets. But the powerful industry has splintered on how to get there and what the standards should be.
2. The state of U.S. carbon emissions
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Data: U.S. Energy Information Administration; Chart: Axios Visuals

U.S. carbon emissions from energy rose by 2.7% last year, ending several years of declines, federal Energy Information Administration data confirms.

Why it matters: While emissions have been in a generally downward trend for well over a decade, the report late last week shows how the U.S. is off track to meet its pledges under the Paris climate deal.

  • Under the Obama administration, the U.S. pledged to cut greenhouse gas emissions by 26%-28% below 2005 levels by 2025.
  • U.S. emissions of CO2, the dominant greenhouse gas, last year were 12% below 2005 levels, per EIA's report.

The intrigue: President Trump is pulling the U.S. out of the agreement, but the data show how a future president who reverses course would be challenged to meet the existing commitment, let alone a tougher pledge.

What they found: EIA attributed the rise to a warmer summer and a colder winter than in 2017.

And then there's transportation, which is the largest source of U.S. emissions and, unlike power, emissions from that sector have been on an upward march.

  • "Transportation-related CO2 emissions have been increasing steadily in the United States since 2012 because of a recovering economy and moderate fuel prices," they write.

Go deeper with EIA's full report

3. Inside the downsizing of Aramco's IPO

The Financial Times just published a deeply reported tick-tock of how Saudi officials retreated to a scaled-back version of the long-planned, often delayed IPO of state oil giant Aramco.

Why it matters: The decision to float just 1.5% of the company's shares on the domestic exchange at a valuation of roughly $1.6-$1.7 trillion, and largely limit the sale to regional investors, is a far cry from more expansive and lucrative plans once envisioned by Crown Prince Mohammed bin Salman.

What they found: The story (subscription required) has inside-the-room details on a meeting Saturday in Riyadh between major investment banks and Saudi officials, as well as other sessions in recent weeks.

The FT quotes one person briefed on the Saturday meeting who said: "There were basically two options — an international deal valued at $1.5tn, which could possibly have been walked up to $1.6tn, or a local version coming in at $1.7tn.”

The intrigue: They report that the meeting was very brief and that the banking advisers left without knowing what would ultimately happen. Let's pick it up from there...

  • "Despite years of jumping through hurdles to win business from Prince Mohammed, the sovereign Public Investment Fund and Saudi Aramco, advisers only found out the decision on Sunday morning," they report of the decision to go with the 1.5% float.

Worthy of your time

4. How climate change threatens Superfund sites
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Reproduced from a U.S. Government Accountability Office map; Map: Axios Visuals

A newly public federal report finds that 945 Superfund sites — around 60% of the nation's total — could be affected by sea-level rise, wildfires and other climate change-related harms.

Why it matters: The Government Accountability Office report warns of more frequent or intense events that damage the waste sites and "lead to releases of contaminants that could pose risks to human health and the environment."

What's next: The study by the congressional watchdog recommends, among other things, that EPA take steps to integrate climate into the Superfund program's risk and response planning.

But, but, but: EPA, in a response included with the report, pushed back against some of the suggestions.

A senior official writes that the program, under existing practices, "adequately ensure that risks and any effects of severe weather events, that may increase in intensity, duration, or frequency, are woven into risk response decisions" for the sites.

Go deeper: GAO: 60% of Superfund sites at higher risk in climate change (Associated Press)

5. Catch up fast: Coal, EVs, storage

Power: Via The Arizona Republic, the largest coal-fired power plant in the West has shut down. "The Navajo Generating Station coal-fired power plant near Page burned the last of its coal Monday, marking the end of the plant's 45-year run, Salt River Project announced," it reports.

Electric cars: Per CNBC, "Chinese electric carmaker WM Motor is seeking up to $1 billion in funding within the next six months as it targets one new model a year."

Meanwhile, The Verge reports: "BMW has been teasing the i4 electric car for years, and now the German automaker has released camouflaged photos of the sedan being tested in winter weather conditions ahead of a 2021 release. The company also started teasing some eye-popping specs — namely, 600 kilometers (373 miles) of range and 530 horsepower."

Batteries: Via The Sydney Morning Herald, "The largest lithium-ion battery in the world – Tesla's big battery in South Australia – will undergo a 50 per cent expansion in a move its owners hope will increase the stability of the grid and reduce power bills."