Oct 9, 2020

Axios Generate

Good morning! Today's Smart Brevity count: 1,277 words, 4.8 minutes.

🚨 Situational awareness: "Saudi Arabia is considering canceling OPEC plans for an oil output hike early next year, senior Saudi oil advisers said, as Covid-19 cases in many parts of the world rise and the expected return of Libyan crude threatens to swell global supplies." (Wall Street Journal)

🎷And Bruce Springsteen's double-album "The River" turns 40 this weekend, so it provides today's intro tune...

1 big thing: Oil giant stakes hydrogen truck startup

Image courtesy of Hyzon Motors

The huge multinational oil-and-gas company Total SE is investing in the hydrogen fuel cell truck and bus startup Hyzon Motors, the companies announced this morning.

Why it matters: It's the latest sign of increasing interest in hydrogen-powered heavy vehicles amid moves by startups and legacy automakers alike.

It also shows how European-headquartered oil giants are boosting their alternative energy portfolios, even though hydrocarbons remain their dominant business lines.

Driving the news: Total's VC arm is leading the funding round that also has participation from Ascent Hydrogen Fund, Hydrogen Capital Partners and Audacy Ventures Ltd.

Yes, but: The size of the investments in Hyzon were not disclosed, but Bloomberg reports that they're relatively small. The funding round "totaled more than $15 million and valued Hyzon at around $200 million," it reports.

What's next: Hyzon says it plans to deliver around 5,000 fuel cell trucks and buses over the next three years from its facilities in North America, Europe and Asia.

The company, a spinoff out of Singapore-based Horizon Fuel Cell Technologies, says it currently has roughly 400 trucks and buses on the roads.

The big picture: Hydrogen-powered heavy vehicles are having a moment even though it remains a small market with plenty of barriers to major growth. Two recent examples...

  • Hyundai delivered its first XCIENT fuel cell heavy-duty trucks to European customers this week and announced plans to bring hydrogen-powered trucks to the U.S. and China, too. It plans to build up to 2,000 trucks a year starting in 2021.
  • Toyota and its subsidiary Hino said Monday they're developing a fuel cell heavy truck for the North American market, with a demonstration model arriving in the first half of 2021.

The intrigue: It has been a busy stretch for Total's growing cleantech portfolio and investments.

  • This week Total made its latest renewables investment by taking a 20% stake in a floating wind project off the French coast.
  • Last week Total announced the acquisition of Blue Point London, the city's largest EV charging network.

Of note: Axios' Joann Muller will have more on hydrogen-powered trucks in her Navigate newsletter later today. You can sign up here.

2. Big law firms facing new climate pressure

Illustration: Aïda Amer/Axios

Here's an emerging front in climate change activism: heavyweight law firms and their recruitment of new talent from law schools.

Driving the news: Later today, activists say they'll deliver signatures of 600+ law students pledging to boycott the firm Paul, Weiss, Rifkind, Wharton & Garrison unless it ditches Exxon as a client.

  • Paul Weiss ranks poorly in a climate scorecard of big firms released this month by the new group Law Students for Climate Accountability.
  • The signatures being delivered today come from students at over 45 schools, the group said.

Why it matters: It signals the evolving tactics of climate advocates. Another example of the widening scope are campaigns in recent years to pressure tech giants over their emissions and work with oil companies.

Harvard and Yale law students protested at Paul Weiss recruitment events in January and February.

The other side: Paul Weiss, in a statement to news outlets around the Yale protests, said...

“We are proud of the outstanding work we do for a wide range of commercial and pro bono clients in their most challenging and high-profile matters, including our recent defense of ExxonMobil in a securities fraud case in which the court found, after trial, that plaintiff’s claims were entirely without merit."

The intrigue: Some firms are taking notice of how they're perceived by students coming into the profession.

This month, Cozen O’Connor and Wilson Sonsini posted statements noting they're among only four firms with "A" grades in the Law Students for Climate Accountability scorecard.

3. A more connected grid needs to be tougher too

Illustration: Eniola Odetunde/Axios

A smarter, more connected electrical grid is more efficient and more resilient against natural threats — but more vulnerable to cyberattacks, Axios' Bryan Walsh reports.

Why it matters: As electricity shifts to more distributed and intermittent renewable sources, updating the grid is a necessity. But unless cyber defense keeps pace, digitizing the grid will open new points of approach for cyber threats.

By the numbers: Over the next two years, 2.5 billion industrial devices are set to be connected to the energy industry's critical infrastructure.

  • As the grid gets more connected, it will be exposed to attacks that endanger electricity service.
  • "The attack surface is increasing," says Leo Simonovich, head of industrial cyber and digital security at Siemens Energy. "At the same time, the cost of attacks have gone down and are being deployed by sophisticated actors like nation-states."

How it works: Simonovich says "you can't protect what you can't see," so improving visibility into operations is key.

  • The company last week launched an AI-based Managed Detection and Response system that can sift through billions of data points to determine "what is not normal and understand the context" of a possible attack, he says.

Read more

4. Fracking animates the fight for Pennsylvania
Data: EIA; Chart: Axios Visuals

This chart helps explain why fracking is a flashpoint in the Biden-Trump race.

The big picture: It shows the stunning rise in natural gas production in Pennsylvania, the big swing state that President Trump narrowly won in 2016, that's now the second-largest gas producer behind Texas.

Why it matters: Trump and VP Mike Pence are frequently accusing Biden and running mate Kamala Harris of wanting to ban fracking and cost jobs in the process.

Reality check: Biden wants new restrictions and regulations on fossil fuel development, but isn't calling for a fracking ban, something he and Harris have been emphasizing. However, Biden's confusing statements in the primaries and Harris' prior endorsement of a ban have helped fuel the attacks.

The intrigue: Polling shows that Pennsylvanians are split on the topic, so it's hardly clear if Trump's strategy in the state — where he trails in recent polls — will bear fruit.

By the numbers: Via this in-depth CNN piece on the tussle...

"As of June 2019, shale operators, pipeline companies and service companies together employed nearly 32,000 people in Pennsylvania, according to a New York Times analysis of Bureau of Labor Statistics data."

5. Catch up fast: BlackRock, OPEC, finance

Climate: "Five Democratic U.S. senators on Thursday asked BlackRock Inc to justify why it rarely supported shareholder resolutions tied to climate change issues despite its increased focus on the environment this year." (Reuters)

Oil demand: "[OPEC] expects oil demand to keep growing for the next two decades, in contrast to large segments of the energy sector that believe a peak in consumption is close." (Financial Times)

Banks: "HSBC will target net zero carbon emissions across its entire customer base by 2050 at the latest, and provide between $750 billion and $1 trillion in financing to help clients make the transition." (Reuters)

6. The election angle to the Devon-WPX merger
Reproduced from a Goldman Sachs report; Chart: Axios Visuals

A Goldman Sachs note this week helps visualize one reason analysts believe Devon Energy's $2.6 billion merger with WPX Energy makes sense: It helps Biden-proof Devon to a degree.

Driving the news: Goldman analysts looked at how much of various shale producers acreage in the prolific Permian Basin is on federal lands.

  • That's important because Biden has pledged to thwart new oil-and-gas development on those lands as part of his energy and climate plan.

Why it matters: Devon's federal lands exposure is one reason their shares "remain out of favor," Goldman notes, although WPX also has a decent — albeit much smaller — share of their acreage in federal areas.

Go deeper: Bloomberg's Rachel Adams-Heard has a nice distillation here of what Biden's plans mean for the industry and how companies are preparing.

7. Amazon shows off its new electric delivery van
Screenshot of Amazon video about its electric vans.

Amazon has taken the wraps off the first electric delivery van developed with the Rivian, the EV startup slated to begin mass producing vehicles for the e-commerce giant.

Why it matters: It shows that Amazon is moving to turn its pledge to be carbon neutral by 2040 into concrete steps and technology deployment.

What's next: Amazon, which is also a major investor in Rivian, plans to have 10,000 Rivian-built vehicles on the roads as early as 2022 and 100,000 by 2030. The first are expected on the roads next year.

How it works: Amazon says the new van will have a 150-mile range. They're also touting a suite of features, such as a camera system linked to an interior digital display that provides drivers a 360-degree view.

Yes, but: When it comes to EVs, Amazon is also working with other providers, including plans to add over 1,800 battery-powered Mercedes-Benz vans in Europe this year.