Mar 30, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning from Seattle. I don't recommend moving in the middle of a pandemic, but then again what is recommended during these weird and trying times. 

My latest column has exclusive interviews on a topic that's poised to grow in importance amid a recession. I'll share glimpses of that, and then Ben Geman will get you up to speed on other news. 

Today's Smart Brevity count: 1,412 words, 5.5 minutes.

1 big thing: Civil rights activists and natural gas

Photo illustration: Eniola Odetunde/Axios. Photos: Johnny Nunez, Scott Olson, and Stringer/Getty Images

Top American civil rights activists are opposing an abrupt move away from natural gas, putting them at odds with environmentalists and progressive Democrats who want to ban fracking.

Driving the news: Revs. Al Sharpton and Jesse Jackson and National Urban League president Marc Morial told Axios energy costs are hitting people of color unfairly hard. These concerns, expressed before the coronavirus pandemic, are poised to expand as paychecks shrink.

What they’re saying:

  • Sharpton in March: “I think people are concerned about the affordability and they are concerned about being left in the cold. I think natural gas is a temporary — I don’t think we ought to make it the end-all, be-all — solution, but in the interim, people in communities of color should not pay the brunt of suffering through cold winters.”
  • Jackson in February: “I support the call [to ban fracking] with a proper transition. In the meantime, those who are down and out have to have it in the meantime.”

Where it stands: Fracking has unlocked vast reserves of natural gas over the past decade. That’s providing a cheap and relatively cleaner fuel for electricity and heating.

  • Lower-income people spend a disproportionate amount of their paychecks on energy. This is especially so in black and Hispanic communities, where poverty rates are higher.
  • Environmentalists and progressive Democrats, including presidential candidate Bernie Sanders, increasingly oppose natural gas and are calling to ban fracking because of its role heating up the planet.

What's happening: “I would not want to cite a specific instance, but generally speaking, people are debating these issues in some instances without consultation with the leaders of the African American communities and neighborhoods affected by these issues,” Morial said.

  • “Natural gas is a bit of a bridge fuel. It’s a fuel that we need to have access to because the transition to alternatives is a long-range transition.”

How it works:

  • In New England and New York, a handful of natural gas pipelines have been scrapped in recent years, partly due to environmental opposition. This has occurred while those regions have increased their dependence on gas for electricity.
  • Those pipelines likely would have helped lower regional winter energy costs, which are usually higher in cold months compared to other parts, per government data.

The other side:

  • Tamara Toles O'Laughlin, North America director for, said: “It is our duty as people who have any measure of privilege to take a position that evokes systematic change, because if we do not, then we’ll all fail.”
  • She said doesn’t have relationships with the Rainbow PUSH Coalition led by Jackson, National Action Network (NAN) led by Sharpton, and Morial’s National Urban League (NUL). “But we are open to it because a lot of our work on energy access and justice overlaps.”

What’s next: Stay tuned for a deeper dive into an Illinois natural gas pipeline project Jackson is backing.

Bonus: The money question

The scrutiny of money ties between fossil fuel companies and people of color runs deep. The National Association for the Advancement of Colored People issued a report last year describing what it said were the sector’s manipulation tactics.

Between the lines: The NAACP was attempting to dissuade local chapters from accepting energy-industry money, per the New York Times.

  • Jackson said he has not received money from natural gas companies as he pushes for a gas pipeline in Illinois.
  • Sharpton’s NAN doesn’t have to disclose its donors given its tax structure.
  • The NUL receives donations from most types of corporations, including oil companies.
  • Morial said he doesn’t monitor donations. He criticized what he describes as a long tradition of unfairly accusing people of color of falling victim to industry money.

“Whenever someone disagrees with what you say, they think ‘oh you must be getting paid,’” Morial said. “It’s condescending, patronizing and racist. I hope you print it. I want them to see it. Because that’s the way we feel.”

2. Trump vows to press Putin

President Trump said on Fox News this morning that he's planning to speak with Russian President Vladimir Putin shortly about the Russia-Saudi rupture on oil policy that's helping to push prices lower.

  • "I’m talking to him about that among other things, because you know, getting along with Russia is a good thing," Trump said in a response to a question about pain in the oil-and-gas industry.

Why it matters: The three-year-old Saudi-Russia agreement on supply management collapsed in early March, putting further pressure on prices already pushed steeply downward because coronavirus has frozen so much travel and economic activity.

  • The vow to discuss the topic with Putin comes as U.S. officials are also pressing Saudi Arabia to back off plans to boost supplies to the already flooded market, but that initiative has yet to show results.
  • The price and demand collapse is creating severe financial pressure on U.S. producers, who have already been announcing steep cutbacks.

But, but, but: Global demand is undergoing such an unprecedented collapse that any potential changes in Russia and Saudi supply decisions are likely to have only a limited effect.

3. Oil's crisis deepens

Speaking of the global demand collapse, a Goldman Sachs note this morning offers a window into the unprecedented crisis facing the oil industry.

Driving the news: Their analysts now estimate that global oil demand has fallen by 26 million barrels per day — a 25% cut in consumption.

  • Worsening physical constraints on storage mean that at least 900,000 barrels per day has been halted, or "shut in," and it's growing by the hour.
  • One problem for the sector is that shutting in wells can significantly and permanently damage them.
  • That will affect the industry's ability to supply the market once demand normalizes. "[W]e believe the upstream sector could lose as much as 5.0 million b/d of oil supply capacity," they note.

Threat level: Bloomberg reports that pipeline operators are asking oil companies to scale back production "in the clearest sign yet that a growing glut of crude is overwhelming storage capacity."

4. How coronavirus could affect Trump's auto regs

The Trump administration is expected to finalize controversial auto mileage and carbon emissions rules early this week.

Why it matters: The plan, which will weaken a pillar of the Obama-era climate agenda, has been at the center of an intense, years-long political and regulatory struggle.

  • But now it can't be untethered from the COVID-19 crisis, which has drawn in big automakers who are under pressure to quickly pivot to ventilator production.

What we're watching: Here are a few things I will be monitoring when the final rules hit...

  • The final numbers: The Trump administration has reportedly settled on requiring roughly 1.5% annual efficiency increases through the mid-2020s, far less than the roughly 5% mandated under Obama.
  • The reaction: One question is whether the plan will satisfy companies who have been favoring year-over-year increases over earlier White House plans to freeze current requirements in place.
  • GM and Ford: They're in an especially unusual spot because President Trump — who is not shy about attacking companies by name — has been very publicly leaning on them to produce ventilators. He's even invoked the Defense Production Act to impose requirements on GM.
  • Speaking of Ford: They've publicly bucked the White House by last year joining three others — VW, Honda and BMW — in striking a separate deal with California regulators to meet tougher nationwide rules.
  • The gas pump: The collapse in oil demand from COVID-19 and the Saudi-Russia price war is creating very low gasoline prices, so the extent and pace of demand recovery could affect some consumer purchase decisions going forward.
  • The green movement: Fighting the Trump plan is a high priority, but the COVID-19 crisis means it's suddenly hard for any advocacy movement to get traction.
  • 2020 election: The rules are guaranteed to be litigated, so their ultimate fate will depend on whether Trump is re-elected, because a President Biden would certainly abandon them.
5. Tracking COVID-19's impact via satellite

Nitrogen dioxide concentrations over Spain. Courtesy of the European Space Agency

One striking way to see the scope of economic paralysis from COVID-19 comes via newly released satellite images from the European Space Agency.

What they found: Observations from the Copernicus Sentinel-5P satellite show steep drops in nitrogen dioxide concentrations over European cities.

  • They compared the period from March 14–25 to average concentrations of the pollutant in March of 2019. Madrid and other Spanish cities are shown above.

Go deeper: Coronavirus lockdowns give Europe's cities cleaner air (Reuters)

6. Japan declines to boost climate ambition

Japan told the UN on Monday that it's not currently strengthening its emissions-cutting goal under the Paris climate agreement, instead sticking with the existing target of a 26% reduction from 2013 levels by 2030.

Why it matters: Per Climate Home News, Japan is the first G7 nation to submit a 2020 update as envisioned under the 2015 pact, and its decision drew "criticism from architects of the Paris climate agreement for failing to set tougher targets."

But, but, but: A government official with the U.K., which is slated to host the next big UN climate conference, told Climate Home News they expect Japan to come up with a more ambitious plan.

Ben GemanAmy Harder