Jun 16, 2021

Axios Generate

Good morning readers! Today's Smart Brevity count is 1,346 words, 5 minutes.

Join us today at 12:30pm ET for a virtual event on energy resilience and the electric grid. Guests include Sen. Martin Heinrich. Register here

🎶 And this week marks 17 years since the Beastie Boys released "To the 5 Boroughs," which provides today's intro tune...

1 big thing: GM just accelerated its electric vehicle plans

Illustration: Sarah Grillo/Axios

General Motors plans to boost its cumulative investment in electric and autonomous vehicles to $35 billion from 2020-2025, a significant jump from a $27 billion target, Ben writes.

Driving the news: GM said this morning that the initiative will include...

  • Building two new battery cell manufacturing plants in addition to the two already under construction in Tennessee and Ohio.
  • GM, without providing details, also said it's adding new commercial electric trucks to its planned EV lineup and additional U.S. assembly capacity for electric SUVs.

Why it matters: It signals how the world's biggest automakers are betting big on electric vehicles that now represent a tiny — albeit growing — share of global sales.

  • GM rival Ford recently increased its estimated investment in EVs and related technologies to $30 billion by 2025.
  • The moves come as regulators in the U.S. and abroad are pushing EVs to fight climate change.

The intrigue: The industry faces also activist pressure to act more aggressively, and a suite of startups are entering the game.

  • Increasing demand for batteries is prompting automakers to more aggressively build up their own supplies.

The big picture: It's GM's second major increase in planned EV investments in less than two years.

  • "We're seeing strong profitability on the [internal combustion engine] franchise. We have to make sure we continue to invest in [scaling] EVs to get the cost down. Acceleration is absolutely right risk for us to invest in right now," GM chief financial officer Paul Jacobson told reporters this morning.

Axios' Joann Muller contributed reporting.

2. Sizzling heat ratchets up in the West

Upper air flow showing the "heat dome" across the Four Corners region, and the "Misery Index" of heat with brightest colors across the Southwest on June 16, 2021. Image: Earth.nullschool.net

A punishing and long-duration heat wave is intensifying in parts of the West and Southwest, with heat warnings and advisories in effect across seven states, Andrew writes.

Threat level: In the coming days, 40 million are likely to see temperatures at or above 100 degrees.

Why it matters: The extreme heat is unusually intense for June, and aggravating already dire drought conditions that threaten to lead to another devastating wildfire season.

The details: Overnight minimum temperatures in Las Vegas barely slipped below 90°F early Wednesday, and daytime highs are anticipated to approach the city’s all-time record of 117°F through Saturday.

  • The heat wave is the result of a sprawling area of high pressure also known as a heat dome. It's deepening the already extreme drought across the West.

By the numbers: In Death Valley, Calif., which holds the distinction of having recorded the hottest temperature on Earth, the June high-temperature record of 129°F is likely to be threatened Wednesday and Thursday.

Numerous monthly and all-time records fell Tuesday, including:

  • 107°F in Salt Lake City, tying the city’s all-time record for any time of the year and beating its previous record for June, which had stood at 106°F.
  • Hundreds of more records are likely by the end of this weekend.

What we're watching: The heat, combined with the drought conditions, means less hydroelectric power available to handle surges in power demand across the Southwest.

The big picture: The heat wave and drought are mutually reinforcing.

One of the clearest conclusions of climate science is that heat waves are becoming more intense and longer-lasting.

3. Battery startup Solid Power is going public

Solid Power, the solid-state battery company whose investors include Ford and BMW, is going public via merger with a special purpose acquisition company at a valuation of $1.2 billion, Ben writes.

Why it matters: Solid-state batteries hold the promise of more energy density, durability and safety than existing battery tech with liquid electrolytes.

The transaction with Decarbonization Plus Acquisition Corp. III will bring in over $600 million in cash for the Colorado-based battery company, the announcement states.

TechCrunch has more on the Solid Power deal.

4. Senate Democrats start playing their climate cards

Illustration: Eniola Odetunde/Axios

It's the end of the beginning for Democrats' bid to steer climate legislation through the Senate with the narrowest possible majority, Ben writes.

Catch up fast: Majority Leader Chuck Schumer today will trigger the next "reconciliation" process — that is, crafting spending and revenue measures immune from Senate filibuster.

A senior aide said Schumer wants legislation that puts the U.S. "on track to reduce carbon pollution at a scale commensurate with the climate crisis."

Why it matters: Democrats want to go big, but writing measures that likely need buy-in from their entire caucus to survive is a politically narrow path.

What's next: Schumer meets today with Budget Committee members about a fiscal blueprint that would direct other committees to write policy measures consistent with its goals.

The New York Times notes that staff-level work has already begun.

The big picture: The aide said Schumer wants funding for...

  • Clean energy incentives that would cut power sector CO2 emissions by 80% by 2030.
  • Consumer rebates for buying electric cars, which is part of the wider electric vehicles plan Schumer first floated in 2019.
  • Funding to help manufacturers and farmers "be part of the solution to reducing emissions."

The big question: Whether there's an intra-Democratic deal possible in both chambers (the Democrats' House majority is small too).

  • Liberal Democrats say strong climate measures are needed to win their votes.
  • But Schumer needs to keep more conservative Democrats in the fold.

Quick take: Schumer's climate goals didn't explicitly mention a "clean energy standard" — a mandate that utilities supply significantly escalating amounts of zero-carbon power.

Many environmentalists and climate-focused Democrats want one, but its omission could signal the steep uphill climb toward gaining 51 votes for it.

Bonus chart: Biden's energy R&D push
Expand chart
Data: Information Technology & Innovation Foundation; Chart: Connor Rothschild/Axios

Speaking of White House energy and climate goals, the Information Technology & Innovation Foundation created a nifty, interactive page on the administration's Energy Department budget request, Ben writes.

Why it matters: As you can see above, the proposal to Congress seeks a big boost in fiscal year 2022 money for R&D and demonstration programs.

  • It would be a down payment on what the White House is hoping would be a huge 10-year boost in efforts to improve existing forms of zero-carbon energy and develop new tech.
  • What's above is the 30,000-foot level, but the page also has tech-specific breakdowns (think renewables, vehicle tech, CO2 capture, buildings and so forth) of past spending and the current proposal.
5. White House oil leasing pause hits a snag

A federal judge has issued a preliminary injunction against the Biden administration's pause on new oil-and-gas lease sales in federal lands and waters, Ben writes.

Why it matters: The January White House order to suspend new sales is among the administration's most controversial policy moves.

Catch up fast: Terry Doughty, a Louisiana federal judge, issued the nationwide injunction late Tuesday in response to litigation from GOP attorneys general in 13 states.

  • The judge, nominated and confirmed under President Trump, said the states have "substantial likelihood of success on the merits" of claims against the pause.
  • "Millions and possibly billions of dollars are at stake," he wrote, citing state proceeds from leasing and development, including funds for Louisiana coastal restoration, and industry jobs.

What they're saying: The research firm ClearView Energy Partners said the injunction shows one big challenge to Biden's regulatory agenda — many recently installed, "strict-constructionist" judges who are "likely to be skeptical of federal agencies exercising broad discretion."

Yes, but: ClearView's note also said: "[T]he victory may be short-lived; not only do we expect Interior to appeal the ruling, but we also think the Biden Administration might look to pause leasing via other mechanisms."

6. More petro-notes: Shell and Equinor

Norwegian oil-and-gas giant Equinor, in an updated strategy, plans to have renewables and other "low carbon solutions" comprise over 50% of its capital investments by 2030, compared to 4% last year, Ben writes.

  • The company said yesterday it plans to grow its renewables portfolio to 12-16 gigawatts of capacity by 2030.
  • Equinor's also planning to boost oil production in the next few years, but per Argus Media, CEO Anders Opedal said: "In the longer term, Equinor expects to produce less oil and gas than today recognising reducing demand."
  • S&P Global Market Intelligence has more.

Reuters follows up its report that Shell may sell its Permian Basin holdings with a story saying suitors could include ConocoPhillips, Chevron, Devon Energy and others.

  • Why it matters: "The potential sale...would be a litmus test of whether rivals are willing to bet on shale's profitability through the energy transition to reduce carbon emissions," it reports.

Editor's note: This item has been corrected to cite S&P Global Market Intelligence instead of S&P Global Platts.