Welcome back! Today's Smart Brevity count: 1,151 words/< 5 min. read.
Ok, let's recognize another recent birthday: the late Levon Helm of The Band on May 26. You can hear him on today's intro tune...
1 big thing: The policy and politics of cutting CO2
A new report has good news and bad news for anyone hoping that the U.S. can steeply cut greenhouse gas emissions in the coming decades.
Driving the news: The nonprofit Center for Climate and Energy Solutions has released a set of 3 pathways for how the U.S. could cut economy-wide emissions by 80% (relative to 2005 levels) by mid-century.
Why it matters: Right now, climate politics are unexpectedly hot, but federal policymaking is largely frozen. But that could change with the 2020 elections, and states are already a hotbed of activity.
- The report is a detailed new addition to the world of scenario planning.
- It involves input from a suite of companies, as well as collaboration with the RAND Corp. and the Joint Global Change Research Institute, a partnership between the Pacific Northwest National Laboratory and the University of Maryland.
The big picture: "Decarbonizing the U.S. economy requires fundamental shifts in the ways we generate energy, produce goods, deliver services, and manage lands," it states.
The intrigue: Here's the glass half-full (or empty) part. There are multiple ways to get there, and the report looks widely at not just federal actors, but also the contributions of state and local governments, corporate decisions, tech development and consumer preferences.
- But 2 of the major pathways involve significant new federal policies — around carbon pricing and more — to varying degrees, which is obviously no certain thing.
- The one that envisions the most aggressive federal role includes implementing an economy-wide CO2 price in 2024 starts at $40 per ton and rises 8% annually, tougher power and vehicle emissions rules, and substantially ramped up spending on low-CO2 tech R&D and deployment.
What's next: Reports on policy always force the question of what's actually feasible, which brings me to something else on my screen.
Over at Vox, David Roberts looks at how Democrats, if they gain the Senate and White House in 2020, might use the complicated process known as budget reconciliation to advance climate policy.
- This could be key because legislation moved under reconciliation is immune from filibusters, and Democrats have essentially no chance of having a filibuster-proof majority even if they gain the upper chamber.
- But Senate rules impose all kinds of constrains on what measures can be fit under the reconciliation umbrella.
2. Exxon and Chevron under the microscope
ExxonMobil and Chevron, the biggest U.S.-based global oil giants, will face pressure to do more on climate change at their annual shareholders meetings today.
Why it matters: Investors have been pushing for climate-related commitments on the industry overall, but Exxon and Chevron have been less willing than European counterparts like Shell and BP.
Where it stands: Among other votes, resolutions urging creation of a board committee on climate change will come up at both meetings.
- Chevron's investors will also vote on a resolution urging the company to cut carbon "in alignment" with the Paris agreement's temperature goal.
What's next: I'd be surprised if they pass over their boards' recommendations to vote no, but will be watching to see how much support they garner.
Go deeper: Exxon, Chevron to Face Climate Change Pressure From Investors (Bloomberg)
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Speaking of Big Oil, Lightsource BP, which is the company's utility-scale solar arm, and the Alabama Municipal Electric Authority on Wednesday announced a $125 million, 100-megawatt project.
- Why it matters: It's among BP's largest solar projects, the company said. It will power roughly 20,000 homes, the announcement states.
3. Rare earths caught in China trade dustup
The critical role of rare earth minerals in modern manufacturing has turned them into the latest lightning rod in the trade war between China and the U.S., Axios' Dion Rabouin reports.
Why it matters: These minerals and elements are necessary components of tech and defense tools, including smartphones, LED lights, wind turbines and nuclear rods.
Driving the news: After President Trump blacklisted Chinese tech company Huawei and threatened to target other Chinese tech firms by disallowing American companies to do business with them, China signaled it could target rare earth minerals.
- Chinese President Xi Jinping recently visited a key rare earth minerals area of China, analysts say as a symbolic show of force of what the U.S. has to lose if Trump pushes forward with blacklisting.
- Though the U.S. does have rare earth minerals, the process of mining and refining them is difficult and environmentally dangerous (sometimes releasing radioactivity), so very few domestic facilities exist.
Threat level: Pushing beyond tariffs and into outright restrictions on trade and international cooperation would take the trade war to a new and more damaging level for individual companies and the stock market.
4. A mysterious EV player in the spotlight
A little-known electric truck company's plan to launch production at a shuttered GM plant in Ohio is hardly a sure thing, the New York Times reports.
Why it matters: The plan, announced in early May with few details, is bound up in the politics of GM's controversial restructuring and layoffs.
- Trump raised the profile by tweeting about it, getting ahead of GM's disclosure of plans to sell the plant to an entity that includes the EV company Workhorse Group as a minority owner.
But, but, but: Via the NYT, "The new venture, whose name remains secret, exists almost entirely on paper. Headed by the founder and former chief executive of Workhorse, Steve Burns, the business would have to raise at least $300 million to get Lordstown running again."
The intrigue: Burns declined to tell the NYT whether he's raised money. Workhorse, meanwhile, is "barely hanging on" and had less than $3 million in cash at the end of March, the paper reports.
- The 12-year-old company has actually built vehicles, albeit just 365, the NYT said, noting "most of the Workhorse trucks made so far are in use at UPS."
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Speaking of GM and EVs, CNN reports: "General Motors, America's largest automaker, and Bechtel, the country's largest construction company, are teaming up to build thousands of electric vehicle fast-charging stations across the United States."
- Why it matters: Wider fast-charging deployment is important in building consumers' confidence in EVs, which are now a tiny slice of the market.
Bonus: The state of global EVs
The International Energy Agency is out with its annual look at the global state of play for electric vehicles.
Why it matters: It's got all kinds of interesting big-picture data, like the chart above showing China's EV dominance, plus lots of finer-grain info too.
5. The shale boom's cash struggle
A new Rystad Energy note this morning shows the financial challenges facing shale drillers even as production rises from the bountiful resource.
By the numbers: The consultancy looked at 40 shale-specific players.
- Just 4 of them reported a positive cash flow from their operations (CFO) during the first quarter of the year.
- "Total CFO fell from $14 billion in the fourth quarter of 2018 to $9.9 billion in the first quarter of 2019," the note states.
Why it matters: It's another sign of how companies in the shale patch have struggled to translate the big resource into returns for investors.
What they're saying: “Recently released data, which confirmed dismal first quarter earnings, only served to cement negative market sentiment,” Rystad analyst Alisa Lukash said in the note.
- “While shale operators continue to focus on improving capital efficiency, investors are putting the industry under extreme pressure, leaving no room for undisciplined spending in 2019," Lukash said.