March 10, 2022
☕ Welcome back, readers. Today's Smart Brevity count is 1,272 words, 5 minutes.
🚨 Follow Axios' live updates on the war in Ukraine.
1 big thing: Team Biden offers oil execs olive branch — and criticism
HOUSTON — Energy Secretary Jennifer Granholm was by turns defiant and solicitous in remarks to oil-and-gas executives here as she called for cooperation on supply increases and the clean energy transition, Ben writes.
Why it matters: Her speech yesterday at the CERAWeek by S&P Global conference is part of a push for faster domestic output growth as Russia's war on Ukraine crimps supply, but without — so far — backing off policies the industry calls restrictive.
Driving the news: "We are on a war footing. We are in an emergency. And we have to responsibly increase short-term supply where we can right now to stabilize the market and to minimize harm to American families," Granholm said.
Yes, but: Granholm also warned the industry against "talking points" about federal restrictions on oil and LNG output, calling it the "same old D.C. BS." Instead, she called out companies' Wall Street backers for being a check on output.
- "Aren’t we ready to finally work together to confront this moment of crisis and come out stronger on the other side?"
- Granholm said the administration is "ready to work with you to seize the opportunity of clean energy" and praised the work companies are already doing.
Quick take: Biden's team traveled to the heart of the oil industry to say they're not the problem, despite the high-profile White House push on climate, arguing there's no tension there with near-term production hikes.
"We can walk and chew gum at the same time," Granholm said.
Or consider my brief chat yesterday with Richard Glick, the Democratic chairman of the independent Federal Energy Regulatory Commission.
- He said recent policy on weighing greenhouse gas emissions in LNG project reviews — criticized by the industry — will actually add legal certainty.
- "We're going to do it the right way and make sure that the courts don't don't have to send it back to us," he said, while also pledging "expeditious" project reviews.
Yes, but: While execs here have agreed that investor demands and supply chain woes are a check on the speed of supply growth, they also see federal headwinds.
- American Petroleum Institute CEO Mike Sommers said Tuesday the administration has sent negative signals about its view of the U.S. oil-and-gas future and criticized its steps to curb federal leasing.
- "The rhetoric from the administration is we need more oil now, but we don't need it later," he told Axios.
- "Why would you expect any company to invest in long-term projects, particularly in the Gulf of Mexico or someplace else when you don't know what the policy regime is going to look like even two years from now?"
2. A geothermal CEO looks forward
HOUSTON — Geothermal energy is hot these days, despite supplying a tiny share of global power, as startups employing sophisticated technologies are attracting significant venture capital, Ben writes.
What they're saying: Tim Latimer, CEO of the startup Fervo Energy, chatted with Axios at a major energy conference here.
The company raised $28 million last year from investors including the Bill Gates-led Breakthrough Energy Ventures, and he said total VC funding to date is almost $60 million.
Don't look for a single tech winner. Fervo's next-generation geothermal system relies on sophisticated horizontal drilling and fiber optic sensing.
- But others in the space are aiming to commercialize closed-loop systems and even tap "supercritical" resources at stunning depths.
- "This is a very big market prize that people are going after. I think there's going to be many different solutions," he said at the CERAWeek by S&P Global conference.
Policy matters. Latimer said the renewable power tax incentives in President Biden's stalled domestic spending plan are important.
- But he's also seeking executive permitting reforms for projects on federal lands.
- "In a weird way, considering it's 2022 and we're all focused on the climate crisis, it's way easier to permit oil-and-gas drilling on federal lands than it is geothermal drilling," Latimer said.
They're weighing going public. "We're exploring new financing, both private and public, in ways that are going to let us grow faster and have more impact sooner."
The 24/7 clean power movement is bullish. Geothermal can help provide clean baseload power.
- That matters as companies like Google (which Fervo is working with), the federal government and others look to begin powering facilities with clean power around the clock, not just aim to match annual demand with renewables.
- "It's very clear to us, the way this market is going both in the public sector and the private sector, that very quickly, 24/7 carbon-free energy is going to become the new standard," he said.
3. "De-extinction technologies" as climate tools
Colossal Biosciences, the firm pioneering "de-extinction technologies" to restore threatened or even vanished species, announced a $60 million Series A round, Axios' Alan Neuhauser reports.
The big picture: The company straddles climate science and biotech — which is reflected in the investor makeup.
The funding round was led by billionaire Thomas Tull, CEO of Tulco, as well as At One Ventures, which focuses on sustainability and regenerative technologies.
The details: The early-stage funding announcement comes five months after Colossal raised $15 million in seed capital, bringing the company's total funding to $75 million.
What's happening: Colossal has attracted the biggest headlines for its work to bring back the woolly mammoth, a species that disappeared roughly 4,000 years ago.
But its work is also aimed at restoring threatened species, such as the white rhino, and others made extinct by human activity — including climate change stemming from fossil fuels.
4. Here comes VW's electric minibus
A legend is going electric. Volkswagen yesterday took the wraps off the ID. Buzz, upcoming electric version of its iconic minibus, Ben writes.
It goes on sale in Europe this year but not until 2024 in North America. The Verge has much more.
5. Oil giants: You need us on climate
HOUSTON — Top oil industry officials say they deserve a seat at the table when it comes to tackling climate change — and argue there's really no choice anyway, Ben writes.
Driving the news: "At COP26 the energy industry was not invited to have a seat at the table to find solutions to the transition to alternatives," Saudi Aramco CEO Amin Nasser said at the CERAWeek by S&P Global conference here Tuesday, referring to the big UN climate summit in late 2021.
He said incumbent energy companies have the experience and expertise and capital to deliver on major projects.
The big picture: Other executives here have offered a similar take.
"While we may show up as kind of a strange person or entity to be at the climate change table, I think we're 100% needed there," Shell USA President Gretchen Watkins said during a panel.
"We're good at building relationships with governments and partnerships with each other. We're good at actually doing things at scale," she said.
Yes, but: Critics of the industry argue they're talking the talk more than walking the walk, noting that zero-carbon energy remains a small share of capital spending.
6. Shift to SUVs and trucks adds to gas price pain
Record gas prices are striking after years of Americans ditching compact cars and sedans for larger, less fuel-efficient SUVs and pickups, Axios' Nathan Bomey reports.
The big picture: The average full-size SUV owner is now paying close to $110 more per month to gas up than a year ago, while the average compact car owner is paying $60 more, according to Kelley Blue Book.
Why it matters: Drivers are left with few options to save on fuel in the short term, as automakers have discontinued numerous small vehicles in recent years after consumers abandoned them.
- Ford and General Motors axed virtually all of their small cars in recent years, except for a few performance models like the Ford Mustang and Chevrolet Corvette.