May 7, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning! Today's Smart Brevity count: 1,274 words, 4.8 minutes.

Reminder: World Central Kitchen is working to feed vulnerable people and help the badly distressed restaurant sector at the same time. You can donate here.

🎶And tomorrow will mark the birthday of singer Philip Bailey, so we'll celebrate a day early and open the edition with this classic Earth, Wind & Fire cut...

1 big thing: The emissions effect of coronavirus response

Illustration: Sarah Grillo/Axios

A new research initiative will track the carbon emissions effects of massive economic recovery packages that governments worldwide are crafting in response to the COVID-19 pandemic.

Driving the news: Johns Hopkins University yesterday announced plans for rigorous "climate impact assessments" of the efforts as part of a much wider set of pandemic-related research grants.

How it works: Researchers plan to track how stimulus funds are spent and model the avoided emissions that result from the investments.

"We are planning to make this tracker available on a website, so that everyone can see how their country’s stimulus packages stack up and hope that other academics will use this data for subsequent projects," JHU's Jonas Nahm, the principal researcher, tells Axios.

The big picture: The project comes amid calls for governments to ensure recovery packages help bolster low-carbon energy tech and industries — and uncertainty about whether this will happen.

Officials from the International Energy Agency, the International Monetary Fund, the European Union, the United Nations and elsewhere have called for green recovery packages.

Why it matters: A new paper in the Oxford Review of Economic Policy gets to the environmental stakes of the policy response.

"The COVID-19 crisis is likely to have dramatic consequences for progress on climate change. Imminent fiscal recovery packages could entrench or partly displace the current fossil-fuel-intensive economic system," the analysis states.

What they're saying: Nahm similarly says response plans could be an inflection point.

  • "The economic recovery is an opportunity for us to shift the global economy on a more sustainable track, but only if we use stimulus funds for investments that yield long-term structural emissions reductions and avoid those that will cause a rebound in global emissions," said the assistant professor of energy, resources, and environment.
  • Nahm also said in our email exchange that the project is born in part from "frustration over the lack of good data on the emissions impact of the great financial crisis in 2009."

What we don't know: The jury's still out on whether governments' forthcoming economic responses will help emissions-cutting efforts.

The Oxford Review paper found that across the G20, the vast majority of the 300-plus substantial policies approved thus far have been "rescue" measures, as opposed to "recovery" efforts that will influence emissions.

They conclude that 92% were neither "green" nor "brown" but instead are "colorless," i.e. they "maintain the status quo."

Where it stands: Early signs are mixed. The big new French aid package for Air France-KLM includes restrictions on shorter flights to avoid competition with more climate-friendly high-speed rail, per Bloomberg and other outlets.

But in the U.S., Capitol Hill Republicans opposed a Democratic push to tether airline aid to emissions mandates, and the climate provisions were dropped from the huge package approved in late March.

Bonus: The flowering of green recovery ideas

There's no shortage of ideas for how policymakers could construct climate-friendly economic rescue plans in the U.S. and worldwide.

The big picture: A suite of think tanks, industry and civil society groups are publishing recommendations at a rapid clip in recent weeks.

What's new: The Energy Transitions Commission — execs from energy, industrial and banking heavyweights — just floated a 7-pillar platform around renewables, electric cars, "green buildings" and more.

It calls for policies ranging from direct investment to private sector incentives to mandates that tether aid to distressed industries to climate commitments.

2. Dallas Fed boss warns of oil-sector bankruptcies

Federal Reserve Bank of Dallas President Robert Kaplan told Yahoo Finance yesterday that he expects a substantial number of bankruptcies in the U.S. oil sector despite the recently expanded access to Fed's Main Street Lending Facility.

How it works: "[T]hat program will be designed for companies that would be already be creditworthy," said Kaplan, whose district has a large number of energy companies.

  • "If you're a company on the other hand, that is more highly leveraged than that, concerned about insolvency and other credit issues...it's not going to be able to access those programs."
  • "And there will be a substantial number of bankruptcies, restructurings that are going to have to happen, because so much of production is being shut in."

What we're watching: Other policy levers the Trump administration may try and use to prop up battered domestic producers.

3. Oil's limited demand revival
Data: EIA; Chart: Axios Visuals

U.S. demand for gasoline rose again last week, per Energy Information Administration data that provides the latest sign of fuel consumption recovering a bit.

Why it matters: EIA's weekly data is preliminary and can be noisy, but it was the latest of several weeks of increases, and it's consistent with other signs of driving starting to pick back up.

The chart above shows product supplied, which is a proxy for consumption.

The big picture: Crude oil prices have also climbed out of their April depths as producers cut back supply and demand starts recovering somewhat from the unprecedented pandemic-fueled collapse.

But, but, but: Oil prices remain far below profitable levels for huge swaths of the industry amid the gigantic supply glut that's straining global storage infrastructure.

"The overwhelming glut is threatening one of the world’s vital industries and could prolong the economic fallout from the coronavirus," The Wall Street Journal notes in an in-depth look at the crisis this morning.

4. IEA warns on clean energy materials access
Adapted from IEA; Chart: Andrew Witherspoon/Axios

The COVID-19 crisis highlights why the security of supply of key minerals used in renewable power and electric vehicles can't be taken for granted, International Energy Agency analysts say in a new commentary.

Why it matters: Ample supplies of materials including copper, cobalt, lithium, molybdenum and more are needed for wind turbines, electric car batteries and other applications.

The big picture: "As the...pandemic has pushed many countries into some form of lockdown and hit mining operations across the globe, the risks around clean energy supply chains, including those of minerals, have come into sharper focus," states the commentary.

It warns of supply chain constraints that could complicate post-crisis growth of clean technologies.

The intrigue: The piece points out that geopolitical risks are hardly limited to familiar concerns about the concentration of oil and natural gas output.

  • "The production of many minerals that are central to energy transitions is more geographically concentrated than that of oil or natural gas," it states in presenting the data in the chart above.
  • "For lithium, cobalt and various rare earths, the top three producers control well over three-quarters of global output."
5. How one group pivoted from climate to COVID-19

Illustration: Rebecca Zisser/Axios

In the age of the coronavirus, makers of one thing are suddenly turning to make other things to help fight the pandemic, Axios' Amy Harder reports.

Driving the news: Automakers are making ventilators, oil and liquor companies are making hand sanitizers, and a climate-change communications group within Yale University has adapted its survey expertise to the pandemic.

What they’re saying: “We saw this as an opportunity to be more than just passive bystanders or victims of this,” said Anthony Leiserowitz, director of Yale’s Program on Climate Change Communication.

Where it stands: The group issued its first COVID-19-related survey on April 17, and since then has released:

  • Another survey more focused on our emotions during the pandemic.
  • A survey looking at how Americans want politicians to listen to scientists.
  • A research paper looking at government calls and mask-wearing.
  • Another paper on how social norms motivate people in this crisis.

What’s next: “We’re going to continue having some focus on [COVID-19], but we’re also going to get back to what is our primary job,” Leiserowitz said. His group has the latest installment on its long-running project “Climate Change in the American Mind” coming in the next couple weeks.

What we’re watching: Email Amy at amy@axios.com with more examples of climate and/or energy organizations/companies shifting focus to the coronavirus.

6. Number of the day: 33.7%

That's the drop in carbon intensity (that is, emissions per unit of output) from U.S. electricity generation in 2019 compared to 2005, per the updated data from Carnegie Mellon University's Power Sector Carbon Index.

The big picture: It's happening as natural gas and renewables keep shoving aside coal in power markets.

But pre-pandemic analysis showed the country is not on pace to meet economy-wide emissions targets under the Paris climate deal (which the White House is abandoning).

Ben GemanAmy Harder