Sep 24, 2020

Axios Generate

Ben Geman

Welcome back! Today's Smart Brevity count: 1,253 words, 4.7 minutes.

Breaking: The big electric vehicle charging company ChargePoint is going public at a $2.4 billion valuation via a merger with a special purpose acquisition company (SPAC). It's the latest in a string of SPAC deals in the EV space. Reuters has more.

And today marks the 1991 release date of A Tribe Called Quest's "The Low End Theory," which provides today's iconic intro tune...

1 big thing: The escalating battle over California and cars

Illustration: Eniola Odetunde/Axios

The fate of California's aggressive moves to wring carbon emissions out of transportation could depend heavily on the election and the shape of the Supreme Court.

Catch up fast: Gov. Gavin Newsom told state regulators Wednesday to craft rules that curb sales of new gasoline-powered passenger vehicles over time, reaching a phaseout in 2035.

  • He also ordered tougher rules to greatly boost sales and use of zer0-emissions trucks and buses over the next 25 years.
  • The Trump administration came out swinging against the plan, calling it anti-consumer.

Why it matters: California is the country's largest auto market and transportation is the country's largest source of CO2.

  • The plan, if it survives, would join the list of the world's most ambitious moves to curb vehicle emissions by favoring electric and hydrogen-powered models.
  • In 2019, fully electric and plug-in hybrid models were well under 10% of California's passenger car sales, per multiple reports.

The intrigue: The plan's fate is bound up in the ongoing battle between California and the White House.

  • The Trump administration is seeking to curtail the state's leeway to set its own tailpipe rules (which a number of other states may adopt).
  • Its decision last year to revoke California's special Clean Air Act waiver is the subject of continuing litigation.

What we're watching: The election and the fight to replace the late Ruth Bader Ginsburg on the Supreme Court.

  • If Trump's upcoming nominee is confirmed, it would give conservative justices a powerful 6-3 majority on the high court.
  • Rapidan Energy Group, in a new note, said that split and a second Trump term would greatly imperil Newsom's plan.
  • "[T]he 6-3 conservative-led Supreme Court is more likely to uphold the Trump administration’s termination of CA’s waiver, eliminating its ability to enforce its [zero emissions vehicle] program," it said.

Yes, but: Per Rapidan, if Biden wins he will "reinstate the CA waiver and take it off the Supreme Court’s docket before it gets there."

"With the waiver secure, we would expect other states that have locked their ZEV targets to CA’s to set similar 100%-by-2035 mandates," Rapidan notes.

Go deeper: California Plans to Ban Sales of New Gas-Powered Cars in 15 Years (New York Times)

2. Why U.S. oil production won't soar again soon
Data: Federal Reserve Bank of Dallas; Chart: Axios Visuals

A new survey of oil and gas executives offers data points that explain why U.S. oil production won't approach its record pre-pandemic level anytime soon — if ever.

Driving the news: The Dallas Fed's quarterly survey asked 108 companies the U.S. oil price that would really juice new drilling. As you can see from the chart above, it's well above $39.90 where it's at this morning.

  • And 66% of executives surveyed believe U.S. production has peaked, a finding Reuters explored more here.
  • The Dallas Fed took the pulse of firms in the region that includes the prolific Permian Basin of Texas and New Mexico.

Why it matters: The report offers the latest look at the pandemic's reshaping of oil markets and ongoing struggles, even though prices have come back from their April nadir.

  • U.S. production was at an all-time record of around 13 million barrels per day, the largest in the world, at the beginning of the year.
  • It's now well under 11 million barrels per day amid the COVID crisis that has greatly lowered global demand.

Yes, but: some "drilled but uncompleted" wells will come back at lower prices than producers generally need for new wells.

  • "Thirty-six percent of executives said they expect a substantial increase in the completion of DUCs if oil prices were $46–$50 per barrel."
  • And just as many respondents signaled interest in growing production as in reducing debt, though "maintain production" was the most popular goal.
3. China's split personality on climate

A new insta-analysis of China's vow to achieve "carbon neutrality" before 2060 helps to underscore why Tuesday's announcement sent shockwaves through the climate and energy world.

Why it matters: Per the Climate Action Tracker, a research group, following through would lower projected global warming 0.2 to 0.3°C. That's a lot!

  • If all countries' existing pledges under the Paris climate deal were implemented, they estimate a rise of 2.7°C above preindustrial levels by 2100.
  • But if China followed through, it would bring that to 2.4 to 2.5°C, they project.
  • The goal of the Paris deal is to hold warming "well below" 2°C and ideally limit it to 1.5°C, but analysts say the lower level is slipping out of reach very fast.

Yes, but: There's no reason to take China's pledge at face value right now, especially before any information on the planned implementation surfaces.

  • And there's quite the disconnect between the long-term goal and China's existing situation.
  • A new analysis posted over at Carbon Brief finds that China is "focusing its post-Covid recovery on high-carbon energy and infrastructure."
4. Lucid Motors takes step toward diversifying

Giphy

A new document shows how the electric vehicle startup Lucid Motors is moving into the stationary energy storage space.

Driving the news: In a Sept. 21 lobbying registration, Lucid calls itself an "Electric Vehicle and Electric Stationary Storage Manufacturer." (Emphasis added)

And the document says the company intends to lobby on legislation that would provide tax credits for energy storage systems as a way to boost deployment.

Why it matters: It's a concrete sign of something CEO Peter Rawlinson recently told Bloomberg — Lucid plans to develop home and grid-connected battery products.

Go deeper: Lucid Motors reveals luxury electric vehicle pricing

5. CO2 capture is growing but still lags badly, IEA says
Screenshot of IEA's "CCUS in Clean Energy Transitions" report

There's growing momentum behind deploying technology that traps and stores CO2 emissions, but much more investment and stronger policies are needed, the International Energy Agency said in a new report.

Why it matters: The technology is vital to enabling the radical emissions cuts needed through the 2050-2070 timeframe to keep temperature rise in check, the agency said.

  • "Without a sharp acceleration in [carbon capture, utilization and storage] innovation and deployment over the next few years, meeting net-zero emissions targets will be all but impossible," the report states.
  • It also warns that investment has "fallen well behind that of other clean energy technologies," and accounts for under 0.5% of global investment in climate-friendly energy.

By the numbers: Plans for over 30 commercial facilities have emerged over the last three years, and projects nearing final investment decisions represent an estimated $27 billion worth of investment.

  • But the extent of the scale-up ultimately needed must increase by orders of magnitude, IEA said.
  • Currently deployed global capture capacity is around 40 million tons of CO2 per year (as the chart above shows).
  • In its Paris-aligned "sustainable development scenario," by 2070 10.4 gigatons of CO2 is captured "from across the energy sector."

Go deeper: Global climate goals 'virtually impossible' without carbon capture - IEA (Reuters)

6. VW's small electric SUV arrives

Photo of the VW ID.4 electric SUV

Volkswagen yesterday unveiled its ID.4, a small electric SUV aimed at the U.S. mass market that comes with a starting price of around $40,000 (that doesn't include the $7,500 federal tax credit).

Why it matters: Via The Verge, it's the "first electric vehicle built on the automaker’s mass-manufactured modular electric vehicle platform, or 'MEB,' to be sold in the U.S."

  • And per CNN, it's an EV designed to compete directly with gasoline-powered models.
  • "The ID.4's starting price is higher than that of the Toyota RAV4 or Honda CR-V, but similar to well-equipped versions of both those bestselling SUVs," it reports.
  • The roughly $44K "1st Edition" available early next year comes with an estimated range of 250-miles per charge.

* * *

Speaking of electric vehicles, The Wall Street Journal reports...

"Talks between electric-truck maker Nikola Corp. and several potential partners, including BP PLC, to build hydrogen-refueling stations stalled following allegations the company had misled investors."

Why it matters: The article notes it's the first outward sign that the controversy swirling around Nikola is "impacting the startup’s ability to execute its business plan."

Ben Geman