Jan 27, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning! My latest Harder Line column looks at the climate change convergence occurring across the political and business landscape. I'll share a glimpse of that, and then Ben Geman will get you up to speed on other news. 

Today's Smart Brevity count: 1,163 words, 4.5 minutes.

1 big thing: The climate change convergence

Illustration: Sarah Grillo/Axios

The economics, politics and science of climate change are converging and catapulting this problem from a joke among critics to a prominent concern.

Driving the news: Shifts by politicians, among corporate leaders and within financial institutions are creating a foundation that could produce big movement for the first time since, well, forever.

Why it matters: If the world’s political and business leaders are going to seriously move to cut heat-trapping emissions, they first need to pay attention to it.

  • They are starting to now, fueled by unrest from the world’s youth, cheaper renewable energy, more bouts of extreme weather, and other evidence of global warming.

The big picture: We’ve written about these shifts several times over the past couple years. It’s worth examining them together because the amount of new attention that’s occurred in a matter of weeks is staggering.

  • Of note: Big caveats exist and the prospect of substantive action on the problem remains deeply uncertain, but the arc of change is forming.

In Washington, congressional Republicans and even President Trump are scrambling to acknowledge the problem after years of denying it — and in some cases mocking it outright.

  • “The issue of climate and the environment is rising in priority for the American voter and you’re seeing the political dynamic shift where people are really demanding their elected officials to address this problem,” Rep. Tom Reed (R-N.Y.) told me last week.

Among corporate executives and financial leaders, climate is quickly becoming a concrete worry. In addition to being the sole official topic of the World Economic Forum last week in Davos for the first time, a range of pronouncements have come from BlackRock, the IMF and more in just the last several weeks.

But, but, but: This doesn’t guarantee a path to big global action. It lays the foundation, but a lot more would have to happen to make actual change possible.

  • Goals from corporate and financial entities deserves frequent scrutiny.
  • Trump continues to roll back climate policies and the Paris Agreement's goals are in serious doubt.

Another big caveat is that although climate change itself poses huge risks, aggressively acting on it does too — and those risks are realized far more quickly and thus may have swift political consequences hindering more action.

What I’m watching: What change — namely, big government policy — could happen from this newfound attention, including to what degree companies really begin to lobby Washington for big change.

Read more

2. Coronavirus fears take toll on oil prices
Expand chart
Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

Crude oil prices fell to their lowest levels in over three months Monday as traders weigh how much the spread of the coronavirus will eat into demand because travel and economic activity is curtailed.

Why it matters: The sharp drop, which follows declines last week, shows how the spreading virus is rippling through global markets.

  • Brent crude has declined by roughly $7-per-barrel over the last week and is currently trading around $58.29.
  • “I think we’re close to peak hysteria, so yes the move is justified. We’re in full panic mode," Global Risk Management trader Edward Marshall tells the Wall Street Journal.

The intrigue: OPEC and allied producers "have held preliminary discussions about making deeper cuts to oil production if the fallout from the coronavirus outbreak keeps weighing on crude prices," the Financial Times reports this morning.

What they're saying: Saudi Energy Minister Abdulaziz bin Salman sought to downplay concerns about the virus having a major effect on oil consumption.

  • "[T]he current impact on global markets, including oil and other commodities, is primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand," he said in a statement.

Go deeper:

3. GM's electric plans are coming into focus

GM will detail plans this morning to invest $2.2 billion to retool its Detroit-Hamtramck plant for production of electric and autonomous vehicles, per multiple reports.

Driving the news: The vehicles include the Cruise Origin, which is the 6-passenger, driverless electric van unveiled last week.

  • The plant's lineup after a 12–18 month overhaul is also "said to include the return of Hummer vehicles branded under GMC, and possibly an electric GMC Sierra and Cadillac Escalade," the Detroit News reports.
  • The paper notes that a senior GM exec, in a letter to employees Friday, said the plan includes "electric pickups, SUVs and AVs."

Why it matters: It signals that GM plans to make Detroit a key hub for those technologies in the years ahead.

  • "The investment brings with it 2,200 jobs at a plant targeted for closure before it found new life during tense negotiations over the course of a six-week strike by the United Auto Workers union last fall," per the Detroit News.

Go deeper: Cruise says new self-driving van will save passengers $5,000 a year

* * *

Speaking of EVs, Reuters reports that Rivian will unveil pricing for its pickup and SUV soon, and "they will be lower than has been previously announced."

Why it matters: Amid the sea of new entrants into the EV market, Rivian has attracted deep-pocketed investors including Ford and Amazon and seems well poised to cross the bridge from startup to commercial-scale producer.

4. Workers test Amazon in latest climate battle

Illustration: Sarah Grillo/Axios

Hundreds of Amazon workers are pushing the company to adopt tougher climate change policies, Axios' Ina Fried reports.

Why it matters: The employees are putting their names to their comments, which were posted on Medium in a move that defies Amazon's corporate policy.

  • The post covers multiple topics, but climate is the most prominent. The group Amazon Employees for Climate Justice organized the effort.

The big picture: Employee activism at tech companies is on the rise, both at companies known for openness, like Google, and companies that don't have a long tradition of worker action, like Amazon.

  • Many of the workers are calling on Amazon’s AWS unit to stop doing business with oil and gas companies.
  • It's the latest wave of criticism of Big Tech's partnerships with the industry, even as players including Amazon and Microsoft have toughened their own climate policies.

The other side: "We do enforce our external communications policy and will not allow employees to publicly disparage or misrepresent the company or the hard work of their colleagues who are developing solutions to these hard problems,” Amazon said.

Go deeper: Amazon and Big Tech can't escape climate pressure

5. Quote of the day
"Depending on what form the carbon tax takes, we will react to it — but if it is in its essence protectionist, like the digital taxes, we will react."

The context: That's Commerce Secretary Wilbur Ross, speaking to the FT about EU plans to impose border "carbon adjustments" on goods from nations without strict climate policies.

Why it matters: "The commerce secretary’s comments are among the clearest signs that the EU’s plans for a carbon tax — a top priority under the new commission led by president Ursula von der Leyen — could emerge as a major new irritant to transatlantic relations," per FT.

Go deeper: Europe's "Green Deal" shows the hard road to U.S. carbon emissions cuts

Ben GemanAmy Harder