October 12, 2022
🐪 Somehow it's Wednesday already! Today's newsletter has a Smart Brevity count of 1,294 words, 5 minutes.
🎶 Hüsker Dü's Bob Mould will celebrate a birthday this weekend, so that's a great reason to give them today's intro tune...
1 big thing: The newest link in the growing battery chain
The U.S. battery sector keeps getting bigger, even as domestic output lags far behind China's in the geopolitical race for EV supply chains, Ben writes.
Driving the news: Honda and Korean giant LG Energy Solution on Tuesday announced a $3.5 billion plan for a large battery production plant in Ohio.
- The planned factory in Fayette County, about 40 miles southwest of Columbus, is slated to start construction early next year and begin large-scale production in 2025.
- Axios Columbus has more.
Why it matters: It's the latest in a suite of planned factories that are forming a U.S. "battery belt" to serve automakers' thirst for supplies to meet EV production plans.
Zoom in: A new Dallas Fed analysis finds overall planned investment in large U.S. battery factories exceeds $40 billion in projects announced since the start of 2021.
- They note that U.S. auto production is grouped largely around the Midwest and South.
- "Due to the high costs of transporting large quantities of lithium-ion batteries, most of the newly announced gigafactories will be in the same geographical region."
The big picture: An array of forces is pushing investment.
- Automakers, partly due to pressure to act on climate change, have begun shifting toward EV production in earnest.
- Federal and state policies, such as California's pending regulation all passenger car sales be zero-emissions by 2035, also play a role.
- The new climate law has manufacturing incentives and sourcing mandates for vehicles eligible for consumer purchase subsidies.
Yes, but: The U.S.-based battery sector is projected to remain much smaller than China's battery output.
The intrigue: The Dallas Fed note points out that U.S. investment in other battery supply chains — including raw materials mining — has been more modest.
The climate law makes Chinese materials a no-go and also requires sourcing that's domestic or among free trade partners for cars to qualify for consumer subsidies.
"These provisions create potentially powerful incentives to boost investment in other parts of the U.S. supply chain, though it is too early to know how successful they will be."
Go deeper: The race to dominate the new battery economy
2. Manchin presses Biden on U.S. output amid OPEC+ cut
👀 First look: Senate Energy Committee chair Joe Manchin (D-W.Va.) is urging President Biden to marshal executive powers to help boost U.S. oil production following the OPEC+ move to cut output, Ben and Andrew write.
Driving the news: Manchin, in a new letter, calls the OPEC+ move "reckless" and a revenue boost for Russian President Vladimir Putin's regime.
- But he also argues Biden should not look to tap more barrels from authoritarian states.
- "I am disheartened by reporting which suggests OPEC+’s actions may drive your administration to seek to unlock sanctioned oil production from Iran or Venezuela," Manchin writes.
- The letter urges Biden to take "all actions within your authority" to boost U.S. output of various energy sources.
Why it matters: His letter underscores wider Capitol Hill pressure to respond to last week's OPEC+ decision, which rebuffed White House appeals to Saudi Arabia to avoid near-term output curbs.
🔍 Zoom in: It calls for steps including...
- More drilling permits and other steps to enable companies to develop federal leases.
- Expedited reviews for energy projects, including the Mountain Valley Pipeline, a gas project through West Virginia that is a Manchin priority.
- Ensuring permitting agencies have enough staff.
The intrigue: Manchin's appeal echoes his legislation to mandate faster permitting for U.S. energy projects, which has stalled.
3. Sizing up the U.S.-Saudi rupture
President Biden and other top officials are taking an increasingly blunt tone to show their anger with Saudi Arabia over OPEC+ oil production cuts, but staying clear of specifics, for now, Andrew and Ben write.
Driving the news: Biden, in a CNN interview that aired last night, said there would be "consequences" for Saudi Arabia.
- That came hours after National Security Council spokesperson John Kirby said Biden would "continue to re-evaluate" the U.S.' relationship with the Saudis.
Why it matters: The remarks signal how the OPEC+ decision — which could boost Russia's revenues — could have lasting effects on U.S. relations with Saudi Arabia, a major recipient of U.S. military aid.
The big picture: The administration sees the OPEC+ move as problematic not just for the U.S., but also for developing countries, deputy energy secretary David Turk said at an Axios event in Washington Tuesday.
- "All of us are bearing the brunt of this misguided decision by OPEC+," Turk said, noting that low and middle-income countries "are least able to withstand these kinds of price increases."
- Watch the whole thing.
What we don't know: Details of the U.S. diplomatic and market response, though Turk reiterated an openness to continue tapping strategic oil reserves.
- While officials say they will work with Congress, Turk stayed mum on whether that means supporting "NOPEC" legislation to enable lawsuits against the cartel under U.S. anti-trust law.
- Some lawmakers, including Senate Foreign Relations chairman Robert Menendez, want to freeze U.S. arms sales to the kingdom.
4. U.S. sees 15 billion-dollar disasters so far in 2022
Hurricanes Fiona and Ian were the latest in a torrent of 15 billion-dollar weather and climate disasters to strike the U.S. so far this year, according to new NOAA data, Andrew writes.
The big picture: The cost and frequency of extreme weather and climate disasters have increased in recent years.
- According to Climate Central, a research and communications nonprofit, the frequency of billion-dollar weather disasters is now about one event every 18 days.
- This compares to 82 days between such disasters in the 1980s, Climate Central found.
Zoom in: Early estimates from Hurricane Ian damage surveys indicate it was one of the costliest storms in U.S. history, with insured losses of $53 billion to $74 billion.
- After the two hurricanes and the wildfires are included, the 2022 disaster toll through the end of September will likely exceed $100 billion.
Between the lines: Much of the increase in damage costs is related to population growth in vulnerable areas, such as the hurricane-prone Gulf Coast. This gives storms, many of which are worsened by climate change, a bigger bullseye to target.
Read the NOAA report.
5. 🏃🏽♀️Catch up fast on tech finance
🌍 The World Bank is launching a new fund called "Scaling Climate Action by Lowering Emissions" that will "provide grant payments to developing countries for achieving verified emissions reductions," bank president David Malpass said Tuesday. Go deeper.
☀️ A subsidiary of the Denmark-based multinational European Energy A/S this morning announced plans for large-scale renewable power projects in the U.S.
- Driving the news: The firm's entry into the U.S. market via subsidiary EE North America envisions up to 10 gigawatts worth of projects — that's a lot! — by 2026.
- Zoom in: The company said it has already purchased 7,000 acres of U.S. land for solar projects and is also eyeing the development of "green" hydrogen.
⚛️ Westinghouse Electric, the nuclear equipment maker, will be acquired by Cameco Corp. and Brookfield Renewable Partners in a $7.9-billion deal including debt that comes "amid renewed interest in nuclear energy," Reuters reports.
✈️ American Airlines yesterday announced an undisclosed equity investment in Universal Hydrogen, an LA-area company that's developing hydrogen infrastructure for aircraft.
6. GM expands its electric horizons beyond cars
General Motors is becoming a diversified energy company — selling battery tech and energy management services to power, not just cars, but also trains, boats, commercial equipment and buildings, Axios' Joann Muller reports.
Why it matters: Parlaying its battery and fuel cell expertise into other uses is a natural extension for GM, which aims to double annual revenue to $280 billion by 2030.
Driving the news: The automaker is creating a new business unit, GM Energy, that will sell energy storage and management services to residential and commercial customers.
- EV owners would be able to use their cars to power their homes during an outage, for example, or earn money by selling energy back to utilities.
- GM will also sell large, stand-alone batteries to commercial customers.
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🙏Thanks to Mickey Meece and David Nather for edits to today's newsletter. We'll see you back here tomorrow!