Aug 12, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning! Today's Smart Brevity count: 1,212 words, 4.6 minutes.

🎸And it's Mark Knopfler's birthday, which needless to say means Dire Straits will bring us into the edition...

1 big thing: What Kamala Harris means for Biden's run — and beyond

Photo illustration: Aïda Amer/Axios. Photo: Joshua Lott/Stringer.

Sen. Kamala Harris' VP selection could heighten the ticket's focus on environmental justice while prompting fresh Trump campaign political attacks on Democrats' energy plans.

Why it matters: Harris' overall energy and climate posture is important for a few reasons.

  • Her introduction comes in an election year that has seen more emphasis on climate change than prior cycles (a low bar but still!).
  • One effect of the movement ignited by the police killing of George Floyd is a new focus on environmental burdens that poor people and communities of color face.
  • And beyond whatever White House influence she may have if Democrats win, the 55-year-old would be positioned to run again for president after serving as veep, so her views are important.

The big picture: Harris' overall energy stance is consistent with Biden's at a 30,000-foot level, but there are some differences, too.

  • One part of her wider climate platform called for a "carbon fee" on polluters, which is a more explicit statement on carbon pricing than Biden has offered.
  • Harris, during a CNN event last year, said she would favor a ban on fracking (though the Washington Post points out a ban wasn't in her online platform).
  • Biden has not called for a ban, which would be extraordinarily unlikely to clear Congress anyway.
  • She's an original Senate co-sponsor of the sweeping but vague Green New Deal resolution. Biden's climate plan calls the Green New Deal a "crucial framework" but he has not explicitly endorsed the Senate proposal.

The intrigue: During her campaign, she called for killing the filibuster if Republicans don't cooperate on a sweeping climate bill.

It's a stance that could lend weight to existing calls for ending the Senate super-majority requirement.

Where it stands: One sign of Harris' priorities arrived just last week when Harris unveiled the "Climate Equity Act" with high-profile Rep. Alexandria Ocasio-Cortez.

The bill is designed to better integrate environmental justice (EJ) into future policies.

It would create a Congressional Budget Office unit that creates an "equity score" for certain bills; and new steps to review the EJ effects of federal regulations and spending.

What to watch: How much and how often the Trump campaign attacks Harris' climate positions. It's already happening.

Last night the Trump campaign's response to her selection cited her Green New Deal support as part of a wider attack claiming she's the most "most radical, far-left" VP pick in history.

Bonus: What Harris means for big oil's legal battles

We'll have more on Harris and energy during the campaign, but some analysis of how the former California attorney general's selection could affect climate litigation quickly caught my eye.

What they're saying: Here's part of a note from the Rapidan Energy Group...

  • "Biden’s climate plan states he will 'strategically support ongoing plaintiff-driven climate litigation against polluters.'"
  • "Although Harris chose not to file suit against ExxonMobil while serving as attorney general of California, her legal expertise and the Democratic Party’s sharp left turn against fossil fuel companies lead us to believe she would push a Biden administration to adopt a more aggressive posture in federal litigation against oil majors."
2. U.S. oil's glass half empty
Data: EIA; Chart: Andrew Witherspoon/Axios

This week is bringing new snapshots of how hard the pandemic hit the U.S. oil patch earlier this year and the difficult path ahead, even as demand is now haltingly returning and prices have recovered somewhat.

Driving the news: The U.S. Energy Information Administration yesterday offered its latest downward revision of its domestic crude oil production forecast.

  • The agency's latest outlook cuts its 2020 average by 370,000 barrels to 11.26 million barrels per day, a far cry from pre-pandemic analyses (see above).
  • The most recent in a string of downward revisions comes largely because May's output collapse was steeper than initially thought, "indicating more extensive production curtailments than previously estimated."

Threat level: Nine more North American oil-and-gas producers and seven more oilfield services companies filed for Chapter 11 bankruptcy protection in July, per new reports from the law firm Haynes and Boone.

"It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy even if oil prices recover over the next few months," the firm said.

What's next: A return to new drilling, but activity will remain at low levels for a while. "Unless WTI oil prices move towards $50 per barrel in the next few weeks, a rig activity rebound is unlikely before the first half of 2021,” Rystad Energy analyst Artem Abramov said in a note this week.

The big picture: A Bloomberg piece points out that companies are figuring out ways to cut well costs even further, but that creates its own dilemmas.

"U.S. shale producers are at a crossroads as they find themselves more efficient than ever. They can keep drilling, and potentially dent oil prices, or use the money to pay down debt," it reports.

3. Big electric trucks are going to be a thing

The number of electric trucks on U.S. roads is about to grow a lot, albeit from a very small base, per the consultancy Wood Mackenzie.

Why it matters: Heavy-duty vehicles are a big source of greenhouse gases, but electrification is not as far along as the passenger market.

Medium- and heavy-duty vehicles are the second-largest source of U.S. transportation emissions, the firm's new analysis notes.

By the numbers: There were just over 2,000 operating in the U.S. at the end of last year, but that's slated to reach over 54,000 by 2025, it expects.

Go deeper: WoodMac: 54,000 Electric Trucks on US Roads by 2025 (Greentech Media)

4. Catch up fast: Mauritius spill, pipelines, coal

Oil spill: "A stricken ship off the coast of Mauritius which has already leaked about 1,000 metric tons of oil into a pristine Indian Ocean lagoon could be about to break in two, experts fear — spelling disaster for the ecologically rich area." (CNN)

Dakota Access: "A federal judge on Monday ordered the U.S. Army Corps of Engineers (ACE) to detail options by the end of the month for resolving the loss of a permit that allows the Dakota Access crude oil pipeline to operate on U.S. land." (Reuters)

Coal: "U.S. coal production and employment took a nosedive in the second quarter as the COVID-19 pandemic delivered a significant blow to demand. Average quarterly coal mine employment fell 13.3% from the prior quarter and 23.1% from the year-ago period to a new low in the second quarter of 2020." (S&P Global Market Intelligence)

Renewables: "Danish energy company Orsted said that low power prices in the UK had knocked its earnings during the second quarter, and warned that low power prices could persist due to the economic impact of coronavirus." (Financial Times)

  • Of note: It's the world's largest offshore wind developer.
5. Tesla splits its stock and sees another bump

Tesla's share price jumped in after-market trading following the Silicon Valley electric automaker's announcement of a 5-for-1 stock split.

Why it matters: The company's Tuesday evening announcement said the move is aimed at stock ownership "more accessible to employees and investors."

The company's stock price has surged this year and yesterday closed at $1,374-per-share, which is three times higher than where it started in 2020.

  • The stock is up almost 7% in premarket activity this morning.

The big picture: "For Tesla, it helps defend against claims its stock price is inflated by reducing the total cost of one share by 80 percent and giving the company the appearance of having more affordable and accessible shares," The Verge reports.

Yes, but: Reuters notes that "brokerages increasingly let customers buy parts of shares, making the benefit of share splits less clear than in the past."

Ben GemanAmy Harder