Welcome back! Today's Smart Brevity count: 1,188 words, 4.5 minutes
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And this weekend will mark 40 years since Tom Petty and the Heartbreakers released "Damn the Torpedoes," which provides today's intro tune...
1 big thing: Why big oil's cleantech R&D is hard to pin down
How much research and development big oil companies are putting into cleantech is one of the few concrete metrics to gauge the industry’s varying shifts toward cleaner energy, Axios' Amy Harder reports.
Between the lines: Pinning that figure down is tricky. Many companies don’t disclose, and the ones that do lack a uniform definition of clean or low-carbon energy.
The big picture: Just 2 out of 8 of the world’s biggest publicly traded oil companies (ExxonMobil and Total) are spending more on overall R&D today than nearly a decade ago, according to the research firm BloombergNEF.
- The R&D spending of all 8 companies analyzed (the 5 companies shown above plus Equinor, Repsol and Eni) dropped in 2015, likely due to the drop in global oil prices that squeezed the industry.
- Exxon consistently spends the most on R&D, surpassing $1 billion in most years.
One level deeper: The Oil and Gas Climate Initiative, an industry-led coalition of 13 of the world’s biggest oil companies, says in a new report that R&D spending on low-carbon energy rose by 38% in 2018, reaching $1 billion.
That figure represents only 9 companies that disclosed their spending to OGCI, and OGCI does not publicly identify them.
- As for what constitutes low carbon, OGCI writes that “low carbon energy technologies include but are not limited to: energy efficiency, wind, solar and other renewables, [carbon capture], hydrogen, biofuels, energy storage and sustainable mobility.”
- The caveat “but are not limited to” gives companies plenty of discretion. But it does appear that natural gas is excluded from this definition.
The intrigue: I just spoke with Bill Farris, an associate laboratory director at the U.S. Energy Department’s National Renewable Energy Laboratory, for my recent column on Exxon’s expanding external research funding, including with NREL.
He said NREL works with other oil companies too, albeit with distinct focuses, illustrating their differing approaches.
“Whether it’s biofuels for Exxon or smart grids for Shell or offshore wind for Equinor, we try to make the R&D capabilities available.” — NREL's Farris
What I’m watching: BloombergNEF analyst David Doherty said he expects oil companies' R&D spending on low-carbon energy to rise again this year.
2. The fallout of PG&E's shut-offs
California regulators and the state's governor are not happy — at all — with how PG&E executed its power shut-offs last week aimed at preventing wildfires.
Why it matters: The preemptive shutdowns affected roughly 2 million people and, as we explored here, show how power companies will need to confront risks heightened by climate change.
Driving the news: The California Public Utilities Commission CPUC yesterday ordered PG&E to take a series of "corrective actions."
“Failures in execution, combined with the magnitude of this [Public Safety Power Shut-off] event, created an unacceptable situation that should never be repeated,” CPUC president Marybel Batjer said in a letter to the company.
What's next: The wide-ranging letter demands steps aimed at better communications (such as ensuring its website doesn't crash again); faster power restoration after such events; better information sharing with local governments; more transparent decision-making, providing better maps showing the boundaries of outages, and a lot more.
Meanwhile, per The Los Angeles Times...
"Gov. Gavin Newsom on Monday urged Pacific Gas & Electric to provide $100 rebates to residential customers affected by last week’s unprecedented power shut-offs, asserting that the company’s communication failures 'put lives at risk.'"
Go deeper: ‘Unacceptable’: State orders PG&E to reform outage program (San Francisco Chronicle)
3. $110 million VC fund targets early-stage players
The VC firm Clean Energy Ventures (CEV) today announced the close of a $110 million funding round aimed at backing a wide-range of climate-friendly energy startups.
Why it matters: Managing director Daniel Goldman tells Axios that the drop-off in clean energy VC a decade ago hit early-stage investing especially hard.
- Now, he said, there's a "supply-demand imbalance" thanks to the proliferation of promising young companies.
- “There’s a lot of growth-stage capital around the market now, but there’s very little early-stage capital,” he said in an interview.
The big picture: The Boston-based fund was initially supposed to be $75 million, but investor interest led to the $110 million closing figure, a company representative said.
- CEV already has 7 companies in its portfolio that Goldman says have already received about 15% of the fund.
- They include the grid tech company SparkMeter (which also has backing from the Bill Gates-led Breakthrough Energy Ventures), and the solar tech firm Leading Edge Crystal Technologies.
What's next: Funding areas of interest "include energy storage, grid connectivity, renewable energy production, clean transportation and the water/energy nexus," the announcement states.
Members of the companies strategic advisory board include former Energy Secretary Ernest Moniz.
4. A challenge for the EV future
A new International Energy Agency analysis finds that governments account for nearly one-fifth of global spending on electric vehicle purchases.
Why it matters: "The ability of governments to stabilise and then reduce their share of total EV spending will be a key test of the sustainability of the EV market in coming years," two analysts write in the Oct. 10 commentary.
"Unless government incentives adjust as the market increases, considerable pressure will be placed on public budgets," they add.
The big picture: Governments accounted for roughly 18% of total EV spending last year — a tally that includes both direct support and tax incentives.
That's roughly the same level as 2017, but the share generally rose between 2012 and 2017 and "could very well rise again in [the] future."
Threat level: They note the EV market is growing at "whirlwind speed" even though they remain a tiny share of overall sales.
"But because it relies on government payments that cannot rise indefinitely, this growth raises risks and uncertainty even as battery costs come down," it states.
The intrigue: Government support is falling in 2 key markets, and the early signs show that it's affecting sales.
- In China, the world's largest EV market, a cut in subsidies this year has eaten into sales.
- In the U.S., sales growth has also slowed as consumer tax credits are phased down.
5. Petro notes: Shale, climate, exports
Deals: The Houston Chronicle has the latest from the shale patch...
- "The Houston oil and gas company ConocoPhillips will sell most of its Australia business for $1.4 billion to better focus on North American shale plays, while Austin’s Parsley Energy is buying a competitor for nearly $1.7 billion to build a bigger player in West Texas’ Permian Basin," it reports.
- Why it matters: Jordan Blum's piece notes that the twin pieces of news reflect 2 trends: Big players selling off international holdings to focus on shale, and midsized players consolidating to better compete with giant companies that are expanding their shale operations.
Climate: Via Reuters, "The European Investment Bank, the world’s biggest multilateral lender, has postponed a decision on whether to stop financing fossil fuel projects to November, a senior EIB official said on Tuesday, to work out final details of the move away from coal."
- One big question: It's not immediately clear how exactly the policy will affect lending for natural gas projects. Both Reuters and this Financial Times ($) piece note divisions on the topic.
Exports: A new analysis from the consultancy Rystad Energy sees U.S. crude oil exports roughly doubling to 6 million barrels per day by 2022 amid "domestic refineries already maxing out capacity to absorb shale growth."
The point out that there's a "flurry of new pipeline and export terminal infrastructure coming online in the coming years."