Jul 16, 2018

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning from Italy! I'm here wrapping up a trip running in the Dolomite mountains (a runcation, if you will). Stay tuned until the end of Generate for an energy-related photo from my trip. Now let's dive into the news. 

My latest column looks at the rise of ad hoc coalitions seeking to influence the scrambled energy and climate issues under President Trump. I'll share that, and then Ben will get you up to speed on the rest of the news. 

1 big thing: Influence groups ramp up
Illustration: Sarah Grillo/Axios

President Trump has scrambled traditional alliances in Washington across the policy spectrum, including energy. The capital's influence apparatus is responding in kind.

Driving the news: Informal coalitions are popping up under Trump more than they have in the past, according to veteran Washington consultants and newly compiled federal lobbying data. These groups are mostly separate from the familiar, entrenched trade groups that traditionally run Washington’s lobbying and public relations machine.

“Over the past decade, we haven’t seen a spike like we have over the past 18 months."
— Amos Snead, founding partner at S-3 Public Affairs

By the numbers: Through the first quarter of this year, nearly 550 informal groups using the words “ad hoc,” “coalition” or “alliance” disclosed lobbying in Washington, a figure poised to match or surpass last year, according to Center for Responsive Politics data compiled for Axios.

  • Last year’s total, 643, was the highest in at least a decade. Most groups are formed at the beginning of each year, reflecting the first quarter’s high number.
  • This is only part of an obscure picture because many other informal coalitions don’t officially lobby or don’t have those words in them, making them difficult to track, according to Daniel Auble, a senior researcher at the Center for Responsive Politics.
  • Most have been created since Trump took office, and all but two are outside of traditional trade groups.

Go deeper: Click here to see a snapshot of the top energy-related coalitions.

2. Big this week: Russia, carbon taxes, data

Happening today: Trump is meeting with Russian President Vladimir Putin. We'll be watching for any signs they discussed energy topics, including sanctions and Gazprom's proposed Nord Stream 2 gas pipeline to Germany, which the U.S. opposes.

In Congress, part 1: The House will vote later this week on a GOP-crafted "sense of Congress" resolution finding that taxing carbon emissions would be "detrimental" to the economy and create all kinds of problems.

  • Why it matters: It's non-binding messaging, but the measure will pass very easily, signaling the huge political hurdles facing proposals to tax heat-trapping gases.

In Congress, part 2: The House is also slated to debate funding legislation for the Interior Department and EPA. Click here to see the list of amendments submitted for debate, with the caveat that only a fraction of them will actually get votes.

In Congress, part 3: The various energy-related hearings this week include...

  • Electricity: On Wednesday, a House Energy and Commerce panel meets to review the role of energy storage.
  • Agencies: The Senate Energy and Natural Resources Committee gathers Thursday to review proposals to reorganize the Departments of Energy and the Interior.

New data on tap:

  • IEA: Tomorrow the International Energy Agency will release a wide-ranging look annual look at worldwide investment in various energy sources.
  • EIA: Later today comes the Energy Information Administration's latest Drilling Productivity Report, which tracks oil and gas production from U.S. shale plays.
3. Elon Musk's weekend of controversy

Tesla CEO Elon Musk is embroiled in two separate controversies...

ICYMI: Musk is downplaying his GOP donations and defending his environmental bona fides after revelations he gave nearly $39,000 to Protect the House, a group seeking to maintain the party's imperiled House majority.

Why it matters: The donation drew quick criticism from some parts of the left, and it's a politically fraught topic for Musk because he's a high-profile green tech pioneer who has previously pushed back against GOP climate policy.

  • Last year, he publicly quit the now-defunct White House business advisory councils after Trump announced his intention to abandon the Paris climate agreement.

To be sure: Musk has for years donated to Democratic and GOP candidates and groups.

Musk's response: Following a burst of news reports about his donation, which surfaced in campaign finance documents, Musk made a few points on Twitter...

  • Musk said his donations to Republicans are "about 0.5%" of what he gives to the Sierra Club, which he called a "reasonable amount to maintain an open dialogue."

Go deeper: Read the full story in the Axois stream.

But wait, there's more: The weekend got even rougher for Musk, who drew widespread criticism on a separate topic.

  • Per Fortune, "Tesla CEO Elon Musk on Twitter [Sunday] accused British diver Vern Unsworth of being a pedophile, after Unsworth criticized Musk’s proposal to use a small submarine to rescue a trapped soccer team in Thailand."
  • My thought bubble: The since-deleted "pedo" tweet, in addition to being terrible, highlights Musk's penchant for getting in his own way and detracting from what should be a good story — the recent success in scaling up Model 3 production.
4. Report dampens supply gap fear — for now

The oil industry has invested enough recently to prevent supply shortfalls from occurring in a few years, per a new analysis by the consultancy Wood Mackenzie.

Why it matters: There has long been a lot of chatter and concern that the capital spending plunge which followed the price collapse a few years ago was setting the stage for a "supply gap" opening up around the 2020s.

  • But WoodMac, in a wide-ranging oil supply report, cites a "swelling hopper of new commercial conventional developments, which will help bolster non-OPEC supply."

One level deeper: "A marked uptick in major project sanctions towards the end of last year suggests confidence is returning to the upstream sector," they note.

  • They say a total of 32 major projects were sanctioned last year that translate to 6 billion barrels of liquids reserves reaching final investment decisions (FIDs), which is "double the reserves sanctioned in 2016."
  • They see over 30 FIDs in 2018. They also note that new projects reach peak production more quickly now, so "this acts to lessen the post-2020 effects from the sharp downturn in new project sanctioning during 2015–2016."

Yes, but: While the "supply gap" might be delayed, it could become a thing again in the late 2020s for several reasons, such as new supply getting more expensive and more contingent on as-yet-undiscovered resources.

5. More petro-notes: Exxon, BP, SPR, Russia

ExxonMobil: The Wall Street Journal explores what's ailing the oil giant, which has been saddled with some bets that didn't pay off as they'd hoped, such as the Russian Arctic.

  • "Now the $350 billion Irving, Texas, company is returning to its old ways: big, disciplined spending on prospects that make money at low oil prices," they report.
  • One nice detail: The piece has in-the-room info on discussions with advisers that now-CEO Darren Woods had over a year ago. "Mr. Woods acknowledged the threat the company faces from shale drilling, electric vehicles and climate hawks," WSJ reports.

BP: Via The Washington Post, a look at the company's transformation since the 2010 Gulf of Mexico catastrophe.

  • "Since the blowout, BP has sold off $75 billion of assets to cover unprecedented government fines, private damage claims and legal bills. It has retooled facilities, ousted two top executives and been lucky with the ups and downs of oil prices," WashPost reports.

Geopolitics: While waiting for the Trump-Putin meeting, read this piece over at The Conversation by Anna Mikulska, an expert in Russian and European energy.

  • She gets into how the U.S. natural gas boom can influence the continent even if large-scale exports never materialize.
  • "That’s because, U.S. natural gas can dampen Russia’s geopolitical influence and economic rents as long as it poses a credible threat to Russian gas," writes Mikulska, who is affiliated with Rice University and the University of Pennsylvania.

SPR: In case you missed it, Friday afternoon pieces in Bloomberg and the WSJ look at the possibility that the Trump administration will release oil from the Strategic Petroleum Reserve.

6. The huge challenge of cooling a warming world

Axios' Andrew Freedman reports ... In a warming world, expanding access to cooling technologies without jeopardizing climate change goals is going to be a major challenge, according to a new report by the Sustainable Energy for All group.

Why it matters: Cooling needs are not only for expanding access to air conditioning as the earth becomes hotter, but applies to many other aspects of the modern economy like medical and food supply chains. The report shows that 1.1 billion people face "cooling access risks."

The big picture: 470 million people live in poor, rural areas that lack access to safe food and medicines and 630 million are located in hotter, poor urban slums with little or no cooling to protect them against extreme heat waves.

What's happening now: Extreme heat waves are a present-day danger as well as a growing risk. In just the past few months, all-time hot temperature records have fallen across the globe.

One key stat: Cooling, from the air conditioners in our homes to the systems that regulate temperature at computer data centers and grocery stores, is already responsible for about 10% of global warming.

Go deeper: Read his full story in the Axios stream.

7. One fun thing: Seeing solar in Italy
A house with solar panels in the Dolomite mountains. Photo: Amy Harder/Axios

Spotted while running in Italy: Rooftop solar in the Dolomite mountains, Amy writes.

Ben GemanAmy Harder