Jan 21, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning, I'm going to dive right in because we have a lot of news to cover.

My latest Harder Line column has the exclusive on policies House Republicans are pursuing in their new focus on climate change. 

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: 1,355 words, 5 minutes.

1 big thing: An exclusive look at the House GOP's climate plan

Illustration: Aïda Amer/Axios

Trees, plastics and favorable tax policy are at the core of House Republicans’ new push on climate change — an effort to tell voters they care about the problem after a decade of dismissing it.

Why it matters: The policies reveal how Republicans hope to counter Democrats’ Green New Deal and show the political saliency of this topic that in the past has been on the electoral back burner.

Driving the news: The proposals, some of which are being disclosed here for the first time, are being coordinated by House Minority Leader Kevin McCarthy of California.

  • McCarthy spoke with Axios after hosting a caucus-wide event on the topic Thursday on Capitol Hill.

Where it stands: There’s not going to be an overall emissions-cutting target, which will likely fuel criticism. But the plan will likely include other kinds of specific targets related to these three areas:

  1. Capturing carbon emissions, with a focus on planting a lot of trees.
  2. Clean energy innovation and funding.
  3. Conservation, focusing on cleaning up plastic pollution.

The big picture: The prioritization of climate-change policies by a top Republican in Washington is a sea change for a party whose leader — President Trump — dismisses the issue and whose members have ignored or denied it for years.

Yes, but: A sea change in actual policy is unlikely. Republicans are doubling down on a small-government agenda. They’re eschewing carbon pricing, and criticizing the far more aggressive policies pushed by some Democrats as ineffective and harmful to America’s economy.

What they're saying: The Bipartisan Policy Center, a centrist D.C.-based think tank that has been working with Republicans on this, indicates Republicans will need to embrace bigger policies. President Jason Grumet says...

“I think once you become engaged with the solution, then math starts to matter. ... Sure, you can start with aggressive gardening, but that’s not a complete solution and serious people then recognize that more has to happen.”

Read more

2. It's Starbucks' turn for big climate pledge

Starbucks hopes cut carbon emissions from its operations and huge supply chain by 50% by 2030 as part of new environmental pledges unveiled Tuesday.

Why it matters: Starbucks is the latest multinational giant to set new targets as global emissions rise and multilateral efforts fail to even lay the groundwork for steep cuts.

The intrigue: The commitments, while lacking detail for now, hint that Starbucks hopes to fund so-called negative emissions methods and tech. That's a key part of commitments Microsoft unveiled last week.

What they're saying: “We will both store carbon and reduce carbon emissions. Offsets do not count towards a science-based target, and we do not plan to utilize offsets to meet our preliminary target of 50% reduction in our carbon footprint,” Rebecca Zimmer, the company's global environment director, tells Axios.

The big picture: CEO Kevin Johnson, in an open letter, says Starbucks' wider aspiration is eventually becoming "resource positive," defined as "storing more carbon than we emit, eliminating waste, and providing more clean freshwater than we use."

Starbucks laid out two other interim 2030 targets in addition to the CO2 pledge:

  1. 50% of the water used for its operations and coffee production will be "conserved or replenished."
  2. They pledge a 50% cut in waste that's sent to landfills from stores and manufacturing.

What's next: The plan envisions more plant-based food offerings; a shift from single-use to reusable packages; investing in "innovative and regenerative" farm and forest practices; and more. Starbucks plans to conduct market research and trials over the next year to add details.

Go deeper: Massive companies' green commitments can't save the planet

3. The split-screen in Davos

President Trump, who rejects the scientific consensus on global warming, was "dismissive" of the threat from climate change in his speech Tuesday at the World Economic Forum, Axios' David Lawler reports this morning from Davos, Switzerland.

  • His speech came the same day that Swedish climate activist Greta Thunberg warned world leaders in Davos that time is running out to address climate change by reducing carbon emissions.

What they're saying: Bloomberg News' Javier Blas tweets from his personal account...

"Greta Thunberg is giving relevance to Davos, which for years has suffered from criticism that it was a billonaires’ playground where the rich debated among themselves. But the risk is that she (and others) are used by Davos for green-washing (and then ignored)."

Speaking of young people, a federal appeals court on Friday threw out a lawsuit brought by 21 young people intended to force the U.S. government to act more aggressively to confront climate change.

  • Why it matters: The case, first brought in 2015, has been among the higher-profile pieces of climate litigation and underscores the challenges of using the court system to tackle global warming.
  • Read more here.
4. Oil majors face new IEA scrutiny on climate
Expand chart
Data: International Energy Agency; Chart: Danielle Alberti/Axios

Axios' Amy Harder scoops ... The world’s oil and gas companies will undergo annual reviews by the International Energy Agency for how they’re doing on climate change and clean energy issues.

Catch up fast: The group released a report Sunday showing that oil and gas producers, including those owned by governments, spend on average just 1% of their total capital expenditure outside oil and gas.

What they’re saying: IEA executive director Fatih Birol told Axios that the group is creating a “verifiable process” to assess what companies are doing to reduce emissions and invest in areas outside their core business.

  • Such a process is necessary, he said, to assure critics “and to get companies a social license to operate so that they are part of the solution.”

The big picture: Some of the world's biggest oil and gas companies are slowly beginning to invest in renewables energy and other climate-friendly technologies.

  • The industry is facing increasing pressure from investors, politicians and activists to be more transparent and diversify their business models.

Go deeper

5. China's big move on plastic waste

China unveiled sweeping plans over the weekend to curb production and use of many single-use plastics including shopping bags over the next five years, with some phases to begin almost immediately.

Why it matters: Plastic waste is a gigantic pollution problem and major threat to marine species. The pace of global efforts to limit plastic bags, packaging and other products will also affect the level of oil demand in decades ahead.

The big picture: "[P]lastic bags will be banned in all of China's major cities by the end of 2020 and banned in all cities and towns in 2022. Markets selling fresh produce will be exempt from the ban until 2025," Reuters reports.

  • The policy also affects other goods, like plastic cutlery. Per CNN, "[P]lastic, non-degradable tableware that will be banned in many restaurants this year will only be partially phased out in takeaway containers by 2025."

Our thought bubble: Via Axios China reporter Bethany Allen-Ebrahimian...

  • "There’s a Chinese saying that goes 'the mountains are high and the emperor is far away.' This means that the central government may issue policies, but out in the distant provinces and townships, it may be difficult to ensure that they are implemented."
  • She says it's possible, with sufficient commitment, that the new policies could work in major cities like Beijing and Shanghai, but notes that most people don't live in these "first tier" cities.
6. The big caveats in the U.S.-China trade deal

China's pledge in the phase one trade deal to boost U.S. energy purchases by $52.4 billion over the next 2 years should be taken with grains — no, boulders — of salt.

Why it matters: China is a gigantic market — it's the world's largest crude oil importer and second-largest LNG buyer. But purchases of U.S. products have fallen substantially as the trade war intensified.

The big picture: "Despite what appears to be an unqualified win for the U.S. energy industry, there is reason to be skeptical that the energy purchasing provisions of the trade deal will come to fruition," writes Sarah Ladislaw of the Center for Strategic and International Studies.

Her short analysis Friday offers three reasons...

  1. China has not signaled it will end tariffs.
  2. The Chinese have been reluctant to strike long-term purchase deals for U.S. LNG.
  3. "[F]ollow-through on phase one of the deal may be slow based on the tenor of negotiations for phase two."

What they're saying: "Larger purchases of U.S. crude oil exports will be the primary method for China to comply with this agreement, but a US$52.4 billion increase in energy imports from the US over two years is going to be challenging," Wood Mackenzie's Ann-Louise Hittle said in a note Sunday.

  • It points out that in 2017, China imported around 300,000 barrels per day of U.S. crude.
  • "With the new trade deal, preliminary estimates suggest that China would need to import an average of about 1.1 million b/d of US crude over the next two years," they write.

Go deeper: What the China trade deal means for U.S. oil producers (Bloomberg)

Ben GemanAmy Harder