Jan 22, 2019

Axios Generate

Good morning! 

This was cool: I recently joined the podcast hosted by Columbia University's Center on Global Energy Policy. Host Bill Loveless, Steve Mufson of the Washington Post and I talked about everything from the Green New Deal (GND) to OPEC. Have a listen here.

Speaking of GND, my latest column breaks down that policy and others floating around Washington. I'll share that, and then Ben Geman will get you up to speed on the rest. 

1 big thing: A climate policy primer

Illustration: Aïda Amer/Axios

In Congress and on the presidential campaign trail, America is gearing up to tussle over big climate-change policy for the first time in nearly a decade. But what this actually means is up for massive interpretation.

Why it matters: How Washington considers tackling this problem, whether through a tax, regulations and/or something else, would affect almost every swath of the country and reverberate around the world.

The big picture: Everything old is new again. Most ideas floating around are actually adapted versions of proposals Washington has pursued before. At the heart of any climate policy is this tough task: Make fossil fuels more expensive without hitting American pocketbooks too much, and/or make cleaner energy technologies cheaper.

Here’s a quick rundown of the different policy pathways, and click here to go deeper with my whole column...

  • Regulations and mandates: The popular-but-vague GND championed by Democratic Rep. Alexandria Ocasio-Cortez probably fits in best here, judging by what we know about it now.
  • Carbon tax and dividend: This is the other climate policy emerging in Washington in recent months. Economists, oil companies, Republicans and some environmental groups are getting on board, even as progressive politicians (and most of the media) focus on GND.
  • Subsidies: The opposite of a tax is a subsidy, where the federal government seeks to encourage behavior by giving money or providing specific tax deductions to projects or initiatives.
  • Cap-and-trade: This is the policy the House passed a decade ago that died in the Senate a year later due to several factors, including lack of support from key Republicans and even some Democrats.
  • All or some of the above: This is self-explanatory but important to mention. Debate is often black and white, but reality isn’t. Any policy, particularly the GND with its sweeping narrative, would likely combine a few of these different levers.

What’s next: While the basic policies addressing climate change haven’t changed much in the last decade, the underlying political environment is evolving. It’s now more conducive to climate action for a few reasons...

The bottom line: Whether things have changed enough for any of these new old ideas to pass the legislative finish line amid deep political polarization is an open question.

What else do you want explained via an Axios primer? Email me at amy@axios.com.

2. Breaking: Toyota and Panasonic link up on EVs

Toyota and Panasonic announced this morning that they've inked a deal for establishing a joint venture to develop electric vehicle batteries.

Why it matters: It's the latest sign of companies in the automotive and battery space pooling resources to get ahead in the increasingly competitive EV market.

  • "The business environment is one in which independent efforts by battery manufacturers or automobile manufacturers are not enough for solving the issues concerned," the companies said in a joint statement.

The intrigue: Via the Associated Press, "Toyota, Japan’s No. 1 automaker, is thought to have fallen behind rival Nissan Motor Co. in pioneering electric vehicles, and has been trying to catch up in recent years."

Where it stands: The corporate giants, which did not disclose investment amounts, said they're setting up a JV by the end of next year with a 51% stake for Toyota and 49% for Panasonic. They added...

  • It will cover R&D, product engineering, manufacturing, and more.
  • It will explore both advances in existing technology as well as development of solid-state and "next generation" tech.
  • Products developed through the venture will likely be sold to "various automakers" through Panasonic.

Of note: As Reuters points out here, the JV builds on a partnership the companies first established in late 2017.

3. Gillibrand backs Green New Deal concept

Democratic Sen. Kirsten Gillibrand, who joined the growing field of White House hopefuls last week, backs the "concept" of the Green New Deal, a Senate aide tells Axios.

Why it matters: It shows momentum among mainstream Democrats for the sweeping climate, energy and economic proposal championed by progressive activists and Rep. Alexandria Ocasio-Cortez.

What they're saying:

  • "Senator Gillibrand supports the Green New Deal concept and has been working for years on policies to aggressively combat climate change, protect our environment and create a green economy in communities that have often been left behind," spokesperson Whitney Brennan tells Axios.

Between the lines: While a growing list of prominent White House hopefuls are offering supportive GND comments, some of their remarks leave wiggle room.

  • That makes sense because right now the GND is an aggressive but broadly worded set of concepts.
  • A template Ocasio-Cortez has circulated includes a rapid transition to 100% renewable electricity and job guarantees for people working in the low-carbon transition.
  • ICYMI: Beto O'Rourke recently said he's "supportive of the concept," while Sen. Elizabeth Warren backs the "idea" of the GND.

The latest: A spokesperson for Sen. Kamala Harris, who joined the race over the weekend, told HuffPost's Alexander Kaufman that Harris "supports the goals" of the GND and is eager to see what legislation emerges.

  • Harris' Senate office and fledgling campaign have not yet provided comment to Axios.

Where it stands: Here's the rest of Brennan's statement to Axios...

"Throughout her time on the Senate Environment and Public Works Committee, [Gillibrand] has supported legislation to keep fossil fuels in the ground and end corporate subsidies for the oil and gas industry, promote the development of renewable energy and green jobs, make our communities more resilient, and protect clean air and clean water as a right for all Americans."

My thought bubble: That line about keeping fossil fuels "in the ground" caught my eye.

  • It echoes an aggressive wing of the environmental movement that directly opposes upstream production — not just policies to lower demand and speed the transition to alternatives.
4. Study: Oil trumps tax cut as biz spending jolt

Giphy

Oil-sector spending driven by higher prices largely explains last year's rise in the overall growth rate of business investment, according to a Wharton School analysis.

Why it matters: Alexander Arnon's study shows the economic influence of the capital-intensive growth in production from shale formations — the stuff tapped with hydraulic fracturing — that has driven U.S. crude output to record levels.

The intrigue: As the school noted when circulating the study, the finding counters White House claims that the corporate tax overhaul signed into law in late 2017 caused last year's acceleration of business investment.

The big picture: "Prior to the shale boom, there was no consistent relationship: rising oil prices sometimes coincided with increases in investment, and other times with decreases. As the boom unfolded over the course of the 2000s, however, a substantial positive correlation emerged," it states.

Whey they did: The study tracks the relationship between the price of West Texas Intermediate and oil-sector investment, and then assesses how much of this accounts for wider changes in the rate of business spending.

  • Oil prices were on a generally upward trajectory through the second half of 2017 until October of last year.

The bottom line: Arnon, a senior analyst with an initiative called the Penn Wharton Budget Model, estimates that the oil price rise added roughly 1.75 percentage points to business investment growth over the last 4 quarters. He writes...

  • "Without it, investment would have grown 5 percent year-over-year in the third quarter, the same rate as in 2017."
  • "The response to the rise in oil prices explains the entire increase in the growth rate of investment in 2018."
5. On my screen: oil and coal

State of the market: "Oil prices fell Tuesday on the back of fresh signs of slowing global economic growth," the Wall Street Journal reports, citing the IMF's lower growth forecast.

2019 capital spending: Bloomberg unpacks a new survey showing that 70% of industry professionals plan to maintain or grow capital spending in 2019.

  • "Three-quarters of senior oil and gas professionals surveyed by energy and maritime services company DNV GL AS say they are optimistic about the sector’s growth in 2019, their sunniest outlook since before the crude-price collapse in 2014," they report.

Coal: Via the Financial Times, "China financed more than a quarter of all coal plants announced outside the country last year according to a new report, putting its clean energy image at risk as Chinese institutions fund coal-fired projects in emerging markets."

  • Their piece explores a report by the nonprofit Institute for Energy Economics and Financial Analysis, which shows $36 billion in Chinese financing for coal plants in other countries last year.
6. GOP-er Curbelo joins climate nonprofit

Amy reports ... Carlos Curbelo, the Republican who lost his re-election bid in a highly contested Florida House district last November, is redoubling his energy and climate focus by joining a small but unique nonprofit pushing bipartisan climate policy.

Why it matters: The nonpartisan nonprofit, DEPLOY/US, was founded in 2015 to push an idea getting little traction in these polarizing times: bipartisan climate policy.

  • Most Democrats in Washington are pushing measures unlikely to gain GOP support, while most elected Republicans ignore climate issues altogether.

Details: Curbelo is joining the nonprofit as a senior adviser and will be working in part to build support among conservative groups on climate change, which has been almost wholly absent for the last decade after Republicans largely ignoring climate change as an issue.

  • DEPLOY/US doesn’t disclose its donors (like a lot of nonprofits), but its president, Andrea Yodsampa, said most of the donors are “new philanthropic investors in this space.”

One level deeper: Curbelo’s focus in this area, along with at least one other former GOP lawmaker, shows a slight uptick in interest among Republicans for climate issues after they leave Congress.

  • For years it has pretty much been just one: former GOP Rep. Bob Inglis of South Carolina, who lost his 2010 race due in part to his vote supporting the comprehensive cap-and-trade climate bill. Since then, he's been nearly universally focused on these issues.

Go deeper: