Jun 3, 2019

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning, did you catch the season 2 premiere of "Axios on HBO" last night? HBO subscribers can watch it anytime online. Check it out!

My latest Harder Line column is illustrated (similar to this) with the big help of visuals editor Lazaro Gamio.

  • This time, we're deconstructing carbon capture and removal technology, an essential but opaque part of the climate and energy debate. 

I'll share that, and then hand things over to Ben Geman who will get you up to speed on other news. Today's edition: 1,083 words/< 5 min. read. 

1 big thing: Visual guide to trapping carbon
Expand chart
Illustration: Lazaro Gamio/Axios

Capturing carbon dioxide emissions is probably unavoidable to address climate change, but the technology to do it is still in its infancy, expensive and not broadly understood.

The intrigue: We're here to show you something none of us can really see — CO2 emissions are invisible to the naked eye — and the technology that's just getting off the ground.

Click here to see a description using multiple illustrations of the main ways CO2 can be captured. 

2. The crude price tug of war

Oil prices are reacting Monday to competing forces — fresh Saudi pledges to create stability battling with downward pressure stemming from President Trump's trade tensions with Mexico and China.

Where it stands: Prices initially slid Monday, continuing last week's steep decline, but newly published comments from the Saudi oil minister are causing prices to gain back a portion of that ground today.

  • This morning, Brent crude was trading at $62.60 and WTI at $54.43.

What's new: Saudi Oil Minister Khalid al-Falih, in newly published comments in Arab News, said OPEC and allied producers will "do what is needed to sustain market stability."

The big picture: Prices are still under pressure. Via Bloomberg, oil has fallen roughly 20% since late April despite tensions in the Middle East.

Why it matters: While all kinds of things affect prices, including ongoing U.S. production growth, the downward movement of late shows the ripple effects of Trump's surprise decision last week to impose new tariffs on Mexican goods.

What they're saying:

  • Jasper Lawler of the London Capital Group tells Reuters: “Traders are increasingly pricing in a prolonged trade war hitting the global economy.”
  • "Oil finally succumbs to macro concerns," is how Goldman Sachs analysts put things in their latest note (which arrived before the new Saudi comments), arguing that trade battles and weak economic signs have "finally caught up with oil market sentiment."
3. Tesla's truck pricing and Model Y plans

Tesla CEO Elon Musk made some news in his newly posted interview with the Tesla-focused "Ride the Lightning" podcast, per reports (I haven't listened yet).

Pickup truck: Musk said the planned pickup truck will cost less than $50,ooo, InsideEVs reports.

  • "This seems an impossible figure given the fact that other Tesla products (aside from the Model 3) start at a price that's much higher," cautions Inside EVs' Eric Loveday in the article.
  • Why it matters: Pickups are hugely popular, so the ability of automakers to penetrate that market with electrics will ultimately be an important part of the wider effort to push cars with plugs into the mainstream.

Model Y: Musk said on the podcast that the Model Y, a small SUV that's supposed to go into production next year, will likely be produced at the company's Fremont, California, plant.

  • MarketWatch writes: "Musk said that Fremont is the 'default plan' because it would be quicker than starting an assembly facility at Tesla’s gigafactory in Sparks, Nev."

The big picture: The New York Times has a new piece today about investor skepticism toward the Silicon Valley electric automaker.

  • "[I]t is not just the stock that is tumbling. The price of Tesla bonds has fallen, while the cost of insuring its debt against default has surged. The moves suggest a greater wariness about Tesla’s long-term fate," Stephen Grocer writes.
4. An opportunity for Congress on tax policy
Electrolyte tanks of a redox flow battery, which can store electricity generated by renewables. Photo: Uli Deck/picture alliance via Getty Images

From December 2019 into the next several years, a slate of federal tax credits for solar and wind power are set to expire, allowing Congress a chance to revisit this valuable plank of clean energy policy, write Axios Expert Voices contributors Varun Sivaram and Noah Kaufman.

The big picture: Under current incentives, wind and solar power have come to produce over 8% of U.S. electricity, up from less than 1% a decade ago

  • But the credits have ballooned in cost — from under $1 billion in 2008 to $5.5 billion in 2018 — while doing little to promote other new technologies that will play a vital role in decarbonizing the economy.

Context: Clean energy tax credits are just one element of a comprehensive climate plan. But they're among the rare policy tools that have a meaningful effect and enjoy broad support.

  • Congress has passed them with bipartisan majorities several times, and recent proposals for new incentives have come from Democrats and Republicans.

What’s needed: Cost-effective decarbonization requires bringing new technologies to commercial scale. 3 principles could help maximize the benefits of a new generation of tax credits...

  1. Tailor incentives to the most critical applications, such as long-duration storage for renewable energy, rather than to specific technologies.
  2. Coordinate government support for research, development and demonstration to ensure that novel technologies — such as advanced reactors and carbon capture and storage — are ready for commercial scale-up with the help of tax credits.
  3. Ramp down support for new technologies as they're adopted in the marketplace, to avoid spikes in incentive costs that don't deliver commensurate returns.

Go deeper: Read the whole post plus more analysis from the Columbia Center on Global Energy Policy.

Sivaram is CTO of ReNew Power and an adjunct senior research scholar at Columbia University’s Center for Global Energy Policy (CGEP). Kaufman is a research scholar at CGEP.

5. Catch up fast: storage, wind, money, people

Storage: Remember that huge energy storage project slated for Utah that we covered last week? MIT Technology Review explains why there's reason for doubts about the hydrogen and compressed air storage aspects.

  • "Some energy observers raised questions about the project’s viability, given the current economics of these technologies, neither of which is in wide use as a grid storage option," James Temple writes.
  • "It was also conspicuous that the announcement didn’t identify customers, or sources of public or private financing," he notes.

Offshore wind: Multiple outlets report that Massachusetts is planning to expand its procurement of offshore wind power at a time when big companies are planning major projects in the Atlantic.

  • Here's WBUR: "The Department of Energy Resources on Friday released its report on 'the necessity, benefits and costs' of pursuing an additional 1,600 megawatts of offshore wind power, which the Legislature last year authorized but did not mandate, and concluded that it would be a good bet for ratepayers, the environment and the economy."
  • Go deeper: Why U.S. offshore wind is finally going big

Money: "Ineos is to spend $2bn building three chemicals plants in Saudi Arabia, heralding the first investment in the Middle East by the business controlled by British billionaire Jim Ratcliffe," the Financial Times reports.

People: A familiar name in environmental circles is on the move. The National Geographic Society said Kalee Kreider is stepping into the newly created role of chief of content, communications and public affairs.

  • Kreider, among other gigs, was most recently a senior adviser to the United Nations Foundation and was a longtime aide to former VP Al Gore.
Ben GemanAmy Harder