Jul 16, 2021

Axios Generate

☀️ Good morning! Today's Smart Brevity count is 1,245 words, 5 minutes.

📊 Data point of the day: $41.6 billion, the Q2 value of oil-and-gas industry M&A deals, far above Q2 2020 levels, per S&P Global Market Intelligence.

🚨Situational awareness: "China’s national carbon market opened with a flurry of trades that sent prices surging, yet it’ll be years before the system helps the top polluting nation curb its emissions." (Bloomberg)

🥁 And happy birthday to drummer extraordinaire Stewart Copeland of The Police, which has today's intro tune...

1 big thing: The sobering reality of the status quo
Expand chart
Data: Rhodium Group; Chart: Axios Visuals

The corporate world and governments are awash in ambitious climate pledges, but two new reports underscore how the on-the-ground policy reality has not yet begun to spur steep emissions cuts, Ben writes.

Driving the news, part 1: The Rhodium Group consultancy is out with new projections of U.S. greenhouse gas emissions cuts under current federal and state policies.

As you can see above, the country is nowhere near on track to meet the recent White House pledge of 50%-52% U.S. cuts by 2030, while the longstanding 2025 target of 26%-28% reductions is a nearer miss (but the uncertainty band is large).

Driving the news, part 2: New International Energy Agency analysis shows that fossil fuels will be used to meet almost half of this year's projected 5% rebound in global electricity demand.

  • They see CO2 emissions from electricity, the largest global emissions source, rising 3.5% this year and another 2.5% in 2022.
  • Coal-fired generation, especially fueled by China, is slated to rise by 5% this year. "It will grow by a further 3% in 2022 and could set an all-time high," IEA notes (emphasis added).

Why it matters: This isn't the hottest take (it's Friday!), but the upshot is that it's important to watch the specifics and implementation efforts that flow from headline-grabbing long-term commitments.

  • For the U.S., the biggest question right now is the fate of huge new investments and incentives the White House wants to move through Congress, as well as executive steps.
  • Globally, keep watch on the fate of aggressive new proposals in Europe, as well as how China fills in the blanks on its pledges, among other efforts.

What they're saying: "To shift to a sustainable trajectory, we need to massively step up investment in clean energy technologies — especially renewables and energy efficiency," Keisuke Sadamori, IEA's director of energy markets and security, said in a statement alongside the power report.

What we're watching: One thing on our U.S. radar is Rhodium's follow-up analysis coming this fall.

It will explore "emissions impacts of a suite of federal and subnational actions that can help close the gap between the current U.S. emissions trajectory and ambitious decarbonization goals."

2. Wildfire woes escalate as another heat wave looms
Expand chart
Data: Aon’s Catastrophe Insight division via NIFC; Note: Data for July 2 in Arizona was removed due to a data reporting discrepancy; Chart: Sara Wise/Axios

A total of 71 large wildfires have burned more than a million acres in recent weeks, and 80% of the country's wildland firefighters are now actively committed to blazes, per the National Interagency Fire Center (NIFC). And it's only mid-July, Andrew writes.

Why it matters: With a record drought present across the West and another brutal heat wave coming this weekend into next week for the northern Rockies and a swath of southwestern and south-central Canada, the situation is sure to worsen.

Driving the news: In the near term, the biggest fire concern is the Bootleg Fire in southern Oregon, which had a spike in activity on Thursday that forced new evacuations.

  • Smoke from these blazes and others burning in the U.S. and Canada have caused poor air quality across the Plains and Rockies. Satellites have shown high altitude smoke in skies above southern Greenland and over Iceland, on its way to mainland Europe.
  • According to the NIFC in Boise, Idaho, 17,000 personnel are already assigned to ongoing blazes.
  • Crews may be stretched thin by the time peak wildfire season arrives toward the end of summer and early fall.
  • NIFC elevated its national alert level from 4 to 5 on Thursday, the highest on its scale and the earliest such designation in a decade, NIFC stated.

The big picture: Heat waves and drought conditions, tied to human-induced climate change, are driving the early increase in wildfire activity across the West.

  • Scientists fear that western forests are already at dryness levels not typically seen until late summer or early fall when destructive blazes are more common. This widens the window for potential conflagrations.

What's next: The next heat wave is on the way this weekend with triple-digit temperatures in eastern Washington, Oregon, much of Idaho, Montana, British Columbia, Alberta, Saskatchewan and Manitoba.

3. Here come the Senate infrastructure votes

Senate Majority Leader Chuck Schumer is scheduling a procedural vote next week on the bipartisan infrastructure package even though the measure is still being written, Ben writes.

Why it matters: The package the White House crafted with a group of senators from both parties has significant energy and climate provisions, such as...

  • $73 billion for grid-related measures including new transmission investments.
  • $15 billion for electric vehicle initiatives — including charging and bus electrification — and $49 billion for public transit.
  • $47 billion for "resiliency."

Yes, but: There's a lot of uncertainty around the wider effort, which has yet to even emerge in bill form.

  • Axios' Alayna Treene reports that there's still a lot of concern about how to pay for the $1 trillion bill, which is key to shoring up Republican support for the measure.
  • Business and labor groups, including electric vehicle and renewables interests, are invited to the White House today to talk strategy.

The big picture: Senate Democrats are hoping to move vastly larger climate and energy provisions through the separate, Democrats-only budget reconciliation process.

They include a "clean energy standard" and hundreds of billions in tax incentives." It's unclear whether either package will get the needed votes.

4. Microsoft's goal: clean power 24/7

Illustration: Sarah Grillo/Axios

Microsoft this week unveiled a new goal: powering all its global data centers and offices with zero-carbon energy around the clock by 2030, Ben writes.

Why it matters: Data centers suck up lots of power, and the company, in a new blog post, acknowledges the limits of its current efforts.

How it works: Top officials note that they're already a major corporate supporter of renewable power.

  • The company says it has purchased enough renewables to match the consumption of its operations since 2014.
  • But that's not the same as running off of clean power on a 24/7 basis, because the company operates on grids supplied by coal and gas.

What's new: The target for 2030 is that "we will match our purchasing of zero carbon energy with our consumption on an hourly basis," write chief environmental officer Lucas Joppa and Noelle Walsh, the corporate VP for cloud operations and innovation.

"And we will do so on the same grid systems into which we are already connected," they write in the post.

Catch up fast: It's similar to an effort underway at Google in recent years to run its data centers on clean power 24/7.

Go deeper: Microsoft is changing the way it buys renewable energy (The Verge)

5. Catch up fast: Exxon, Shell, GM, Tesla

Carbon capture: "The Acorn carbon capture and storage project in north-east Scotland has signed provisional deals with customers including ExxonMobil, Royal Dutch Shell and a company backed by Kuwait’s sovereign wealth fund, bringing together some of the largest operators in the UK North Sea." (Financial Times)

EV charging: "GM and its new EV business unit BrightDrop are launching a fleet charging service as the automaker aims to ramp up its bet on connected and electric commercial vehicles." (TechCrunch)

EV sales: "Tesla Inc's vehicle registrations in California rose more than 85% in the second quarter versus last year, largely due to the success of the company's Model Y, according to data from Cross-Sell, a research firm that collates title and registration data." (Reuters)

6. Quote of the day
“The [European] Commission has really good lawyers.”
— Oliver Sartor of the energy think tank Agora Energiewende

The context: Sartor is quoted in Bloomberg on likely challenges to the EU's newly proposed carbon border tax before the WTO.

Why it matters: It would tax certain imports (like steel) from nations without strong climate policies. That Bloomberg piece is a good primer.