Aug 11, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning! Today's Smart Brevity count: 1,296 words, 5 minutes.

Housekeeping note: Yesterday's Generate email accidentally came from my account, not from my Axios colleague Amy Harder. By the way, she's off this week, so the next Harder Line column will appear Aug. 24.

Situational awareness: "A Japanese ship that ran aground on a reef off Mauritius two weeks ago has now stopped leaking oil into the Indian Ocean but the island nation must still prepare for 'a worst case scenario,' Prime Minister Pravind Jugnauth said late on Monday." (Reuters)

🎤 Finally, tomorrow will mark the 1981 release date of late R&B great Luther Vandross' "Never Too Much," which provides today's intro tune...

1 big thing: The fight to shape Biden's climate orbit

Illustration: Sarah Grillo/Axios

Lefty climate activists don't want Joe Biden getting advice from people with credentials they don't like — and they're increasingly going public with their campaign.

What's new: Later today, groups including Stop the Money Pipeline, 350.org and Climate Finance Action plan to stage demonstrations at offices of investment behemoth BlackRock in four cities.

  • They don't want Biden to bring BlackRock execs into his administration if he wins, citing the company's investments in fossil fuels despite its sustainability initiative launched this year.
  • The demonstrations will be in New York, Los Angeles, Boston and San Francisco.

Why it matters: Nobody is confusing Biden with President Trump, and his climate platform goes much further than anything contemplated in the Obama years.

  • But the protests are one snapshot of wider battles — in public and behind the scenes — looming within Democratic and progressive circles over staffing and nomination decisions.
  • Already, per Bloomberg, some activists are pressing Biden to "distance himself from former Obama administration advisers they view as either too moderate or too cozy with the fossil-fuel industry."

What's next: Look for these debates to intensify if Biden actually wins, which is the priority for the environmental movement, especially the biggest and most influential groups.

  • The Sierra Club endorsed Biden yesterday, an expected move but one that signals a flurry of activity to come as the race intensifies this fall.
  • "Along with its endorsement, the Sierra Club has launched the biggest grassroots political operation in the organization’s 128-year history," the group said.

Where it stands: Biden's network of aides and informal advisers is pretty broad.

  • It spans former Obama-era hands but also outside activists, and he's conferred with officials like Washington Gov. Jay Inslee, whose call for a 100% clean power mandate by 2035 was recently added to Biden's platform.
  • E&E News has a good, in-depth rundown here.

Quick take: "Personnel is policy," as Sen. Elizabeth Warren likes to say.

  • But Senate makeup and rules, the judiciary and competing priorities are probably bigger hurdles to sweeping action than outside advisers or potential appointees who aren't Green New Deal-y enough for some activists.

***

Speaking of Biden, if elected he's vowing to block a large proposed gold and copper mine in the ecologically sensitive Bristol Bay region of Alaska. The Anchorage Daily News has more.

2. Lucid Motors claims new benchmark for EV range

The upcoming Lucid Air. Photo: Lucid Motors

Lucid Motors, a Silicon Valley-based electric vehicle startup, says its upcoming Lucid Air luxury sedan is expected to achieve an unprecedented driving range of 517 miles on a single battery charge, Axios' Joann Muller reports.

Why it matters: Lucid's driving range is about 115 miles farther than Tesla's longest-range Model S. More importantly, the efficiency breakthrough could enable the arrival of more affordable EVs in the future.

The intrigue: Nobody needs 500+ miles of electric driving range, Lucid Air CEO and CTO Peter Rawlinson admits.

  • "It's crazy. It's dangerous to drive that long without taking a break," he tells Axios.
  • "What’s really exciting about this is the breakthrough in efficiency. It will lead to the $25,000 [electric] car, and it will come sooner because of the technology we're developing."

Where it stands: Today, the way to get more driving range out of an EV is simple — use a bigger battery.

  • Lucid made its system more efficient so it could incorporate a smaller battery pack that reduces vehicle weight and cost and provides more interior space.
  • Lucid Air's range has not yet been rated by the EPA, but an independent engineering lab widely used by automakers came up with the estimate using the agency's own testing procedure.

Between the lines: Lucid optimized the powertrain's performance and efficiency with some nifty in-house engineering.

  • That included the integration of miniaturized electric motors with other components and a 900+ volt electrical architecture.

What's next: More details are expected when the production version of the Lucid Air makes its online debut Sept. 9.

  • Production begins in early 2021 at a new factory being completed near Phoenix.
3. Occidental's perfect storm

Occidental Petroleum, a huge U.S.-based oil producer, posted an $8.35 billion second-quarter loss Monday afternoon as it took huge write-downs on its asset values.

Why it matters: The whole industry is under pressure. But Occidental's problems are compounded by the additional debt it assumed when it beat out Chevron to acquire Anardarko in 2019.

By the numbers: The Houston-based company announced a $6.6 billion write-down, including a $4.3 billion hit to the value of its U.S. onshore acreage

  • While multiple companies are taking multibillion dollar write-downs amid forecasts of continued weak prices and demand, Bloomberg notes that Occidental's is among the largest relative to its size.

What they're saying: "We remain concerned about the company's high debt load and ability to generate cash flow in a prolonged low oil price environment," Jennifer Rowland, an analyst with Edward Jones, writes in a note.

Yes, but: The company touted its various steps to weather the storm and manage debt, including an over 50% cut to its 2020 capital budget down to the $2.4 billion to $2.6 billion range and over $2 billion in asset sales.

  • “We continue to make progress on our debt structure and have significantly exceeded our cost savings targets while delivering operational excellence across our business," CEO Vicki Hollub said in a statement.
4. The market likes corporate EV buys
Data: Yahoo Finance; Chart: Axios Visuals

The EV truck startup Nikola Motors' stock surged 22% Monday and the company now has a market capitalization of $17 billion. That's pretty, pretty good considering they have basically no revenue yet.

Driving the news: The bump came after Monday's announcement that the waste management company Republic Services has ordered at least 2,500 electric garbage trucks, with deliveries slated to start in 2023.

Why it matters: Corporate fleet purchases are likely to be a big part of the pathway for EVs.

  • As Nikola CEO Trevor Milton put it: "The refuse market is one of the most stable markets in the industry and provides long-term shareholder value."

The big picture: Other companies are also targeting fleet customers right out of the gate.

  • Fleets make sense for several kinds of EVs, not just heavy trucks, because of predictable routes and centralized charging locations.
  • The startup Rivian is building a pickup and an SUV, but has raised gobs of cash partly on the strength of its deal to supply Amazon with electric delivery vehicles.
  • Lordstown Motors, which is aiming its planned pickup at commercial fleets, just raised money via purchase by a special purpose acquisition company that will allow it to go public.

How it works: Back to Nikola (which by the way is also building a pickup). They said the garbage trucks will be based on the drivetrain of the Nikola Tre electric semitruck, which is supposed to begin production late next year.

  • The vehicles for Republic Services will have a range of 150 miles per charge, Nikola said. The order is for 2,500 units but could expand to 5,000.
5. Power notes: Duke, policy, money

Earnings: "Duke Energy on Monday reported a $1.6 billion charge related to abandoning the Atlantic Coast Pipeline. The utility also laid out how its renewable energy and grid modernization plans will fill in the capital-investments hole left by the canceled multibillion-dollar natural-gas project." (Greentech Media)

Transmission: "Federal regulators on Friday sent a report to Congress outlining opportunities and barriers around transmission development, in a move clean energy advocates see as a 'strong endorsement' of the need for large scale transmission." (Utility Dive)

Money: "Utilities, traditionally seen as a recession-proof sector, have been underperforming the broader U.S. market in the current economic downturn. That may present a good buying opportunity for investors harboring doubts about the latest bull market." (WSJ)

6. Climate number of the day: 0.01°C

That's the tiny reduction in projected temperature rise in 2030 due to the emissions cuts stemming from COVID-19, which has reduced travel and economic activity, per a recent study.

Why it matters: The analysis in Nature Climate Change shows that this year's CO2 emissions decline will have a negligible long-term effect — unless accompanied by major policy shifts.

  • "In contrast, with an economic recovery tilted towards green stimulus and reductions in fossil fuel investments, it is possible to avoid future warming of 0.3 °C by 2050," it states.

Go deeper: Green recovery "could prevent 0.3C" of warming by 2050 (Carbon Brief)

Ben GemanAmy Harder