Axios Generate

New warning: The think tank Third Way just published an interesting look at the effect of planned and potential nuclear plant closures on carbon emissions in the U.S. power sector.

Why it matters: Even if just some early retirements come to pass, it will knock the country further from a target set under former President Obama to cut greenhouse emissions by 80% below 2005 levels by 2050.

Check out the chart above: The top black line shows how much zero-carbon power — from renewables and nuclear plants — is needed to support the economy-wide 2050 goal (based on analysis underlying a 2016 White House report).

• The solid dark purple line shows how close we get if nuke plants don't close.
• The dotted lines below show how much varying levels of retirements will cause the U.S. to fall even farther short of the goal of generating 2,750 million megawatt-hours of zero-carbon power annually by 2030.

One level deeper: Much of this generation will likely be replaced by gas, which means more emissions, and even if it's all replaced by renewables, that's still a setback.

• "The only way we win is if we grow the amount of zero-carbon energy we’re producing. As nuclear plants get shut down, new renewables will have to pay-off that zero-carbon debt before they actually start increasing our totals again," writes Ryan Fitzpatrick, deputy director of the Third Way's clean energy program.
• "Even if we limit the loss of nuclear generation between now and 2030 to just 20%, that’s a setback of 4.5 years’ worth of clean energy growth," he writes.

Click here for more in the Axios stream.

State of the market: Geopolitical tension including the prospect of U.S. strikes against Syria helped to send crude oil prices to their highest levels in over three years during trading yesterday.

What they're saying: In a note Thursday, a Barclays analyst predicted that geopolitical events could keep Brent prices above $70 over the next couple of months, though they see a downward trend in the second half of the year.

• "Over the near term, however, prices continue to benefit from a perfect storm of stagnant supply, geopolitical risk, and a harsh winter," Michael Cohen writes.

One level deeper: Flashpoints and events affecting the market included President Trump's tweet warning Russia that missiles "will be coming" in Syria in response to the apparent chemical attack, and reports that Yemen's Houthi rebels fired more missiles into Saudi Arabia.

What might be next: In a note late last night, RBC Capital Markets analysts raised the prospect of the Syrian conflict spreading beyond the country's borders, and also said the conflict in Yemen "presents a clear risk to regional energy supplies given attempted attacks on Saudi targets."

• "Both situations present clear risks and may add a ‘fear premium’ or even put physical barrels at risk in the case of Yemen," they write, reiterating that the U.S. is likely to end waivers of Iran sanctions next month and ultimately abandon the nuclear deal.

Where things stand this morning: Per MarketWatch, "oil futures wavered Thursday, holding near three-year highs as investors kept a nervous watch on Middle Eastern events."

Out today: Royal Dutch Shell published a big new report on the company's strategy in a world transitioning to climate-friendly energy sources.

One big takeaway: The oil-and-gas behemoth, which is investing a small but growing amount in green areas like electric vehicle charging, concludes there's little risk of being left with "stranded" oil-and-gas reserves in the medium term — looking out to 2030 — that it can't economically produce in a lower-carbon world.

One level deeper: Via The Financial Times story on the report...

• "The Anglo-Dutch group said 80 per cent of its current proved oil and gas reserves would be produced by 2030, when it expects demand for those hydrocarbons to be higher than it is today even under its most aggressive scenario for growth in alternative forms of energy."

Why it matters: Major energy companies are increasingly laying out long-term approaches to their business in the context of climate change. Oil-and-gas companies are seeking to reassure investors that a future climate-constrained energy system isn't an existential threat to their business.

Looking well beyond 2030, Shell said achieving the goals of the Paris agreement will require net zero additional CO2 emissions from energy by 2070, and that it plans to "keep pace."

• "That will likely mean we need to reduce the Net Carbon Footprint of our energy products by around half by the middle of the century," the report states.

A couple of energy-related things of note in Congress on Thursday...

Energy Department: Energy secretary Rick Perry will testify later this morning before a House Energy and Commerce subcommittee about DOE's budget request. His prepared statement is here.

• What we're watching: Whether Perry drops any more hints about the department's response to bankrupt FirstEnergy Solutions' request for sweeping use of DOE's emergency powers to aid coal-fired and nuclear plants in the PJM Interconnection region.
• Flashback: On Monday, Perry kind of, sort of, hinted at a thumbs-down. The request "may not be the way that we decide is the most appropriate, the most efficient way to address this. It’s not the only way," he said at an energy conference in New York.

State Department: Mike Pompeo, the CIA chief nominated to run the State Department, will appear before the Senate Foreign Relations Committee this morning.

• What we're watching: S&P Global Platts has a detailed primer on the energy and oil market-related topics likely to surface at the hearing. "I expect questions for him on Iran, Venezuela, Russia and Qatar and his answers will be closely watched by energy markets," analyst Joe McMonigle tells Platts.

Out today: On Thursday the Rhodium Group published a new analysis that concludes the power loss in Puerto Rico and the Virgin Islands from Hurricane Maria makes it the second-largest blackout in world history.

• They analyzed customer-hours of power loss to conclude that it's behind only Typhoon Haiyan that devastated the Philippines in 2013 (albeit a distant second).

Why it matters: Their tally underscores the magnitude of suffering faced by U.S. citizens from the storm that hit last September. By early this week, it had had caused the loss of 3.4 billion customer hours of service in Puerto Rico and the Virgin Islands.

Bottom line: The report takes stock of power loss from disasters and other disruptions, while also noting the need for electrification for the over 1 billion people globally who have never had power.

• "[M]aking existing electricity supply more resilient to storm-related disruptions in both developed and developing countries is ... important, particularly given recent and projected changes in the global climate," it concludes.

Still possible: A new HSBC note says China can meet its goal under the Paris climate agreement of peaking its emissions around 2030 — but it won't be a cakewalk.

• "[T]his peaking is achievable since the share of coal in total energy demand continues to decline (to around 60% in 2017). Nonetheless, a concerted effort of various economic planners and the [Ministry of Ecology and Environment], tackling a host of industries including building out the appropriate lower-carbon infrastructure (natural gas, power grid etc.), will be required to meet or better this 2030 peak GHG target," writes HSBC's Wai-Shin Chan.

Why it matters: China is by far the world's largest greenhouse gas emitter, so its future is key to staving off runaway global warming.

Focus on governance: The wide-ranging report on China's deep environmental problems and climate efforts sizes up the newly created Ministry of Ecology and Environment.

"We think this is a positive move because it centralises many environmental issues which were previously everyone’s yet no one’s responsibility as multiple departments and divisions were involved," it states.

Big picture: The report cites progress in several areas, such as cutting terrible air pollution via reductions in fine particulates, sulphur dioxide and other pollutants. But, it adds, there's a long way to go:

"It will take time — many years — before businesses think that polluting is not a corner to be cut in the name of profit; before local authorities find the right balance between the local economy and the local environment; before data can be independently verified and used to inform investment decisions."

Need more: Via my Axios colleague Khorri Atkinson, House Oversight chairman Trey Gowdy (R) sent a letter Wednesday asking the Environmental Protection Agency to disclose additional records concerning administrator Scott Pruitt’s frequent first-class travel trips and a controversial condo rental agreement.

In the Senate: Per CNN, "The Senate is set to vote on Andrew Wheeler to be the number two official at the Environmental Protection Agency amid ethics concerns plaguing EPA chief Scott Pruitt and calls from Democrats for him to resign."

If Pruitt is forced out, Wheeler could run the agency until the Senate confirms a new administrator, the story notes.