Nov 23, 2020

Axios Generate

Good morning. I've been wanting to tackle the topic of my latest column for some time, and Biden's election win makes it timely. I'm taking this week off so I won't have a column Monday. I hope you have a happy — and safe and healthy — Thanksgiving! 

  • I'll share a glimpse of my column (plus a bonus scoop), and then Ben Geman will bring you the other news.

🚨Tonight on “Axios on HBO” at 11pm ET/PT on all platforms:

  • Charles Koch takes no responsibility for America's political climate. (clip)
  • Moderna explains why people should not be skeptical of its coronavirus vaccine. (clip
  • Southwest Airlines' CEO says the Boeing 737 MAX is still "a great airplane." (clip)

Today's Smart Brevity count: 1,315 words, a 5-minute read.

1 big thing: Subsidizing climate change away

Illustration: Aïda Amer/Axios

Washington lawmakers may throw billions of taxpayer dollars at clean energy next year, prompting a rush of ideas about how to do it and how effective it can be at tackling climate change.

Driving the news: With the federal government’s political power likely divided, the biggest policies may come through an economic recovery package in the form of subsidies and other spending.

Where it stands: Extending wind and solar tax credits are at the top of the list for Democrats and renewable-energy lobbyists. But more measures are in the works that could also hitch a ride on a stimulus bill.

  • One is a bipartisan Senate bill introduced last week that would give subsidies to nuclear power plants that are in danger of closing down. It would also streamline the regulatory government reviews that advanced nuclear power plants must undergo.
  • Another is a National Wildlife Federation (NWF) proposal intended to bring cleaner electricity to areas currently powered by coal and natural gas (more on that below).

Yes, but: A GOP Senate controlled by Mitch McConnell of coal-rich Kentucky is unlikely to approve anything close to President-elect Joe Biden's campaign goal of $2 trillion over four years for clean energy and climate policy.

The big picture: Washington has a decades-long practice of approving carrots (rewards) over sticks (penalties) to affect energy policy.

  • In fact, the federal government has almost never passed a major “sticks” policy — like carbon taxes and mandates penalizing oil, natural gas and coal — despite decades of debate about such approaches.

What they’re saying: For now, Washington’s divided control continues to favor the carrot-only approach, but with a boost of Democratic leadership in the White House.

“Under unified government, energy innovation would be broadly popular but might compete for attention with other progressive priorities. Under divided government, it's the first priority for climate action, the most politically feasible, and I happen to think the most important."
— Varun Sivaram, of Columbia University's Center on Global Energy Policy

By the numbers: The federal government should almost triple federal investment into energy innovation to $25 billion by 2025, compared to less than $9 billion currently, per a recent book by Sivaram and others.

The bottom line: Most experts agree Washington will eventually have to use sticks along with carrots to have a real impact on climate change.

Bonus: A new tax credit proposal

Illustration: Aïda Amer/Axios

The NWF is sharing a tax-credit proposal with lawmakers to help bring cleaner electricity to regions currently powering with coal and natural gas, Amy reports.

What's new: It would give varying levels of tax credits to utilities depending on how high carbon emissions are in the state's electricity, according to Shannon Heyck-Williams, the group's climate and energy policy director.

  • The higher the emissions, the bigger the subsidy offered to generate cleaner electricity.

How it works: States whose electricity grids already have a lot of cleaner electricity, like California and Washington State, would get a 10% tax credit. States with electricity heavily powered by coal and natural gas, such as many in the Midwest, could get up to a 45% tax credit.

What they’re saying: The proposal could have bipartisan support.

Read more

2. The expanding battle over oil-and-gas PR

Climate activists just launched a campaign that could create bad PR for the PR industry.

Driving the news: "Clean Creatives" aims to pressure PR firms and ad agencies to drop oil-and-gas industry clients. The campaign alleges they help those clients spread "misinformation."

The latest: They're vowing to reveal "concealed relationships" between PR and ad agencies and fossil-fuel clients, and organize employees of those creative agencies.

  • Another tactic will be organizing sustainability-focused business, nonprofits and others that don't want partner agencies to have contracts with oil-and-gas interests.

Where it stands: Fossil Free Media is leading the effort. Others include the Hip Hop Caucus, Sum of Us, Climate Investigations Center, and Union of Concerned Scientists.

The other side: The American Petroleum Institute, the big trade association whose ad and PR spending is targeted in the campaign's rollout, called it "divisive and unfounded."

  • “This so-called campaign recycles tired and disproven rhetoric about natural gas and oil companies that have innovated to reinvent themselves over and over in the past few decades to measurably reduce U.S. emissions and deliver affordable and reliable energy from coast to coast to schools, stores, hospitals and homes," spokesperson Megan Bloomgren says.

Why it matters: The campaign shows how advocates are seeking new or expanded avenues to pressure oil companies' finances and, in this case, social license to operate.

  • For instance, Law Students for Climate Accountability is looking to put a negative light on big law firms' work with the sector
  • The divestment movement, over the last decade, has spurred universities, pension funds and other investors to ditch oil and coal stocks.
  • The new "creatives" campaign builds on past efforts to investigate and attack industry PR efforts, such as advocacy journalist Amy Westervelt's "Drilled" podcast.

The intrigue: Per a weekend piece in the New Yorker by activist and writer Bill McKibben, the PR giant Porter Novelli, after his inquiries, said it's ending work with the American Public Gas Association.

3. 11th-hour move against banks' oil limits

Source: Giphy

A major banking regulator is racing to thwart big banks' policies that refuse lending and services for broad categories of activities — including new coal mining and Arctic oil projects, Courtenay Brown and I write.

Driving the news: The Office of the Comptroller of the Currency floated draft rules Friday that say banks must instead base decisions on whether applicants meet "quantitative, impartial risk-based standards."

  • "Politically controversial but lawful businesses" deserve "fair access to financial services under the law," it states.

Why it matters: A number of banks are ruling out or restricting services for controversial sectors and project types.

  • Banks like JPMorgan Chase, Citi and Goldman Sachs have crafted or expanded policies for new coal mines, coal-fired power and Arctic drilling.
  • Some banks are also limiting services for private prison operators and gun manufacturers.

What they're saying: “There is a creeping politicization of the banking industry that has the propensity to be very, very dangerous,” says Brian Brooks, acting comptroller of the currency, per Bloomberg.

  • Over two dozen GOP lawmakers wrote to President Trump this year attacking bank policies that "openly discriminate against the American energy sector."

The other side: "Contrary to the claims of oil-backed politicians, banks don't want to finance more drilling in the Arctic not because of some vast liberal conspiracy, but because it's bad business," Sierra Club's Ben Cushing said.

What we're watching: The clock. The OCC is taking public comments until Jan. 4, and then would have a fast turnaround to complete the rule before Biden takes office.

The intrigue: The Biden administration — by installing its preferred OCC head — could unwind a completed rule, but that's complicated and slow compared to abandoning an incomplete proposal.

Read more

4. Biden's emerging Cabinet

Biden will name as secretary of state his longtime adviser Antony Blinken, who has held diplomatic and national security jobs since the Clinton administration, a Biden adviser confirmed to Axios on Sunday.

Why it matters: The State Department is poised for an important role in Biden’s climate agenda. Beyond simply rejoining the Paris Agreement, he's aiming for a big diplomatic push to collaborate with other big emitters on more aggressive policies.

  • Blinken served as deputy national security adviser from 2013 to 2015 and deputy secretary of state from 2015 to 2017.

The intrigue: He's not primarily known for working on climate change.

  • But Andrew Light, a senior climate aide in Obama's State Department, tells me: "Every interaction that I had with Tony Blinken and his staff on climate was excellent. "
  • "He gets the problem, the imperative of a global solution, and the importance climate is now and will continue to play among nations as we move forward," says Light, who's now with the World Resources Institute.
5. Catch up fast: hydrogen, oil, policy

Deals: "Hyundai and Ineos have struck a deal that could lead to the Korean carmaker buying hydrogen from the chemicals group. In exchange, Ineos may purchase Hyundai’s fuel cell technology for its audacious entry into the car industry." (FT)

Markets: "Oil touched its strongest level since early September as signs that Covid-19 vaccinations in the U.S. could be underway within three weeks improved the demand outlook." (Bloomberg)

Biofuels: "America’s biggest biofuel companies plan to ask President-elect Joe Biden to impose a nationwide standard to reduce carbon emissions from transport fuels, according to five sources familiar with the matter, and hope to preserve a role for products like ethanol amid the fight against climate change." (Reuters)