Nov 12, 2020

Axios Generate

Good morning. Today's Smart Brevity count: 1,262 words, < 5 minutes.

🚨 Situational awareness: "A former Google executive [Arun Majumdar], who previously led an Energy Department unit that funded research into experimental power projects, is among the front-runners to lead the agency under President-elect Joe Biden, according to two people familiar with the matter." (Bloomberg)

🎵 And happy 75th birthday to Neil Young, who's 5+ decades into his prime and opens today's edition with one of my (many, many, many) favorites...

1 big thing: The bull case for Biden's climate agenda

Photo illustration: Eniola Odetunde/Axios. Photo: Spencer Platt/Getty Images     

Generate readers probably know the institutional hurdles in front of President-elect Joe Biden's energy and climate agenda are very formidable.

  • But you can be clear-eyed about that and also imagine things breaking Biden's way — enough to set the country on a path toward the emissions cuts his platform envisions.

Why it matters: Biden aims to put the country on a path toward net-zero emissions by 2050 and 100% carbon-free power by 2035 — but Democrats face long odds of winning the Senate.

  • So big legislation is very unlikely and would be tough even with a 50-50 Senate that enabled VP-elect Kamala Harris to break ties.
  • Plus, regulations face litigation that could land before the conservative Supreme Court.

The big picture: All that said, a bunch of forces could move in tandem to help Biden despite those strong headwinds. Here's that bull case...

1. Preparations. Many have been waiting for this opportunity for a long time, so there's no shortage of ideas for marshaling a government-wide approach that draws in many agencies.

  • "There have been hundreds of thousands of hours by think tanks, NGOs, academics, and lawyers preparing for really solid regulatory efforts," says Jeff Navin, who was the DOE's chief of staff during the Obama administration.
  • For instance, yesterday the Washington Post reported: "A team of former Obama administration officials and experts have created a 300-page blueprint laying out a holistic approach to the climate while avoiding some of the pitfalls."
  • Leah Stokes, a climate policy expert with UC Santa Barbara, points out that unlike in the early Obama era, nobody is pinning their hopes on a "magical" climate bill.
  • "Executive actions can focus on the tools that are already in the toolbox sooner and move them along faster," Stokes says. (BTW, the latest episode of "A Matter of Degrees," a podcast she co-hosts, delves into this.)

2. Economics. Clean energy is way cheaper than it was when Barack Obama took office, and many big power companies — like Duke and Southern — are vowing aggressive emissions curbs over the next few decades.

  • "These are not liberal, tree-hugging utilities. ... The transition to clean makes economic sense, it’s what their customers want, and it helps hedge against further carbon regulation swing," notes Navin, co-founder of Boundary Stone Partners, an advisory and lobbying firm that includes clean energy clients.
  • Electric vehicles offerings are becoming wider and batteries are getting cheaper.

3. Congress. There could be successful efforts to include clean energy and climate-related investments in a COVID-19 recovery package and/or infrastructure bill, even if moving a sweeping emissions bill won't happen.

4. Corporations. While legal fights await ambitious regulations, companies begin adapting to the rules anyway, Stokes says. Regulated industries “are probably going to start planning for those rules anyway even while litigation is pending. That all takes a long time,” she adds.

  • Plus, big companies are making pretty aggressive pledges these days. Some of them are kind of airy, but others are devoting real resources and doing tangible things.
  • We’re starting to see some big U.S. oil producers — Occidental and ConocoPhillips — move in the direction of European efforts.
2. The U.S. renewables surge
Data: IEA's Renewables 2020 forecast; Chart: Axios Visuals

The International Energy Agency's new five-year forecast for renewable power — showing rapid growth partly due to far lower costs compared to a decade ago — reflects one reason why Biden has the wind at his back (sorry!) in his climate push.

The intrigue: And that's just their "main" case. IEA sees even more growth in their "accelerated" case, where countries address policy uncertainties like expiring incentives.

3. Biden talks climate with heads of state

Meanwhile, climate change has been an immediate topic of discussion in Biden's discussions this week with over a half-dozen foreign leaders.

Why it matters: It's an early sign of Biden's intent to stitch climate into his foreign policy posture. His plan includes more than simply rejoining the Paris Agreement, but expanding diplomatic efforts more broadly.

Driving the news: Per Biden's transition team, his "congratulatory calls" on Tuesday and Wednesday with leaders of Germany, Japan, the U.K., South Korea and elsewhere touched on climate.

4. Vaccine won't rescue oil markets anytime soon

A COVID-19 vaccine is "unlikely to ride to the rescue of the global oil market for some time," the IEA warned as they deepened their estimate of the pandemic's near-term effect on oil demand.

Why it matters: This morning's monthly oil market report is IEA's first analysis of where supply and demand is heading since Pfizer and BioNTech announced promising early results from its vaccine trials.

What they're saying: "[I]t is far too early to know how and when vaccines will allow normal life to resume. For now, our forecasts do not anticipate a significant impact in the first half of 2021," IEA said.

  • "Vaccines are unlikely to significantly boost demand until well into next year," they said.

Threat level: Surging caseloads and new lockdowns led IEA to increase their estimate for how much oil demand will fall this year.

  • IEA sees demand falling by 8.8 million barrels per day compared to 2019 levels, which is 400,000 barrels per day more than their prior monthly analysis (though revisions to past data also play a role).

What's next: Market watchers are looking to see whether OPEC+ will revisit plans to ease their joint supply curbs at the end of the year.

  • "With a COVID-19 vaccine unlikely to ride to the rescue of the global oil market for some time, the combination of weaker demand and rising oil supply provides a difficult backdrop to the meeting of OPEC+ countries due to take place on 1 December," IEA said.

Where it stands: "Talks between OPEC and its allies are zeroing in on a delay to next year’s planned oil-output increase of three to six months, according to several delegates," Bloomberg reports.

5. Rivian shows its hand on pickup and SUV specs

Photo of the Rivian R1S. Courtesy of Rivian.

Rivian has released details for its electric pickup and SUV, and soon the well-financed startup will let customers configure the exact vehicle they want.

By the numbers: The "Launch" edition of the R1T pickup starts at $75,000 and will have over 300 miles of range, with deliveries starting in June.

  • The "Launch" edition of the R1S SUV, which arrives two months later, has the same range and starts at $77,500.
  • The "Explore" package that's less tricked out — in relative terms as you still get vegan leather seating, for instance — arrives in early 2022. It has the same range, but starts $67,500 for the truck and $70,000 for the SUV.
  • Of note: A $7,500 federal EV tax credit will further reduce those prices, at least for buyers of the first 200,000 vehicles.

Meanwhile, a 400+ mile battery pack will be available for truck editions in early 2022, with a 400+ mile SUV coming at some point too.

  • The price and timing of the planned lower-range 250+ mile battery is unknown.

The big picture: The market for electric pickups and SUVs is getting crowded, with offerings from startups and legacy players heading into production in the next few years.

  • For instance, the base model of the GM's Cadillac Lyriq SUV is slated to be under $60,000.
  • Versions of GM's electric Hummer range from $80,000 to over $112,000, with the most expensive coming first.
  • Tesla's Cybertrucks, which also arrives in stages over years, have starting prices ranging from roughly $40,000 to $70,000.
6. Companies moving away from coal

Three big companies have signaled in recent days that they're getting out of the coal business.

  1. "Siemens Energy, which builds steam turbines for power plants, will no longer take on new business to supply coal-fired powered stations, it said on Tuesday, making it the latest firm to scale back fossil fuel-related operations." (Reuters)
  2. "Toshiba will stop taking orders for new coal-fired power plants, moving in line with a global shift toward reducing carbon emissions." (Nikkei)
  3. "Samsung Group’s financial units have pledged to stop all investment in new coal projects, including via bonds or insurance underwriting, bowing to growing pressure to reduce their exposure to fossil fuels." (FT)