Axios Generate

March 08, 2021
Good morning. Today's Smart Brevity count is 1,255 words, 4.7 minutes.
🎧 Today the Axios Re:Cap podcast launches "The Week America Changed," a 7-part series featuring conversations with key COVID-19 decision-makers. Subscribe here.
🎸 And this week in 1982, The Jam released the album "The Gift," which provides today's intro tune...
1 big thing: Energy and climate move closer to Capitol's center stage
Illustration: Rebecca Zisser/Axios
The imminent enactment of Democrats' $1.9 trillion COVID-19 relief package creates space for lawmakers and the White House to craft infrastructure plans with big climate and energy-related provisions.
Why it matters: President Biden, during the campaign, vowed to make low-carbon energy, climate-resilient infrastructure and transportation projects a big focus of an economic recovery package.
And the Texas power crisis could give fresh momentum to investments in grid modernization.
What we're watching: A major package isn't expected to come up for votes for months, but Capitol Hill hearings this week and going forward will offer glimpses into lawmakers' thinking.
They include...
- On Wednesday, the Senate Environment and Public Works Committee holds a hearing on "addressing climate change in the electricity sector and fostering economic growth.”
- A House Transportation and Infrastructure Committee panel has a Wednesday hearing on the environmental and economic case for rail transport.
- The Senate Energy and Natural Resources Committee meets Thursday for a hearing on power system reliability, resilience and affordability.
But, but, but: There are lots of questions right now, such as how many different packages will move (one thing to watch is the need to reauthorize five-year transportation programs), how much Democrats will again look to use budget reconciliation, and more.
What they're saying: Capital Alpha Partners' James Lucier, in a note, said the COVID-19 package passed more quickly and at a higher amount than he expected.
- "As a result, Democrats may feel increased confidence in offering an aggressive clean energy and infrastructure package as part of a bigger 'economic recovery plan' toward the end of the year," he writes.
- But Lucier's note also cautions that this will likely be more complicated than the big relief package that's expected to win final approval this week.
- "There will be more separate topics involved and thus more committees. The House-Senate Conference committee could take a long time," he writes.
The intrigue: Sen. Joe Manchin, who chairs the energy committee, tells "Axios on HBO" that he doesn't want Biden's climate and infrastructure package to move through reconciliation.
- That's the process Democrats just used for the COVID-19 relief package that makes certain spending and revenue measures immune from Senate filibuster, which is very important in the narrowly divided chamber.
- Manchin also said he wants a big infrastructure package paid for with tax increases, including a higher corporate rate and higher taxes on the wealthy.
2. Oil markets respond to attack on Saudi sites
Brent crude oil temporarily surged above $71 per barrel following strikes against Saudi Arabian oil facilities, but Saudi officials said the attacks — which Yemen's Houthi rebels said they conducted — caused no injuries or damage.
Where it stands: Prices have since come back down after the strikes on Sunday.
But they remain close to their highest levels in well over a year as traders weigh the OPEC+ decision not to boost output, the U.S. stimulus and, with Sunday's attack, a reminder of geopolitical risks.
By the numbers: This morning Brent is is back down to just under $69 per barrel while WTI, the U.S. benchmark, is at $65.74.
What they're saying: "The oil price was already on a strong footing after Saudi Arabia and Opec’s decision last week to keep restricting production," said Energy Aspects' Amrita Sen, per the Financial Times.
And here's a couple of points from a note this morning from Rystad Energy analyst Louise Dickson...
- "If vaccine campaigns accelerate and oil demand recovers from summer onwards, healthy prices can be maintained even if OPEC+ eventually brings back some output."
- While Saudi oil production was unaffected by the attacks, "the heating up of what’s commonly understood as a proxy war between Iran and Saudi Arabia in Yemen is just adding to the bullish oil price fever, as no one knows if any escalation is following."
3. The quest for cleaner shipping
Illustration: Eniola Odetunde/Axios
Axios' Joann Muller reports that the world's maritime industry — from ferries to freighters — is trying to navigate a once-in-a-century transition away from fossil fuels to new, cleaner means of propulsion.
Why it matters: International shipping is key to the world's economy, responsible for 90% of global trade. But the vessels burn about 4 million barrels of oil a day, accounting for almost 3% of the world's carbon emissions, and regulators are demanding they clean up their act.
The big picture: Oceans cover 70% of the planet, and their microscopic plant life provides 80% of the world's oxygen. Increased carbon emissions are warming the oceans, causing rising sea levels that threaten coastal communities while disrupting aquatic ecosystems, harming marine life.
Driving the news: The International Maritime Organization, a United Nations regulatory agency, in 2018 set tough new targets for greenhouse gas reduction.
- By 2050, shipping should aim to reduce emissions by 50% (compared to 2008 levels), with the goal of eventually phasing out all emissions.
Yes, but: Technologies to meet those ambitions don't yet exist in a form or scale that is commercially viable for transocean shipping. And with most ships built to last 30 years, there's not much time left to find solutions.
- "We basically have five to seven years to figure out what the fuel of the future is for these giant vessels plying around the globe, and that has everybody with their hair on fire," says Joshua Berger, founder of Washington Maritime Blue, a strategic alliance focused on maritime sustainability.
4. Kerry and Graham talk climate again
"Axios on HBO"
Sen. Lindsey Graham (R-S.C.) told "Axios on HBO" he intends to "lean into" climate change and that he has already discussed potential common ground with President Biden's special climate envoy John Kerry, Axios' Jonathan Swan and I report.
"I'm trying to get the Republican Party to be thinking about a new economy," Graham said.
Behind the scenes: In a follow-up interview with Axios, Graham said Kerry called him in November, around the time Kerry's new position was announced, to see if there were openings to work together.
The intrigue: Graham has a history on climate with Kerry — but not a successful one.
- Over a decade ago, he negotiated for months on a sweeping climate bill with then-Democratic senators Kerry and Joe Lieberman.
- But Graham abruptly walked away from the two Democrats in April 2010, dealing a mortal blow to the legislation that collapsed entirely months later.
The big picture: Graham, who has endorsed putting a fee on carbon emissions, argues that shifts in the posture of powerful industries, including oil-and-gas companies and automakers, create new openings.
"There is a coalition to put together that didn't exist two years ago," Graham said.
Reality check: Graham has signaled interest in climate several times in recent years, but hasn't made it a big priority during his Senate tenure since abandoning the 2010 effort.
- More broadly, Republicans remain resistant to the kind of aggressive emissions-cutting policies that Democrats and environmentalists are seeking.
- And carbon pricing is no longer a centerpiece of Democratic climate efforts.
Bonus: Kerry heads to Europe
Speaking of Kerry, he's heading to London, Brussels and Paris this week to "work with European allies to strengthen global climate ambition" ahead of two key summits on the issue, his office announced Saturday.
Quick take: It's a sign that team the U.S. is seeking tangible outcomes from the global climate summit President Biden is convening next month.
The big picture: The goals of the meetings this week are to "work with European allies to strengthen global climate ambition" ahead of the April event and the major UN summit in Glasgow this year, the State Department said.
Axios' Rebecca Falconer reports that Kerry's March 8-10 visit to the European cities marks the first major in-person multilateral meeting for months, with the COVID-19 pandemic forcing leaders to hold such talks virtually. Kerry was vaccinated against the virus last month.
5. Catch up fast: China, BP, Porsche
Climate: “The size of China’s carbon market will expand more than 30-fold over the next decade as it covers more industries and polluting becomes more expensive, according to Citigroup Inc.” (Bloomberg)
Big Oil: “BP has told office-based staff they will be expected to spend two days a week working from home after lockdown restrictions ease. The oil giant said in meetings last month that most would be asked to work from home 40% of the time, or two days a week for full-time employees.” (BBC)
Electric cars: “Porsche has invested an additional €70 million ($83.3 million) in Rimac, boosting its stake in the hypercar manufacturer and EV component supplier from 15 to 24 percent, Rimac has announced.” (Engadget)
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