Yesterday marked exactly 30 years since Public Enemy released "It Takes A Nation Of Millions To Hold Us Back." So that groundbreaking act provide today's intro tune...
1 big thing: The scope of the climate challenge
A few new reports underscore a common theme of this newsletter: the immensity of the global climate problem and the ramifications for energy.
New projection: The Rhodium Group consultancy published a big picture look at U.S. greenhouse gas (GHG) emissions trends. Some of the takeaways...
- The U.S. is well off the pace to meet its former Paris agreement goals of cutting emissions by 26%–28% below 2005 levels by 2025.
- Emissions from electric power, which have fallen a lot over the last decade, are poised to start rising again around the mid-2020s.
- Trump administration moves to unwind Obama-era climate policies are fueling uncertainty about future emissions, and would knock the U.S. even further off-pace.
In their "baseline" scenario (see chart above), emissions are 15%–19% below 2005 levels in 2025 and 10%–18% lower by 2030. Economic and energy market uncertainties widen those ranges a lot in both directions.
One key finding: "Cheap natural gas and renewables continue to thrust coal out of the market, but after 2025 those same forces push a larger share of zero-emitting nuclear plants into retirement — leading to a rebound in power sector emissions."
Why that matters: One reason is that it reinforces how, despite the surge in renewables, nuclear plants slated to go offline will have a big effect.
- Also, that post-2025 forecast is a reminder that while market trends — notably cheap gas — and not policy have been the main driver of power-sector CO2 cuts for years, Obama-era Clean Power Plan was meant as a backstop to ensure continued reductions.
- Overall, the report notes: "Today’s regulatory rollbacks also have a bigger impact after 2025." Similarly, they find that planned rollbacks of auto mileage rules will slow the rate of transportation-sector emissions cuts.
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Two pieces by Axios science editor Andrew Freedman underscore the effects of climate change and the challenge of fighting it.
1. Tropical trees: Last year saw the second-largest tropical tree cover loss on record since 1999, in large part because of human-caused fires in the Amazon, a new analysis from the World Resources Institute and University of Maryland found.
2. Trump's pyrrhic OPEC outcome
Two smart pieces of commentary explore why OPEC's decision to lift output was a split decision for the White House, which openly called for higher production.
1. In Bloomberg's opinion section, Harvard's Meghan O'Sullivan writes that President Trump may have overplayed his hand by taking tough stances against Iran and Venezuela at a time of tightening markets.
- Unintended: "Trump seems to have been too confident in his ability to make foreign policy first and think about energy next. A byproduct of his 'energy dominance' approach has been to reinforce OPEC’s relevance at a time when the future of the cartel has been in question. Given Trump’s longstanding animosity toward OPEC, this result was surely unintended," she writes.
2. The Atlantic Council has a good interview with RBC Capital Markets' Helima Croft. She's more bullish on how the White House fared, calling the administration the "biggest winner" from the OPEC meeting.
- "President Trump intervened in the OPEC decision-making in April with his first Tweet criticizing the organization, posted while they were meeting in Jeddah. He kept up the pressure and there were reports that America wanted a million barrels, and they got the number they wanted," she writes.
- Yes, but: Croft later notes that it's not all sunny for the U.S., because logistical constraints in the Permian basin are slowing shale's growth. "This puts the White House back in a position where it is forced to ask Saudi Arabia and other Gulf allies for help. And that is why the United States is back in this position of dependence," she said.
Situational awareness: "Oil prices rose Friday, holding on to more than three-year highs, supported by continuing risks to supply in Libya, Iran and North America," the Wall Street Journal reports.
3. Policy notes: FERC exit and DOE coal plan
Powelson out: Robert Powelson, a GOP member of the Federal Energy Regulatory Commission, said Thursday afternoon that he's leaving in mid-August. He'll become president and CEO of the National Association of Water Companies.
- Why it matters: The decision will leave the commission with a 2–2 partisan split until a new nominee is confirmed.
- One important dynamic: Argus Media's Chris Knight notes recent FERC debates over how much the commission should consider the GHG effects of gas pipeline approvals.
- "LaFleur and Glick's dissents on FERC policy shift on pipeline GHGs could become a lot more powerful, if replacement isn't confirmed quickly. 2-2 split would prevent pipeline approvals," he said on Twitter, referring to Democratic members Cheryl LaFleur and Richard Glick.
- What's next: Look for senators from both parties to question the nominee on her or his views on whether the Energy Department should aggressively intervene in power markets to prop coal-fired and nuclear plants.
Meanwhile, Energy Secretary Rick Perry told reporters at the big Washington Gas Conference Thursday that DOE plans to release a cost estimate of plans to aid coal and nuclear plants, per the Washington Examiner and other outlets.
- But he also suggested the price tag was secondary as he promoted the controversial, hotly disputed claim that the plan is needed for national security.
4. Cryptocurrencies are straining utilities
David Livingston writes in our Expert Voices section ... Canada's largest utility, Hydro Quebec, says it's facing "unprecedented" demand from cryptocurrency mining, and has temporarily blocked servicing much of this demand until it finds a sustainable rate structure for blockchain-related processing.
Why it matters: Despite a precipitous drop in the value of many cryptocurrencies this year, the energy demands of the architecture behind such cryptocurrencies — blockchain and distributed ledger technologies — continue to grow.
It is presenting challenges, but also opportunities, particularly for utilities in developed countries that are desperately searching for new sources of demand growth.
The big picture: Blockchain-related power demand already outstrips that of electric vehicles globally, and Quebec is not alone. From Beijing to Tbilisi and beyond, blockchain-based processing is searching for low-cost electricity wherever it can be found, whether due to abundant renewable resources or price-distorting subsidies.
Hydro Quebec had until recently been courting cryptocurrency miners — touting its cheap, abundant, hydro-derived electricity — but was quickly overwhelmed with blockchain requests that represented over a quarter of its total generating capacity.
What's next: It's now up to governments and utilities to work together to harvest this potentially significant new source of electricity demand in a way that maximizes low-carbon power output and still ensures the ability to meet moments of peak demand.
Livingston is deputy director of the Atlantic Council’s Global Energy Center.
5. Update on Exxon's massive Guyana play
Avoiding the resource curse: The World Bank recently approved $35 million in assistance — called development policy credit — to help Guyana's government prepare for ExxonMobil and its partners to launch production from massive offshore oilfields.
Why this matters: The country is poised to become the world's newest petro-state, and officials in Guayana and the bank say they're taking to steps to ensure the huge boost in federal revenues is appropriately handled and benefits the public.
Quoted: Riccardo Puliti, head of the World Bank Group's energy and extractives practice, told Axios that work with the government just started. On the sidelines of the World Gas Conference in Washington, Puliti said:
"It is really about ... making sure transparency, revenue management, it is all done in a certain way so the issue of resource curse is eliminated as much as possible."
The big picture: ExxonMobil's exploratory drilling has yielded multiple discoveries in the deepwater Stabroek block, which the company estimates to contain several billion barrels of oil-equivalent.
- The company plans to begin producing around 120,000 barrels per day in 2020 and ramp up significantly from there.
Why it matters for the companies: The new episode of Wood Mackenzie's podcast has some interesting numbers. They note that by 2027...
- Guyana could represent 7% of ExxonMobil's global production.
- It could be 40% of worldwide output from partner Hess.
- The assets there work well even at low prices, providing a 10% return at $35 per barrel, WoodMac's Tom Ellacott said.
6. Congress: fresh carbon tax pushback
Axios intern Henrietta Reily reports ... An influential conservative organization is rallying like-minded interest groups to voice opposition to a carbon tax, largely in response to a new initiative launched last week urging support for such a policy, Axios has learned.
Why it matters: The American Energy Alliance is among several such conservative groups with sway among Republicans on Capitol Hill. This influence is likely to hold strong despite former Republican leaders voicing support for a carbon price, including former Senate Majority Leader Trent Lott.
The details: The letter, for which the group is still seeking signatures, is addressed to House Speaker Paul Ryan and House Majority Leader Kevin McCarthy, and it urges them to hold a vote on Rep. Steve Scalise's non-binding, but politically important, resolution that would put lawmakers on the record opposing a carbon tax. The House overwhelmingly voted in support of the measure in 2016.
Go deeper: Read the story here.
7. The Pope's next move on climate change
Axios contributor Eric J. Lyman reports from Rome ... Pope Francis is hosting environmental leaders, researchers and activists next week at the Vatican to advocate for more aggressive action on climate change, according to multiple officials and an agenda viewed by Axios.
Why it matters: It’s the latest move in the pope's strategy pushing a worldwide discussion on climate change and comes just a few weeks after he hosted a very different crowd on the same topic: big oil and investment firm executives.
The details: The Vatican says the upcoming meeting, scheduled for July 5–6, will help set the stage for greater action in upcoming meetings including the Global Climate Action Summit in California, the International Monetary Fund-World Bank meeting in Bali, and the year-end COP-24 UN climate summit in Poland. The pope is expected to address attendees on the second day.
Some expected attendees, as of June 28:
- Patricia Espinosa and Christiana Figueres, the current and previous heads of the United Nations Framework Convention on Climate Change.
- Michal Kurtyka, president of the upcoming annual UN climate conference in Poland.
- Environmental activist Bill McKibben, founder of 350.org.
- Researchers Hans Joachim Schellnhuber from the Potsdam Institute for Climate Impact Research and Nicholas Stern of the London School of Economics.
- Several high-ranking church officials and other religious leaders.
Go deeper: Read the full story here.