August 01, 2022
🥞 Welcome back! Today's newsletter, edited by Mickey Meece, has a Smart Brevity count of 1,239 words, 5 minutes.
🚨California's deadly McKinney Fire exploded in size this weekend, while an expansive heat wave looms across the country. Go deeper
🎸 Happy birthday to the great blues guitarist and songwriter Robert Cray, who has today's intro tune...
1 big thing: The barriers to an EV revolution
Electric vehicles are poised for the biggest policy boost in U.S. history, but barriers remain before plugs replace gas pumps on a mass scale, Ben writes.
Why it matters: EVs are a key tool for cutting carbon from transportation, the largest source of U.S. planet-warming emissions.
Catch up fast: Democrats' energy deal would hugely expand incentives if it passes.
- It nixes the per-manufacturer cap on the $7,500 consumer tax credit for EVs and makes them available as point-of-sale rebates.
- There are also first-time credits for buying used EVs (up to $4,000) and commercial fleet purchases. Axios' Joann Muller has a deeper look.
Yes, but: While the plan would likely boost sales, there are still barriers that will stand in the way of a very rapid transition.
Sticker prices: The average electric vehicle price in June was nearly $67,000, which is well above the average gas-powered car, per Kelley Blue Book, a division of Cox Automotive.
- "Our data shows that price is the number one barrier to EV adoption," said Michelle Krebs, a top analyst with Cox.
- "We should be getting more affordable EVs, we're promised that by the automakers, but they're not here right now, not in great numbers," she said.
- That's especially important because the Senate deal imposes price limits on which vehicles qualify for credits: They can't cost more than $55,000 for sedans and $80,000 for pickups and SUVs.
Availability: While automakers are ramping up output and rolling out new models, EVs remain relatively scarce. Buyers often have long wait times.
- "Supply is the primary limiting factor for electric vehicles right now," iSeeCars.com executive analyst Karl Brauer told me via email.
Acceptance and education. Surveys show lots of consumers are at least EV-curious, but taking the plunge can be another matter.
- Moving from gas to electricity means different fueling habits, often installing new home charging infrastructure, and more.
Charging access. Drivers' confidence they can find plenty of places to charge up — and quickly — will be key.
- Nationwide access is rising, but there's miles to go before charging is deeply woven into the fabric of U.S. transport infrastructure.
Editor's note: Cox Automotive's parent, Cox Enterprises, is an investor in Axios.
👀 Bonus: A new lithium supply deal
Ioneer, a firm planning a major lithium mine in Nevada, announced a binding five-year deal to supply a battery joint venture between Toyota and Panasonic, Ben writes.
Driving the news: The deal calls for 4,000 metric tons of lithium carbonate annually from the proposed Rhyolite Ridge project.
- It would represent almost 20% of the project's output during its first five years, Ioneer said.
- The deal announced Sunday follows a separate and larger agreement with Ford announced July 21.
Why it matters: The agreements are a "strong vote of confidence in a project that is racing to be the first new U.S. source of the battery metal in decades," Reuters reports.
Also, the Capitol Hill deal ties expanded EV tax credits to automakers sourcing key battery materials to North America or countries that have free-trade deals with the U.S.
E&E News unpacks those challenges.
2. First look: Canadian hydrogen startup raises $10 million
Aurora Hydrogen, which aims to produce zero carbon hydrogen at the point of use, has raised a $10 million Series A funding round led by Energy Innovation Capital, Andrew writes.
Why it matters: The Canadian company’s distributed technology, if successful, could allow hydrogen to make rapid inroads in hard-to-decarbonize sectors.
Zoom in: Aurora CEO Andrew Gillis tells Axios in an interview that the company’s technology relies on methane pyrolysis, which takes natural gas and uses microwaves to produce hydrogen and solid carbon, with no added carbon dioxide emissions in the process.
- In contrast, other firms focused on using electrolyzers to produce hydrogen require large electricity inputs as well as carbon dioxide and water to produce clean hydrogen.
- Aurora's methods also do not require infrastructure to transport the hydrogen it produces, since the facilities would be located where the hydrogen is needed.
- "We think the real key to unlocking the say hydrogen economy is going to be producing hydrogen, where it's required at the scale required," Gillis says.
The intrigue: Two energy companies invested in Aurora Hydrogen via their VC arms: Shell Ventures and Chevron Technology Ventures. Other investors include Williams and the George Kaiser Family Foundation.
What's next: Gillis tells Andrew the company plans to build and operate a commercially viable demonstration plant that would produce 200 kilograms of hydrogen per day, at a plant in Edmonton, Alberta.
3. Analysis: Deal's CO2 cuts swamp fossil emissions
Emissions from oil leasing mandates in the revived Democratic energy bill would be tiny compared to carbon cuts expected from the legislation, a new analysis finds, Ben writes.
Why it matters: Pro-drilling provisions in the delicate deal have caused some grumbling among activists, even as huge swaths of the climate movement back the overall bill.
What they found: "For every ton of emissions increases generated by [the bill's] oil and gas provisions, at least 24 tons of emissions are avoided by the other provisions," concludes Energy Innovation, a firm that produces research in support of stronger climate policies.
- The Democratic deal includes the Gulf of Mexico and offshore Alaskan leasing, and over the long term ties renewables lease sales to continued oil-and-gas auctions.
- Energy Innovation cites prior studies showing higher oil production on federal lands is largely offset by lower output on non-federal tracts and OPEC.
The big picture: Energy Innovation finds the bill would shove U.S. greenhouse gas emissions down to 37%-41% below 2005 levels by 2030, compared to 24% without the measure.
That's largely consistent with separate Rhodium Group estimates we covered Friday, though the Rhodium lower range shows shallower cuts.
4. 🛢️Catch up fast on oil: deals, profits, sanctions
🤝 Saudi Aramco is buying Valvoline's global products business for $2.65 billion. The WSJ has more.
💵 "US shale drillers are expected to post record second-quarter profits in coming days, reversing nearly a decade of debt-fueled losses," Bloomberg reports.
🇪🇺 The Financial Times reports that European governments have "eased back on efforts to curb trade in Russian oil," including a delay of plans to block Russia's access to a key London shipping insurance market.
5. Broken promises on climate aid
In 2020, developed countries fell $16.7 billion short of their promise to provide $100 billion a year in funding to developing nations to help them withstand the impacts of global warming, a new report concludes, Andrew writes.
Why it matters: The lack of climate finance is a hot-button issue in climate diplomacy since developing nations that contributed the least to climate change are suffering the most from its impacts.
The big picture: The report, from the Organization for Economic Cooperation and Development, is a stark depiction of the West's failure to fulfill a 2009 commitment.
- At COP 26 in Glasgow, wealthy countries signaled they would not meet their finance goal until 2023.
- The funding gap is sure to loom over the next UN climate summit in Egypt in November.
Zoom in: The report finds that industrialized nations provided $83.3 billion in climate mitigation and adaptation finance to developing countries in 2020.
- The U.S. has been a laggard on climate finance, despite being the biggest historical emitter of greenhouse gasses.
- The Biden administration’s Fiscal Year 2023 budget request includes $11 billion for international climate funding, but it is unclear if Congress will act.
- Congress provided just $1 billion for international climate finance in 2022.
6. ICYMI: The business of climate risks
The weekend edition of Axios Pro Rata explores startups in the insurance and hurricane forecasting space, homebuyers' challenges to acting on risk info, and more.
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