Jun 11, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Welcome back. Today's Smart Brevity count: 1,266 words, < 5 minutes.

🎤 And 45 years ago, Gwen McCrae was about to reach the top of Billboard's R&B charts with today's irresistible intro tune...

1 big thing: A promising sign for offshore wind

Illustration: Lazaro Gamio/Axios

Massive offshore wind farms planned for America’s East Coast are poised to move ahead after the Trump administration inched closer this week to approving the first full-scale project, Axios' Amy Harder reports.

Why it matters: The Interior Department has been slow to review the project, signaling regulatory trouble for the nascent sector. Then the pandemic hit, increasing the likelihood of a broad delay.

Where it stands: Interior's Bureau of Ocean Energy Management on Tuesday released a lengthy environmental assessment of the Massachusetts project, called Vineyard Wind.

  • The Interior Department initially was only reviewing the impact of Vineyard Wind. But then, as other project proposals came in, the agency decided to broaden the scope and examine their cumulative effect on fisheries.
  • The project is backed by Avangrid, a U.S.-based subsidiary of Spanish energy firm Iberdrola, and Copenhagen Infrastructure Partners, a Danish investment company.
  • The agency says it will make a final decision whether to approve the project by mid-December.

The big picture: U.S. offshore wind, much like its onshore counterpart more than a decade ago, is at a growth stage where it’s poised to offer a jobs boom as it grows rapidly from virtually nothing.

  • In the next five years, the sector could create between 20,000 and 45,000 jobs, according to recent estimates in a wind industry report.

One level deeper: Offshore wind will also help New England and mid-Atlantic states meet their aggressive goals to cut carbon emissions.

What they’re saying: A few factors suggest smoother sailing for this specific deal and others compared to the past year, according to ClearView Energy Partners, an independent research firm.

  • Approving this project (and possibly future projects) fits into the administration’s recent focus on infrastructure as a way to stimulate the economy amid the pandemic.
  • The additional review increases the likelihood that this project will withstand probable legal challenges, providing a template for future ones.
  • Interior could incorporate that broader analysis into environmental reviews of future offshore wind farms, making those processes smoother and quicker.

Yes, but: Politics and the pandemic could slow things down.

  • President Trump strongly dislikes wind, though for now it appears Interior is progressing without direct input from Trump one way or the other.
  • Consultancy Wood Mackenzie has cut its 2023 forecast for U.S. offshore wind installations by 50% between the first and second quarter of this year.
  • That said, “we’re not projecting any project abandonment as a result of the coronavirus, just delays,” says Dan Shreve, the firm’s global head of wind energy research.

The bottom line: “While President Donald Trump has occasionally criticized offshore wind, we think approving the project would align with the president’s ‘energy dominance’ agenda,” ClearView said in a note Wednesday.

Go deeper: Troubles lurk for America's booming offshore wind boom

2. Market exuberance around electric trucks
Data: Yahoo; Chart: Axios Visuals

The stock market is really psyched about companies producing electric pickup and semitrucks — even if the building part is still in the future.

Driving the news: Tesla's share price spiked above $1,000 for the first time Wednesday.

  • It followed news of an internal memo from CEO Elon Musk that it's "time to go all out" and bring its long-planned semitruck into "volume production."

Meanwhile, shares of the electric and hydrogen fuel-cell truck company Nikola soared since trading launched June 4 and they announced Monday that reservations for its pickup would open June 29.

  • For a sense of scale, Nikola briefly surpassed Ford's market valuation this week before its shares dropped somewhat, but it's still above Fiat Chrysler.
  • But, Tesla's market cap is far larger still and getting closer to Toyota.

Where it stands: Both Tesla and Nikola companies have both pickup and semitruck models in the works.

  • But it's worth noting that despite the market excitement, none of them are yet in commercial production, and competition in the electric trucking space is growing.
  • “People are looking at [Nikola] as the next Tesla, and they’re being stupid. Investors are being ridiculous,” Sam Abuelsamid of the research firm Guidehouse Insights tells Bloomberg.

The big picture: Musk's vague semitruck announcement, which doesn't offer a timeline or production location, isn't the only tailwind of late.

  • Chinese sales of the Model 3 sedan also surged recently, and Tesla is also preparing to unveil a battery with much longer range.
  • But that said, the early days of Nikola's trading and Tesla's bump yesterday show enthusiasm that electrics will gain a beachhead in both pickup and freight markets.

What's next: Tesla plans to bring its pickup, the Cybertruck, into production late next year, but has not provided a timeline for its long-planned semitruck.

  • Nikola, meanwhile, hopes to bring an electric semitruck into production in 2021, and a hydrogen fuel-cell model into production two years later.
  • There's no clear schedule for "Badger" pickup, which will have both battery and fuel-cell models. CEO Trevor Milton tells Reuters they're in talks with automakers about a joint venture.

Go deeper: Tesla shares soar past $1,000 on Elon Musk’s plan to move forward with semitruck (WSJ)

Bonus: More EV news and notes

Timelines: "Ford Motor plans to have all-electric versions of the Ford F-150 pickup and Ford Transit van to market by mid-2022, Chief Operating Officer Jim Farley said Wednesday. The two-year time frame is the most detailed the company has given regarding the vehicles." (CNBC)

People: "Rivian said it has hired GM's Design Engineer Alex Archer. Archer, 27, is a 2015 Stanford University graduate who led the invention of the power sliding console that is in the 2020 models of the GMC Yukon and Yukon XL, Denali, Chevrolet Tahoe and Suburban full-size SUVs." (Detroit Free Press)

Glitches: "Volkswagen AG said its flagship electric car model, the ID.3 hatchback, wouldn’t be delivered to customers until September, several months later than originally planned after software glitches delayed production." (WSJ)

3. Renewables are big but not big enough for Paris

Photovoltaic power station operated by State Power Investment Corporation on June 3 in Shanxi Province, China. Photo:Shi Gangze/VCG via Getty Images

Renewables are attracting substantial investment and developers are getting more bang for the buck, but none of it is enough to be consistent with the goals of the Paris climate agreement, a data-rich new report shows.

The big picture: Last year saw 184 gigawatts of new capacity added worldwide (excluding large hydro projects) — the most ever — with solar leading the way, per a joint report from the Frankfurt School, the UN and BloombergNEF.

  • The 12% growth came even though total investment was flat, a sign of continued cost declines for wind and solar technologies.

Threat level: The pandemic is creating near-term headwinds for growth (which we looked at here).

Yes, but: Even putting the pandemic problems aside, the analysis says the long-term investment picture is not robust enough. From the report...

"Governments and companies around the world have committed to adding some 826 gigawatts of new non-hydro renewable power capacity in the decade to 2030, at a likely cost of around $1 trillion."
"Those commitments fall far short of what would be needed to limit world temperature increases to less than 2 degrees Celsius. They also look modest compared to the $2.7 trillion invested during the 2010-2019 decade."

What's next: Per the authors, what should be next is for governments to stitch low-carbon energy initiatives into their pandemic response plans.

  • "If governments take advantage of the ever-falling price tag of renewables to put clean energy at the heart of COVID-19 economic recovery, instead of subsidizing the recovery of fossil-fuel industries, they can take a big step towards clean energy and a healthy natural world," it states.
4. Petro-notes: drilling, Arctic spill, profits

Policy: "The Trump administration is preparing to open the door to oil and gas drilling off Florida’s coast — but will wait until after the November election to avoid blowback in a swing state whose waters both parties have long considered sacrosanct, according to four people familiar with the plan." (Politico)

Russia: "The mishandling of the biggest Arctic oil spill ever infuriated Russian President Vladimir Putin and could give a boost to the country’s environmental regulation." (Bloomberg)

Earnings: "Trafigura recorded its highest first half net profit since 2016, despite $580 million in impairments, as its oil and metals trading divisions thrived in the extreme volatility caused by Middle East events and COVID-19, the company said on Thursday." (Reuters)

Ben GemanAmy Harder