Jun 19, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning. Today's Smart Brevity count: 871 words, < 3.5 minutes.

🚨 Worthy of your time: Join Axios Markets editor Dion Rabouin today at 12:30pm ET for a Juneteenth discussion featuring Valerie Jarrett, former senior adviser under President Barack Obama, and BET co-founder Bob JohnsonRegister here.

🎶 And at this moment in 1971, Carole King was beginning a long run atop the Billboard album charts with "Tapestry," which provides today's wistful intro tune...

1 big thing: Coal's global persistence...
Data: BP; Chart: Axios Visuals

Global coal consumption dipped by 0.6% in 2019, the fourth decline in six years, but the most carbon-intensive fuel remains by far the largest source of power generation in world, per BP's latest global data review.

Why it matters: Coal's persistence in the global mix, even as it loses some ground, is among the major reasons why the world is far, far away from achieving steep emissions declines needed to meet the goals of the Paris climate deal.

The big picture: It's something of a bifurcated world, with consumption falling sharply in the U.S. (more on that below) and Europe, while still trending upward in the Asia-Pacific region.

By the numbers: Coal's share of electric power was 36% last year, while its role in the wider global energy mix fell to 27% — the lowest in 16 years — as renewables and gas meet increasing demand, BP's report this week notes.

2. ...amid the downward U.S. spiral
Data: U.S. Energy Information Administration; Chart: Axios Visuals

Meanwhile, an Energy Information Administration primer this week takes stock of coal's steep and ongoing declines in the United States.

The big picture: The drop-off since the 2007–2008 peak has been steep. Last year's production was the lowest since 1978, while consumption was the lowest since 1975.

3. COVID-19 means more oil will stay in the ground

The pandemic will "expedite peak oil demand," the consultancy Rystad Energy said in a note this week, taking stock of how much additional oil will not be produced in the future as a result.

  • Hat tip to the Financial Times, which wrote about the findings here ($).

Why it matters: Rystad's summary of its annual review of oil resources shows how COVID-19 is prompting analysts to change their thinking about the future of oil.

The big picture: The consultancy tells me they see oil demand bouncing back to exceed pre-pandemic levels, but now projects demand peaking at roughly 106.5 million–107 million bpd in 2027–2028, as opposed to 107.5 million bpd in 2030 under a prior forecast.

What's next: The accelerated peak will curtail some oil exploration efforts, Rystad said.

  • “Non-OPEC countries account for the lion’s share of 'lost' recoverable resources with more than 260 billion barrels of undiscovered oil now more likely to be left untouched, especially in remote exploratory areas,” Per Magnus Nysveen, Rystad's head of analysis, said in a statement.
4. Following up: Lyft's big EV plan

Illustration: Sarah Grillo/Axios

Let's spend a little more time with Lyft's new pledge to have electric cars (or other zero-emissions vehicles) make up 100% of the vehicles on its platform by 2030.

Why it matters: Morgan Stanley analysts, in note yesterday, said it could be a trendsetting move. They write...

"Following Lyft’s announcement, we would expect a number of competitors in rideshare and delivery/logistics services to announce similar types of commitments to sustainable transport with clear goals and paths to execution."

But, but, but: Julio Friedmann, a senior Energy Department official in the Obama era, is skeptical about Lyft's plan, though he notes the emissions benefits would be substantial if it succeeds.

  • In a Twitter thread last night, he pointed out (as did our piece) that Lyft's ability to deploy EVs at that scale requires substantial national policy changes and incentives.
  • Friedmann said he has "enormous respect" for Lyft and the Environmental Defense Fund, which is working with them, but added: "[T]his announcement looks like a pledge to lobby and a wish for a good outcome. I look forward to more substantive announcements I hope will come from this effort."
5. Tesla closing in on Texas factory

There are growing signs that Tesla will choose the Austin region in Texas to build a factory that will be the "Cybertruck" pickup and Model Ys for East Coast delivery.

Driving the news: Per the Austin American-Statesman, Tesla has a proposed deal with a local school district that would provide up to $68 million in tax incentives over a decade for building a 4 million- to 5 million-square-foot plant that would employ thousands.

  • Tesla is eyeing a 2,100-acre site that's currently home to a sand and gravel mining operation, per the Statesman and other reports.

But, but, but: Musk cautioned via Twitter last night that they "are considering several options," a comment that came in response to someone who asked whether Tulsa, Oklahoma, was still in the mix.

Quick take: If the Austin region indeed gets the plant, it will be the second big recent sign that tech players see options well beyond the coasts.

  • Earlier this week, the big Boston-area cleantech startup incubator Greentown Labs announced that it's opening a second location in Houston.

How it works: "The proposed deal with the Texas school district makes use of a state tax program that allows districts to grant breaks to economic-development projects. The state then repays the district," Bloomberg reports.

6. Catch up fast: Aramco, divestment, batteries

Saudi Arabia: "Saudi Aramco, the world’s biggest oil exporter, has begun cutting hundreds of jobs as it looks to reduce costs after a slump in energy prices, according to people familiar with the matter." (Bloomberg)

Finance: "The Vatican urged Catholics on Thursday to disinvest from the armaments and fossil fuel industries and to closely monitor companies in sectors such as mining to check if they are damaging the environment." (Reuters)

Grid tech: Sunrun, the leading U.S. rooftop solar installer, finalized two utility partnerships to turn home batteries into miniature power plants. (Greentech Media)

7. Quote of the day
"We still have the same cars, the same power plants, the same industries that we had before the pandemic. ... Without big structural changes, emissions are likely to come back."

Who said it: Corinne Le Quéré, a climate scientist at the University of East Anglia, who is quoted in this New York Times story.

The big picture: "After a drastic decline this spring, global greenhouse gas emissions are now rebounding sharply, scientists reported, as countries relax their coronavirus lockdowns and traffic surges back onto roads," the NYT reports.

Ben GemanAmy Harder