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November 15, 2022

🕺🏽Good morning Tuesday! Today's newsletter has a Smart Brevity count of 1,192 words, 4.5 minutes. 

👀 Join Axios’ Courtenay Brown and Niala Boodhoo tomorrow at 8am ET in Washington, D.C., for an event on closing economic equity gaps and expanding opportunity. Guests include Council of Economic Advisers member Jared Bernstein. Register to attend in person or online.

🎶45 years ago, L.T.D. (or Love, Togetherness and Devotion) was atop Billboard's R&B chart with today's intro tune...

1 big thing: A big test for making energy transition really happen

Photo illustration of a collage of a handshake, power plants and coal.

Photo illustration: Shoshana Gordon/Axios. Photo: Horst Galuschka/picture alliance via Getty Images

The U.S., Japan and a suite of other partners today unveiled a $20 billion plan to help Indonesia curb reliance on coal-fired power in the world's fourth-most populous country, Ben writes.

Why it matters: Indonesia is Southeast Asia's largest economy and relies on coal, the most carbon-emitting fuel, for roughly 60% of its electricity.

"It is the largest single climate finance transaction ever, according to a senior U.S. Treasury Department official," Bloomberg reports.

Driving the news: Officials including President Biden unveiled the plan today at the G20 meeting in Indonesia, which holds the group's rotating presidency.

  • The goal is to bring about a peak in Indonesia's power-sector emissions by 2030, an acceleration of seven years, and have renewables accelerate to provide at least a 34% share by then, per the joint announcement and a White House summary.
  • It envisions $20 billion in combined public and private finance — including major global banks — over three to five years.
  • The idea is a mix of "grants, concessional loans, market-rate loans, guarantees, and technical assistance." Others involved include Canada, the U.K. and the EU.

Catch up fast: The "Just Energy Transition Partnership," or JETP, follows a similar multinational effort to announced a year ago to support South Africa's movement away from coal.

Quick take: The plan tests whether a mix of public and private finance can be logistically translated into a (relatively) quick move away from coal in a huge developing economy.

The International Energy Agency, as part of a wider report we describe below, today unveiled its "Coal Transition Exposure Index" where movement away from the fuel will be most difficult.

Yes, but: The initial financing pledges are a fraction of what's needed for equitably transforming Indonesia's energy mix and meeting long-term climate goals.

"[A]ctivists and experts say this will only make a small dent in the approximately $600 billion that Indonesia needs to phase out coal-generated electricity and reach net-zero emissions," the Washington Post reports.

The intrigue: While the deal with South Africa helped lay the groundwork for other JETPs, there are already headwinds.

  • The South African partnership has "attracted criticism from several of the country’s politicians, including its president, for burdening the country with more debt and containing too few outright grants," the WSJ reports.

What we don't know: Details. The announcement says more granular plans will be crafted on various aspects of the partnership over the next six months.

Read more

2. Coal pledges don't match reality yet

Data: International Energy Agency; Chart: Axios Visuals

Speaking of coal, a new report shows the chasm between nations' climate pledges and today's coal-fueled reality — and offers ideas for bridging the gap, Ben writes.

The big picture: More than 95% of global coal consumption occurs in nations that have pledged to achieve net-zero emissions, the International Energy Agency said.

  • Sounds good! But...there's no sign yet of a move from coal on a global basis, despite declines in some nations, consumption data shows.
  • The biggest challenge remains in China, which accounts for over half of global coal demand.

Why it matters: "If nothing is done, emissions from existing coal assets would, by themselves, tip the world across the 1.5°C limit," IEA states.

Holding temperature rise to 1.5°C above preindustrial levels is the Paris Agreement goal that's slipping out of reach (and may be gone already 😬).

Threat level: If the world's roughly 9,000 coal-fired power plants run for their expected lifetimes, they would emit "more than the historical emissions to date of all coal plants that have ever operated."

Adding to the challenge: New plant construction has slowed but a significant amount is still occurring.

What's next: Renewables are surging, but IEA says more policies are needed to enable low-carbon power to start displacing large amounts of existing coal.

  • It offers ideas for a fair "people-centered" transition for the coal workforce and local economies. Over 8 million people work in some part of the coal value chain.
  • One focus is refinancing methods that allow plant owners to more quickly recoup investments, "clearing the path towards retirement for up to one‐third of the global coal‐fired power plant fleet within ten years."

👀 Full report...IEA boss Fatih Birol's Twitter thread

Bonus: Coal's global age divide

Map showing the age and size of coal-fired power plants worldwide

Image courtesy of the International Energy Agency

"Coal transitions are complicated by the relatively young age of coal plants across much of the Asia Pacific region," IEA's report notes.

"[P]lants in developing economies in Asia are on average less than 15 years old compared with more than 40 years in North America."

3. A warning for COP27 on the 1.5-degree goal

Illustration of a thermometer and bleached coral reefs with abstracted elements.

Illustration: Allie Carl/Axios

Alok Sharma, the British politician who steered the COP26 climate negotiations in Glasgow last year, warned diplomats assembled in Egypt for COP27 not to abandon a central outcome of those talks, Andrew writes.

Driving the news: The Glasgow Climate Pact reaffirmed the Paris Agreement’s most ambitious warming limit of 1.5°C.

  • Now some countries are seeking to avoid mentions of this target from the COP27 negotiating text, in favor of more easily attainable goals.

The big picture: The world has already warmed by 1.2°C above pre-industrial levels, and meeting the 1.5-degree target would require far more ambitious pre-2030 emissions cuts.

  • “We’ll either leave Egypt having kept 1.5 alive or this will be the COP where we lose 1.5,” Sharma said yesterday at a COP27 session on pre-2030 emissions reductions.
  • "You need to work out how you want future generations to look upon this COP and each of us individually as countries."

Threat level: Studies show that if global warming exceeds 1.5°C above preindustrial levels, potentially devastating consequences, such as the loss of tropical coral reefs and crossing tipping points, are far more likely.

Between the lines: Sharma’s warnings came as a potential breakthrough occurred nearly 6,000 miles away.

  • At the G20 in Bali, Chinese leader Xi Jinping and President Biden agreed to resume climate change cooperation between the world's top emitters, and strive for a successful COP27 outcome.

Yes, but: It is not clear what that means in practical terms.

4. Catch up fast on EV finance (and cash burn)

Illustration of an electric car charging pump with a dollar bill as the prong.

Illustration: Aïda Amer/Axios

💰BlackRock is providing $50 million in debt financing to Revel to help the mobility startup build out its network of fast-charging "superhubs" in U.S. cities, the companies said today, Ben writes.

  • Zoom in: It's the latest resource infusion from BlackRock to Revel, which has business lines in charging and electric ridesharing mopeds. BlackRock led a $126 million Series B round early this year.

WeaveGrid, a software startup that helps enable EV integration with lower-carbon power grids, this morning announced $35 million in Series B finance led by Salesforce Ventures, joined by various other new and existing investors.

👀 Moving from infrastructure to EVs themselves, Reuters has a detailed look at how quickly several startup automakers are burning through cash.

  • Some companies are better equipped than others to weather the losses — Rivian, for instance, says it has enough cash to fund operations through 2025.
  • But overall, it's tough out there. "In the EV business ... being early stage is a money-burning exercise, it's difficult to get over the hump," Canaccord Genuity analyst George Gianarikas tells Reuters.

5. 💬 Quoted

"We’re absolutely convinced that this is a race, a zero-sum game and resources are a finite limit."
— Tanya Skilton, GM's director of critical materials for EVs

That's via the Financial Times' dive into automakers' scramble to reach deals with mining companies to meet the surging need for lithium, nickel and more.

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🙏Thanks to Mickey Meece and David Nather for edits to today's newsletter. We'll see you back here tomorrow!