March 24, 2020
Welcome back. Today's Smart Brevity count: 1,176 words, 4.5 minutes.
And let's say goodbye to Kenny Rogers, who passed away Friday and opens today's edition...
1 big thing: Renewables face Capitol Hill setbacks
The renewable power sector would not get sought-after aid in the COVID-19 economic plans before lawmakers on Capitol Hill, a setback for the industry warning of steep job losses and scuttled projects.
Driving the news: House Democrats' $2.5 trillion proposal unveiled last night omits what industry groups and some lawmakers wanted: an extension of deadlines to use tax credits and the ability to quickly monetize them. The provisions are also absent from the Senate's GOP-drafted "phase three" proposal.
The intrigue: There may be room for negotiation. The House plan lacks White House-backed language in the Senate bill that would provide $3 billion to buy oil for the Strategic Petroleum Reserve.
What they're saying: Democrat Kathy Castor, who heads the House select climate panel and is among the lawmakers seeking the renewables' aid, tells Axios she'll fight to include the provisions in the "phase three" bill.
- "As President Trump and Senator McConnell insist on bailing out polluters through the COVID stimulus bill, my Democratic colleagues and I will keep fighting to protect the millions of clean energy workers affected by this crisis."
But, but, but: The sense I got in my reporting yesterday is that while the industry hasn’t given up on this round, a push in a subsequent COVID-19 aid package could become the focus.
- The absence of the provisions in the measure Speaker Nancy Pelosi unveiled last night signals that it's not among Democratic leadership's priorities in this round.
- Senate Majority Leader Mitch McConnell and other Republicans are attacking Democrats for efforts to include renewable tax provisions and other climate-related measures in "phase three."
- And, this morning, President Trump attacked via Twitter efforts to put green provisions into the stimulus.
- Democrats' leverage is limited, given GOP control of the White House and Senate and the need to quickly take steps to shore up the collapsing economy.
2. Chevron joins other majors making big cutbacks
Chevron this morning said it's slashing its planned 2020 capital spending by $4 billion (or 20%) and suspending share buybacks, making it the latest multinational giant to announce cutbacks as global oil demand craters.
Driving the news: Chevron, the second-largest U.S.-based oil company, said around $2 billion of the cuts would be focused on shale, largely in the Permian Basin region.
- More broadly, companies of various sizes are announcing spending cuts as they grapple with the stunningly fast changes in oil markets.
- Most recently, European-based multinationals Shell and Total unveiled deep cuts and suspension of share buybacks.
The big picture: The travel and economic freeze from COVID-19, combined with the collapse of the Saudi-Russia output-limiting deal, is upending the oil sector as prices have collapsed.
- Analysts are racing to keep up with how much the global appetite for oil will fall this year, with many projections seeing a loss of millions of barrels per day.
- A number of projections show a near-term decline in the 10 million barrel per day range.
- For instance, the firm Thunder Said Energy sees a Q2 drop of 11.5 million barrels per day and a full year-over-year decline of 6.5 million.
3. The new fight over airline emissions
Another thing I'm watching on Capitol Hill is the fate of efforts to impose new carbon emissions requirements on airlines in return for emergency financial aid.
Driving the news: The House package would provide over $60 billion in grants and loans to the airline industry. But the environmental and labor strings attached to the aid include...
- A mandate that airlines "fully offset the annual carbon emissions" for domestic flights starting in 2025.
- Regulations imposing a "binding commitment" to cut emissions attributable to domestic flights starting in 2021 — requiring a "path consistent" with a 25% cut from 2019 levels by 2035, and a 50% cut by 2050.
Why it matters: Aviation accounts for roughly 2.5% of global carbon dioxide emissions, but the sector's emissions are projected to rise in coming decades absent stronger policies.
The big question: Do the provisions, which are under attack from Republicans, stand any chance of surviving in a final Capitol Hill deal?
4. Chart of the day: Coronavirus and power demand
One effect of the social and economic paralysis from COVID-19 is lower power demand in Europe as countries impose new restrictions.
Where it stands: The U.K.-based clean energy think tank Ember is tracking the data on a country-by-country basis and part of their analysis yesterday is above.
What they found: The chart above shows changes in select countries from March 16–22 compared to the prior week.
- Of note: Countries entered those weeks in different phases of their outbreak response.
By the numbers: "In Italy, although the week-on-week fall was 12%, there was already an 8% impact from the previous week, implying a total impact of 20% over the last 2 weeks," the post notes.
5. The significance of PG&E's guilty plea
"In a federal filing Monday permanently documenting its role in causing California’s deadliest wildfire, Pacific Gas & Electric announced it has pleaded guilty to 84 counts of involuntary manslaughter for the 2018 Camp fire in the Northern California town of Paradise."
Why it matters: "It is unusual for major corporations to face serious criminal charges," the Wall Street Journal notes, adding that they will also pay a $3.5 billion penalty.
- The LAT story quotes Shon Hiatt of USC’s Marshall School of Business, who says there are implications for other power companies.
- "Hiatt said the plea 'is a big thing' not just for Southern California Edison and San Diego Gas & Electric, but for municipal utilities, which could face similar lawsuits for future wildfires."
Threat level: The California tragedies can't be untethered from how power companies have to manage climate change. That's because hotter and drier conditions are among the risk factors for wildfires.
What's next: "The company is racing to emerge from bankruptcy by June so that it can qualify for inclusion in a new state wildfire fund that could cover the costs of future fires," the New York Times reports.
By the numbers: "The company previously reached $25.5 billion of settlements related to wildfires in 2015, 2017 and 2018, including $13.5 billion for victims and $12 billion for insurers, cities, counties and other public entities," per Reuters.
6. Coronavirus forces pause in plastic limits
Driving the news: "The delays are in response to concerns that reusable bags and containers carry more risk of spreading the virus than single-use items, which are designed to be used once and thrown away," Argus reports.
Why it matters: It's yet another variable in the complicated question of how COVID-19 will affect energy use policies and patterns in the near- and long-term.
The big picture: Petrochemicals used to make plastic are a big source of oil demand. The scope of future restrictions on plastics are one factor that will determine when global oil use eventually peaks.
Where it stands: States and local officials in Maine, New York, Massachusetts and elsewhere are taking steps to enable continued plastic bag use.
Where it stands: Major restaurants have also been forced to rethink their plans.
- "Starbucks Corp. has said stores that remain open in North America would serve coffee only in disposable cups for takeout," WSJ reports.
- "Starbucks, Dunkin’ Brands Group Inc. and Tim Hortons — owned by Restaurant Brands International Inc. — have all stopped filling customers’ reusable cups, a U-turn after years of encouraging them."