Nov 2, 2020

Axios Generate

Happy Election Eve! As promised last week, my latest column sizes up a potential Biden presidency. I'll share a glimpse of that and then Ben Geman will get you up to speed on other news.

Today's Smart Brevity Count: 1,243 words, 4.7 minutes

1 big thing: The political limits of Biden's climate agenda

Illustration: Aïda Amer/Axios

Expect Joe Biden to pursue the most aggressive climate-change plan in U.S. presidential history should he win the election.

Driving the news: A sea change would come to Washington, D.C., but the aspirations he laid out in his campaign are far higher than what political reality allows.

Where it stands: Let’s take a look at the highlights when it comes to a potential Biden administration. Last week, I assessed a potential second Trump administration.

Congressional action

The centerpieces of Biden’s climate plan, including the $2 trillion in spending over four years and a goal of making the electricity grid carbon-free in 15 years, will probably need congressional legislation.

Yes, but: Even if Democrats control both chambers of Congress and even if they use legislative rules in a way that requires fewer votes, major climate policy changes are far from guaranteed.

  • Congress is likely to prioritize several pressing issues ahead of standalone climate policy, including economic stimulus. Funding for clean energy is likely to feature prominently there, though.
  • It’s not just the number of Democratic senators that matter, but also the political leanings of those senators, and many of them are more moderate than climate activists on social media.
  • Opponents of big climate policy are eyeing Democrats’ big ambitions.

“The more ambitious they are, the better chance we have of defeating them,” said Myron Ebell, who directs energy and environment at the conservative Competitive Enterprise Institute.

Personnel

Expect an intra-party battle over the types of people Biden would tap to lead key agencies and White House roles, with the progressive corner of the party pitted against the more centrist part.

Regulations

Expect a yearslong slog to reverse Trump’s deregulatory agenda.

  • This is Washington’s swinging pendulum: Biden would be at least the third president to mostly, if not completely, repeal his predecessor’s regulatory actions. This has become par for the course given congressional gridlock.

Oil and natural gas

Oil and natural gas will take a hit with Biden’s likely move to ban new leasing of the fuels’ production on federal lands, though most production occurs on state or private lands.

Renewable and other new energy technologies

Clean energy of all kinds, including renewables and electric cars, would see a huge boon under Biden. He would not only push favorable U.S. policy but also increase the chances the world moves faster, thereby increasing the market globally.

Climate diplomacy

America will, once again, face reengaging on the global stage after retreating on climate change.

After George W. Bush stepped back from an earlier climate treaty in the early 2000s, Trump did the same thing with the Paris Climate Agreement.

Go deeper: My full column.

2. COVID-19 has the upper hand against oil's recovery

Crude oil is trading at its lowest levels in over five months as new cases of COVID-19 are rising globally, a bearish sign for the recovery of petroleum demand.

WTI is trading around $35 this morning, while the global benchmark Brent crude is around $37.

Why it matters: The stalled (and now reversing) price recovery is ominous for the industry, including indebted U.S. producers that were struggling even before the crisis. This year has brought a slew of bankruptcies.

The big picture: Via the Financial Times, "The gloomy start to the week came after Boris Johnson, UK prime minister, announced on Saturday tight national restrictions in England just days after Germany and France enacted similar measures."

What they're saying: “Near-term oil fundamentals will continue to deteriorate until the unprecedented rise in COVID infections is brought under control,” PVM broker Stephen Brennock tells Reuters.

What we're watching: Whether OPEC+ will revisit plans to further ease their joint supply curbs at the start of 2021.

3. Exxon's fading empire

Illustration: Aïda Amer/Axios

Axios' Felix Salmon reports that the decline of ExxonMobil has been remarkable in its magnitude and unexpectedness

Driving the news: Exxon reported a loss of $680 million in the third quarter of this year, bringing its losses for 2020 as a whole up to $2.37 billion. (In 2008, by contrast, it made a profit of $46 billion.)

  • The company also announced it would shed up to 15% of its workforce over the next two years, including roughly 1,900 U.S. layoffs, mostly at its Houston HQ.
  • By the numbers: Exxon and Mobil combined had 390,000 employees in 1980. By 2017, that number had shrunk to less than 70,000.

Losses and layoffs notwithstanding, Exxon is still spending roughly $15 billion on sending a $3.48-per-share dividend to shareholders this year.

  • Few if any analysts believe such a payout is sustainable. “We have doubts about the sanctity of the dividend longer-term,” Edward Jones analyst Jennifer Rowland told Reuters.

Flashback: The oil giant was the largest company in the world, measured by market value, as recently as 2013.

  • A 700-page corporate biography by Columbia University journalism dean Steve Coll was entitled "Private Empire" and compared the company's power and reach to that of the United States itself.
  • When CEO Rex Tillerson became U.S. Secretary of State in 2017, it was not obvious that he was gaining power or influence.

The big picture: Today, ExxonMobil is not even in the top 40 most valuable companies in America. It's losing money, cutting staff and stretching to maintain an unsustainable dividend.

Go deeper

4. Two more Big Oil things: Equinor and Shell

Climate: "Norway's state-controlled Equinor aims to achieve net zero emissions from its operations and consumption of its products by 2050, new CEO Anders Opedal said Nov. 2, while reiterating the goal of increasing oil and gas output by 3% annually in 2019-26." (S&P Global Platts)

Deals: "Royal Dutch Shell Plc has acquired full control of one of its gas station joint ventures in China as the oil major doubles down on the fuel retailing market in the world’s second-largest economy." (Bloomberg)

5. Trump's Paris endgame is here

Illustration: Aïda Amer/Axios

On Nov. 4, the U.S. will have bailed (pretty sure that's the precise diplomatic term), on the Paris climate agreement, but the date's significance depends almost entirely on what happens a day earlier.

Driving the news: Wednesday marks a year since the Trump administration started the one-year countdown required under the pact's rules to formally abandon the deal, though President Trump first announced the plan back in 2017.

Why it matters: If Trump wins Tuesday, pulling out the U.S. — the second-largest greenhouse gas emitter after China — will underscore his reversal of Obama-era international policy and lock it in for years.

  • The effects on other nations are unclear, although lately several of the biggest carbon emitters — notably China and Japan — have actually been setting more aggressive long-term targets.

The big picture: Countries set their own emissions targets under the 2015 deal, but it's a venue for setting global rules around things like monitoring and verifying cuts.

And it's a key forum to prod nations to implement policies and provide resources to start changing the global emissions trajectory, which is far off track to meet the deal's temperature-limiting goals.

What we're watching: The election! Joe Biden has vowed to quickly bring the U.S. back into the deal — an agreement that Trump calls unfair to the U.S. even though countries set their own pledges.

  • Beyond reverting to the status quo, Biden says he'd look to pressure big emitting nations to go further.
  • His plan vows to "fully integrate" climate into foreign, national security and trade policy.

The bottom line: "That election could be a make or break point for international climate policy," scientist Niklas Hohne of the Netherlands' Wageningen University tells the Associated Press.

6. Number of the day: 52%

That's the percentage of likely voters in Pennsylvania who support fracking, while 27% oppose it, per a newly released New York Times/Siena College poll.

Why it matters: Pennsylvania is a critical swing state. President Trump, who trails in most polls there, is making fracking a central part of his closing argument.

By the numbers: The same poll, conducted in the final week of October, shows that 57% of likely voters in Arizona, another critical swing state, worry that global warming will significantly impact their lives.

And 54% of Florida voters polls are concerned that rising sea levels will have a big effect on their lives.

Go deeper: Trump reaches for oily lifeline