Jan 10, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Welcome back! Today's Smart Brevity count: 1,190 words, 4.5 minutes.

And today marks the 1989 release date of the late Lou Reed's "New York," so its lyrical brilliance opens today's edition...

1 big thing: The climate spotlight on BlackRock

Illustration: Eniola Odetunde/Axios

Two bits of news Thursday illustrate how investment giants are becoming increasingly prominent actors — and targets — in battles over corporate climate policy.

Driving the news, part 1: The behemoth fund manager BlackRock has joined Climate Action 100+, an investor network that pushes fossil fuel companies to make new disclosures and carbon emissions commitments.

Why it matters: BlackRock adds heft to the 3-year-old group, which has already won concessions from companies including Shell, BP and Norwegian oil major Equinor.

  • The group's combined assets under management are now $41 trillion with BlackRock's addition, organizers say. Its hundreds of members include CalPERS, Allianz, and UBS Asset Management, to name a few.

One big question: Whether joining Climate Action 100+ changes BlackRock's asset management policies and voting decisions on climate-related shareholder resolutions, which it has rarely backed.

  • As the Financial Times notes, "BlackRock has voted against shareholder proposals brought about by Climate Action 100+ in the past and is under no obligation to vote for them in the future."

Quick take, per Axios' Felix Salmon: "If this means that BlackRock is going to vote its trillions of dollars worth of shares in support of climate resolutions, that could change corporate governance significantly. But no one yet knows whether it means that."

Driving the news, part 2: BlackRock's addition to Climate Action 100+ happened coincidentally on the same day that activists stepped up pressure on the company.

  • Thursday brought the announcement of the Stop the Money Pipeline campaign, which is pressing banks and fund managers to end financing of fossil fuel projects. It will hold a demonstration in Washington, D.C., today.

Where it stands: BlackRock is among the main targets of the mobilization — whose participants include Greenpeace, the Sierra Club, EarthRights and 350.org — that brings together several existing campaigns.

  • Moira Birss of Amazon Watch and the BlackRock's Big Problem campaign, which is part of the umbrella effort, said they want BlackRock to end coal-related investments and to "prioritize fossil- and deforestation-free funds by making them the default option for all investors and clients."
  • They also want BlackRock to support shareholder resolutions that push energy companies to align their business models with the Paris climate agreement's goals.

What they're saying: BlackRock called joining Climate Action 100+ a "natural progression" of the work its "investment stewardship" team already does with many companies in their passive and active portfolios.

  • "We believe evidence of the impact of climate risk on investment portfolios is building rapidly and we are accelerating our engagement with companies on this critical issue," a spokesperson said.

Go deeper: BlackRock Joins World’s Largest Investor Group on Climate Change (WSJ)

2. The grid benefits of electric buses

Illustration: Sarah Grillo/Axios

Power companies are helping cash-strapped school districts replace diesel buses with electric ones that have a secondary purpose: helping to manage electricity demand, Axios' Joann Muller reports.

Why it matters: Electric buses are cleaner, but upfront cost are about three times higher. Using them for energy storage can help close that cost gap and help meet fluctuating demand levels on electric grids.

What's happening: Less than 1% of America's 480,000 school buses are electric today, but that's beginning to change.

  • Communities in California, Massachusetts and a few other states are testing electric school buses and charging infrastructure.
  • Vehicle-to-grid (V2G) technology for school buses is still fairly new.
  • The most ambitious V2G effort comes from Dominion Energy, which plans to deploy 1,050 electric school buses in Virginia over the next five years.

How it works: V2G technology is not a new concept, but the economics have been challenging.

  • V2G enables electric EVs to store surplus energy from intermittent wind or solar sources during non-peak periods and feed power back to the grid when needed.
  • The problem is that passenger cars tend to move around, and their relatively small batteries can discharge only a small amount of electricity at a time.
  • School bus fleets are a better distributed power source because their usage patterns are predictable.

Go deeper

3. The next phase of Europe's Green Deal

"The European Union will unveil next week an investment plan designed to mobilize at least 1 trillion euros ($1.1 trillion) over the next decade for an unprecedented shift to a climate-neutral economy," Bloomberg reports.

Why it matters: The story shows how EU officials are trying to put meat on the bones of the European Green Deal — the recently unveiled array of policy ideas aimed at making the EU a net-zero emitter by 2050.

Where it stands: Their piece on the "Sustainable Europe Investment Plan" reports:

"The European Commission, the bloc’s executive arm, wants to pull together a set of new policy initiatives with existing tools and ensure a coherent framework that will spur investment from every corner of the EU, according to a draft document seen by Bloomberg News."

But, but, but: The price tag for the envisioned transition is higher, the story notes. The document they obtained states that "more will be needed to master the challenges ahead. Public finance needs to lead the way, but private actors will need to provide the scale.”

4. How the Iran conflict could help Russian oil

An interesting new post makes the case that Russia would emerge as a winner if the U.S.-Iran conflict — which has cooled off — greatly escalates.

The big picture: Anna Mikulska, a senior fellow with UPenn's Kleinman Center for Energy Policy, explores what would happen in the unlikely — but not impossible — event that Iran shut down oil tanker traffic through the Strait of Hormuz.

  • It's a critical shipping lane for Middle East oil and nearly 20 million barrels per day pass through the narrow channel.

The intrigue: If there's a shutdown, "Russia could become a crucial market stabilizer deriving significant financial, strategic, and diplomatic benefits," she writes.

  • "Not only does Russia produce the 'right' quality of crude (a substitute for the crude potentially locked in by the Strait of Hormuz), but according to a Russian government statement, it holds spare capacity of 500,000 barrels per day."
  • Elsewhere Mikulska notes that an Iranian blockade "could potentially strengthen Russia’s position vis-a-vis energy-hungry Asia since about three-fourths of the crude that passes through the Strait lands there."
5. "Soft costs" are an EV infrastructure problem

There's a suite of "soft costs" for EV charging infrastructure — think permitting delays, "balkanized" regulations and more — that are a poorly understood barrier to the deployment of the technology, according to a new report.

Why it matters: Hardware costs have fallen a lot in recent years and that's slated to continue, but a report from the nonprofit Rocky Mountain Institute notes...

"Unlike the trends in hardware costs, soft costs for nonresidential charging stations — such as the costs of acquiring sites, meeting local building codes, and participating in extended processes for obtaining utility interconnections, easements, and local building permits — are not so easily reduced."
"We strongly suspect that soft costs are a big part of the reasons why charger installation costs in the United States are three to five times the cost of the charger itself, a much higher ratio than that seen in Europe."

What's next: The report lays out lots of recommendations for reducing costs, such as grouping more chargers at single sites (which would help spread fixed costs like site prep).

  • Others include: better site selection processes, making charging infrastructure part of construction plans in new buildings and parking structures, and standardizing procurement processes.

Quick take: This is worth thinking about in an election year, because Democratic White House contenders hope to bolster federal investment in charging infrastructure.

Go deeper: EV Charging Infrastructure Has a Soft Costs Problem (Greentech Media)

Ben GemanAmy Harder