Jan 18, 2019

Axios Generate

By Ben Geman
Ben GemanAmy Harder

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This weekend marks 44 years since Bob Dylan released "Blood On The Tracks," so a cut from that masterpiece will take us into the weekend...

1 big thing: Urban transport is a climate wildcard
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Adapted from Hannon et. al., 2019, "The road to seamless urban mobility"; Chart: Andrew Witherspoon/Axios

A new McKinsey report shows why autonomous vehicles and ride-sharing are kind of a wild card when it comes to greenhouse gas emissions — and have the potential to help provide climate benefits if planners take the right steps.

Why it matters: Uber and other companies are already changing the way people move around in cities, while AVs are poised to shake things up even further as the tech takes hold.

  • But right now traffic is still getting worse for all kinds of reasons.

What they did: The report looks at 3 trajectories for how urban traffic and transport patterns could evolve, and what that means for the environment (among other things).

  • The best outcome, but hardly a foregone conclusion, is what they call "seamless mobility." This is reflected in the third bar in the chart above.
  • "In such an environment, the boundaries among private, shared, and public transport would be blurred, and travelers would have a variety of clean, cheap, and flexible ways to get from point A to point B," they write.
  • Under that scenario, traffic could rise by 30% yet travel times could still fall. And, if AVs are electric, urban emissions from transportation could fall by 85%.

In essence, under "seamless mobility," they see people traveling further per year than under their other scenarios, yet more efficiently and cleanly.

But, but, but: That won't happen by itself, the report shows. If cities don't act, "the trends related to urbanization, population, and e-commerce are likely to make congestion and pollution worse."

  • Under a "business as usual" approach in which transport demand swells with populations and there's little policy innovation, urban transport demand rises by another 15% in 2030, emissions "could rise proportionally" and travel time grows.
  • Under the "unconstrained autonomy" scenario, where AV tech advances but policymakers hang back, there are still advantages. Use of shared AV robotaxis rises, private car ownership falls and emissions could improve — depending on how much of the fleet is electric. But travel times still rise and congestion might get worse.

What's next: The report lays out dozens of ways for cities to help manage the rise of autonomy and growing populations, including...

  • Deploying autonomous tech to trains to speed them up and carry more people.
  • Working with state and federal officials on AV rules.
  • Using "smart parking" tech.
  • Shifting commercial deliveries to off-peak hours.
  • Scaling electric scooters and bikes to connect to mass transit.

"One tool that cities can use to encourage the use of EVs is the creation of low- or zero-emissions zones," while other steps include a push to electrify fleet and government vehicles.

2. Breaking Friday: Layoffs at Tesla

Tesla CEO Elon Musk announced Friday that the Silicon Valley electric automaker is cutting its workforce by 7%.

  • Musk also said that the company's 4th-quarter financials are again expected to show a profit, albeit smaller than its Q3 profit of 4%.
  • In pre-market trading, Tesla's stock dropped almost 6% after showing even steeper declines earlier in the morning.

The big picture: The announcement comes as Musk is trying to make good on pledges to begin offering lower-priced variants of its Model 3, a car critical to the company's future.

  • He acknowledged that "the road ahead is very difficult."
  • "[S]tarting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles," Musk wrote.
  • "Moreover, we need to continue making progress towards lower priced variants of Model 3," he said.

By the numbers: Currently the cheapest Model 3 is a 264-mile range that's $44,000, Musk noted.

  • "The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely."

Where it stands: Per Bloomberg, a 7% workforce cut means shedding about 3,150 jobs. From their piece...

  • "While it succeeded in scaling up output of its Model 3, the company missed analysts’ production targets during the fourth quarter, and it’s had to cut prices to make up for the halving of a U.S. federal tax credit that’s helped spur sales."
3. Sizing up the wild U.S. crude boom

A single line in the International Energy Agency's latest oil market report is a remarkable summary of the decade-long rise by the U.S. into a crude oil powerhouse.

What they're saying: "By the middle of the year, US crude output will probably be more than the capacity of either Saudi Arabia or Russia," IEA said.

  • Capacity refers to how much a country is currently capable of producing, which is often more than actual output.

The big picture: The U.S is already the world's largest crude oil producer, with Energy Information Administration data showing output closing in on 12 million barrels per day and rising.

  • Earlier this week, EIA forecast U.S. crude output averaging 12.1 million daily barrels this year and 12.9 million in 2020, cracking the 13 million mark later that year.

Where it stands: As for where the market is today, IEA sees things gradually heading toward balance this year thanks to forces including the OPEC+ production cutting agreement.

  • "[T]he journey to a balanced market will take time, and is more likely to be a marathon than a sprint," IEA writes.
  • "If the producers deliver on their promises, the market could return to balance in 1H19."

But, but, but: Needless to say there are caveats, such as OPEC nations complying with planned output curbs, and continued declines in output from Iran and Venezuela.

  • While the Saudis have been delivering on production cuts, going forward there is "less clarity with regard to its Russian partner."

For now, IEA is leaving their demand growth forecast for 2019 unchanged. They project a rise of 1.4 million barrels per day, almost entirely from non-OECD nations.

  • "The impact of higher oil prices in 2018 is fading, which will help offset lower economic growth," the report states.

Go deeper: Reuters breaks down the numbers here.

4. The road ahead for wireless EV charging

Illustration: Sarah Grillo/Axios

Axios Expert Voices contributor Alex Gruzen writes ... Newly introduced EVs are capable of charging wirelessly rather than tethered to a power cable, a technology that could one day help autonomous EVs stay running around the clock.

Why it matters: The ability to charge whenever they have a chance — through wireless charging source pads embedded in roadways and parking spots — would make AVs more efficient because they would never have to be taken out of operation for refueling.

How it works: These systems rely on resonant charging, which transfers electricity across an air gap between two magnetic coils and then to the vehicle's battery. It's a larger-scale version of technology already available for cellphones.

The catch: Significant public and private investment will be required to expand wireless source pads beyond private homes and offices and into roadways, especially to support electric AVs in ride-sharing and delivery fleets.

  • Automakers will have to make sure their vehicles are compliant with industry standards for interoperability, while state and local governments will need to install wireless charging infrastructure along streets and in public parking facilities and residential areas.

Go deeper: Read the full piece here.

Gruzen is CEO of WiTricity, which develops technologies for wireless energy transfer.

5. Climate policy and politics

Green New Deal: The New Yorker looks at the left politics around the Green New Deal and the young activists who have pushed it into the Democratic mainstream so fast.

  • "To its creators, the scale of the project is not a political complication but a point of pride," Benjamin Wallace-Wells writes.
  • Where stands: Christy Goldfuss, a senior White House environmental aide under former President Obama, tells Wallace-Wells that the GND push has changed the calculus for more senior Democrats too.
  • “People are asking how are we going to address climate change at scale, not what’s our building-block approach,” she said. “For me, that is a huge, huge shift, and it would not have happened if the Green New Deal had not come along.”

* * *

Carbon taxes: The idea is fighting for air in Washington and elsewhere, but this new commentary in the journal Nature makes the case for how to win a broader global buy-in.

  • It explores the concept of a harmonized system of national taxes as well as some kind of global carbon price.

Why it matters: A multi-nation survey that forms the backbone of the piece shows once again why tax design and use of the revenues are such important variables.

What they did: The researchers asked respondents in 5 countries about a range of tax costs ($40, $60 and $80 per ton), and a suite of options for how to use the revenue.

  • Those included domestic emissions-cutting projects, funding mitigation in other countries, and paying out per-capita dividends domestically or globally alongside cutting domestic income taxes.

The bottom line: "Three designs received majority (>50%) support in all five countries, when averaged across tax rates," according to researchers with Georgia State University and Norway's CICERO Center for International Climate Research.

  • "These were: lowering income taxes, redistributing revenues domestically to each citizen, and earmarking funds for mitigation projects in all countries."
  • "The first two could be achieved through harmonized carbon taxes; the third would require a global carbon tax."
Ben GemanAmy Harder