Jan 12, 2021

Axios Generate

Good morning. Today's Smart Brevity count: 1,287 words, 5 minutes.

🛢️"Oil hit an 11-month high just below $57 a barrel on Tuesday as tighter supply and expectations of a drop in U.S. inventories offset concerns over rising coronavirus cases globally." (Reuters)

🎧Axios' Amy Harder joined the podcast of Ally, a social community for an equitable energy transition. Have a listen here.

🎷And yesterday marked the birthday of the late Clarence Clemons, whose brilliant sax playing with Bruce Springsteen animates today's intro tune...

1 big thing: The race to electrify package delivery

Illustration: Eniola Odetunde/Axios

General Motors is launching a new business unit devoted to electrifying the goods delivery market and says package giant FedEx will be the first customer, Axios' Joann Muller and I report.

Why it matters: Big automakers and startups alike see a huge opportunity.

  • GM said it sees an $850 billion U.S. market for "parcel, food delivery and reverse logistics" by the mid-2020s.
  • "E-commerce already was on a tremendous growth trajectory and COVID has just taken that to the next level," Pam Fletcher, GM's vice president of global innovation, told reporters yesterday.

Driving the news: GM's new BrightDrop unit provides an "ecosystem of electric first-to-last-mile products, software and services" for delivery and logistics companies, the company said.

  • A key piece is a new electric delivery vehicle arriving late this year that GM says will have a range of 250 miles per charge.
  • There's also an "electric pallet" to help move goods over short distances, as well as software products to help customers in areas like ensuring the most efficient delivery routes.

The big picture: GM is plunging into an increasingly competitive market for electric delivery vans and other commercial vehicles with a plug.

  • Amazon has invested heavily in the EV startup Rivian and plans to have as many as 100,000 of its electric delivery vehicles on the roads by 2030.
  • Ford unveiled its E-Transit van last month as it hopes to defend its current market position in the commercial vehicle market.
  • UPS is among the deep-pocketed investors in the U.K.-based startup Arrival and plans to buy lots of its vans.
  • Workhorse Group, another EV startup, last week said the trucking and logistics company Pride Group Enterprises has ordered 6,320 of its delivery vehicles.
  • That's not even a full list!

The intrigue: GM is pursuing multiple strategies for deploying its much-touted Ultium battery propulsion system at a time of upheaval in the auto industry.

The new business-to-business line is coming as GM rolls out a bunch of vehicles for the private consumer market, too.

What they're saying: GM officials say the idea of BrightDrop is that the products and services together form a one-stop-shop for customers — providing everything from fleet maintenance to route optimization.

"That's the big 'a-ha' here," said Fletcher said, touting the notion of an ecosystem of hardware, software and services. "But we also have a great van," she added.

What's next: Fletcher said FedEx plans to take delivery of its first 500 vans by the end of this year. She also said GM has lined up commitments from other customers she did not name.

Bonus EV news: Bus maker Proterra is going public

Breaking...The electric bus company Proterra this morning became the latest EV player to announce it's going public via a merger with a special purpose acquisition company.

Driving the news: The deal with ArcLight Clean Transition Corp. values Proterra at $1.6 billion. Proterra builds buses and also provides battery systems and other products for heavy electric vehicles.

Why it matters: It's the latest in a wave of SPAC deals as investors bank on major growth in what remain somewhat niche markets for electric vehicles of all stripes.

Backers of the transaction include Daimler Trucks, Fidelity Management & Research Company LLC and BlackRock-managed funds.

Go deeper: EV-Tech Company Proterra to Go Public Through ArcLight SPAC (Bloomberg)

2. How the pandemic affected U.S. emissions
Reproduced from Rhodium Group; Chart: Axios Visuals

The COVID-19 pandemic led to an estimated — and unprecedented — 10.3% drop in U.S. greenhouse gas emissions last year, per a new preliminary analysis from the Rhodium Group.

Why it matters: It's by far the single largest annual drop in the post-World War II era and puts U.S. emissions 21.5% below 2005 levels.

The analysis also shows how COVID-19 affected not only aggregate national emissions but also specific sectors.

Yes, but: The decline is rooted in the "enormous toll of significant economic damage and human suffering" and isn't a substitute for emissions policy at all, Rhodium says.

  • Last year "should not in any way be considered a down payment" on the U.S. goal under the Paris Agreement of cutting emissions 26%-28% percent below 2005 levels by 2025.
  • The incoming Biden administration will rejoin the agreement and submit a longer-term target for deeper cuts.

What's next: "With coronavirus vaccines now in distribution, we expect economic activity to pick up again in 2021, but without meaningful structural changes in the carbon intensity of the U.S. economy, emissions will likely rise again as well," it states.

The New York Times has more.

3. Filling in the blanks on Kerry's climate role

Photo: Pablo Blazquez Dominguez/Getty Images

Politico is out with fresh reporting on how John Kerry's gig as Joe Biden's special climate envoy will be structured — and some familiar names in climate circles who may work with the former secretary of State.

Why it matters: Biden's transition team has signaled that Kerry's job will have substantial weight inside the administration — including a seat on the National Security Council.

Driving the news: "Sue Biniaz, a longtime career State Department climate official, already has accepted a job to work on Kerry’s staff, according to a person familiar with the move," Politico reports.

The piece also says Jonathan Pershing, a senior Obama-era climate official now with the Hewlett Foundation, is also in discussions for a top role. Neither commented in the story.

The big picture: Kerry will have staff at the State Department and within the NSC, the story notes, and also tap staff from agencies like the Commerce Department and USTR "to infuse climate across agencies with an international-facing portfolio."

Catch up fast: Biden's team announced Friday that Melanie Nakagawa will be the NSC's senior director for climate and energy.

During the Obama administration, she was a strategic adviser on climate to Kerry at State and was also deputy assistant secretary for energy transformation at the department.

4. Oil interests hit pause on political giving

Several large oil companies and at least one trade group are suspending political contributions in the wake of the Capitol siege.

Driving the news: American Fuel & Petrochemical Manufacturers announced a pause to ensure giving reflects its "values, principles, and mission."

  • BP said its PAC would pause donations for six months and will "reevaluate its criteria for candidate support."
  • Per Bloomberg, ConocoPhillips is also pausing for six months while it reviews its policies.
  • Occidental said it's pausing to "ensure that we contribute to candidates who support our interests and align with our values."

Why it matters: The industry's PAC giving favors Republicans, though amounts and party breakdown vary by company and election cycle.

Yes, but: Some other oil-and-gas interests said they're reviewing their giving but did not announce a suspension.

  • Exxon officials said they "continually review" all PAC contributions," adding they have a "robust process" to weigh candidates' voting records and "consistency" with their values.
  • Chevron said "the events of the past week will be part of" its regular review of political contributions.

The big picture: The oil sector decisions are part of a wider corporate reckoning with the Capitol attack.

5. IEA vows to chart a detailed net-zero pathway

The International Energy Agency said that later this year it will produce the world's "first comprehensive roadmap" for the entire energy sector to reach net-zero greenhouse gas emissions by 2050.

Why it matters: While midcentury emissions-cutting pledges are becoming the coin of the realm for companies and countries, detailed and realistic ways to achieve those goals tend to be in shorter supply.

The big picture: The report, coming in May, will "set out in detail what is needed from governments, companies, investors and citizens to fully decarbonise the energy sector and put emissions on a path in line with a temperature rise of 1.5 degrees Celsius," IEA said.

6. Catch up fast: Wind, EVs, mining

Renewables: "Wind power surged past coal in Texas’ electricity mix for the first time in 2020, the latest sign of renewable energy’s rising prominence in America’s fossil fuel heartland." (Financial Times)

SPAC deals: Faraday & Future Inc., an electric-vehicle startup, is in talks to go public through a merger with Property Solutions Acquisition Corp., a blank-check firm, according to people with knowledge with the matter." (Bloomberg)

Coal: "Wyoming’s long-held dream of exporting Powder River Basin coal from a West Coast terminal was recently dashed when the project’s owner filed for bankruptcy and failed to find an interested buyer." (Casper Star-Tribune)