Aug 13, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning! Today's Smart Brevity count: 1,085 words, 4 minutes.

And at this moment in 1976, the great Earth, Wind & Fire were atop Billboard's R&B charts with today's intro tune...

1 big thing: Wind and solar hit new global milestone during COVID-19
Reproduced from Ember; Chart: Axios Visuals

A steep decline in coal-fired power combined with rising wind and solar output drove those carbon-free sources to record global market share in the first half of 2020, a new analysis finds.

Why it matters: The report, from the environmental think tank Ember, shows how COVID-19 is speeding the ongoing shakeup of the global power mix — but also how it's occurring too slowly to reach international climate goals.

Driving the news: Combined wind and solar generation rose 14% in the year's first six months compared to the same period last year, reaching a tenth of the electricity mix for the first time.

Their aggregate share has doubled since 2015. Meanwhile, the amount of coal-fired generation fell by over 8% compared to the first half of 2019.

Declines in coal-fired output were especially steep in the U.S. and Europe, while in China, the world's largest CO2 emitter and coal user, generation from the fuel fell just slightly.

The big picture: The pandemic is playing a big role in the changing shares of the power mix — but it's not the only force at play.

  • Ember's analysis finds that over two-thirds of the coal generation decline this year stems from lower overall power demand during the pandemic.
  • But 30% can be chalked up to wind and solar displacing the fuel worldwide. Forces including an increase in U.S. gas-fired generation also contributed.
  • Overall, wind and solar have taken 5% of coal's global market share in the last half-decade.

But, but, but: "[T]o keep a chance of limiting climate change to 1.5 degrees [Celsius], coal generation needs to fall by 13% every year this decade," Ember analyst Dave Jones said in comments alongside the report.

  • "The fact that, during a global pandemic, coal generation has still only fallen by 8% shows just how far off-track we still are," Jones said.
  • Limiting global temperature rise to 1.5°C (2.7°F) above preindustrial levels is the most ambitious target of the Paris climate deal.
  • But as this analysis reinforces, that's an immensely, immensely heavy lift that the world is nowhere near on track to achieve.

Of note: The review is based on 48 nations that together make up the overwhelming bulk of global generation.

Bonus: More on 2020's power shift
Data: Ember; Chart: Danielle Alberti/Axios

The Ember analysis shows how wind and solar were the only major electricity source to increase generation on a global basis during the pandemic.

Of note: It did not have reliable data from some key gas-generating nations, so the gas estimate has a higher error margin than other fuel types, Ember said.

2. "Stalling" mobility cuts oil demand forecast anew

The International Energy Agency has again lowered its projected global oil demand estimates, "reflecting the stalling of mobility as the number of COVID-19 cases remains high."

Why it matters: The agency's analysis Thursday is the first time in several months that IEA deepened its projection of the extent of the pandemic-driven demand collapse.

Its latest monthly report underscores how COVID-19 continues to weigh heavily on the oil sector despite some recovery in consumption and prices from the depths of the crisis.

By the numbers: IEA now sees demand at 91.9 million barrels per day (bpd) this year, down 8.1 million bpd from last year's levels, which is 140,000 bpd lower than its prior report.

The report also reduces expectations for the amount of recovery next year. IEA sees oil demand rebounding to 97.1 million bpd next year, which is also lower than its prior outlook.

What they're saying: "Jet fuel demand remains the major source of weakness," the Paris-based agency said.

"For road transport fuels, demand in the first half of 2020 was slightly stronger than anticipated, but for the second half we remain cautious and the upsurge in Covid-19 cases has seen us downgrade our estimates, mainly for gasoline," the report states.

Go deeper: Coronavirus Projected to Sap More Oil Demand Than Expected (Wall Street Journal)

3. Clean energy jobs clawback stalls
Data: BW Research Partnership; Chart: Axios Visuals

The jobs rebound in clean energy sectors, broadly defined, slowed greatly last month, per a newly released analysis.

The big picture: Clean energy industries added just 3,200 jobs last month, far fewer than in June, according to the BW Research Partnership's analysis of unemployment claims.

  • The sectors' combined employment remains about 15% below pre-pandemic levels, per the research firm commissioned to do the analysis on behalf of industry groups and advocates.
  • The tally looks at several broad categories: efficiency, renewable power, alternative fuels, storage and grid tech, and electric cars.

What they're saying: The renewables sector said the data shows that Congress should enact policy changes.

"What is needed most right now is temporary refundability of renewable tax credits so projects can continue to move forward despite an increasingly constrained tax equity market, and a delay in the scheduled phasedown of existing tax credits," said Gregory Wetstone of the American Council on Renewable Energy.

It is one of the groups that commissioned the analysis.

4. Chevron stakes nuclear fusion startup

Chevron is making a Series A investment in the three-year-old nuclear fusion startup Zap Energy, marking the latest foray by an oil-and-gas giant into companies outside a core business.

Why it matters: It's the first nuclear power investment from Chevron Technology Ventures, the company's in-house VC arm that's spreading money around a range of energy technologies.

The size of the investment was not disclosed. Seattle-based Zap has also received Energy Department funding.

The big picture: If — if! — decadeslong efforts to develop fusion power ever succeed, it promises an essentially limitless source of carbon-free power without the dangerous waste associated with traditional fission reactors.

Where it stands: Per Reuters, the huge oil-and-gas companies Equinor and Eni have also backed nuclear fusion startups.

* * *

Speaking of Chevron, this morning Bloomberg is out with an in-depth piece on how the company's posture breaks with European majors that are moving to diversify faster.

"[U]nlike its rivals in Europe, Chevron is betting its future less on renewable energies such as wind and solar and more on the subterranean stuff derived from hydrocarbons," it reports.

Threat level: "The risk for Chevron is that it gets left behind, producing a lot of climate-endangering oil and gas that no one needs," Bloomberg reports.

5. Catch up fast: Aramco, EPA, EVs

Spending: "Saudi Aramco plans to make even deeper cuts to its capital spending to help pay for the $75bn in dividends the state energy group promised investors at its initial public offering last year." (Financial Times)

Agencies: "Six former Environmental Protection Agency chiefs who served in Republican and Democratic administrations signed an open letter Wednesday calling for a 'reset' of the agency after November's presidential election." (Axios)

Electric vehicles: "Xcel Energy wants to help put about 1.5 million electric vehicles on the roads by 2030. It has proposed investing $100 million in Colorado over the next three years as part of those efforts." (Denver Post)

Ben GemanAmy Harder