Aug 23, 2019

Axios Generate

Good morning. Today's Smart Brevity: 1,096 words, ~ 4 minutes.

Onto music ... At this moment in 1997, the Notorious B.I.G. was atop Billboard's rap charts (and would soon hit #1 in the Hot 100) with today's all-timer of an intro tune...

1 big thing: Crude oil caught in U.S.-China trade fight

Illustration: Rebecca Zisser/Axios

Breaking: Crude oil prices are dropping following China's announcement of retaliatory tariffs ranging from 5% to 10% on $75 billion of U.S. goods — including crude oil — in two batches on Sept. 1 and Dec. 15.

What's next: Per Bloomberg, the new 5% levy applied to crude oil takes effect next month.

Why it matters: The latest volley in the trade battle will feed existing concerns about the global economic slowdown hitting oil demand.

  • It comes 2 weeks after the International Energy Agency said global oil demand growth from January–May was the slowest for that period since 2008, and that the U.S.-China fight adds more uncertainty.

Where it stands: This morning, Brent was trading around $58.86 and WTI at $53.88.

Go deeper: China announces retaliatory tariffs on $75 billion of U.S. goods

2. Sanders' of-the-moment climate plan


Sen. Bernie Sanders' sweeping new $16 trillion climate and energy platform for his 2020 presidential campaign does not include a tax on carbon emissions.

Why it matters: There's a small reason and a big one.

  • First, its language is kinda vague on this point, as I noted yesterday, but last night an aide confirmed with me: "There is no carbon tax in the plan."
  • More importantly, its absence and Sanders' dismissive comments about CO2 taxes yesterday say a lot about the shifting political plates.

The big picture: The proposal is a stark sign of how CO2 pricing has lost cachet on the left (to the dismay of some backers), at least as a central tool.

  • Instead, there's pressure for direct reshaping of energy systems — in part via huge federal investments — to force CO2 cuts that match what scientists say is needed to limit warming.

Where it stands: Consider that Sanders himself had proposed major CO2 tax measures in recent years.

  • But yesterday he said, "I think we’ve come farther than that now," per the Washington Post.
  • “It’s not an essential part of what I believe has to happen," he added.

Catch up fast: The plan nonetheless calls for tax code changes and other policies that would raise costs on fossil fuel producers.

  • Part of the campaign's claim that the plan would "pay for itself" over 15 years includes $3.1 trillion from "[m]aking the fossil fuel industry pay for [its] pollution, through litigation, fees, and taxes, and eliminating federal fossil fuel subsidies."

The intrigue: That phrase sounds a bit like a CO2 tax.

  • Leah Stokes, an energy policy expert with UC Santa Barbara, says the plan effectively includes one.
  • “There are a lot of things that we do not call carbon taxes that function like a carbon tax,” she tells me, citing gasoline taxes as one example.

Quick take: Stokes said in a series of tweets that Sanders' overall proposal has merits and flaws. Check it out.

3. Lessons for the future of mobility
Expand chart
Adapted from Rocky Mountain Institute; Chart: Axios Visuals

The overlapping rise of electric vehicles, autonomous tech and ride-hailing must be managed correctly to ensure these disruptive forces better the environment and don't worsen congestion, a new report argues.

Driving the news: The nonprofit Rocky Mountain Institute explores mobility policy and tech in 3 huge markets — India, China and the U.S. — and lessons that can be drawn.

Check out the chart above, which helps to show the potential for these technologies to steer the direction of automobile adoption, given its lower but rising levels in China and India.

What they found: The report explores ways the 3 countries can learn from how markets are developing in the other nations. Some of the numerous examples are...

  • India can look to experiences in the U.S. and China in testing autonomous vehicles if the country revisits laws that prohibit testing.
  • The U.S. could learn from China's aggressive national EV adoption policies, and specifically India's targeting of high-mileage commercial vehicles for electrification.
  • "US ridehailing companies can borrow from China an integrated ride booking system that incorporates public transit and bikeshare as part of a multimodal journey."

The bottom line: "Ensuring that rides in autonomous vehicles are both electrified and pooled can mitigate these congestion and pollution issues and provide reliable, low-cost mobility for a rapidly urbanizing society."

4. What they're saying: the auto regs fight
LA traffic. Photo: Frederic J. Brown/AFP/Getty Images

More analysis on the President Trump-California fight over auto regulations...

By the numbers: A piece in our Expert Voices section gets to the stakes. Megan Mahajan of the climate-focused consultancy Energy Innovation, talks about their modeling of what would happen if White House plans to freeze Obama-era CO2 and mileage rules takes effect...

  • The result: An additional 7.6 billion barrels of gasoline would be burned, costing as much as $400 billion through 2050. Vehicle emissions would increase by up to 10% by 2035, the year of maximum impact.
  • But, but, but: Of course at least 4 big automakers have now cut a separate deal with California, which will blunt — but not erase — the effect of the White House plan. Go deeper with her whole item.

The big picture: Cox Automotive senior economist Charlie Chesbrough explains why automakers have reason to compromise with California on what will effectively be tougher nationwide rules. In comments circulated to reporters, he said...

"Europe and China are already implementing significant fuel economy standards on their vehicle industries."
"If U.S. designed and manufactured products don’t achieve similar fuel economy and emissions levels, the domestic industry risks becoming regional companies only, with limited global growth prospects.” 

One big question: Now that Trump is attacking automakers making a separate peace with California, will his public criticism affect their sales? Probably not, one expert tells me. Auto analyst Rebecca Lindland says...

“I think it is pretty rare that if somebody was thinking about buying a brand and something like this happens, they say, ‘That’s it. I’m definitely not buying the brand.’”
5. Catch up fast: Tesla, the Amazon, DNC tussle

Solar: Walmart and Tesla "are looking to address all issues surrounding the solar installations at Walmart stores, the companies said late on Thursday, two days after the retailer sued the electric carmaker for 'widespread negligence' that led to repeated fires at the installations," Reuters reports.

Climate: The Amazon rainforest is burning faster than usual. This is most likely happening because of land clearance for agriculture, and it's expected to make efforts to fight climate change much harder if it doesn't stop soon.

  • Why it matters: "By one recent estimate, the trees of the Amazon rainforest pulled in carbon dioxide equivalent to the fossil fuel emissions of most of the nine countries that own or border the forest between 1980–2010," the BBC writes.

2020: "The Democratic National Committee on Thursday rejected a proposal for an official climate change debate for the party’s presidential candidates, pitting party officials against activists who believe Democrats aren’t taking the issue seriously heading into 2020," per ABC News.