March 27, 2020
Welcome back. Today's Smart Brevity count: 1,370 words, 5 minutes.
Situational awareness: "A new OPEC+ deal to balance oil markets might be possible if other countries join in, Kirill Dmitriev, head of Russia’s sovereign wealth fund said, adding that countries should also cooperate to cushion the economic fallout from coronavirus," Reuters reports from Moscow this morning.
🎵Let's just begin the edition with this beautifully written Greg Brown song...
1 big thing: Imagining a new normal after coronavirus
One thing to watch once this tragic crisis passes is what forms of enforced behavior stick around by choice after lockdowns end — and what it means for energy use.
Where it stands: Global oil demand has collapsed as lots of air and vehicle travel has stopped, and billions of people worldwide are cutting back or halting their movements.
- It's not so clear that everyone's life will simply snap back into its old form — especially people lucky enough to have jobs that enable working from home.
- And the changes go beyond just having your cats as officemates, especially as technology around remote interactions evolves.
Energy analyst Michael Liebreich posted a wide-ranging analysis yesterday on the energy dimensions of the crisis.
- One of his points: "Many of the new forms of behavior we adopt through necessity are going to prove sticky — and given that most of them involve staying at home or staying local, they are going to act as powerful long-term brakes on emission growth."
- His piece in BloombergNEF explores ways that work, business travel, remote health care, schooling, urban infrastructure and more could be reshaped.
Climate expert Michael Gerrard, director of Columbia University's Sabin Center for Climate Change Law, mentions a similar point in this thorough blog post from the university's Earth Institute, saying we're “learning more about how much face-to-face interaction is and is not essential."
- “We’re all struggling to communicate virtually, and we’ll learn a lot more about the contexts in which travel can be avoided without great loss from face-to-face interaction," Gerrard said.
- "This could ultimately help us deal with climate change because we will see what chunk of [our interactions] can be reduced by electronic communication."
But, but, but: Let me clear the decks here. No sane people — and certainly not the two men quoted above — are welcoming the COVID-19 pandemic or calling it anything other than a tragedy.
- And a number of experts (Gerrard among them) fear that the coronavirus is serving to sap resources and policymakers' focus on climate change as they address the crisis.
- In fact, I recommend this post from The Breakthrough Institute. It estimates that the coronavirus will drive a 0.5% to 2.2% cut in global CO2 emissions this year, but overall says the effect will "be neither strong enough nor prolonged enough to meaningfully alter our climate’s trajectory."
The bottom line: It's nonetheless worth thinking about how COVID-19 could re-shape people's lives once the crisis is over.
- I think it'll be the stuff of academic analysis — and other exploration deeper than a single newsletter item — down the road. And next week I plan to look at some of the existing literature on remote work. Stay tuned.
2. A remarkable interview with an oil CEO
If you have a few minutes, please check out this CNBC interview yesterday with Scott Sheffield, CEO of the big independent shale oil producer Pioneer Natural Resources.
Why it matters: It's a very blunt assessment of the tumult facing the industry as demand and prices collapse, and lays bare internal divisions in the sector too.
Driving the news: Pioneer has floated the idea that Texas regulators should weigh mandatory production curbs — if a wider deal can be struck to dial back output elsewhere too.
- “It’s going to take a long time to balance the market. That’s why Pioneer and several independents are seeking a global settlement to look at really reducing production with all states, OPEC, OPEC+, until the virus has ended,” he said.
The intrigue: “We’ve run into roadblocks. We’ve had opposition from Exxon," he said, claiming that Exxon "controls" the American Petroleum Institute and the Texas Oil and Gas Association.
- In addition, Sheffield said some independents oppose production curbs because they're so financially stressed that it would push them into bankruptcy.
Where it stands: Sheffield says they've asked President Trump to put "significant pressure" on Saudi Arabia to "stop this price war."
- He noted some administration efforts to work with the Saudis to date, but said later in the interview, “We really need Trump to do something, or he is going to lose all the energy states in this election."
The big picture: Sheffield warns the crisis will decimate independent players.
- He said that of the roughly 74 publicly traded independent companies, “There’s only going to be about 10 left at the end of 2021 that have decent balance sheets. The rest will become ghosts or zombies."
3. Breaking: Equinor bails on oil trade group over climate
Oil-and-gas giant Equinor said Friday that it’s leaving the Independent Petroleum Association of America, an industry trade group, due to differences over climate policy.
What's happening: Equinor cited the group’s lack of public support for the Paris Agreement and carbon pricing.
- However, Equinor is staying in the powerful American Petroleum Institute despite “some misalignment” on climate.
- Read their review of trade group memberships here.
Why it matters: It’s the latest evidence of the emerging divisions in the relationship between European-based energy majors and K Street over climate change.
4. Trump closes in on auto regs rewrite
The Trump administration is on the cusp of finalizing plans that will weaken Obama-era vehicle mileage and carbon emissions rules, per published reports and multiple sources.
Why it matters: Requiring substantially tougher standards through the mid-2020s was a pillar of the Obama-era climate agenda, but Trump officials and a number of automakers called the requirements infeasible.
What's next: "A draft final proposal circulated by the administration this year proposed increase requirements by about 1.5% per year and the final rule is expected to be similar," Reuters reports.
The intrigue: The long-simmering Trump administration plans that will run through model year 2026 have split the auto industry.
- Four companies — Ford, VW, Honda and BMW — last year struck a preliminary deal with California to meet tougher nationwide standards than what Trump officials are planning.
What's next: Final rules are expected by Tuesday.
5. The role of climate and wildlife in pandemics
The good news is, climate change is not directly at play with the novel coronavirus. The bad news: we humans are still root drivers in pandemics like this one, Axios' Amy Harder reports.
The state of play: Buying, selling and consuming wild animals, such as at the Wuhan, China, market where this novel coronavirus is believed to have originated, is increasingly spreading deadly infectious diseases, experts say.
How it works: “We know that tropical diseases tend to have wildlife as reservoirs,” said Lee Hannah, a senior scientist in climate change biology with Conservation International.
- By moving wild animals into cities, “you’re taking something that’s known to be a wildlife disease reservoir and putting it into a densely populated area,” Hannah said.
Climate change has an overarching impact on it all, though it’s a less direct connection than wild animal markets. Some of these indirect links include...
1. Air pollution, largely from fossil-fuel emitting sources that also drive climate change, worsens any given virus’ impact on human health, according to Aaron Bernstein of Harvard's Center for Climate, Health, and the Global Environment.
- A study of 2003's outbreak of SARS in Asia found that “people exposed to the highest level of air pollution were twice as likely to die from the disease as those who were not,” Bernstein said.
2. Increasing temperatures could change the habitat for disease-carrying mosquitoes, such as with Zika, into more northern locales, Bernstein says.
- That’s unlikely to spread as quickly as COVID-19, the illness stemming from the coronavirus, because Zika is primarily spread via mosquitos.
3. Deforestation is linked to increased carbon dioxide emissions and also destroys habitats, which increases the risk of close human-animal encounters, Bernstein said.
6. EPA backs off enforcement during coronavirus crisis
EPA says it will exercise "enforcement discretion" around compliance with certain environmental rules during the COVID-19 crisis.
Why it matters: The policy unveiled Thursday shows how the pandemic is upending government operations and, potentially, creating new risks.
- The New York Times reports that the policy will allow power plants, factories and other facilities to "determine for themselves if they are able to meet legal requirements on reporting air and water pollution."
Driving the news: EPA administrator Andrew Wheeler said the difficulty of protecting workers and the public from the coronavirus "may directly impact the ability of regulated facilities to meet all federal regulatory requirements."
Details: The memo issued Thursday states...
- "In general, the EPA does not expect to seek penalties for violations of routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification obligations in situations where the EPA agrees that COVID-19 was the cause of the noncompliance and the entity provides supporting documentation to the EPA upon request."
The other side: "As the country focuses on protecting public health and safety from COVID-19, Donald Trump and Andrew Wheeler are exploiting this pandemic to make toxic pollution legal," Sierra Club executive director Michael Brune said.