Aug 4, 2021

Axios Generate

Good morning! Today's Smart Brevity count is 1,340 words, 5 minutes.

📊 Data point of the day: $27,400 — the new, lower base price for the Nissan Leaf EV. That makes it the cheapest in the U.S., Engadget reports.

🎶 Stevie Wonder's album "Innervisions" turned 48 yesterday and a slice of its brilliance is today's intro tune...

1 big thing: Big Oil's unsteady recovery from COVID-19
Data: Yahoo Finance; Chart: Axios Visuals

The just-concluded Big Oil earnings season highlighted two things at once: The sector's on far more solid footing than last year, but still faces big headwinds, Ben writes.

Driving the news: BP's stock rose 7% Tuesday after it reported a $2.8 billion Q2 profit after losing $6.7 billion that period last year, and announced higher dividends and new share buybacks.

  • Shell and TotalEnergies saw increases after they reported multibillion-dollar earnings last week alongside new plans to return more cash to shareholders.
  • U.S.-based Exxon ($4.7 billion compared to a $1.1 billion loss this period last year) and Chevron ($3.1 billion compared to an $8.3 billion loss in Q2 2020) saw little movement despite profit reports Friday.
  • For the U.S. giants, it's "a sign that winning back investors remains an uphill fight," the Financial Times reports. Of note: Chevron unveiled new buybacks and Exxon didn't.
  • CNN points to the uncertainties facing the majors in this piece.

Where it stands: Overall, the last two quarters show that Big Oil has recovered significantly from the pandemic that brought huge losses during 2020.

  • But their limited share price movement is one sign that the industry still faces challenges.
  • The near-term future is clouded by the spread of the Delta variant, which could slow the demand recovery. The oil price recovery has been losing ground in recent days.
  • Looking further out, the majors' ability to navigate the global move to lower-carbon energy is another question mark — and one that varies by company as they employ different strategies.

The big picture: "The fundamentals are improving, but it’s possible that that COVID-related demand concerns and longer term questions related to the energy transition are playing a role in the investor response," Ben Cahill, an oil expert with the Center for Strategic and International Studies, said via email.

  • OK, sure, any snapshot of share price movements, like the six-month window above, is an incomplete story.
  • For instance, zoom out a little further and Exxon's up 40% this year, but still nowhere near its mid-2010s salad days, while the other giants are also well below prior peaks.

What they're saying: Oil analyst Ellen Wald cited several things keeping investors hesitant despite a recovery in prices and profits.

  • "Part of it may have to do with money-managers' reluctance to invest in oil for environmental reasons, which is compounded by non-environmentally motivated investors who simply don't want to buy into stocks that they don't think others will buy," she said via email.
  • While huge pension funds are still significantly invested in oil companies despite fund managers' climate pledges, Wald notes the perception of share dumps could be making investors wary.

Turning to market fundamentals, she said that "investors may see this as the peak for oil prices," due to more OPEC+ barrels arriving and COVID hitting demand anew.

2. Kerry names G20 climate holdouts, points to nature's "message"

Photo illustration: Shoshana Gordon/Axios. Photo: Alex Wong/Getty Images

John Kerry said the Biden administration is still grappling with ripple effects from former President Donald Trump’s rejection of the Paris Agreement and eschewing of multilateralism writ large, Andrew writes.

Driving the news: In an interview with The New Yorker’s David Remnick, Kerry, the special envoy for climate change, said Trump, "Did a whopper of a job putting America’s credibility in a terrible place, destroying it fundamentally."

  • "I hear from country after country: How do we know we can count on America?" Kerry said. According to him, the momentum building in the private sector to move away from carbon-intensive fuels is self-sustaining and can withstand any future president.

Why it matters: Kerry made clear that this lack of trust is a roadblock to the success of the next United Nations climate summit, scheduled for Glasgow in early November.

  • At this meeting, the U.S. and other nations are seeking a commitment from the world’s top economies to slash carbon emissions by 2030 and finance the developing nations’ transition to clean energy.

Yes, but: Those major economies recently tried and failed to achieve consensus on the need to limit warming to 1.5°C (2.7°F) above preindustrial levels through 2100. Kerry said the holdouts at the G20 energy ministers meeting, held last month in Italy, included China, Russia, India, South Africa and Brazil.

What's next: For a breakthrough in Glasgow, Kerry may be betting on an assist from Mother Nature, given the devastating extreme weather events of late — from heat waves to wildfires and floods.

"Mother Nature is messaging pretty forcibly right now," Kerry said. "Increasingly, leaders are taking note of this," he said, citing Russian President Vladimir Putin among that list, due to the vast wildfires in Siberia and permafrost melt in the country's Arctic region.

3. Americans' climate action disconnect
Expand chart
Yale Program on Climate Change Communication/George Mason University Center for Climate Change Communication; Chart: Will Chase/Axios

Despite a widespread recognition among a majority of Americans that climate change is a problem, and a willingness to take actions to combat it, there’s a large gulf between what people say they would be willing to do, and what they are actually doing, Andrew writes.

Why it matters: This finding, from a new polling analysis conducted by climate opinion researchers at Yale University and George Mason, suggests there's considerable room for growing the climate movement beyond current activists.

Details: For example, about half of Americans said they would sign a petition about global warming, but only 15% said they have done so at least once in the past year.

  • In addition, about 33% said they would donate money to an organization working on global warming, while only 13% said they have done so in the past year.
  • About 30% of Americans say they are "definitely" or "probably" willing to join a campaign to get elected officials to act to reduce global warming, yet only 1% of Americans say they are currently participating in such an effort.

The poll has an average margin of error of plus or minus 3 percentage points.

4. Meet the fast e-scooter heading for the U.S.

The Zapp i300 is designed for urban commuters. Photo: Zapp

A new high-performance electric scooter is being billed as the transportation solution for urban residents who want an EV but don't have dedicated parking and can't exactly hang a charging cable out their apartment window, Axios' Joann Muller reports.

Driving the news: The $7,495 Zapp i300 is positioned as a daily commuter vehicle for urban dwellers — offering the convenience of a scooter and the performance of a motorcycle.

Debuting this month in Paris, it's headed to Asia and the United States next year.

The big picture: Powered, road-legal scooters are popular in many parts of the world, and the $109 billion global scooter market is transitioning to electric power at a faster rate than cars.

The details: The i300 is equipped with two 1.4-kilowatt-hour, independent, portable battery packs, housed under the rider's feet, which provide improved stability.

  • The lightweight architecture — just 200 pounds — means it is easy to maneuver and goes 0 to 30 mph in just 2.3 seconds.

Go deeper

5. The debt premium for fossil fuel companies

Illustration: Sarah Grillo/Axios

Banks are coming under fire from all sides for their role in funding fossil fuel companies, even though most have pledged to pull back over the coming decades, Axios' Kate Marino reports.

The big picture: Withdrawing capital from fossil fuel companies is only half the story in the transition to a sustainable future.

The other half is investment in developing the technology and infrastructure to support the widespread adoption of renewable power.

Where it stands: Until that renewable infrastructure and other zero-carbon tech's in place at a larger scale, there’s still a need for fossil power.

  • Those companies need funding — but simple supply-and-demand dynamics means fossil fuel companies increasingly have to pay up for the privilege of borrowing cash, sources tell Axios.
  • "There’s a growing number of [credit] investors who have oil and gas on their list of what they don't want to lend to," a capital markets banker tells Axios.

The intrigue: How much more do dirty energy companies have to pay? The cost compared to non-fossil fuel businesses can range from a half a percent premium to more than 5% for riskier endeavors.

Keep reading and sign up here for the Axios Markets newsletter