Mar 5, 2019

Axios Generate

Ben Geman

Welcome back! Before we get started, a reminder to keep up with the latest news by signing up for our breaking news alerts.

And happy birthday (a day late) to the late Bobby Womack, who opens today's edition...

1 big thing: IPOs mean climate pressure on Uber and Lyft

Illustration: Sarah Grillo/Axios

Planned IPOs by Uber and Lyft will likely lead to pressure from shareholder activists who want the ride-hailing giants to act more aggressively on stemming carbon emissions.

Why it matters: The IPOs come as some analysts fear that the growth of ride-hailing is siphoning riders from more climate-friendly mass-transit options and adding to congestion.

  • Once the companies are public, advocates will have new chances and tools — such as shareholder resolutions — to push for disclosures and steps like stronger initiatives around electric vehicles and shared rides.

What they're saying: Sue Reid of the sustainable investor advocacy network Ceres tells Axios...

“These companies either could be part of a broad set of climate solutions or they could significantly exacerbate the cause of climate change."
"They have some really important decisions in terms of their business plans to be made.”
“Savvy investors should be asking some tough questions of these companies to ensure they are calibrating their business plans to be on the right side of the climate equation."

The intrigue: Ride-hailing, along with the rise of autonomous tech, is something of a wildcard for the future of transport-related carbon emissions.

  • There's the potential to increase miles traveled, but experts say that a combination of sound planning and practices plus electrification can provide climate benefits too.

Yes, but: Lyft and Uber have several existing climate-focused and sustainability initiatives. For instance...

  • Last September, Uber announced a new $10 million "fund for sustainable mobility" and is working with partners in a number of cities on ways to bolster EV adoption among drivers.
  • Lyft says it's purchasing enough carbon offsets to be a "carbon neutral" company, buying enough renewable power to cover its operations, and introducing a "green mode" to let passengers request EVs and hybrids.
  • "Lyft was founded on the belief that technology will enable us to dramatically reduce carbon emissions from the transportation system," the company said in papers filed last week with the Securities and Exchange Commission.

Between the lines: Reid tells me investors will be looking for the companies to "build on" those programs.

Where it stands: Ceres is not the only group eyeing the IPOs and both company's future.

  • Danielle Fugere, president of the shareholder advocacy group As You Sow, predicts that shareholders will look at them from a climate standpoint and weigh the steps they're taking to lower their impact.
  • "These issues are the subject of current debate, so shareholders and analysts will likely be asking for appropriate disclosures," she tells Axios.

What's next: Uber is expected to file papers with securities regulators soon, and Lyft submitted its papers last week.

  • Reid sees Lyft's upcoming "roadshow" for investors as a chance for prospective shareholders to engage with the company.

The big picture: Climate-focused investors have in recent years notched several successes in pushing some very big companies into new steps on corporate disclosure and emissions targets.

  • Most recently, the umbrella group Climate Action 100+ has won concessions from Shell, BP and the mining giant Glencore.
2. Chevron's shale push and more petro notes

Breaking this morning: Chevron expects to more than double its production in the Permian Basin in Texas and New Mexico in the next 5 years — an almost 40% increase from its prior forecast, the Wall Street Journal reports.

LNG: Via Reuters, "Total has agreed to buy a 10 percent stake in the Arctic LNG 2 project from Russia’s Novatek, as the French energy group looks to build up its presence in the area to service a fast-growing Asian market."

Pipelines: Per Bloomberg, "China announced it will form a national oil and pipeline company, the first public acknowledgment of the massive energy industry overhaul planned since at least 2014."

Libya: The Wall Street Journal reports that Libya's state oil company has re-started some production at the big Sharara oil field following removal of gunmen who had occupied the region.

  • Why it matters: "The reopening will bring relief to oil markets that have been rattled by disruptions in sanction-hit Venezuela and Iran as well as steep production cuts from Saudi Arabia," the paper reports.
  • Yes, but: Bloomberg notes it adds "another complication to OPEC’s effort to trim a global supply glut."
3. Bill Gates fund backs new cobalt venture

Quartz reports this morning that a California startup called Kobold, which has developed advanced methods to chase down supplies of cobalt, has won backing from the Bill Gates' Breakthrough Energy Ventures and the VC powerhouse Andreessen Horowitz.

Why it matters: Cobalt is a critical component in batteries needed for smartphones and the growth of EVs, so demand is growing.

  • The majority of the world's supply comes from the Democratic Republic of Congo, where mining is associated with human rights and environmental problems.

The intrigue: Per Quartz, Kobold employs experts in fields ranging from quantum computing to economic geology and says it can bring advanced digital tech to bear on finding supplies outside the DRC.

  • "Kobold’s bet is that it can sniff out new cobalt reserves by deploying machine learning and other AI techniques to large sets of geological, physical, and chemical data," Akshat Rathi reports.
4. "Next year fuel is going to cost more money"

As if tumult and sanctions around Venezuela and Iran weren't enough, Axios' Dion Rabouin looks at another change looming in oil markets: new maritime fuel standards. From his piece...

The oil landscape is changing rapidly. Two major producers, Iran and Venezuela, have had oil output largely sidelined by U.S. sanctions and in Venezuela's case a massive production shortfall.

  • Another major change will be in maritime shipping.

What's happening: Next year, the UN's International Maritime Organization will bar ships from carrying fuel that contains sulfur content higher than 0.5% and capping sulfur emissions from ships at 0.5%.

  • The rule passed despite objections from the U.S. and is part of a plan to cut greenhouse gas emissions in the international shipping sector 50% below 2008 levels by 2050.

Why it matters: Maritime shipping uses about 4 million–5 million barrels of fuel a day of the oil market's 100-million-barrel-per-day total. S&P Global Platts Analytics estimates that compliance will add $60 billion to fuel costs in 2020.

What they're saying: Sebastian Esposito, VP of business development at Inatech, tells Axios he doesn't know if companies are ready for the new regulations. While he says a lot of elements are still up in the air, "I would imagine next year fuel is going to cost more money."

Go deeper: Read Dion's full piece here and sign up for his Axios Markets newsletter here.

5. 1 cool thing: a solar-powered EV

Image courtesy of Sono Motors

The German EV startup Sono Motors has released updated images of its Sion, a vehicle that can partially re-charge using solar panels integrated into its design.

Why it matters: The company said the panels can add up to 34 kilometers a day of additional range under "peak" conditions. The company says the car will cost 25,500 Euros (around $28,900).

  • "It’s more than initially planned, but 9,460 partially paid pre-orders were placed so far, which gives hope that there is demand and the company will be able to start production," Inside EVs writes.

What they're saying: Via the EV site Electrek, "Their claim of 30 km of range per day added with solar panels is most likely in ideal conditions. Therefore, make no mistake, this vehicle is very much powered by its battery pack."

* * *

Speaking of new electric models, CNET looks at today's debut at the Geneva Motor Show of Mercedes-Benz's new electric minivan that's "slated to enter production in the near future."

  • "Juice comes from a 100-kWh lithium-ion battery, which gives the EQV a range of about 249 miles and a top speed of 99 miles per hour," they report.
Ben Geman