Good morning and welcome back to a rather transportation-heavy edition of the newsletter.
Generate is taking next week off, including Amy Harder's column, but keep your eyes on the Axios stream for energy news.
And 25 years ago, Cypress Hill was about to snag the top slot on Billboard's album charts with "Black Sunday," so they'll take us into the weekend...
1 big thing: The EV revolution still needs Tesla
Tesla's fate will have an outsized influence on something far more important than any one company: the future growth of electric vehicles.
Driving the news: Tesla's stock is up this week after its decent second quarter financials and a renewed pledge to be profitable later this year. But Tesla's long-term health is a question mark as it ramps up production of the Model 3 sedan.
- “What happens with the Model 3 is going to be hugely indicative of whether the EV industry is going to be successful,” said Sam Ori, the executive director of Energy Policy Institute at the University of Chicago.
Why it matters: The future of EV adoption, in the U.S. but elsewhere too, remains bound up with Tesla even as other automakers bring more models to market and overall sales rise.
- Tesla stands out as the clearest example of a disruptive player with a cool factor that can help transform EVs into something beyond niche status.
- Plus, EVs can help to fight climate change, quicken the arrival of peak oil demand, and alter the very nature of mobility when paired with autonomous tech.
Where it stands: Right now, Tesla represents a third of the U.S. market for plug-in vehicles (including full electrics like Tesla's line and plug-in hybrids), as the chart above shows.
- The company is now ramping up production of its Model 3, a more mass-market product that's key to its long-term future and already the nation's top-selling EV.
- But Tesla must still show it can consistently keep boosting production.
On the other side: Paul Ruiz, policy analyst with Securing America's Future Energy, says:
“Losing Tesla would have a big impact on the EV market, especially in the short term."
“On the other hand, in the medium and long-term, a lot of these automakers have made sizable investments in EVs, and the EV infrastructure nationwide is continuing to grow."
Meanwhile: Looking at China, where officials are strongly pushing EV deployment in the world's biggest auto market, Tesla wouldn't have as much impact as other manufacturers play a greater role. However, many parts of Europe would be affected by Tesla's fate.
Go deeper: Read the full story in the Axios stream.
2. On my screen: Trump's auto mileage move
There's plenty of fallout from the Trump administration proposal to weaken Obama-era auto mileage and carbon emissions rules. Here are a few angles...
Oil lobbying: Bloomberg reports that oil producers "quietly lobbied" for the measure that freezes standards in place at 2020.
- By the numbers: "The proposal, released Thursday, would translate into an additional 500,000 barrels of U.S. oil demand per day by the early 2030s, about 2 to 3 percent of projected consumption, according to government calculations," they report.
California's war: The Los Angeles Times' coverage delves into how California plans to fight the plan, which would strip the state's power to set tougher emissions rules and mandate EV sales.
Climate impact: This analysis by the Rhodium Group consultancy explores how the plan could affect future U.S. CO2 emissions. There are all kinds of variables and uncertainties, but it states...
- "At our upper bound estimate, the increase in annual CO2 emissions resulting from the NPRM by 2035 would be larger than the total national annual emissions today of 82% of the countries on earth, and larger than the COMBINED annual CO2 emissions of the 70 smallest countries in the world."
3. Where heat extremes hit energy and mining
A new report from the consultancy Verisk Maplecroft explores how rising heat stress could hinder exports in nations where hydrocarbons and mining are major industries.
Why it matters: The analysis adds to research on the economic risks posed by global warming in the decades ahead, focusing on regions where high heat and humidity will increasingly create very dangerous conditions for strenuous outdoor activity.
Where it matters: Central Africa, West Africa, the Middle East and North Africa face risks to extractive industries.
- "The extractives sector is central to export economies in Central Africa, accounting for 88% of the region’s total export value projected to be at risk by 2045," the report states.
- In West Africa, nearly 11% of export values will be at risk by 2045, the report notes, and 60% of that is in extractives.
- Similarly, looking at mining and petroleum in the Middle East and North Africa, the report notes that without adaptation, "heat stress and associated labour capacity losses are expected to have negative impacts on export economies in the region." 6% of export values will be at risk in 2045.
Electricity warning: Elsewhere, the report examines how the convergence of rising heat, rising urbanization and booming demand for cooling will put massive strains on electricity grids.
- By 2050, urban populations are expected to swell by 2.7 billion people, the report states.
- "Without enhanced efficiency or infrastructure improvements, locations with weak power grids may experience widespread blackouts during heatwaves when cooling requirements soar," they note.
4. Following up: carbon taxes and transportation
Let's revisit something we explored last month: modeling that shows carbon taxes high enough to slash electricity emissions would have little effect on CO2 from transportation.
Taking exception: A new commentary from Columbia University economist Noah Kaufman says transportation emissions probably aren't as resistant to carbon pricing as some studies predict. Kaufman, who's with Columbia's Center on Global Energy Policy, writes...
"[T]he effect of a carbon tax on vehicle emissions may be more substantial than conventional wisdom suggests."
Why it matters: Transportation has overtaken power as the largest source of U.S. carbon emissions, and the commentary arrives as the Trump administration moves to weaken Obama-era aut0 mileage and emissions rules.
The big picture: Kaufman argues that while, yes, Americans change driving habits much in response to gasoline price fluctuations, "they are not immune to larger responses when the price changes are due to policy shifts."
"Policy changes are more permanent than typical price fluctuations. Drivers may not pay attention to small changes in prices at the pump, but new policies create price changes that are more noticeable because they are often well publicized and involve 'shocks' rather than gradual price changes," he writes.
Kaufman also says evidence is beginning to emerge about the interplay between driving and CO2 taxes, including a detailed study about British Columbia which showed that reactions to their tax have been at least three times greater than responses to equivalent pump price changes.
The bottom line: "For sure, a carbon price by itself will not rapidly decarbonize the transportation sector, but it is an important component of a cost-effective strategy for addressing vehicle emissions."
5. The global costs of the morning commute
Around the world, national and municipal governments are experimenting with ways to cope with growing transportation demands in the face of economic and environmental pressures — some more successfully than others, Axios' Zach Basu reports.
Read more of Zach's story in the Axios stream.