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Nov 29, 2021

Axios Generate

🌞 Welcome back readers! Today's Smart Brevity count is 1,243 words, 5 minutes.

🎶 Happy birthday (it was yesterday) to the songwriter Randy Newman, who has today's intro tune...

1 big thing: Oil markets lurch on new COVID threat

Illustration: Aïda Amer/Axios

Oil prices have swung wildly in recent days as traders grapple with two uncertainties — the Omicron variant's impact and OPEC+ output plans, Ben writes.

Catch up fast: Oil plunged Friday on word of the new variant and travel restrictions, with U.S. prices falling 13% and the global benchmark Brent crude by just slightly less.

But prices have regained around a third of the decline since markets opened again after the weekend.

What they're saying: "The decline in the oil price, over concerns that any new restrictions could impact demand...appears somewhat overdone, which helps explain this morning’s subsequent rebound," CMC Markets analyst Michael Hewson said in a note via MarketWatch.

That's the rapidly forming CW. Analysts from "Goldman Sachs to Energy Aspects said that the move was overdone and traders are now waiting to see how severe the variant’s impact will be," Bloomberg reports.

Why it matters: Oil prices affect costs for a suite of goods and services, ranging from gasoline to various manufactured products to shipping costs.

But their movements are also a window onto how a hive mind — in this case, traders — are viewing geopolitical and COVID conditions.

The uncertainty could last for weeks as scientists take time to evaluate the new variant and countries make decisions on restrictions.

The intrigue: OPEC+ has moved monthly meetings this week from Monday-Tuesday until Wednesday-Thursday as the coalition evaluates the effect of the new variant, Bloomberg first reported.

Whether the group would proceed with another monthly output hike was already uncertain amid U.S. plans to release 50 million barrels from strategic reserves alongside smaller releases by several other countries.

2. Cautious hope for CO2 capture after "false starts"
Expand chart
Data: IEA; Chart: Will Chase/Axios

The pipeline of carbon capture projects worldwide is growing and there are signs that fewer plans will die on the vine than in the past, the International Energy Agency said, Ben writes.

Why it matters: Carbon capture, utilization and storage has the potential to curb emissions from heavy industries and power generation. But the long-hoped-for scale-up of commercial deployment has unfolded very slowly.

Driving the news: The new IEA commentary says over 100 projects have been announced this year. And more projects may survive the journey from concept to commercial operation, writes Samantha McCulloch, head of IEA's CCUS unit.

"While CCUS certainly still faces challenges, the combination of strengthened climate goals, an improved investment environment and new business models have set the stage for greater success in coming years," she writes.

Catch up fast: The IEA report catalogs the gap between hope and reality in the past, with numerous projects canceled over the past decade.

Less than 3 million tons of CO2 capture capacity has been added annually. Right now global capacity is around 40 million tons.

That's a far cry from the 1.6 billion cumulative total envisioned by 2030 in IEA's roadmap for meeting net-zero global emissions by 2050.

Read the analysis.

3. Leasing plan shows climate agenda's limits

Illustration: Sarah Grillo/Axios

The big policy news over the break was the Interior Department's Black Friday release of its review of oil-and-gas leasing policy, Ben writes.

Catch up fast: The long-awaited document recommends higher royalty rates, bidding costs and rental costs.

It also calls for a more selective and restrictive approach to deciding which lands and waters to offer. Axios' Torey Van Oot has more.

Why it matters: While federal lands and waters are a relatively small share of U.S. production, there's still expansive development.

Climate activists have looked to federal leasing and permitting policy as a place where the Biden administration could impose major new limits on fossil fuel development.

Yes, but: The plan stops far short of President Biden's campaign platform, which vowed sweeping new restrictions.

The Black Friday release underscores how the administration is in a politically delicate spot on oil-and-gas policy.

The White House faces political jeopardy from elevated gasoline prices and last week announced a major release from the Strategic Petroleum Reserve.

What they're saying: "Lesser availability at higher prices and stricter standards for a smaller pool of bidders may not meet some environmental activists’ hopes for an outright leasing ban," the research firm ClearView Energy Partners said in a note.

"But...this approach could still significantly curtail future federal oil and gas production activity while remaining consistent with existing laws."

Go deeper: Oil-and-Gas Companies Should Pay Higher Fees to Drill on Federal Lands, Interior Department Says (WSJ)

4. Catch up fast: BP, Gazprom, Olympics

Hydrogen: "BP said on Monday it plans to set up a large-scale green hydrogen production plant in northeast England, generated with wind, water and solar energy to aid Britain's move away from fossil fuels." (Reuters)

Natural gas: "Gazprom has reported record profits for the first nine months of the year on the back of soaring gas prices, which the Russian state gas giant expects to boost performance even further in the final quarter." (Financial Times)

Electric flight: "France will begin testing electric air taxis in coming months at a hub outside Paris with the goal of having two dedicated flight paths to ferry passengers in time for the 2024 summer Olympics." (Bloomberg)

5. Nissan makes its move on EVs

Nissan Ariya electric crossover. Photo courtesy of Nissan.

Nissan, which introduced the electric Leaf a decade ago but now has just a small share of the EV market, is looking to power up its efforts, Ben writes.

Driving the news: The company said Monday that it's investing $17.6 billion into electrification efforts over the next five years.

  • The Japanese company plans to have 23 electrified models on the market by 2030, including 15 fully electric vehicles.
  • It is aiming to have electrified vehicles account for 50% of worldwide sales in 2030.
  • Nissan also plans to greatly increase battery production capacity and bring a proprietary solid-state battery to market late in this decade.

Why it matters: It's the latest sign of major automakers devoting increasing resources into EVs as sales climb quickly, albeit from a small base.

"This is the first time Japan's No.3 automaker...is unveiling a comprehensive electrification plan," Reuters reports.

Yes, but: The Reuters piece also notes that "some analysts were unimpressed with Nissan's plan, noting it was already behind its rivals in electrification."

6. BlackRock joins European charging push

Illustration: Aïda Amer/Axios

The European charging network Ionity, a joint venture between automakers, brought in nearly $800 million to help toward its goal of quadrupling its number of charging points to 7,000 by 2025, Ben writes.

The intrigue: Investment giant BlackRock contributed to the funding, per last week's announcement, becoming the first non-automaker to become an Ionity shareholder.

Ionity is a joint venture between automakers BMW Group, Ford, Hyundai, Mercedes and VW.

Speaking of EV infrastructure, Shell and the Chinese electric vehicle company Nio signed a "strategic cooperation agreement."

Part of it involves plans to develop a network of "co-branded battery swap stations," beginning with pilot projects in China. Via Argus Media, it's a market BP is entering too.

1 Oasis thing: Storm Arwen strands tribute band

Snow surrounds the Tan Hill Inn pub in North Yorkshire in March 2019. Photo: Owen Humphreys/PA Images via Getty Images

An Oasis tribute band has been stranded for days along with dozens of fans and guests at the Tan Hill Inn, in Yorkshire, Andrew writes.

Driving the news: Storm Arwen dumped up to 3 feet of snow on the U.K.’s highest pub, according to the BBC, and guests have been stuck since turning up to watch the Oasis tribute band, “Noasis,” on Friday night.

  • Roads are impassible due to snow and ice and fallen power lines after the storm brought wind gusts to 90 mph, driving frigid air south from Scandinavia into Western Europe. The pub is located at 1,732 feet above sea level.

The big picture: The deadly storm caused widespread power outages and damage across the U.K.

  • According to the New York Times, some of the stranded guests have begun calling the band “Snowasis.”