Jun 17, 2019

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning, and Happy Father's Day to all the fathers out there — especially my own! 

Today's Smart Brevity count is 1,052 words, ~ 4 minute read.

I'll share my latest Harder Line column, and then Ben Geman will you get up to speed on other news. 

1 big thing: Oil companies' plastic push

Illustration: Rebecca Zisser/Axios

The oil and gas industry is ramping up petrochemicals — building blocks of plastics — right as the global outcry intensifies over plastic waste.

Where it stands: China, which had imported around 70% of the world’s plastic waste, has nearly banned all such imports since last year. That move, combined with horrific images of plastic waste circulating social media, has catapulted the world’s plastic problems to the front of people’s minds and politicians’ priorities.

  • Increasing government restrictions and mandates — plus the industry’s own response of better recycling — could cut plastic demand growth.
  • America is leading a worldwide petrochemical buildout, because its plentiful oil and gas supplies have produced cheap petrochemical feedstocks, or raw material.
  • Oil companies want this growth to offset anticipated lower oil demand elsewhere, particularly transportation as electric cars become more common.

What they're saying: While some experts and industry executives argue that plastic is better than alternatives like glass, environmentalists say industry’s focus on recycling reinforces the world’s plastic dependency and unfairly shifts attention to waste management.

  • “They could address it in very fundamental ways, by making commitments to reduce the amount of plastics being produced and reduce what it’s being used for,” said Carroll Muffett, president and CEO of the Center for International Environmental Law, an environmental nonprofit.

What we’re watching: To what degree oil companies branch out into other technologies aimed at plastic recycling.

  • Such moves would further diversify an industry already under pressure to invest in cleaner energy sources in response to climate change.
  • “The solution here is to try to find technology that can recycle plastic far more efficiently and far more effectively,” Spencer Dale, BP’s top economist, told Axios earlier this year. “That’s just the type of scientific problem that we’re quite good at solving.”
  • He declined to elaborate, saying only: “Watch this space.”

Go deeper

2. A deep dive into the global plastics problem
Expand chart
Adapted from Geyer et al., 2017, "Production, use, and fate of all plastics ever made," Science Advances; Chart: Axios Visuals

Speaking of plastics, Amy and our Axios colleagues ran an eye-opening collection of stories over the weekend, including her story here, about how we've sipped, packaged and played our way into a global plastics crisis.

Go deeper: Read the full Axios deep dive

3. The push to secure oil tankers

The weekend brought fresh pledges to protect oil tankers following last week's attacks in the Gulf of Oman, but markets picked up where they left off Friday — reacting more to bearish economic signs than heightened security fears.

Why it matters: Over 18 million barrels of oil per day — nearly a fifth of global demand — pass through the Strait of Hormuz.

Where it stands: The security of oil moving through the strait was prominent at a previously scheduled weekend meeting of G20 energy ministers in Japan, per S&P Global Platts and other reports.

  • The summit communique states: "In light of recent developments highlighting concerns about energy security, the G20 Energy Ministers acknowledge energy security as one of the guiding principles for the transformation of energy systems," Bloomberg reports.

What they're saying: "We always defend freedom of navigation. We are going to work to build out a set of countries that have deep vested interest in keeping that strait open to help us do that," Secretary of State Mike Pompeo said Sunday on CBS News' "Face the Nation," noting Asian nations' reliance on oil moved through the area.

But, but, but: Economic headwinds are checking oil prices despite the rise in geopolitical tensions.

  • "Oil prices slipped on Monday as signs of an economic slowdown amid international trade disputes began to outweigh supply fears that were stoked by attacks on oil tankers in the Gulf of Oman last week and sent prices higher," Reuters reports.
  • However, there are already other costs. A bunch of stories, like this Bloomberg piece, note surging prices for insuring tankers moving through the region.

Go deeper: A crude tug of war on the global oil market

4. Report: U.S. cyber move targets Russia's grid

This NYT story made the rounds over the weekend...

"The United States is stepping up digital incursions into Russia’s electric power grid in a warning to President Vladimir V. Putin and a demonstration of how the Trump administration is using new authorities to deploy cybertools more aggressively."

Why it matters: "Power grids are certain to become a rapidly escalating part of the battlefield for cybersecurity warfare," Jason Bordoff, head of the Columbia University energy think tank, noted via Twitter.

The big picture: The story, sourced to current and former U.S. officials, follows 2018 reports of wide-ranging Russian intrusions into U.S. energy infrastructure. And more broadly, the NYT notes, "Power grids have been a low-intensity battleground for years."

The intrigue: President Trump denied the story over the weekend.

  • But the NYT notes that 2 administration officials said Trump had not been briefed in detail about steps to place software code in the Russian grid that could be used for surveillance or attacks.
  • The paper says defense and intelligence officials are hesitant to provide details to Trump about moves against Russia because there's a chance he would "countermand it or discuss it with foreign officials."

Threat level: Axios cybersecurity expert Joe Uchill notes that tampering with power plants would be a high-risk move by the U.S. — there's no rule saying escalating tensions will be limited to the cyber domain.

5. What to watch: EU goal, U.S. auto regs, South America blackout

Europe: EU officials could endorse a goal of reaching net-zero greenhouse gas emissions by 2050 at a meeting late this week, per the Financial Times and Politico.

  • What's new: The FT reported yesterday that Germany has decided to endorse the plan. "A lack of German support had been a sticking point for the adoption of tougher EU emissions target," the paper reports.

Regulations: House Energy and Commerce panels will meet Thursday for a hearing on Trump administration plans to prevent auto mileage and emissions standards from growing tougher after 2020.

  • Why it matters: Upcoming regulations to scuttle Obama-era mandates are among the biggest White House moves to pare back federal climate policies.
  • What's next: Witnesses are expected to include EPA and Transportation Department officials, as well as Mary Nichols, a top California regulator battling the proposal.

South America: Authorities continue seeking the cause of a massive blackout that hit the interconnected grid for Argentina, Uruguay and Paraguay over the weekend, affecting tens of millions of people, per the Washington Post.

  • The intrigue: CNN reports that Argentina Energy Secretary Gustavo Lopetegui told reporters Sunday, "At this moment we do not rule out any possibilities but ... a cyberattack is not within the preliminary alternatives being considered."
Ben GemanAmy Harder