Jul 20, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning. I've been wanting to tackle the topic of labor rights and renewable energy jobs for years. Joe Biden gave me a compelling reason to last week with his climate plan's big focus on it. 

Today's Smart Brevity count: 1,399 words, 5.5 minutes.

1 big thing: Biden's push to unionize clean energy

Photo illustration: Aïda Amer/Axios. Photo: Brendan Smialowski/AFP via Getty Images

Joe Biden’s latest climate change and clean energy plan mentions the word union more than it does the climate itself.

Why it matters: Wind and solar energy has grown immensely across America over the last decade, but associated union jobs have not. The Democrats’ presumptive presidential nominee is trying to change that, which politicians and others say is key to tackling climate change.

What they’re saying: “There’s a halo effect that pertains to the clean energy industry with respect to how those industries treat workers,” said Jason Walsh, executive director of the BlueGreen Alliance, a group backed by labor unions and environmental groups.

  • But like other industries, he said, "under our prevailing labor law regime, companies are actively discouraging and in some cases actively blocking the ability of their workers to organize, which includes firing them.”

The big picture: The pandemic and resulting economic recession is catapulting worker rights and equity to the forefront of all debates, including energy and climate change.

Where it stands: Biden’s expanded plan on those topics unveiled last week calls for sweeping changes to labor laws, alongside aggressive goals to transition off fossil fuels.

By the numbers: Union presence is “an important factor” in job quality, said Phil Jordan, vice president at BW Research, which conducted an annual report about energy jobs on behalf of the Energy Futures Initiative, a think tank led by former Energy Secretary Ernest Moniz.

  • Jobs in wind and solar are between 4% and 6% unionized. That’s on par with the national average for all jobs, but far lower than the share of union jobs in other energy sectors.

Yes, but: Factors inherent to renewable energy will make it hard for Biden to fulfill his promises on labor and use less fossil fuels, such as how relatively few long-term jobs exist in operating and maintaining renewable-energy facilities compared to other kinds.

  • “We agree that over the coming decades we’re going to do more transition” to renewable energy, said Sean McGarvey, president of the North America's Building Trades Unions. “But we can’t transition into careers where they take a 50-75% paycheck cut.”

The intrigue: Some renewable energy advocates agree. “Where we are right now is not good enough,” Sen. Jeff Merkley (D-Ore.), who is pushing a bill on this topic, told Axios in an interview last week.

The other side: Renewable-energy officials say the topic is increasingly on their radar, but they maintain that their sector already creates quality jobs.

The bottom line: "The speed with which we can transition will be affected profoundly if those who have good-paying jobs in the fossil-fuel world hate the idea of the transition to renewable energy,” Merkley says.

Read more

2. Breaking: Big oil patch deal

Illustration: Sarah Grillo/Axios

Chevron has entered into an agreement to acquire Noble Energy, a large independent oil-and-gas producer, in a $5 billion all-stock transaction, the company announced Monday.

  • The total deal value, including debt, is $13 billion, according to Chevron.

Why it matters: It will expand Chevron's footprint in the U.S. shale patch, where the company is competing with U.S. rival ExxonMobil, and elsewhere via Noble's operations in the Mediterranean Sea and West Africa.

Where it stands: Chevron said the deal with Noble would enhance its position in several areas, including the prolific Permian Basin.

  • Overall, the deal will add 18% to Chevron's proven oil-and-gas reserves and provide an estimated $300 million in annual cost savings, the announcement states.
  • Chevron also added that the deal improves its international gas holdings, bringing "low-capital, cash-generating offshore assets in Israel, strengthening Chevron’s position in the Eastern Mediterranean."

What they're saying: “Noble’s position in Israel is the company’s crown jewel. Israel will provide Chevron with a new core international geography that will rebalance the portfolio towards gas and provide a springboard to capture further upside potential in the region," said Wood Mackenzie analyst Jean-Baptiste Bouzard in a note.

Flashback: Chevron was already looking for acquisitions before the pandemic that has battered the industry.

  • Last year, Chevron looked to buy Anadarko Petroleum, another large independent player, but declined to enter into a bidding war with Occidental Petroleum, which ultimately bought the company.
3. Report: Jobs case for cleaning up old wells
Reproduced from Resources for the Future via IOGCC; Note: For estimated undocumented wells, average of low and high estimate was used for states that report a range; Chart: Axios Visuals

There's a lot of jobs potential if the federal government gets serious about plugging what could be as many as 3 million abandoned oil-and-gas wells nationwide, a new report concludes.

  • If it tackles 500,000 of those, this could mean up to 120,000 more jobs.

Why it matters: Abandoned wells can leak methane — a very potent planet-warming gas — and other pollutants.

  • The report from Resources for the Future and a Columbia University energy think tank comes as oil-and-gas industry workers are reeling from layoffs due to the price and demand collapse.

The big picture: Estimates for the number of abandoned wells nationwide range from hundreds of thousands to 3 million, "depending on the definition of such wells needing attention," the report notes.

  • "A significant federal program to plug orphan wells could create tens of thousands of jobs, potentially as many as 120,000 if 500,000 wells were plugged," it finds.
  • It points out that the oil industry has equipment and labor available for the job, given that the sector shed more than 76,000 jobs (and counting) this year.

By the numbers: They estimate that the costs of plugging the "known inventory" of roughly 57,000 wells could range from $1.4 billion to $2.7 billion, while identifying and plugging 500,000 wells could plausibly cost $12 billion to $24 billion.

What we're watching: The election. Joe Biden's climate and energy plan calls for new investments in cleaning up old wells as well as mining sites.

4. An EV startup's Apple-like strategy

Illustration: Eniola Odetunde/Axios

Car designer Henrik Fisker just raised more than $1 billion for his namesake electric car company, but unlike other EV entrepreneurs attracting capital recently, making cars is not part of his plan, Axios' Joann Muller reports.

Why it matters: In an industry ripe for reinvention, Fisker's aim is to become the Apple of the automotive world — a fabless manufacturer that designs and markets cool cars but farms out the production, avoiding the huge capital outlays and manufacturing pitfalls that have dogged Tesla for a decade.

Driving the news: Last week Fisker reached a deal to go public by merging with a special purpose acquisition company backed by Apollo Global Management.

  • Proceeds from the transaction, which valued Fisker at $2.9 billion, will help bring its Fisker Ocean electric SUV to market by late 2022.

The big picture: We're on the cusp of a historic shift to electric, self-driving cars. But the burden of technology investments is overwhelming for many, requiring even the world's biggest auto giants to partner up on redundant development.

  • Meanwhile, well-funded newbies like Nikola, Rivian and Lucid Motors — none of whom have produced a single vehicle yet — are mirroring Tesla and spending heavily on their own factories.

Where it stands: The Ocean is billed as the world's most sustainable car — an affordable, premium, electric SUV with a solar roof, vegan and recycled materials throughout, and a battery range of 250 to 300 miles.

  • It starts at $37,499 before federal tax credits, or $379 per month to lease.

The intrigue: The real innovation is Fisker's business model. Instead of developing its own electric powertrain or sinking money into a factory, Fisker is in talks with Volkswagen to use its modular EV platform and assemble Fisker vehicles at a VW plant in Europe.

Read more

5. Tesla earnings and more EV notes

Tesla will report second-quarter results Wednesday, the latest moment in the spotlight for the company that has seen its stock price triple this year and now has a market cap of nearly $280 billion (!).

What we're watching: If Tesla ekes out a small profit, it would be the electric automakers' fourth profitable quarter in a row, which clears the way for its addition to the S&P 500 index.

Why it matters: Via Fortune, "The bulls' thinking goes that Tesla's inclusion in the S&P 500 would automatically force all sorts of passive investors—such as exchange-traded funds (ETFs) and other index-tracking funds—to buy Tesla stock, boosting the shares further."

A couple other EV items on my screen...

Finance: "Xpeng, an electric vehicle startup run by former Alibaba executive He Xiaopeng, said Monday it has raised around $500 million in a Series C+ round to further develop models tailored to China’s tech-savvy middle-class consumers." (TechCrunch)

Renault: "Sales of Renault SA’s all-electric Zoe car jumped 38% in the first half, a rare bright spot amid the grim fallout of the coronavirus pandemic." (Bloomberg)

Ben GemanAmy Harder