Good morning! My name is on the email you just opened, but credit where it's due: today's newsletter has great stuff from new colleague Steve LeVine and my new-ish colleague Amy Harder. You can find them on Twitter at @stevelevine and @amyaharder. And it has been a few days since I mentioned that you can sign up for all the Axios newsletters here. Let's dive in . . .
Just one word: cobalt
Great news: Steve Levine has joined Axios from Quartz to write about robotics and AI and the future of work. Steve is also a world-class energy expert and the author of The Powerhouse: Inside the Invention of a Battery to Save the World.
Here's Steve's first post for Generate . . .
Eyes on the ball: For those worried about lithium becoming the world's new problem addiction, you are watching the wrong element. Your eyes instead should be peeled toward cobalt, a super-expensive metal and a primary component of all commercial advanced batteries. Cobalt's expense is one matter; the other is where it largely comes from — Congo, the venue of some of the world's most brutal warfare.
Get smart: Cobalt is in the cathode of your iPhone (lithium cobalt-oxide, invented by the famous John Goodenough at the University of Texas); your Tesla, if you happen to own one (lithium cobalt aluminum); and your Chevy Volt (nickel manganese cobalt). It is indispensable, mainly because it allows for a stable, energy-dense electrode.
Why it matters: Look for activist campaigns to arise around human rights issues concerning cobalt and its mining locations. Meanwhile, increasing cobalt prices will make it harder for electric car manufacturers to lower their prices, which has been a key factor in its failure to break into the mainstream.
Oil production's trajectory
Up, up and away: The Energy Information Administration revised its 2018 U.S. oil production forecast to average 9.9 million barrels per day, an increase of nearly 200,000 barrels per day over its previous estimate.
- Ain't no mountain high enough: The prior U.S. annual crude oil production high was 9.6 million barrels per day in 1970. The new forecast projects that production will crack 10 million in the fourth quarter of next year.
- Why it matters: A few reasons. One is that the forecast shows how producers are able to lift U.S. output despite more modest prices because they have cut production costs. The growth could also provide a political lift for the White House, which is aggressively championing fossil fuels, even though it's rooted in market trends and not policy decisions.
Fantastic voyage: EIA also released its summer gasoline price forecast, which projects average prices at the pump of $2.46 per gallon, compared with $2.23 last summer. The average price for all of this year is expected to be $2.39 per gallon, which means the average U.S. household will spend about $200 more on fuel compared with last year.
- Modest: While crude oil's rebound is sending pump prices higher, they're still pretty low when you examine just a few years ago. "That imaginary average household would still save about $300 compared to average yearly spending on gas from 2012 to 2016," the Associated Press notes.
OPEC's decision: The Wall Street Journal reports that Saudi Arabia, OPEC's dominant producer, is throwing its weight behind an extension of the cartel's production-cutting agreement for six months when the group meets in May.
- Impact: News of the Saudi stance helped push oil prices higher in early trading on Wednesday, Reuters reports.
From Amy’s notebook: the lesser of two tax evils
Axios energy reporter Amy Harder has a look at how conservative energy activists are looking warily at the embattled border adjustment tax, a plan oil companies are also not thrilled about. Check it out....
The American Energy Alliance, a conservative advocacy group funded partly by the billionaire Koch brothers, hasn't taken an official position on the border tax proposal, the linchpin of House Republicans' tax plan. That proposal is facing criticism from other like-minded groups, including Americans for Prosperity, which also receives funding from the Kochs.
Why it matters: In Washington, lack of policy positions can say more than actual stated positions. AEA president Tom Pyle, who is close to the Trump administration, was an advisor on the transition team.
- For the record: "We're still evaluating our position on a border adjustment tax," Chris Warren, spokesman for the group, told Axios. "As opposition grows, we are concerned about alternatives that may emerge, such as a carbon tax, which could potentially be even worse."
Our thought bubble:
Politically speaking, a carbon tax is harder to swallow for more Republicans than a border adjustment tax, given the dicey partisan politics around climate change. For many corporations, many of which have already incorporated carbon taxes into their operations, it's the opposite: They prefer carbon taxes over border taxes.
Tesla: Bloomberg has the scoop that influential investors in Tesla are pressing for additions to the board of directors that don't have ties to CEO Elon Musk, "a sign that concerns over the electric-car maker's corporate governance remain as its shares soar."
- Response: "We are actively engaged in a search process for independent board members, which is something we committed to do several months ago, and expect to announce new additions fairly soon," a spokesman for the electric vehicle and solar company tells Bloomberg.
Climate skepticism (of a different kind): Veteran environmental lawyer David Bookbinder, in a new Niskanen Center essay, argues that the Obama administration missed chances to put regulation of carbon emissions from big industrial sources on much firmer legal footing.
- Why it matters: The Trump administration has begun the legal and regulatory fight to unwind Obama's carbon emissions rules for power plants, a centerpiece of his global warming policies.
Failure to communicate: Politico explores the battle between the Trump administration and other G-7 members on climate and energy policy, tensions that burst into the open when G-7 energy ministers failed to reach a consensus statement at their April 9-10 meeting.
- "G-7 officials, led by the Europeans, refused to agree to stronger language touting fossil fuels without assurances from the United States that it would stay in the Paris climate change agreement, according to officials briefed on the discussions," the story states.
EPA: The Washington Post reports that a federal appeals court has granted EPA's request to delay arguments in litigation over 2015 regulations to tighten federal smog standards as the Trump administration considers its stance on the rule, which faced industry and GOP opposition.
- EPA boss Scott Pruitt was among the state officials who challenged the rule when he was Oklahoma's attorney general.
Finance: Bloomberg New Energy Finance reported Tuesday that worldwide investment in "clean" energy (such as renewables, efficiency, grid technologies and more) dipped to $53.6 billion in the first quarter of 2017.That's a decline of 17 percent from a year earlier and a 7 percent dip from the fourth quarter of 2016. BNEF notes that a big factor in the reduction stems from falling costs for wind and solar.Greentech Media looks more closely at the report here.
Xi gives Trump the gift of coal
Here's another item from Steve LeVine, who offers some critical context on the way coal factored into the recent meeting between Trump and Chinese President Xi Jinping. Without further ado....
What happened: On April 7, as Trump and Xi met at Mar-a-Lago, Chinese bureaucrats issued an order telling traders to send North Korean coal cargoes back from where they came. Reuters says in a scoop that it has tracked a dozen cargo ships headed from China to North Korea's main west coast port of Nampo, full or mostly full. At the same time, after importing no U.S. coking coal from 2014 through 2016, China bought 400,000 metric tons by the end of February, Reuters said.
Why it matters: China is North Korea's main trading partner, and coal is North Korea's main export. By turning back the cargoes, China is sending a sharp signal of unhappiness with North Korean leader Kim Jong-un and his recent flaunting of ballistic missile technology. The surge in U.S. imports makes the message even clearer.
Get smarter: What the coal politics won't do is change Kim's missile policies. To get there, China and the U.S. will have to somehow jointly reassure the skittish and youthful Korean leader.