May 31, 2018

Axios Generate

Good morning and welcome back!

Tomorrow will mark the birthday of The Rolling Stones' guitarist Ron Wood, who joined the band in the mid-70s. So we'll get started with something from that era...

1 big thing: Global plastics problem is staggering
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Adapted from Geyer et al., 2017, "Production, use, and fate of all plastics ever made," Science Advances; Chart: Axios Visuals

Several recent reports highlight the damage from massive global plastics consumption and the challenge of tackling the problem.

In focus: The chart above shows a stunning statistic highlighted in one of the recent reports — global plastics production grew to over 400 million tons in 2015.

Why it matters: Plastic bags, bottles and many other wastes are causing widespread harm to marine and coastal ecosystems and as the Organization for Economic Co-operation and Development's May 24 report reminds us, the problem is getting worse.

  • Plastics kill massive numbers of marine animals (including 1 million seabirds and 100,000 marine mammals annually in one widely cited estimate), degrade the environment, and enter the food chain, OECD says.

Fresh evidence of the environmental problem...

  • A recent study in Marine Policy, which uses a major dataset on ocean debris, shows a plastic bag located nearly seven miles below the surface in the Mariana Trench, underscoring the breadth of marine pollution.
  • A major collection of stories and stunning photos in the latest edition of National Geographic brings fresh attention to the topic.
  • The OECD report explores ways to boost recycling and barriers to adoption. It cites data showing that worldwide, just 14%–18% of waste plastics is recycled, 24% is thermally treated, and the rest is disposed of in landfills, open burning, or gets into the environment via "uncontrolled dumping" and other means.

Why it matters for energy: Plastics are a major source of oil demand. They currently account for around 4%–8% of worldwide oil and gas consumption, per the OECD.

  • Petrochemical production more broadly is one reason why global oil consumption may not peak for decades, even as greater vehicle efficiency and electrification bring a peak in oil demand for transportation closer to reality.

Go deeper: Read the full story in the Axios stream.

2. Scenes from the petro-transition

Two items caught my eye about how large oil-and-gas companies are positioning themselves for a lower-carbon world (eventually)...

1. The Oxford Institute for Energy Studies explores the decision-making behind how the industry and oil-exporting countries should approach the rise of renewables and the long-term move away from carbon-intensive fuels, in this new paper.

  • Why it matters: The pace of the global energy transition is a "critical uncertainty," and there are "dire" consequences of miscalculating in either direction, including stranded fossil assets for moving too slowly.
  • The authors' advice: "For oil companies, moving beyond their core business is risky, but a ‘wait-and-see' strategy could be costly, therefore oil companies need to gradually ‘extend’ their business model and rather than a complete shift from hydrocarbons to renewables, they should aim to build an integrated portfolio which includes both hydrocarbon and low-carbon assets."

2. The Financial Times this morning looks at oil-and-gas majors' growing investments in the electric vehicle charging and battery space.

  • The piece also examines more broadly how they're approaching changing mobility systems enabled by the rise of ride-sharing and eventually autonomous cars.
  • One takeaway: Accenture's Andrew Smart tells FT that oil companies cannot set the pace of the transition and should not assume it will happen slowly.
  • “They cannot set their own clocks any more,” he tells the paper. “They will have to move at the same speed as technology develops around them and that could accelerate very quickly.”
3. A quiet GOP climate player — mayors

Trendspotting: An interesting analysis over at The Conversation shows that a number of GOP mayors are taking steps to make their cities less carbon-intensive, but shy away from overt advocacy.

Why it matters: The post suggests that local steps on global warming may have a more bipartisan foundation — if you look for it — compared to where climate policy stands at the federal level.

Quoted: "In our research at the Boston University Initiative on Cities, we found that large-city Republican mayors shy away from climate network memberships and their associated framing of the problem," writes Boston University research fellow Nicolas Gunkel.

  • "But in many cases they advocate locally for policies that help advance climate goals for other reasons, such as fiscal responsibility and public health," he adds, citing initiatives on energy-savings and local air pollution.

One level deeper: Gunkel looks at planning documents from the 29 largest cities led by GOP mayors.

  • "Among this group, 15 have developed or are developing concrete goals that guide their efforts to improve local environmental quality. Many of these actions reduce cities’ carbon footprints, although they are not primarily framed that way," the piece notes.
4. On my screen: solar tariffs' impact, Exxon, LNG

Solar: Via Greentech Media, Hanwha Q Cells Korea Corporation announced Wednesday that it's building solar PV module manufacturing facility in Georgia that's set to be completed in 2019.

  • Why it matters: It's the latest of several industry moves to boost U.S. manufacturing since the White House decided to impose tariffs for four years on imported solar panel equipment.
  • Yes, but: "I still have concerns about the long-term competitiveness of these module assembly facilities versus imports once the tariffs expire," analyst MJ Shiao says in the piece.

Exxon and climate: Per Reuters, "ExxonMobil's chief executive said on Wednesday he hopes the new attorney general in New York 'comes to a different conclusion' than predecessor Eric Schneiderman on a climate change probe into the world's largest publicly traded oil producer."

Disclosure: Per S&P Global Platts, "Despite calling their decisions to not report tax information both 'unprecedented' and 'disappointing,' the chairman of Extractive Industries Transparency Initiative said Wednesday that he would not recommend Chevron and ExxonMobil be removed from the initiative."

LNG deal: Via Bloomberg, "Malaysia’s Petroliam Nasional Bhd. agreed to take a 25 percent stake in a proposed liquefied natural gas project in Canada led by Royal Dutch Shell Plc."

5. Chevron shareholders vote down climate measures


Axios' Amy Harder reports that investors rejected two non-binding but symbolically important shareholder resolutions related to climate change at Chevron’s annual meeting Wednesday.

Driving the news: One resolution calling for more action cutting methane emissions narrowly failed at 45%. Another more aggressive proposal calling for the oil giant to suggest ways to lessen its production of fossil fuels received just 8%, according to As You Sow, a nonprofit group that filed the resolutions on behalf of some Chevron investors.

The big picture: These votes are the latest in a trend of investors increasingly calling on publicly held fossil-fuel companies to be more transparent about how policies to cut greenhouse gas emissions could impact their bottom lines despite President Trump's retreat on the issue.

Between the lines:

  • The methane vote, although not passing the 50% mark, is considered to be a strong showing and was in the same ballpark as similar ones at other oil companies, such as Range Resources, where a similar measure narrowly passed with 50.3%.
  • The more aggressive resolution asking for a transition plan was widely expected to fail considering it went a step further than most other proposals by asking not just for more climate disclosure, but to change business strategy.
6. Latest in lobbying

Climate change: The Center for Carbon Removal, which promotes technologies aimed at pulling out atmospheric carbon that has already been emitted, has brought on Cassidy & Associates.

  • Why it matters: It's the first lobbying registration for the group. They're trying to advance bipartisan legislation which recently cleared the Senate's environment committee that's designed to bolster R&D and deployment of technologies including direct air capture systems.

Batteries: The Taiwanese company Pihsiang has retained the The Washington Advocacy Group for work on establishing their U.S. business operations, a new filing shows.

Power: PacifiCorp Energy has tapped K&L Gates for work related to "review of environmental mitigation studies related to hydropower licenses," according to this filing.

Biofuels: The Small Refinery Owners Ad Hoc Coalition has retained Perkins Coie for work on topics around the Renewable Fuel Standard, according to a new filing that lists the "effective date" of the registration as October of last year.

Solar: The big residential solar company Sunrun has brought on Cassidy & Associates for work on federal regulatory matters, this filing shows.

Trade: The energy company Hydromine has tapped Farragut Partners for work on topics including promotion of U.S. trade and investment in Africa and "development of renewable energy projects in the U.S. and abroad," a filing shows.