Oct 20, 2021

Axios Generate

🐪 Wednesday has arrived. Today's Smart Brevity count is 1,240 words, 5 minutes.

📊 Data point of the day: 9, the number of huge companies including Amazon and Ikea pledging to use only zero-carbon fuels for ocean shipping by 2040.

👀 Breaking: Russian President Vladimir Putin, whose country is a huge oil producer, won't attend the UN climate summit. Go deeper

🚨 Situational awareness: "A White House-backed clean power program that was rejected by Senator Joe Manchin could be resurrected as a grant program that would reward states that increase clean energy." (Bloomberg)

🎸 And happy birthday to the late legend Tom Petty, who has today's intro tune...

1 big thing: New climate website touts Biden's actions (first look)

Illustration: Annelise Capossela/Axios

What is a White House to do when it is stuck between slow-moving climate legislation and a fast-approaching climate summit where its credibility is on the line?

Why it matters: The Biden administration, which shared the site first with Axios, focuses it around the actions taken by the White House National Climate Task Force.

  • According to a person familiar with the administration's thinking, the White House wants to showcase how its all-of-government approach on the climate crisis is achieving results, and that it is also aimed at connecting domestic climate ambition with international leadership.

Details: The task force brings together heads of government agencies — from Commerce to NASA to Defense — to take actions that reduce the impacts of global warming and cut U.S. emissions of greenhouse gases.

  • The site links to Biden’s executive orders to evaluate and incorporate climate risk into oversight of the financial system; highlights his Day One reentry into the Paris Agreement; and casts the 2020s as the “decisive decade” to act on global warming.
  • The site plays up the virtual climate summit Biden held on Earth Day and emphasizes the U.S.’s commitment to quadruple climate finance overseas toward a goal of $100 billion per year that was first promised in 2009.
  • For a president that has been in office for less than a year, there’s a sense of making up for lost time. Biden’s predecessor denied the existence of human-caused climate change, pulled the U.S. from the Paris Agreement, and systematically dismantled the Obama administration’s climate measures.

Between the lines: The timing of the website rollout is noteworthy, coming when some progressives in Congress are questioning Biden’s backbone on climate policy in the face of opposition from moderate West Virginia Democratic Sen. Joe Manchin.

  • It also comes about two weeks before the start of COP26 in Glasgow, where the U.S. had hoped to come in with a demonstrated record of accomplishment — preferably in the form of enacted laws.
  • Instead, the U.S. will most likely arrive with a lot of rhetoric, executive actions as detailed on the new site, and good intentions. Whether that’s enough to recover from the reversals under Trump remains to be seen.

What we’re watching: Whether Democrats agree to a framework that includes aggressive climate actions prior to or during COP26.

2. UN: Fossil fuel output plans would crush Paris hopes

Illustration: Sarah Grillo/Axios

A United Nations report warns that governments and fossil fuel companies are planning levels of oil, natural gas and coal production that are "dangerously out of sync" with holding global warming in check, Ben writes.

Driving the news: "[T]he world’s governments still plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting global warming to 1.5°C, and 45% more than consistent with limiting warming to 2°C," it states.

This year's version of the annual "production gap" report arrives just ahead of the UN climate summit in Glasgow, Scotland.

By the numbers: The report, which explores 15 major producing countries, says plans and projections lead to 240% more coal, 57% more oil, and 71% more gas in 2030 than is consistent with limiting warming to 1.5°C above preindustrial levels.

  • That's the Paris Agreement target for avoiding some of the most significant climate harm.
  • Paris calls for limiting warming to "well below" 2°C and ideally 1.5°C, but the latter target is fast slipping out of reach.

Why it matters: "Collectively, although many governments have pledged to lower their emissions and even set net-zero targets, they have not yet made plans to wind down production of the fossil fuels that, once burned, generate most of those emissions."

CNN has more.

3. What we're watching: Tesla earnings
Expand chart
Data: FactSet and company release; Chart: Will Chase/Axios

Tesla is likely on track for another strong earnings report after logging record deliveries as the company appears to be weathering the storm of the global chip shortage, Ben writes.

What's next: The electric automaker will report third-quarter earnings this evening after markets close.

Wedbush Securities analyst Dan Ives, in a note, said the company is expected to beat revenue and earnings per share estimates.

The intrigue: A Barclay's note ahead of the report says Tesla has been able to handle the chip shortage better than legacy automakers for several reasons.

  • One is that Tesla predominantly sells just two vehicles (Model 3 and Model Y), not dozens, so "the problem of locating chips is more focused."
  • But automakers face multiple supply chain problems and Tesla isn't immune — a topic sure to surface on their earnings call.

What we're watching: Reuters notes investors will be seeking information about how Tesla's faring in China, where it has seen robust sales but faces "negative publicity and a host of new domestic competitors."

What we don't know: That's whether CEO Elon Musk will be on this evening's call with analysts after saying on the Q2 call that he'd no longer be a regular.

4. The long road to quitting coal

National pledges to both phase out coal and reach net-zero emissions are becoming more common, but a new International Energy Agency report puts some sobering numbers behind the headlines, Ben writes.

By the numbers: As of midyear, 21 countries have pledged to end "unabated" coal-fired power generation within a fixed timeframe, per IEA.

But here's a key related stat: the countries with these pledges accounted for just 4.1% of global coal power generation in 2019 (emphasis added).

Why it matters: Coal-fired power accounts for about 30% of global energy-related CO2 emissions, IEA notes.

While it has been generally on the wane in OECD economies, that's not the case in emerging and developing markets, notably China, by far the biggest user.

What we're watching: The IEA report offers guidance for how countries can move away from coal while considering economic impacts, power prices and power supply security.

It provides "case studies" of three regions, including the U.K., where coal was 34% of generation in 2005 but just 2% in 2020.

Read the IEA report.

5. Drilling down on banks' oil finance pledges

Illustration: Sarah Grillo/Axios

A revealing Wall Street Journal story looks at the limits of banking giants' pledges in recent years to steer clear of funding Arctic oil drilling projects, Ben writes.

The intrigue: It explores the gulf between policies against project finance — which a suite of banks like Goldman Sachs, Barclays and BNP Paribas have in place— and their broader lending services.

  • "[T]hey continue to lend to oil-and-gas companies active in the Arctic at the corporate level, where money is fungible," the WSJ notes.
  • The story, citing IEA data, notes that "about 90% of energy investments are financed primarily from company balance sheets."
  • It also says that some banks define "Arctic" more narrowly than environmentalists.

The bottom line: While the story says there's no evidence banks have violated their commitments, it does underscore their real-world limits.

6. Catch up fast: LNG, UK, banks

Deals: "China has agreed three huge liquefied natural gas (LNG) deals with U.S. exporter Venture Global LNG as the world's second-biggest economy looks to secure long-term supplies amid soaring gas prices and domestic power shortages." (Reuters)

Pledges: "The UK government on Tuesday unveiled its roadmap to reaching net zero emissions by 2050, putting new funds behind electric vehicles, sustainable aviation fuel and forests as carbon sinks, while boosting the role of nuclear in its energy transition." (CNN)

Finance: "By 2025, 29 of the world’s biggest pension funds and investment firms, including Allianz SE and the California Public Employees’ Retirement System, intend to have cut the emissions of their portfolio holdings by at least 25%." (Bloomberg)