Feb 27, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning! Today's Smart Brevity count: 1,216 words, 4.5 minutes.

🎵March 1 will bring the birthday of Roger Daltrey of The Who, so they will play us into the news...

1 big thing: Ride-hailing's climate threat

Illustration: Sarah Grillo/Axios

A new analysis provides the latest evidence that the explosive growth of ride-hailing services like Uber and Lyft is making it harder to fight CO2 emissions from transportation.

Driving the news: The Union of Concerned Scientists studied the triple-whammy of trips replacing climate-friendly transit, inducing new travel and "deadhead" miles — that is, when ride-hailing vehicles move without passengers.

What they found: "A typical ride-hailing trip is about 69 percent more polluting than the trips it replaces, and can increase congestion during peak periods," it states.

  • Those "deadhead" miles are a big problem and more than cancel out the fact that ride-hailing vehicles are more efficient on average than personally owned cars, the study finds.

Why it matters: Transportation is the nation's largest source of greenhouse gas emissions, overtaking electric power a few years ago.

The big picture: While the emissions analysis isn't in a peer-reviewed journal, it's directionally consistent with analyses of how ride-hailing is cannibalizing more climate-friendly modes of transit — like trains, bikes, buses and feet — and fueling congestion.

  • For instance, a paper last year in the journal Science Advances found that ride-hailing companies are the " biggest factor driving the rapid growth of congestion" in San Francisco.

What they're saying: “Certainly the evidence to date points to an overall increase in greenhouse gas emissions associated with ride-hailing under current market conditions,” said Giovanni Circella of the Institute of Transportation Studies at UC Davis, which provided some of the data used by UCS.

What's next: The report lays out a bunch of recommendations for ride-hailing companies and policymakers. Among them...

  • It calls on the companies to boost their fleet electrification efforts, encourage more pooled rides, "facilitate connections to mass transit," and aim to better complement modes like biking and walking.
  • "[I]f ride-hailing companies switch to EVs and increase the share of pooling to 50 percent, emissions would be 52 percent lower than the displaced trips," it finds.
  • It also calls on policymakers to boost investments in mass transit, and pedestrian- and bike-friendly infrastructures. Policymakers should also help ride-hailing companies electrify and create incentives for pooled rides, like lower tolls.

The intrigue: The accumulating evidence of ride-hailing's impact and the recent IPOs of Uber and Lyft are likely to create new pressure on the companies.

  • "[I]t is reasonable to expect increased scrutiny from investors on this topic at those companies," said Lila Holzman of the shareholder advocacy group As You Sow.
  • "Fleet electrification and other strategies to reduce unacceptably high emissions from the transportation sector are of increasing importance to investors," she said.
Bonus 1: The growth of ride-hailing in the U.S.
Expand chart
Reproduced from UCS via Schaller Consulting; Chart: Axios Visuals

The chart above is a version of a graphic in the UCS report which uses data from the firm Schaller Consulting — showing the rapid growth of ride-hailing.

Bonus 2: Uber and Lyft respond to emissions study

It's worth noting that Uber and Lyft — which have acknowledged some congestion effects — both have a bunch of sustainability and electrification programs.

What they're saying: Lyft pushed back against the UCS report and alleged the methodology was flawed and incomplete.

Lyft argues that it doesn't accurately capture how their service, by enabling people to forgo owning cars, prompts use of mass-transit and ride-hailing.

  • “This report, like many before it, makes misleading claims about rideshare. Lyft encourages the use of shared rides, was the first rideshare company to put public transit information into our app, and last year, made one of the largest single deployments of electric vehicles in the nation," spokesperson Campbell Matthews said.
  • "We are eager to continue this work in partnership with cities, to advance shared, sustainable transportation," she said.

Uber, meanwhile, pointed to its own green efforts.

  • "To unlock the opportunities we have to reduce emissions, we will continue to invest in products and advocate for policies that reduce car ownership, promote more pooled trips and support greater adoption of bikes, scooters, green vehicles and the use of public transit," the company said.
2. Oil's outlook dims as virus spreads

Oil prices are at their lowest levels in over a year and tumbled again early Thursday as the novel coronavirus spreads.

Why it matters: The accumulating evidence of the virus' toll on markets is putting an ever-brighter focus on next week's meeting of OPEC, Russia and allied producers.

The latest: The firm Rystad Energy this morning said it now expects Brent crude oil prices to average $56 for the year, down from $60 in their prior forecast.

What they're saying: "For now, what we know for sure is that the month of February will record the worst oil demand contraction since the Great Recession," S&P Global Platts analyst Claudio Galimberti said in a note.

Where it stands: Brent crude oil prices were $51.21 as we sent this newsletter.

The intrigue: This Wall Street Journal piece seeks to unpack why Russia has not yet gone along with efforts to deepen the joint production cutbacks with OPEC.

  • “The sensible thing for Russia to do would be let the [U.S.] shale price erode even more,” SEB Markets analyst Bjarne Schieldrop tells the WSJ.
  • “When demand kicks back in, instead of higher prices that will stimulate shale, shale will decline, making room for Russian oil,” Schieldrop said.

Go deeper: More new coronavirus cases outside China than inside for first time

3. Where it stands: trade groups and climate

Following BP's decision to abandon three trade groups over differences on climate, two other pieces of news from the lobbying world caught my eye.

What's new, part 1: The Electric Power Supply Association said it supports a "price on carbon or other economy-wide, market-based mechanisms to reduce carbon dioxide emissions."

The intrigue: The announcement warns against a "rigid patchwork of state mandates."

  • Via the Washington Examiner: "It has supported recent actions by the Federal Energy Regulatory Commission to impose price floors in power markets in order to help fossil fuel plants compete with renewables and nuclear subsidized by states."

What's new, part 2: The American Public Power Association, which represents community-owned utilities, this week approved a resolution laying out principles for climate legislation.

  • The group, whose members' generation mix includes plenty of coal, said legislation should "[e]nsure the continued use of all sources of non-emitting energy, including hydropower, wind, solar, geothermal and nuclear power, as well as fossil-fuel based and dispatchable resources."

Go deeper: Public power utilities back climate push for first time (E&E News)($)

4. Aramco IPO's potential second act

It's back! Or ... Maybe it's back. Or could eventually be back. Possibly.

The latest: Bloomberg reports that Saudi Aramco is "starting early preparations" for a potential listing in an international stock exchange at some point, which comes after its long-awaited debut on the Saudi exchange late last year.

  • "The world’s largest publicly traded company is in discussions with Wall Street banks to draw up scenarios for a second listing overseas, according to the people, who asked not to be identified because the information is private," they report.
  • But their piece and a Reuters report note that it's unlikely to occur this year.

The intrigue: Plans for an international listing have been a moving target for years, especially after the kingdom split the listing plan and focused on the domestic IPO, which finally happened in December and raised $29 billion.

Why it matters: It would bring a fresh infusion of capital into the kingdom, which is using the transformation of Aramco into a traded company to raise money to help with the country's economic diversification.

  • Banks working on the deal wouldn't do too badly either.
5. Catch up fast: coal, renewables, pipelines

Coal: "U.S. regulators rejected a plan from mining companies Peabody Energy Corp. and Arch Coal Inc. to combine their operations in a major coal-production region, saying it would limit competition and raise prices." (Wall Street Journal)

Solar: "The coronavirus outbreak is threatening to slow the global solar-energy revolution as it cuts the supply of key equipment for solar and wind farms in China and beyond." (Bloomberg)

Pipelines: "Williams Companies Inc is seeking a partner to invest in a network of its pipelines in the western United States, a deal that could raise close to $5 billion for the Tulsa, Oklahoma-based company, people familiar with the matter said." (Reuters)

Ben GemanAmy Harder