May 13, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning. Today's Smart Brevity count: 1,145 words, 4.3 minutes.

Heads up: Axios is hosting a live virtual event tomorrow on the future of workplace safety.

  • Join Axios co-founder Mike Allen and Axios co-founder & CEO Jim VandeHei Thursday, May 14, at 12:30pm ET for a conversation with chairman & CEO of CLEAR Caryn Seidman-Becker and CEO of RXR Realty Scott Rechler
  • Register here.

And happy birthday to the Stevie Wonder, who brilliantly plays us into the news...

1 big thing: The pandemic is a fork in the road

Illustration: Aïda Amer/Axios

A new report tries to grapple with ways that the COVID-19 pandemic might be an inflection point for the global energy system that changes its trajectory for decades.

Driving the news: Wood Mackenzie is exploring how government policies, corporate decisions, and even the success of vaccination will affect the future of oil and other fuels.

Why it matters: The consultancy concludes that, depending on how things shake out, the pandemic could greatly accelerate coal's decline and hinder the long-term growth of oil demand.

The big picture: "Earlier pandemics have changed the world, and so will Covid-19. The impact will often be greatest when it reinforces shifts that are already underway, but it is also driving innovation in ways that can create radical changes in corporate and individual behaviour," it states.

What they did: The report takes a stab at modeling the largely unknowable by grouping long-term post-pandemic futures into three big conceptual buckets.

  • A "full recovery" scenario that assumes an effective vaccine; successful stimulus; and resumption of pre-crisis trade and travel. Corporate strategies and consumer behavior revert to pre-pandemic norms.
  • A "go it alone" scenario marked by slow economic recovery; new trade barriers; limited vaccine effectiveness; and weak climate action.
  • A "greener growth" scenario marked by aggressive policy support for low-carbon energy in economic response packages, tougher carbon pricing and more.

What they found: Big differences in the trajectory of different energy sources, which partly reflect the consequences of how governments craft their recovery packages.

Take oil. While all the possible futures see oil demand bouncing back to pre-crisis levels, things look a lot different by 2040 under the different cases.

  • In "full recovery," oil demand will be roughly 113 million barrels per day in 20 years, an expansion of the 100 million barrel per day pre-crisis market.
  • In "go it alone," that long-term growth is cut in half. The "greener growth" future, meanwhile, sees oil consumption going into a steep decline in about a decade, falling to around 83 million barrels daily by 2040.

What's next: The biggest difference in the three scenarios comes in the future of coal, which falls in all cases but at different rates.

In "greener growth," global consumption in 2040 is only about 60% of where it stands in the "full recovery" case.

Bonus: The future of supply chains

The Wood Mackenzie report captures several ways that global energy use and different corporate sectors are impacted by responses to the pandemic.

One interesting one is how it could affect the movement of goods, which is an important driver of oil use via shipping, trucking and airplanes.

What they're saying: "The pandemic has exposed the risks in some critical extended supply chains, most urgently for medical equipment," the report notes.

"The longer the crisis lasts, the more governments and businesses will seek to source commodities, components and goods that are less distant and more secure."

2. Resetting oil's crystal ball
Data: EIA; Chart: Naema Ahmed/Axios

What a difference a few months makes, at least in the tragic and surreal 2020.

Driving the news: The Energy Information Administration has again cut its U.S. oil production forecast as companies curb output amid the price and demand collapse.

The agency now sees production averaging 11.7 million barrels per day this year and 10.9 million in 2021.

The big picture: Those estimates are slightly lower than the April edition of their monthly analysis, but what really caught my eye is what's apparent in the chart above.

Back in January, which feels like a century ago, EIA estimated that U.S. production would average 13.3 million daily barrels this year and keep climbing to around 14 million in the fourth quarter of 2021.

3. Campaign vets unveil 2020 climate push

A new group staffed by veterans of Democratic politics and advocacy is launching today with the aim of "changing the politics of climate in 2020" — especially in swing states.

Why it matters: The launch of Climate Power 2020 represents both a new effort to put President Trump on the defensive but also lay the groundwork for Democrats to prioritize climate policy on the trail and post-election.

Who they are: The executive director of the group is Lori Lodes, who comes from Apple but worked on Hillary Clinton's 2016 campaign. She worked on healthcare in the Obama administration and in advocacy roles afterward.

Others include Sarah Baron, who worked on Elizabeth Warren's presidential campaign; as well as former aides from the campaigns of Pete Buttigieg and Michael Bloomberg; and former Democratic congressional aides.

How it works: The group is national in scope but will focus on Arizona, Colorado, Florida, Georgia, Michigan, North Carolina, Pennsylvania and Wisconsin.

It's set up as an independent project created by the Center for American Progress Action Fund, the League of Conservation Voters, and the Sierra Club.

The big picture: "By elevating the climate crisis in national and state conversations and aggressively putting the Trump administration on defense for selling our future to his special interest friends, Climate Power 2020 will build the momentum necessary for bold action in 2021," the announcement states.

The intrigue: It combines longtime, establishment climate movement figures with elements of the new guard.

Advisory board members range from the veteran Democratic political player John Podesta to Rhiana Gunn-Wright, a prominent figure in the Green New Deal movement who is currently with the Roosevelt Institute.

4. Catch up fast: Coal, Tesla, OPEC+

Coal: "Norway’s $1 trillion wealth fund is doubling down on its climate action by making deeper cuts to its fossil fuel exposure. The exclusions span some of the world’s biggest coal miners and make use of climate rules for the first time to exit oil-sands firms." (Bloomberg)

Electric cars: "Alameda County officials said Tuesday they have agreed to allow Tesla to reopen as early as next week if the auto manufacturer agrees to certain safety conditions." (San Francisco Chronicle)

Crude oil: "OPEC and its allies want to maintain existing oil cuts beyond June when the OPEC+ group is next due to meet to shore up prices and demand, which has been hit by the coronavirus pandemic, four OPEC+ sources said on Tuesday." (Reuters)

5. AOC joins Biden climate task force as Sanders' rep

Democratic Rep. Alexandria Ocasio-Cortez will co-chair the climate policy task force presumptive nominee Joe Biden's campaign is creating with former rival Bernie Sanders.

Why it matters: Ocasio-Cortez, or AOC, is among the most high-profile figures in the party's progressive wing.

  • The freshman lawmaker co-authored the sweeping Green New Deal resolution and subsequent proposals to add details to the framework.
  • She's popular among activists who have attacked Biden's climate platform as too modest, even though it goes far beyond Obama-era policies.

Where it stands: The other co-chair of the group rolled out this morning is former Secretary of State John Kerry, who endorsed Biden during the campaign. Click here to see the other members.

What they're saying: "She made the decision with members of the Climate Justice community — and she will be fully accountable to them and the larger advocacy community during this process," a spokesperson for AOC told CNN and others.

"She believes the movement will only be successful if we continue to apply pressure both inside and outside the system."

Catch up fast: Biden said last month that he's planning to add new elements to his climate policy, and has signaled that he'll prioritize the topic if elected.

What we're watching: What kind of changes to Biden's platform might flow from the collaboration.

"The Task Forces will meet in advance of the Democratic National Convention to make recommendations to the DNC Platform Committee and to Vice President Biden directly," the campaigns said in a joint statement this morning.

Ben GemanAmy Harder