February 24, 2021

Good morning! Today's Smart Brevity count is 1,340 words, 5 minutes.

🚨Breaking: EV startup Fisker says it has a preliminary agreement with electronics giant Foxconn to develop a vehicle. Foxconn is a huge Apple supplier, so it's sure to fuel speculation over Apple's long-rumored EV plans. Bloomberg has more.

🔌"Five officials will resign from the board overseeing the Texas power grid after it was pushed to the brink of collapse by the recent winter storm." (NYT)

🎹 And happy birthday to the late and brilliant rock pianist Nicky Hopkins, whose playing animates today's intro tune...

1 big thing: Imagining the energy jobs transition

Solar power costs in fossil fuel jobs hubs
Wind power costs in fossil fuel jobs hubs

A new analysis shows lots of potential for regions with a high share of fossil fuel jobs to benefit from wind and solar development — with the right policies in place.

Why it matters: The idea of a "just transition" in the energy sector is discussed a lot in climate policy plans, including President Biden's recent executive order.

  • An aggressive shift to low-carbon energy to fight global warming creates risks for places where employment and the wider economy benefit from fossil fuel industries.
  • Enter the Brookings Institution analysis of counties with dense concentrations of oil, gas and coal-related employment that also have high renewables potential.

The big picture: The paper finds "impressive overlap between where fossil fuel jobs are now and where renewable energy generation could be."

  • "A quarter of the counties in the U.S. with the greatest potential for both wind and solar electricity generation are also fossil fuel hubs."
  • It also concludes that targeted policies to make that happen could lower political barriers to emissions-cutting policies.

How it works: Brookings analyzed county-level employment to construct a map of these "fossil fuel hubs."

  • Those are places in the top 20% job density in a suite of sectors like oil-and-gas extraction, fossil power generation, coal mining, oil-and-gas pipelines and distribution and more.
  • They overlaid that with University of Texas data on regions with high potential for wind and solar development and the most competitive costs for doing it.
  • That data relies on a metric called the levelized cost of electricity, which basically means the costs of building and then running, supplying and maintaining power facilities over time.

The intrigue: They find that of the 155 congressional districts with high potential in at least one of the renewable technologies, 91 are represented by GOP lawmakers.

But, but, but: The right policies are needed for successful transitions, the paper argues, and it's pretty clear-eyed about the opportunities but also the challenges.

  • It calls for steps like targeted job training efforts in “Goldilocks” communities — places reliant on fossil industries that also have strong renewables potential.
  • More broadly, transition efforts should involve partnerships between government, schools, labor, community groups and other stakeholders.

2. Oil surges and clean tech valuations slip

Data: FactSet; Chart: Michelle McGhee/Axios

Axios' Dion Rabouin reports: Over the past two years, electric vehicle and emerging renewable technology stocks have soared as investors priced in the transition away from fossil fuels, but so far in 2021 that narrative has reversed.

By the numbers: XOP, an ETF that tracks the largest U.S. oil and gas companies, has gained nearly 40% so far this year as oil producers like Diamondback Energy and Occidental Petroleum have seen their shares jump by more than 50%.

  • The S&P 500 energy sector has been far and away the best performing of the index's 11 sectors (delivering 15 percentage points better return for investors this year than the second best sector, financials).
  • Diesel, crude oil and gasoline have been the world's top performing major assets in 2021, each gaining more than 25%.

On the other side: Clean energy has suffered, led by the swoon of 2020's world-beating stock, Tesla, which has dropped into "bear market" territory having fallen by 20.6% from its last record high on Jan. 8.

  • The decline in renewable energy names has been broad, too.

What they're saying: UBS Global Wealth Management CIO Mark Haefele is recommending "investors with a high risk appetite ... seek direct exposure to oil," even as crude prices reach one-year highs.

  • "As border closures and quarantine measures are eased, this should release pent-up demand for holiday travel and other types of recreational activity, boosting demand for oil," he said in a client note.
  • He expects global oil demand to reach 100 million barrels a day in the second half of the year, nearly equaling the global record of 102 million bpd.

Read more

3. Winners and losers from USPS' vehicle plan

The U.S. Postal Service's Next Generation Delivery Vehicle. Courtesy USPS

The U.S. Postal Service is going electric — well, just sort of.

Driving the news: USPS is awarding Oshkosh Defense a contract to complete design and ultimately build up to 165,000 "Next Generation Delivery Vehicles" over 10 years.

How it works: The vehicles can accommodate either internal combustion or battery drivetrains and "can be retrofitted to keep pace with advances in electric vehicle technologies," Tuesday's announcement states.

  • USPS is initially granting $482 million as the first phase of what will ultimately be a multibillion dollar fleet modernization contract.

Why it matters: Electrification of delivery fleets is considered an important way to increase market penetration of EVs and curb greenhouse gas emissions.

Winners and losers: Shares of Wisconsin-based Oshkosh rose but the news took a toll on Ohio-based EV startup Workhorse Group, which had been vying for the deal.

  • Its shares fell over 47% and kept dropping in after-hours trading.

What they're saying: "It is disappointing that today’s announcement does not immediately commit to electrifying one of our nation’s largest vehicle fleets," says Robbie Diamond, head of the pro-EV group Securing America's Future Energy.

  • The new vehicles should be electrified with "urgency" to help compete with China's aggressive moves in EV tech, he adds.

The other side: Postal officials touted the option to install both types of drivetrains a way to phase in battery-powered deliveries.

  • "This contract gives us a good foundation to expand our use of electric vehicles,” Postmaster General Louis DeJoy said.

Quick take: Getting back to Workhorse, the USPS announcement signals the peril that young EV startups face in the wild, when the whims of a single potential customer can have outsized influence.

4. The latest in corporate emissions plans

A few notes from the expanding world of big companies' climate change commitments...

1) Etsy, the big online marketplace, this morning vowed to reach net-zero emissions by 2030.

  • The company said its plan seeks 50% direct emissions cuts from its direct operations and the energy they procure.
  • It's vowing a 13.5% cut from "Scope 3" emissions, or use of a companies products in the economy and in this case covers shipping (the biggest emissions source linked to Etsy) and packaging.
  • Addressing the balance of the emissions needed to meet the target will come from funding carbon-removal efforts.

2) Sweetgreen, the restaurant chain known for fast salads and other foods, today said it plans to be carbon neutral by 2027.

  • They're vowing more climate-friendly sourcing and working with suppliers, more plant-based options, low-CO2 buildings and materials, and more.
  • Sweetgreen said in the announcement that after cutting emissions as much as possible, they'll use "meaningful offsets" to help achieve the CO2-neutral goal.

* * *

On the VC front, the platform Patch — which helps companies tally emissions and find CO2 removal projects — said this morning that it raised $4.5 million in seed funding.

  • The firm Andreessen Horowitz led the round, with VersionOne, Pale Blue Dot, and Maple VC taking part too.
  • Why it matters: With more companies making emissions-cutting pledges, ways to help them transform plans into tangible steps — via direct reductions or trustworthy offsets — are getting more important too.

5. Electric school buses take a step forward

Illustration: Sarah Grillo/Axios

A populous Maryland county next to Washington, D.C., is going big on electric school buses with last night's approval of plans to procure several hundred vehicles and maybe far more.

Why it matters: The Montgomery County Board of Education's move will create the nation's largest electric school bus fleet, per the sustainable business group Advanced Energy Economy (AEE).

By the numbers: Under the initial four-year $169 million deal with Highland Electric Transportation, the county will receive 326 buses, with the first 25 this fall.

  • The county expects to more than offset upfront costs via lower lifetime fuel and operational expenses than diesel models.
  • Per Bloomberg, the plan could "result in the county replacing its entire 1,422-bus fleet" in subsequent years.

How it works: Via AEE, Highland will own and provide charging and other services for the fleet.

  • Thomas Built Buses, a U.S. Daimler subsidiary, will make the buses that use tech from Proterra, an EV company that focuses on heavy vehicles.

6. New SPAC deals in renewables and electric flight

Flying taxis: "Joby Aviation, a startup that has spent a more than a decade developing an all-electric, vertical take-off and landing passenger aircraft, will become a public company through a merger with Reinvent Technology Partners, a special purpose acquisition company from well-known investor and LinkedIn co-founder Reid Hoffman." (TechCrunch)

Clean power: "India’s largest renewable energy firm ReNew Power on Wednesday agreed to go public through a merger with blank-check firm RMG Acquisition Corporation II, in a deal that values the merged entity at roughly $8 billion." (Reuters