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September 20, 2022

🚀 Let's do this! Today's newsletter has a Smart Brevity count of 1,269 words, 5 minutes. 

🗓️ Join Axios tomorrow at 12:30pm ET for a virtual event examining what's next for energy reliability after the passage of the new climate law. Guests include Sen. Michael Bennet (D-Colo.) and Rep. Bob Latta (R-Ohio). Register

🎶 At this moment in 1999, TLC was #1 on the Billboard singles charts with today's intro tune...

1 big thing: World leaders search for progress on climate

Illustration of globe on the United Nations flag

Illustration: Eniola Odetunde/Axios

This week of intense diplomacy in New York City is pivotal for setting up a successful climate summit in Egypt in November. This is no easy task, Andrew writes.

The big picture: A "policycrisis," to use a term from World Trade Organization chief Ngozi Okonjo-Iweala, has engulfed the world, sucking up political oxygen.

  • From the war in Ukraine to spiraling energy and food costs and climate disasters, leaders are confronting simultaneous (and sometimes literal) fires.
  • Since the last United Nations climate summit in Glasgow, the urgency to act has only increased.

What's happening: Extreme weather events have had ripple effects globally, from a record-shattering heat wave in China to Pakistan's devastating floods.

  • In speeches beginning today, world leaders are likely to point to such disasters as reasons to act on the key unfulfilled agenda items at COP27: climate finance and "loss and damage."

Between the lines: The industrialized world still has not made good on a 2009 promise to direct at least $100 billion per year to developing nations to help them adapt to a changing climate. This is a threshold issue for progress at COP27 in November.

  • "The Global North has made financial commitments to the south and these are not being delivered," said Helen Clarkson, CEO of the Climate Group, at her organization's NYC Climate Week event. "And every day this doesn't happen. The credibility of our leaders diminishes."
  • While last year's Glasgow Climate Pact contains provisions for discussing how developed nations can compensate developing countries for climate-related damage, developing nations want concrete commitments.
  • Making their case at COP27 will be Pakistan's delegation, which will be leading the largest bloc of developing nations. Look for them to emphasize the climate links to the extensive flooding.

What's next: It is expected that UN Secretary-General António Guterres will hold little back when he speaks this morning.

  • "There will be no sugar coating in his remarks, but he will outline reasons for hope," said Guterres spokesperson Stéphane Dujarric. The speech will warn that "geopolitical divides are putting all of us at risk," he said.
  • The secretary-general has put countries on notice that COP27 needs to make progress on loss and damage.

What we're watching: The UN General Assembly can also serve as a springboard for global cooperation.

  • A key meeting will take place Wednesday behind closed doors, with about two-dozen world leaders invited for a frank discussion on climate change.
  • It is not yet clear which leaders will attend.
  • A similar confab was credited with helping to clarify fault lines ahead of Glasgow.

2. Pondering oil's new redline

Data: Yahoo Finance; Chart: Axios Visuals
Data: Yahoo Finance; Chart: Axios Visuals

Elevated oil prices may have lots of staying power despite global economic headwinds and slowing demand growth, Ben writes.

The big picture: In a note, Bank of America analysts argue that $80 per barrel is the "new $60" for the benchmark Brent crude price. A few reasons...

  • The OPEC+ production cut announcement this month was small in substance but spoke volumes. It was the first-ever cut when prices were above $90, they note.
  • Other factors include limited spare capacity and capital spending growth levels. "[T]he global rig count is now half as sensitive to oil prices than it used to be, a fact that is true for OPEC, non-OPEC and U.S. shale producers."

Barron's has more on the analysis.

What they're saying: Looking at 2023 specifically, BofA sees even higher prices, with Brent averaging $100 and the U.S. benchmark WTI at $94, with "upside risk from Russian supply disruptions and downside risk from a macro slowdown."

Meanwhile, via Reuters: "U.S. crude oil prices will average between $80 and $100 per barrel next year, investors attending a Barclays conference this month estimated, suggesting a stronger outlook than future prices suggest."

3. Puerto Rico's grid under scrutiny after Fiona

Photo of a street in Puerto Rico in darkness without power

Lights from cars are seen on an otherwise dark street in the Condado community of Santurce in San Juan, Puerto Rico, on Sept. 19. Photo: AFP via Getty Images

Huge swaths of Puerto Rico remain without power after the weekend landfall of Hurricane Fiona, a disaster putting a fresh spotlight on the failures of the island's grid infrastructure, Ben writes.

Why it matters: Five years after the more powerful Hurricane Maria devastated the island, residents are again facing catastrophic energy consequences.

Via the Washington Post, Fiona's hit a power grid that "experts liken to a house of cards: a fragile, decrepit, patchwork system running on old equipment that has failed to substantially modernize" since Maria.

Zoom in: As Politico notes, the island's struggles with its power system date back many years, but problems persist after the private company LUMA Energy took over in 2021.

"The privatization of the grid’s management has attracted much of the recent fury, with calls for the Puerto Rican government to take steps to terminate LUMA’s control of the grid as soon as November," it reports.

The intrigue: The problems afflicting the state's electricity have many roots. The NYT has a quick run-through, ranging from Trump-era restrictions on aid to slow action on recovery from Maria.

"As of last month, the island’s government had spent only about $5.3 billion, or 19 percent, of the $28 billion in funding that FEMA has committed for post-2017 recovery projects," it reports, citing Government Accountability Office info.

4. 🏃🏽‍♀️Catch up fast on climate announcements

🚛 Five corporate giants including Ikea, Unilever and Maersk are founding members of a new push to electrify medium- and heavy-duty trucks.

  • The big picture: Under the initiative launched by the nonprofit Climate Group, companies pledge to make their fleets zero emission by 2040 in OECD markets, China and India.
  • Why it matters: These kinds of trucks spew 40% of all road transport emissions, per the Climate Group.

⛏️ Fortescue Metals Group, the Australian iron mining giant, this morning vowed to invest $6.2 billion to decarbonize its operations this decade. AP has more.

💵 Huge investors say their portfolios will get much greener. Bloomberg covers this morning's announcements from the UN-convened Net-Zero Asset Owner Alliance:

  • "A coalition of pension funds and insurance companies that includes Allianz SE, the California Public Employees’ Retirement System and Zurich Insurance Group AG have committed to managing $7.1 trillion of assets in line with the Paris Agreement’s goal of limiting warming to 1.5 degrees Celsius."
  • Meanwhile, Reuters reports: "Norway's $1.2 trillion wealth fund, the world's largest, said on Tuesday it would decarbonise its holdings by pushing firms to cut their greenhouse gas emissions to net zero by 2050 in line with the Paris Agreement."

🎦 Adam McKay, director of the film "Don't Look Up," announced a $4 million commitment to the Climate Emergency Fund (CEF), which makes grants to climate activists.

  • The CEF focuses its investments on disruptive, transformational change agents.
  • “We are past time for politeness, past time for baby steps. It’s time to get in the streets," McKay said in a statement.

5. The clean energy "collaboration gap"

Fight over energy

Illustration: Rebecca Zisser/Axios

A first-of-its-kind report from multilateral agencies warns that inadequate global collaboration on decarbonizing huge industries is slowing down the clean energy transition, Ben writes.

Why it matters: Despite the growing deployment of low-carbon sources, global emissions have not yet even begun the steep cuts needed to limit temperatures in line with the Paris Agreement.

Driving the news: The UN, International Energy Agency and International Renewable Energy Agency this morning said there's a "collaboration gap."

  • The report focuses on power, agriculture, road transport, steel and hydrogen.
  • "Without international collaboration, the transition to net zero global emissions could be delayed by decades," it states.

Catch up fast: The report stems from a request from dozens of world leaders at last year's COP26 conference to develop an annual report on the topic and metrics surrounding it.

Zoom in: The dozens of recommendations include...

  • Regional collaboration to develop cross-border "super grids."
  • Joint national agreements on minimum standards for high-consuming appliances.
  • Joint agreements on timelines for ensuring new passenger sales are zero emissions.
  • Stronger work to ensure that the food trade does not hinder sustainable farming.

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Thanks to Mickey Meece and David Nather for edits to today's newsletter. We'll see you back here tomorrow!