A glimpse of my second annual outlook is the top story below, and then I'll hand the reins back to Ben Geman for the rest of the news.
Illustration: Rebecca Zisser/Axios
From Washington to Down Under, energy and climate are hotter topics this year than they have been in some time. Here's a glimpse of what I'm watching this year, and click here to go deeper with the whole column.
1. Climate politics. After taking a backseat on Washington’s priority list for the past decade, expect climate and energy policy to be in the limelight with the start of the 116th Congress and the 2020 presidential campaign.
2. Regulatory lawsuits. We’ll see many of regulatory rollback proposals go final — and a mountain of lawsuits swiftly filed by blue states, particularly California and New York, and other parties.
3. Ailing coal and nuclear plants. Trump’s promise to keep open economically struggling coal and nuclear plants hasn't translated into action after more than a year.
4. Protectionist spillover. Trump’s trade war with China hit full force last year, and now we’re seeing the disparate impacts. I’ll be watching to see if this escalates, dissipates or plateaus.
5. Carbon taxes. I’m watching developments both in D.C. and in Canada.
6. Oil-demand levers. I’m watching two in particular, one high-profile and one less so: electric vehicles and plastics.
7. Oil prices’ wild ride. After 2018’s volatile ups and downs — accentuated by sporadic Trump tweets — oil is likely set for another tumultuous year.
8. Growing climate disconnect. At a high-profile UN summit in September, nations will be expected to say what they have done or plan to do to ramp up their commitments to the 2015 Paris Climate Agreement — despite little progress on current goals.
9. Australia and Brazil election consequences. I’m watching the climate moves of Brazil’s new president and Australia’s elections this spring, given the similarity between the energy and climate debates there compared to here.
What are you watching this year? Email me at firstname.lastname@example.org.
Six U.S. nuclear plants have closed in the past 5 years and nearly 35% of the remaining fleet are now at risk of early closure or slated to retire, writes Axios Expert Voices contributor Michael Greenstone of the University of Chicago.
The big picture: Many tout carbon-free nuclear energy as a climate solution, but today’s nuclear plants are having a difficult time competing with cheap natural gas and renewables in today’s wholesale electricity markets.
Advanced technologies could prove cheaper and safer than current reactors, although they remain largely untested.
Yes, but: Thanks to the fracking boom, nuclear technologies will face stiff competition from natural gas combined cycle (NGCC) power plants for decades, as well as from renewables due to their decreasing costs.
What to watch: The above chart compares the expected range of costs for producing a megawatt hour of electricity from advanced nuclear technologies in 2040 to the projected cost of NGCC plants — both with and without a carbon price of roughly $50 per ton of emissions, as used by the Obama administration.
The bottom line: The capital investments that increase the odds of innovation depend on market signals. To plan on a nuclear renaissance without a price on carbon is to treat hope as a strategy.
Greenstone is an economics professor and director of the university's Energy Policy Institute.
Groundbreaking ceremony of Tesla Shanghai Gigafactory on Jan. 7. Photo: VCG/VCG via Getty Images
Tesla began official construction today on its factory in Shanghai, China. CEO Elon Musk said via Twitter that the company aims to launch Model 3 production there by year's end and reach "high volume" in 2020.
Why it matters: It's a step toward gaining a larger beachhead in the world's largest auto market, where officials are pushing expansion of EV deployment but have significant restrictions on foreign players.
The big picture: Per CNBC, "Producing vehicles in China would reduce costs from tariffs and ocean transport for Tesla. In an Oct. 2 report, the American company said it is operating at a 55 percent to 60 percent cost disadvantage for those reasons and because it cannot access the same cash incentives as local Chinese manufacturers."
Where it stands: "Gigafactory 3 will allow Tesla to localize production of Model 3 and future models sold in China, with plans to eventually produce approximately 3,000 Model 3 vehicles per week in the initial phase and to ramp up to 500,000 vehicles per year when fully operational (subject to local factors including regulatory approval and supply chain constraints)," Tesla said in a statement Monday.
Oil prices are climbing again Monday as the market still absorbs some positive economic signals. Brent crude is above $58 and WTI, the U.S. benchmark, has risen above $49 this morning.
What they're saying:
But, but, but: Goldman Sachs, in a note this morning, takes stock of forces that will constrain the price rise this year. Their analysts cut their average 2019 forecast for Brent spot prices to $62.50, down from $70 in their prior forecast.
Two noteworthy things in climate politics happened since our last edition...
1. Beto O’Rourke told HuffPost through an aide that he's "supportive of the concept" of the Green New Deal and "is looking forward to engaging more on the issue."
2. Speaking of Ocasio-Cortez, she told CBS' "60 Minutes" that returning the country to top marginal income tax rates into the 70% range could be needed to help fund the massive decarbonization envisioned in the Green New Deal.
The intrigue: The remarks caused a stir, but a number of analysts quickly pointed out that her views on tax rates are rooted in prior U.S. policy.
Go deeper: Axios' Dion Rabouin examines what she said in his first edition of the daily Axios Markets.
Amy reports that Carlos Curbelo, the Republican who lost his re-election bid in a highly contested Florida House district in November, is doubling down on his energy and climate change focus with a new fellowship at Columbia University’s energy think tank.
Why it matters: During his 4 years in Congress, Curbelo was an important outlier in the Republican Party. He created a bipartisan House caucus on climate change and last summer introduced legislation taxing carbon emissions, the first such move by a Republican in a decade.
Details: Curbelo will be a distinguished visiting fellow at the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs.
The big picture: Congress is unlikely to seriously consider a carbon tax any time soon, given the GOP’s near universal opposition to the idea and Trump’s dismissal of climate change generally.