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Nov 22, 2021

Axios Generate

🍳 Good morning! Today's Smart Brevity count is 994 words, 4 minutes.

🎶 Happy birthday to Tina Weymouth of the Talking Heads and the Tom Tom Club, which has today's intro tune...

1 big thing: The murky Senate future of Biden's climate agenda

Illustration: Allie Carl/Axios

The big news since our last edition was House Democrats passing their $1.75 trillion social spending and climate package, but what happens next is hazy, Ben writes.

Why it matters: The bill, if it makes the finish line, would be by far the most sweeping U.S. climate package ever enacted.

The provisions — including over $300 billion in clean energy tax incentives — are key to the White House goal of cutting U.S. emissions 50% below 2005 levels by 2030.

Yes, but: The House plan approved Friday is likely to change in the Senate. Here are a few things we're watching...

Electric vehicles. The plan would expand consumer tax incentives, and one big way is that union-made EVs can receive up to $4,500 more in incentives over the base $7,500 credit.

  • But Sen. Joe Manchin (D-W.Va.) is reportedly not on board with the union-made provision, and nonunion automakers are lobbying against it too.
  • "The union provision may be problematic from an international trade standpoint in any case. I wouldn’t bet on seeing it in the final draft," ClearView Energy Partners Kevin Book said in an email exchange.

Carbon pricing. There's intermittent buzz about a carbon tax push, but the odds are very long.

The clock. Senate Majority Leader Chuck Schumer (D-N.Y.) wants to complete the plan before Christmas, but the calendar is very tight and negotiations could drag.

If the talks spill over into 2022, the plan could lose momentum.

The overall size. The plan contains over $500 billion total in clean energy and climate-related provisions, so keep an eye on whether that overall size and scope remains.

Methane fees and other oil-and-gas provisions. The House plan imposes fees of up to $1,500 per ton on industry methane emissions.

  • Manchin, whose state is a major gas producer, is again a lawmaker to watch there.
  • ClearView's Book notes one reason a methane fee could survive: "Appalachian gas production might be a relative winner on methane intensity."
  • The plan also raises royalty rates for oil-and-gas production on federal lands and waters and includes new fees on federal leases.
2. Business news: Rivian, Shell, Aramco

Illustration: Shoshana Gordon/Axios

Electric vehicles: "Ford Motor and Rivian have dropped plans to develop an electric vehicle together, although Ford remains a major investor in the start-up automaker." (New York Times)

Power markets: "Royal Dutch Shell has made its first foray into selling power to households in Australia, teaming up with an infrastructure fund to buy Meridian Energy's local electricity business for A$729 million ($528 million)." (Reuters)

Storage: Apollo Global Management has agreed to buy a 50% stake in Broad Reach Power from its existing owners, the parties said, a deal which will result in up to $400 million of capital being invested in the U.S. energy storage and renewables company to fund expansion." (Reuters)

Deals (or not): "Saudi Aramco said it will continue to look for investment opportunities in India, days after Reliance Industries Ltd. scrapped a plan to sell a stake in its oil-to-chemicals unit to the Middle Eastern company." (Bloomberg)

3. The slowing global gains in fuel economy...
Expand chart
Data: Global Fuel Economy Initiative/IEA; Chart: Jacque Schrag/Axios

A new(ish) analysis shows that "fuel economy progress is stalling" amid the growing global popularity of SUVs and light trucks, Ben writes.

Driving the news: The joint report from the Global Fuel Economy Initiative (GFEI) and the International Energy Agency takes stock of where things stand through 2019, the last year with comparative data.

The big picture: "The average rated fuel consumption of new light-duty vehicles fell by only 0.9% between 2017 and 2019...to 7.1 litres of gasoline equivalent per 100 kilometres," the report notes. That's far below the 1.8% annual average decline between 2010 and 2015.

  • It's nowhere near the pace needed for GFEI's goal of cutting the fuel consumption of new light-duty vehicles in half by 2030, relative to 2005 levels.
  • The group is a partnership between the United Nations, International Council on Clean Transportation and others.

The intrigue: "Increasing vehicle size and power has eroded as much as 40% of the fuel consumption improvements that would otherwise have occurred thanks to technical advances in vehicles and engines."

What they're saying: Getting on a better fuel consumption path requires stronger electric vehicle deployment policies, but also faster adoption of advanced efficiency tech for internal combustion engines.

The report lays out ideas in areas like policy design for efficiency and CO2 standards, phasing out fuel subsidies, harmonizing standards across nations to lower costs and more.

Read the report.

4. ...and where the U.S. stands today
Data: EPA; Chart: Axios Visuals

New EPA data on U.S. vehicle fuel economy paints a mixed picture, showing record average efficiency in model year 2020 that's nonetheless far short of what policymakers hope to see ahead, Ben writes.

Driving the news: The annual report shows that average overall fuel economy for cars, SUVs and light trucks sold in the U.S. reached 25.4 miles per gallon (mpg) in model year 2020 in real-world conditions, a 0.5 mpg increase over 2019.

Preliminary data shows that it's basically stagnant this year (see above).

The big picture: It's nowhere near the 52 mpg by 2026 in standards the Biden administration has floated, which Bloomberg notes "equates to roughly 41 mpg in real-world driving conditions that typically account for about a 20% drop in fuel economy from EPA’s ratings."

Why it matters: Transportation overall — including heavy trucks and other vehicles — is the largest source of U.S. carbon emissions.

Zoom in: For model year 2020, Tesla’s all-electric fleet had by far the lowest tailpipe CO2 emissions, EPA notes. The next best performers on average CO2 emissions and mileage were Honda, Subaru and Hyundai.

Conversely, "Stellantis had the highest new vehicle average CO2 emissions and lowest fuel economy of the large manufacturers in model year 2020, followed by Ford and GM," EPA notes.

Go deeper: EPA: Detroit Three vehicles lag in emissions, MPG ratings (The Detroit News)

5. Quote of the day
"We are not where we should be, and now is beyond the time when we need to get in front of that challenge."
— Deputy Secretary of Defense Kathleen Hicks

That's Hicks talking to CNN about the Defense Department preparations for climate change.