Nov 10, 2020

Axios Generate

Good morning. Today's Smart Brevity count: 1,349 words, 5 minutes.

🚨"The U.S. Federal Reserve for the first time called out climate change among risks enumerated in its biannual financial stability report, and warned about the potential for abrupt changes in asset values in response to a warming planet." (Reuters)

Heads up: We'll be off for Veterans Day tomorrow (thank you to all who serve), so look for Generate again on Thursday.

🎶And tomorrow also marks 45 years since Earth, Wind & Fire released the album "Gratitude," which provides today's intro tune...

1 big thing: The intra-left flashpoints over climate and energy

Illustration: Eniola Odetunde/Axios

Environmentalists are all psyched that Joe Biden beat Donald Trump, but tensions on the left could soon come to the surface as Biden starts implementing his energy agenda.

Why it matters: Democrats and the wider left are in the midst of a public reckoning with how progressive the party's stances and message should be.

It follows an election that handed Biden a sizable win, but Democrats failed to re-take the Senate (unless both Georgia runoffs go their way), while their House majority shrunk.

The big picture: "Biden is already caught up in the Democratic conflict over how far to go in combating climate change," The Washington Examiner reports.

Driving the news: Biden has a sprawling platform under his overall goal of reaching net-zero U.S. emissions by 2050, so here's just a few potential flashpoints I'll be watching...

  • Personnel: Activist groups like 350.org and Oil Change don't want Biden to choose anyone who has worked with or is even indirectly associated with fossil fuel interests to top roles. And it's an effort that goes well beyond just Cabinet secretaries.
  • “I think everyone is fixated at the Cabinet level for obvious reasons, but the folks below that are really important too,” said Julian Brave NoiseCat, a top strategist with the progressive think tank Data for Progress.
  • Oil-and-gas drilling: Biden's pledge to end permitting on federal lands is pretty sweeping and...pretty vague. So let's see how aggressively it's crafted in terms of timelines and so forth.
  • Congress: There's no chance for a sweeping climate bill unless Democrats take the Senate, but look for efforts to include clean energy-related investments in an economic recovery package. The shape of a potential compromise — especially around topics like support for carbon capture and nuclear power — is something to watch.
  • Congress, part II: If Democrats somehow win both Georgia runoffs and claim a small majority, that opens the first window for major climate legislation in a decade, with all kinds of interests to balance.
  • LNG exports: Will Biden's posture be supportive? Both the Obama and Trump administration's viewed liquefied natural gas exports as an important source of U.S. leverage in gas-reliant Europe, while the left opposes the sector. Axios' Amy Harder explored this tension in more detail here.
2. Renewables are shrugging off the pandemic...
Reproduced from IEA; Chart: Axios Visuals

The International Energy Agency has boosted its estimate of renewable power growth this year and now sees installations setting a fresh record.

Why it matters: Wind and solar are proving more resilient to COVID-19 than initially believed as projects and manufacturing "ramped up again quickly" after disruptions in the first half of the year, IEA said.

Driving the news: IEA's new analysis estimates that installed renewable generating capacity will grow by nearly 200 gigawatts this year, which is 18% higher than a previous estimate in May.

IEA also finds that renewables are slated to account for 90% of all new generating capacity additions this year.

What they're saying: "The resilience and positive prospects of the sector are clearly reflected by continued strong appetite from investors," said IEA executive director Fatih Birol.

Where it stands: A big part of this year's growth stems from developers in China and the U.S. rushing to complete projects before incentives lapse, IEA said.

They expect a fresh record next year, with capacity additions jumping in Europe and India, as well as continued recovery from pandemic delays.

Yes, but: IEA's main forecast sees a dip in 2022 thanks to a reduction in incentives in some regions, delayed auctions in Latin America and other forces.

It's a projected slowdown that comes as IEA is among the voices calling for accelerating energy transition to combat climate change.

...and an inflection point is looming with coal

Two other big findings from IEA's five-year outlook: One is that total installed wind and solar capacity (a reminder that it's not the same thing as actual generation) will surpass natural gas in 2023 and coal in 2024.

The big picture: When all renewables are taken together including hydropower, still the largest renewable generation source, "Renewables will overtake coal to become the largest source of electricity generation worldwide in 2025."

"By that time, they are expected to supply one-third of the world’s electricity," IEA notes. Carbon Brief has more.

3. Oil's vaccine boost bumps against COVID's deadly spread
Data: FactSet; Chart: Axios Visuals

That spike you see above is what happened to oil prices Monday as the market absorbed news of promising trial results from the Pfizer and BioNTech COVID-19 vaccine.

Why it matters: It's a glimmer of hope for oil producers who for months have been grappling with the stalled recovery in oil prices as cases mount and demand remains curtailed.

  • Yesterday also brought another sign of those woes when the huge producer Occidental Petroleum reported a $3.8 billion quarterly net loss.

Yes, but: Prices remain well below what's needed for the financial health of many producers, and the world is a long way from normal even if the vaccine works.

  • Indeed despite yesterday's rally, oil is still trading within the rather narrow price band where it has been stalled since early June.
  • New restrictions in multiple countries to help contain the spread will keep weighing on the market.
  • Oil prices are again ticking upward this morning, with West Texas Intermediate futures trading well above $40-per-barrel and Brent, the global benchmark, at almost $43 per barrel.

The big picture: Via Bloomberg...

"[T]hough the market has been awash with optimism in recent days, there are reasons to remain cautious. Global oil demand still won’t get back to pre-virus levels until the end of next year, JPMorgan Chase & Co. analysts including Natasha Kaneva wrote in a report. The chief executive of Vitol Group also warned on Tuesday that there are difficult months ahead for oil demand."

4. Reports: Trump ousts climate research team boss

The White House has removed the scientist overseeing the multi-agency group that crafts influential reports every several years on global warming and its harms, per the New York Times and the Washington Post.

Driving the news: Michael Kuperberg was ousted as head of the U.S. Global Change Research Program — which produces the National Climate Assessment (NCA) — and returned to his prior Energy Department role, both papers report.

Per the NYT, he's expected to be replaced by David Legates, a recent appointee to a senior National Oceanic and Atmospheric Administration role who disputes mainstream climate science.

Why it matters: The stories note the moves could influence which scientists are initially considered to help write the next NCA due in 2023.

The NYT warns of ripple effects, such as a "biased or diminished" report being "used in court to bolster...fossil fuel companies being sued for climate damages."

Yes, but: Or maybe it's just not that big a deal. The incoming Joe Biden administration could reverse the Trump administration's efforts, both papers note.

The University of Arizona's Kathy Jacobs, who helmed the third NCA process roughly a decade ago, tells the Post: "I would be more concerned if Trump had won the election."

The big picture: The NCA is written by government researchers and outside scientists. The last one in 2018 warned of steep future economic losses to the U.S., with harmful consequences already underway.

5. GM accelerates its electric vehicles push

Illustration: Lazaro Gamio/Axios

Axios' Joann Muller reports that General Motors is accelerating the launch of two future electric vehicles and plans to add 3,000 new software jobs by early next year as it races to get electric vehicles on the road faster.

Why it matters: The hiring spree is a sign that GM is accelerating its transition toward an electric future by mid-decade. It comes as President-elect Joe Biden is also talking up electric vehicles as part of his climate and energy priorities.

What's happening: In a year turned upside down by the coronavirus, GM has been developing vehicles more quickly using virtual tools, said Ken Morris, GM's vice president of autonomous and electric vehicle programs.

  • That has enabled the automaker to pull ahead two major electric vehicle programs, Morris told reporters Monday, without providing further details.
  • "We really want to advance the entire EV portfolio. That’s where we need the extra horsepower of 3,000 additional software engineers," he said.

What to watch: GM CEO Mary Barra will share more details about the accelerated pipeline at a Barclays investor event on Thursday, he said.

6. Catch up fast: BP, utilities, storage

Hydrogen: "BP and Danish wind power group Orsted are teaming up to develop a green hydrogen project in Germany, in the oil major’s first foray into this business." (Financial Times)

Deals (maybe): "NextEra Energy Inc, the world’s largest producer of wind and solar energy, has made a roughly $15 billion all-stock acquisition offer for U.S. power utility Evergy Inc, people familiar with the matter said on Monday." (Reuters)

Batteries: "European energy storage deployment is set to shrink compared to other global markets, even as the need for flexibility on the grid increases, according to new research from Wood Mackenzie." (Greentech Media)