Jan 25, 2019

Axios Generate

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At this moment 50 years ago, the late Marvin Gaye was atop the Billboard charts with today's immortal intro tune...

1 big thing: The 2020 cycle starts hot
Expand chart
Data: Berkeley Earth; Chart: Axios Visuals

New data shows that 2018 was the 4th-warmest in the modern temperature record. And climate change is also heating up (sorry!) on the campaign trail.

Democratic Sen. Kirsten Gillibrand, who recently joined the field of 2020 hopefuls, laid out her broad positions on energy and climate. Via Twitter and an open letter to Sen. John Barrasso, chairman of the environment committee, she indicated she supports...

  • Legislation to get the country to net-zero emissions by "as close to 2050 as possible."
  • Full-throated support for the idea of a Green New Deal (GND).
  • Connecting her climate and jobs messages, noting "this bold action is an opportunity to save our planet and transform our economy."
  • Making infrastructure more resilient in "low-income and frontline communities that will bear the worst of climate impacts."

The big picture: This piece of early — and still rather vague — positioning in the 2020 race is the latest example of candidates staking out turf on a topic that's rarely at the forefront of national politics.

  • Gillibrand's move also arrived the same day as fresh data underscored the long-term warming trend.
  • The research group Berkeley Earth reported that 2018 ranks only behind 2016 (the warmest), 2015 and 2017. Global temperatures last year were 1.4°F (or 0.77°C) above the average between 1951 and 1980.

Threat level: Robert Rohde, the team's lead scientist, underscored how current warming trends will blow past the targets of the Paris climate agreement.

  • "If the current warming trend is allowed to continue at the present rate, we estimate that the Earth will have warmed 1.5 °C above the 1850-1900 average by about 2035, and reach 2.0 °C by about 2060," he said via Twitter.

But, but, but: Something else happened yesterday that signals why the recent flurry of political attention may not last as election day draws closer. The Pew Research Center released their annual survey of public priorities for Congress and the White House.

  • Climate change remains close to the bottom of the list (albeit 10 points higher than in 2015).
  • 44% said it should be a top priority, compared to 70% for the economy, 69% for health care costs, and 50% for jobs (which is far lower than recent years).
  • The partisan gap on climate was the largest of all 18 topics they polled, with 67% of Democrats making it their top priority compared to 21% of Republicans.

Quick take: Glance at those numbers and you can see why climate advocates have political as well as policy reasons for tethering emissions cuts to wider economic ideas. And, the partisan canyon makes me wonder whether we'll see two phases:

  1. More emphasis on the primaries as 2020 hopefuls appeal to base voters — especially young voters on the left inspired by Rep. Alexandria Ocasio-Cortez's push for GND.
  2. A far more muted discussion in the general election.

Go deeper: 2018 was the 4th-hottest year on record as global warming marches on

2. The long-term future of the U.S. oil boom
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Reproduced from EIA; Chart: Axios Visuals

The Energy Information Administration unveiled their annual long-term forecasts yesterday and here's a hot take: The U.S. is going to keep pumping lots of oil and shale will remain the dominant force.

The big picture: Just how much will depend on price, resource and technology variables, some of them reflected in the chart above (where "tight" oil is a proxy for shale).

  • In EIA's central or "reference" scenario, "U.S. crude oil production continues to grow through 2030 and then plateaus at more than 14.0 million barrels per day (b/d) until 2040."

The intrigue: Bloomberg reporters noticed something interesting from what we could label in the "life moves pretty fast" file...

  • "A year ago, the U.S. government saw American crude production averaging 11.95 million barrels a day in 2042. Shale drillers are set to exceed that this year," they note.
  • "The Energy Information Administration now estimates output will top out at 14.53 million barrels a day in 2031."

Why it matters: The crude surge is a reason behind one of the key findings — that the U.S. becoming a net energy exporter will be the new normal.

  • The report's reference case projects that the U.S. becomes a net energy exporter in 2020 and stays that way through the end of their projection period in 2050.
  • It's the result of "large increases in crude oil, natural gas, and natural gas plant liquids (NGPL) production coupled with slow growth in U.S. energy consumption," EIA notes.
  • Of note: EIA already said in a separate report recently that the U.S. would be a net exporter of crude and petroleum products combined in Q4 of 2020, but the new report signals their view that this will be a long-lasting dynamic.

What's next: I plan to explore one of the other findings — EIA's pessimistic projection of electric vehicle adoption — some time next week.

Go deeper: US to become a net energy exporter in 2020 for first time in nearly 70 years, Energy Dept says (CNBC)

3. PG&E cleared in one fire but bankruptcy plans remain

Grapevines burned in the 2017 Tubbs Fire in Santa Rosa, California. Photo: George Rose via Getty Images

The 2017 Tubbs Fire that burned over 36,000 acres and killed more than 20 people in California's Sonoma County was caused by a "private electrical system," the California Department of Forestry and Fire Protection said Thursday.

That's a relief for utility PG&E, whose equipment was suspected as having sparked the blaze, Axios' Courtenay Brown reports.

The big picture: A source close to the company tells Axios that the findings of the investigation do not change its plans to file for bankruptcy next week.

  • PG&E said earlier this month it would file for bankruptcy in an effort to shield itself from billions of dollars in potential liability costs related to PG&E's possible role in wildfires in 2017 and 2018.

What they're saying: In a statement to Axios, a spokesperson says the company still faces "significant potential liabilities and a deteriorating financial situation, which was further impaired by the recent credit agency downgrades to below investment grade."

  • The Tubbs Fire, which devastated the community of Santa Rosa, stood for a short time as the most destructive wildfire in California history.
  • It was eclipsed by the Camp Fire in 2018, which destroyed most of the town of Paradise, killing 86.

Go deeper: The cost of climate change for PG&E is a warning to big business

4. On my screen: LNG, EVs, beer

LNG: Via Reuters this morning, "Europe is now the top buyer of U.S. liquefied natural gas (LNG) after a near fivefold spike in U.S. LNG sales to the continent this winter, overtaking South Korea and Mexico, a Reuters analysis showed."

  • "Profit rather than politics is driving the increase, despite pressure from U.S. President Donald Trump for Europe to wean itself off Russian gas," they report.

Electric vehicles: Per CNBC, "With its CEO setting a goal of going 100 percent electric, General Motors is taking a close look at how, if not when, to offer an all-electric SUV, according to the head of the automaker's GMC truck brand."

Beer: The St. Louis Post-Dispatch looks at how wind energy will show up on Super Bowl Sunday via a Budweiser ad...

  • "The Budweiser commercial features a Dalmatian dog riding atop a Clydesdale hitch through a wind farm, accompanied by Bob Dylan's song Blowin' in the Wind."
  • "The commercial's message 'Now brewed with wind power for a better tomorrow,' touts the brewer's global goal to have 100 percent of its purchased electricity come from renewable sources by 2025."
5. The ski industry's move into renewables

Skiers in Park City, Utah. Photo: EyesWideOpen via Getty Images

Axios Expert Voices contributor Maggie Teliska writes ... Last ski season, Vermont's Bromley ski resort, winner of the 2017 Energy Leadership award, installed low-energy snowmaking guns to optimize snow production while reducing energy waste. 

  • The new low-energy guns can operate at 10 cents per hour, compared to older versions' $10 per hour.

The big picture: The ski industry is increasingly embracing new innovations in energy-efficient technology — combined with existing technologies such as wind and solar energy and LED lighting — to reduce its carbon footprint and improve its bottom line.

  • Ski resorts consume a great deal of energy during peak seasons to operate chair lifts, make snow and power vehicles and on-site lighting.
  • Using renewables allows ski resorts to reallocate utilities funds for other amenities.

Where it stands: Berkshire East ski resort, a family-owned ski area in western Massachusetts, became the only ski area in the world to generate 100% of its electricity on-site in 2011

  • The resort uses a 900 kilowatt-hour wind turbine and an 1,800-panel, 500 kilowatt-hour solar farm. 

What's next: Several other ski resorts are planning to become more sustainable, and even to generate a large percentage of their energy on site.

The bottom line: Roughly 75% of U.S. ski resorts have incorporated renewable programs, with many announcing commitments to transition to 100% clean and renewable energy in the next few years. More energy-efficient ski operations will help save on energy production and use while building a more eco-friendly brand.  

Teliska is a technical specialist at Caldwell Intellectual Property Law, an intellectual property law firm. She is also a member of GLG, a platform connecting businesses with industry experts.

6. The Saudi-China solar intrigue

A solar plant north of Riyadh, Saudi Arabia. Photo: Fayez Nureldine/AFP via Getty Images

Axios Expert Voices contributors Juergen Braunstein and Oliver McPherson-Smith write ... Last May, Chinese solar panel manufacturer LONGi signed an agreement with Saudi trading company El Seif Group to establish large-scale solar manufacturing infrastructure in Saudi Arabia.

The big picture: Uneasy about its oil dependence and lack of domestic manufacturing capabilities, Saudi Arabia has long looked to partner with China to develop its burgeoning green industries.

  • But while the U.S.–China trade war has given the kingdom a chance to fortify that collaboration, it also puts Riyadh in the tough position of choosing between the world’s largest solar manufacturer and its most important geopolitical ally.

Background: China laid out its industrial investment policy for the Greater Middle East in a 2016 white paper, highlighting the importance of exporting industrial capacity in nuclear, traditional and renewable energy.

Saudi Arabia’s goal of developing 60 gigawatts of solar power by 2030, together with its dearth of indigenous competition, makes the country an attractive manufacturing destination for Chinese firms, which have already sought to deepen their cooperation with their Saudi counterparts.

Where it stands: Saudi Arabia seems poised to take advantage. The country aims to become a global trade hub as part of its ambitious Vision 2030 plan, and has already taken action in industrial policy to establish local manufacturing centers.

  • In addition to streamlining its once-byzantine trade documentation requirements, the Kingdom has established a special economic zone near Riyadh’s flagship airport.
  • With the lure of tax incentives, the zone could serve as a hub for assembling solar components — and, potentially, a destination for Chinese manufacturers seeking to avoid the 10% U.S. tariff.
  • The potential for domestic job creation might entice Riyadh even further to pursue geopolitically risky economic relations.

Read more

Braunstein is a postdoctoral fellow at Harvard Kennedy School’s Belfer Center. McPherson-Smith is a Master’s student at Harvard’s Center for Middle Eastern Studies.