News: Axios Generate: Reconciliation and energy — Tallying green stimulus

Friday, February 5, 2021

Axios Generate: Reconciliation and energy — Tallying green stimulus — Ford's EV plans

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By Ben Geman ·Feb 05, 2021

☕ Good morning! Today's Smart Brevity count is 1,294 words, 5 minutes.

🎶 And this weekend brings the birthday of the late Bob Marley, who has today's intro tune...

1 big thing: How Democrats could thread the needle

Photo illustration of Chuck Schumer next to a government-issued check and the Capitol Dome

Photo illustration: Sarah Grillo/Axios. Photo: Mark Wilson/Getty Images

A new report offers a window onto something on a lot of people's minds in the energy world: what kind of policies Democrats could try to move through the Senate with 51 votes.

Driving the news: The groups Evergreen Action and Data for Progress yesterday released a proposal for ways to move a "clean energy standard" through the Senate using the budget reconciliation process.

That's the procedural tool that enables some types of spending- and revenue-related policies to move on special legislation that's immune from filibusters, but it's a tricky thing.

Why it matters: President Biden, during his campaign, set a target of reaching 100% carbon-free U.S. electricity by 2035.

Electricity is the second-largest source of U.S. carbon emissions after transportation, but the policy and legislative pathways to meet that ambitious goal are a little foggy.

How it works: The new analysis says there are lots of options to spur power sector transformation that are consistent with reconciliation. Here are a few...

A new federal system of "zero-emissions electricity credits."
"Utilities would earn ZECs by continuously increasing the amount of carbon-free electricity they deliver to customers, or else purchase the credits from the federal program," the authors note in a Vox summary.
A twist on the idea would "involve the federal government regularly buying a quantity of ZECs from power companies, through auctions," they note.
Another could be "conditional block grants based on their utilities' commitments to meet certain clean electricity criteria," the report notes.
Yet another would be a federal "carbon intensity standard" that gives power producers incentives to "remain below a declining emissions-intensity threshold, by charging them an increasing penalty for failing to do so."

Reality check: Senate Majority Leader Chuck Schumer has signaled that he's interested in moving some climate-related provisions through reconciliation.

But even then, the political pathway and appetite for aggressive power-sector policies are really unclear right now.
Sen. Joe Manchin, the chairman of the Senate's energy committee, has expressed deep reservations about moving things with a bare majority (zoom to the 26-minute mark of his interview yesterday with the Bipartisan Policy Center to get that flavor).
And this Washington Examiner piece explores his skepticism about zero-carbon power mandates.

The big picture: An RBC Capital Markets report yesterday lays out some broad areas that could be ripe for reconciliation.

The report notes overall there would be a "strong hand in determining the mandatory spending allocations that can fit with clean energy advancement and climate change mitigation."
One avenue is a "clean energy financing mechanism or 'bank' to consistently fund clean technologies or infrastructure."
"Extended or improved tax rebates for renewable energy, battery storage, carbon capture technologies, etc. are also on the table."

2. Chart of the day: Green stimulus (or not)

Data: Rhodium Group; Chart: Axios Visuals

Updated analysis from the Rhodium Group finds that among the world's largest greenhouse gas emitters, "green" provisions in pandemic stimulus packages have been very limited so far beyond the EU.

Why it matters: The UN, the International Energy Agency and others have called for nations' COVID-19 responses to bolster low-carbon energy and infrastructure.

Of note: The spending captured in the chart defines "green" as provisions around areas like energy efficiency, zero-emissions energy generation and vehicles, mass transit, and more.

What we're watching: President Biden is pushing for such measures in the economic package he hopes to steer through Congress after a more immediate relief package.

Rhodium notes China and India may pursue more "green" measures "as the pandemic evolves over the course of 2021 and governments turn from emergency measures toward longer-term recovery."

3. Ford makes its move on EVs as GM bets big

Illustration of poker chips with the logos of GM, FCA and Ford

Illustration: Eniola Odetunde/Axios

Ford plans to invest $22 billion in vehicle electrification through 2025, an amount that's nearly double its prior plans, the company said.

Why it matters: The announcement is the latest sign of how the world's biggest carmakers are pouring more resources into tech that's still a tiny slice of the auto market.

"We are accelerating all our plans — breaking constraints, increasing battery capacity, improving costs and getting more electric vehicles into our product cycle plan," CEO Jim Farley said in a statement Thursday evening.

The intrigue: Ford's move comes as domestic rival GM is getting more aggressive with its EV plans and now aspires to stop selling internal combustion cars, SUVs and pickups by 2035.

What they're saying: Wedbush Securities analysts, in a note about the Ford effort, said there's an "EV arms race" underway.

The note cites GM's plans, reports that Apple will work with Hyundai on an electric car, new Ford investment targets, Tesla's expansion and more.
"We believe this speaks to...a golden age of EVs on the horizon with a green tidal wave expected in the U.S. under a Biden Administration and China seeing skyrocketing consumer demand across the board," they said.

What's next: Ford began delivering its Mustang Mach-E late last year, and this year plans to launch its electric transit van.

Its much-hyped all-electric version of the popular F-150 pickup arrives in mid-2022, Ford said.
The company also said that EVs will be "fundamental to the Lincoln luxury brand and the Transit commercial lineup."

Yes, but: As Bloomberg notes, Ford's ability to make big new investments stems partly from the large revenues from gasoline-powered trucks and SUVs it sells in high volumes.

A message from Chevron

Chevron is working toward a brighter future

It's only human to be there when it matters.

Last year, Chevron invested billions of dollars to bring affordable, reliable, ever-cleaner energy to people across America.

Find out more about how Chevron is working toward a brighter future.

4. One VC thing: electric bikes

Photo of different models from the electric bike company Rad Power Bikes.

Photo courtesy of Rad Power Bikes.

The electric bike company Rad Power Bikes has landed $150 million in new funding to expand its operations, including plans to widen its retail and service network.

Driving the news: Funders include Morgan Stanley, Fidelity, the Rise Fund, existing investor Vulcan Capital and others.

The Seattle-based company says it's already North America's largest e-bike brand and now plans to quickly grow from the 325 employees it reached last year.
The company "plans to double the size of its team by the end of 2021, hiring throughout North America, Europe and Asia," the announcement states.
The company did $100 million in sales in 2019 but isn't disclosing its 2020 volumes, TechCrunch reports (and Rad Power Bikes later told me the same thing).

Why it matters: Electric mobility raises the prospect of cleaner transport, though it depends on how much it's replacing driving versus cannibalizing bicycles or walking.

Go deeper: Rad Power Bikes raises $150 million to grow its electric bike empire (The Verge)

5. Climate diplomacy news: China, U.S., United Nations

There's a burst of personnel news in the climate diplomacy space...

China: Xie Zhenhua is returning for another stint as special climate envoy for China, the world's largest greenhouse gas emitter.

Why it matters: He's worked in the past with former U.S. secretary of state John Kerry, who's back as Joe Biden's top climate diplomat.
The big picture: Climate Home News reports that the former longtime negotiator's return is "widely seen" as a response to Biden tapping Kerry, and a "signal of Beijing's willingness to engage with Washington on climate."
What they're saying: "This is clearly a tailored move towards the U.S., an effort to ensure the diplomatic channels are there. With his experience and contacts, Xie's appointment will at least help reduce transactional cost in China's climate diplomacy," Li Shuo, a China expert with Greenpeace, said in a statement in multiple reports.

United Nations: UN Secretary-General António Guterres on Friday named former New York City Mayor Michael Bloomberg as his "special envoy for climate ambition and solutions."

I've got more on that news here.

Biden administration: Speaking of Kerry, yesterday brought the news that clean energy expert Varun Sivaram is now serving as a senior adviser to him.

Sivaram was most recently with Columbia University's Center on Global Energy Policy and has focused heavily on technology innovation and finance.
Flashback: We chatted in 2018 about his book on solar power and climate policy more broadly.

6. Big Oil notes: BP, Chevron, Exxon

Technology: "BP Plc is deepening its use of Palantir Technologies Inc.'s data processing software, as the oil company looks to a greater use of technology to help cut greenhouse-gas emissions." (Bloomberg)

Deals: "Chevron Corp said on Friday it had offered to buy Noble Midstream Partners LP in a deal valuing the company at $1.13 billion, months after the U.S. oil major bought the pipeline operator's sponsor, Noble Energy." (Reuters)

Changes: "Activist investor Jeff Ubben is being considered for a board seat at Exxon Mobil Corp., according to people familiar with the matter." (Bloomberg)