Wednesday, February 10, 2021

Axios Generate: Sobering science news — Rivian's market future — House EJ plans

1 big thing: A sobering day on the science front | Wednesday, February 10, 2021
 
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By Ben Geman ·Feb 10, 2021

Hi readers! Today's Smart Brevity count is 1,218 words, 4.6 minutes.

🎶 And the Carole King album "Tapestry" turns 50 today, so it provides today's intro tune...

 
 
1 big thing: A sobering day on the science front
In this illustration, a puzzle piece with a nuclear reactor, a puzzle piece with oil fields, and other energy puzzle pieces are scattered on a red background.

Illustration: Rebecca Zisser/Axios

 

Sorry to be a downer, but two new studies offer a rough one-two punch — showing the lagging efforts to meet the Paris Agreement's targets and the health effects of the world's current fossil-heavy energy system.

Driving the news: Let's start with an analysis in the journal Communications Earth & Environment about what it would take to hold global temperature rise under 2°C above preindustrial levels.

The University of Washington researchers found that on a worldwide basis (though it varies by country), nations' formal pledges under Paris would need to be 80% stronger than current plans.

How it works: It seeks to assess how countries are doing at implementing existing pledges, and whether carrying out those plans would be enough to meet the agreement's temperature targets.

The big picture: Countries are generally not on track to meet even existing goals. "On current trends, the probability of staying below 2 °C of warming is only 5%," the study notes.

  • But even if countries meet their current medium-term pledges and continue with only the same rate of emissions cuts after 2030, the chances rise only to 26%.
  • "To have an even chance of staying below 2 °C, the average rate of decline in emissions would need to increase from the 1% per year needed to meet the nationally determined contributions, to 1.8% per year."

Why it matters: The study comes ahead of UN talks late this year aimed at strengthening global efforts to even begin sustained emissions curbs.

It puts a fine point on the understanding that existing pledges are not enough, as the Washington Post's detailed story on the paper points out.

Yes, but: Via the Post's coverage..."Kelly Levin, a senior associate at the World Resources Institute, noted that Tuesday's study did not take into account more recent policies that some large countries have adopted or already begun to implement."

Also, efforts needed for a pathway with a strong chance of meeting the 2°C target are not radical.

"Achieving the Paris Agreement's temperature goals is something we're not on target to do now, but it wouldn't take that much extra to do it," said lead author Peiran Liu.

Of note: A 2°C world is no picnic, considering harms from warming at half that amount apparent today and estimated effects of breaching 1.5°C, the more ambitious and longshot Paris target.

Getting on track for 1.5°C would require far steeper emissions cuts — one widely cited UN estimate is 7.6% annually this decade.

* * *

OK, that brings us to the second part of the one-two punch.

It's a new study in Environmental Research that tries to quantify deaths from the effects of fine particulate matter (PM2.5) released when fossil fuels are combusted.

The estimate that in 2018, the "premature mortality" from this pollution was 8.7 million, or roughly 18% of total deaths that year. The mortality effects of the pollution are higher than previously thought, the research states. CNN has more.

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2. House COVID-19 plan eyes environmental justice funds

House Democrats' COVID-19 relief package unveiled last night includes $100 million for EPA to address "health outcome disparities from pollution and the COVID-19 pandemic," per House Energy and Commerce Committee bill text.

How it works: The proposed funding would provide $50 million for grants, contracts and other activities, and another $50 million for EPA-funded air quality monitoring and related efforts, panel Democrats said.

And it also provides $4.5 billion to the federal government's Low-Income Home Energy Assistance Program.

Why it matters: Democrats plan to move the wider COVID-19 relief package under the budget reconciliation process, and those measures are immune from Senate filibusters.

So if Senate Democrats back these provisions in their reconciliation package, they have a clear path to enactment.

What's next: The House Energy and Commerce Committee will mark up the package tomorrow.

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3. EV startup Rivian heads for IPO — report
Photo of electric vehicle startup Rivian's SUV

Photo of the Rivian R1S. Courtesy of Rivian.

 

Bloomberg reported last night that the electric vehicle company Rivian is heading for an initial public offering as soon as September, though the timing seems fluid.

The big picture: "At a $50 billion valuation, it would likely be one of the biggest IPOs of the year and one of the most noteworthy EV listings since Tesla's 2010 offering," it reports.

Why it matters: Rivian appears well-positioned among the sea of EV startups.

  • It's very well-funded, with big investments from backers including Amazon and Ford.
  • It has a big agreement with Amazon to supply 100,000 electric delivery vans by 2030, with 10,000 by 2022 (and test deliveries using them have begun).
  • Its consumer products, an SUV and a pickup, are getting into drivers' hands starting this year.

The intrigue: If the IPO report is true, Rivian is bucking the trend of EV startups going public via reverse mergers with special purpose acquisition companies. But the ones going the SPAC route have lower valuations (more on that in the next item).

Quick take: The IPO route removes some of the speed and certainty around elements like valuation that SPACs provide, and signals a company has the confidence and footing to go through the traditional process of going public.

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A message from the National Mining Association

U.S. supply chain security depends on mining
 
 

COVID-19 revealed the dangers of a heavily import-dependent supply chain.

The U.S. imports minerals that are abundant here at home and do so at 2x the rate we did 20 years ago. By supporting domestic mining projects, we can protect our industries from supply chain exposure.

Learn more.

 
 
4. Electric and hydrogen vehicles zoom into public markets
Illustration of a car blinker light shaped like a dollar bill sign.

Illustration: Aïda Amer/Axios

 

Axios' Dan Primack reports that alternative vehicles have become the new biotechs, often racing into the public markets with little to no revenue.

Driving the news: As we reported yesterday, Hyzon Motors, a hydrogen fuel cell truck and bus startup, is going public via SPAC at a $2.7 billion valuation.

The company's technology is commercialized but says it plans to have only 5,000 vehicles delivered by the end of 2023.

  • Reuters reports that electric truck maker Xos Trucks is in talks to go public via SPAC at a $2 billion valuation. It also reported that Chinese EV startup Byton was exploring its own SPAC deal.
  • And there has been a slew of earlier ones, including for flying taxis.

What's happening: Investors are reading regulatory tea leaves, Axios transportation reporter Joann Muller reports. And issuers are leveraging the moment.

  • That starts in China, the world's largest market. But it also extends to Europe, where environmental rules are stricter, and in the U.S., where President Biden's climate agenda could increase chances for alt vehicle success.
  • Tesla tailwinds also are having an impact.

Threat level: Piling into EVs is perilous, even by blank-check standards.

  • Biotechs are binary, with an almost-guaranteed customer base if their drugs are approved by regulators.
  • Alt vehicles face challenges in terms of both product and product-market fit. Plus, many EV hopefuls rely on outside battery makers.
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5. Chart of the day: The coming (mini) coal rebound
Data: U.S. Energy Information Administration; Chart: Axios Visuals

U.S. coal production is still slated for a bounce-back from the pandemic lows, but it may be smaller than federal analysts previously thought.

Driving the news: The latest Energy Information Administration estimates show U.S. production rising 9% this year, down from their prior guess of 12%.

The big picture: The long-term trend for coal, once the largest U.S. power source, is still downward.

  • But as I noted here, expected increases in coal and oil output in 2021 and 2022 illustrate an irony. President Biden, who has vowed aggressive steps on climate change, is initially likely to preside over an increase in coal and oil production.
  • Sources that took the biggest pandemic hits return to some degree. Market forces — namely projections of natural gas prices — are at play in coal's mini-rebound, per EIA. 

By the numbers: EIA sees annual U.S. coal production rising this year to 589 million short tons, and ticking up slightly again in 2022.

Its share of power generation is projected to rise from 20% last year to 22% in 2022. But it provided well over half of U.S. power earlier this century.

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6. Catch up fast: Venture capital, EVs, renewables

Hydrogen: The California startup C-Zero has raised $11.5 million in Series A funding from backers including Bill Gates' Breakthrough Energy Ventures and the VC arm of Italian oil heavyweight Eni. TechCrunch has more.

Cars: "Audi has announced the E-Tron GT, an expensive new high-performance electric sedan built on technology developed for Porsche's first EV, the Taycan." (The Verge)

Money: "Macquarie, the world's largest infrastructure investor, has raised 1.6 billion euros ($1.93 billion) for its second global renewables fund, driven by strong demand from institutional investors in Britain and Germany." (Reuters)

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A message from the National Mining Association

U.S. supply chain security depends on mining
 
 

COVID-19 revealed the dangers of a heavily import-dependent supply chain.

The U.S. imports minerals that are abundant here at home and do so at 2x the rate we did 20 years ago. By supporting domestic mining projects, we can protect our industries from supply chain exposure.

Learn more.

 
 

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