Transition Finance Weekly - October 24, 2024
Investors Dump Fossil Fuels; New NYC Investment Rules; Lobbyists Prep for Trump
1. Investors Say Time’s Running Out for Fossil Fuels
Anti-ESG attacks aren’t working; 79% of U.S. investors say fossil fuels are “uncertain” and “unattractive” investments beyond the next 5 years.
A new study conducted by FT Longitude and published by the Climate Opinion Research Exchange (CORE) shows institutional investors are increasingly bullish on renewables and risk adverse to fossil fuels.
Wariness is even more pronounced for investors managing $50+ billion funds. 86% of such large institutional investors agree the fossil fuel sector is risky.
Even more investors said they’re ramping up renewables investments in the short term. Investor confidence in renewables has risen more steeply in the U.S. than elsewhere, with 87% of U.S. investors assessing renewables as prudent, up from 69% in just one year.
Sonia Kowal, Zevin Asset Management: “With rising commitments from governments and corporations to achieve net-zero emissions, renewable energy is poised to be the clear winner in the energy transition, and capital flows into renewable projects are set to accelerate.”
2. NYC Comptroller Proposes Additional Fossil Fuel Investing Restrictions
Investing in fossil fuel reserves is banned by existing policy; the proposal would expand the ban to cover pipelines, LNG terminals, and other infrastructure.
New York City Comptroller Brad Lander has proposed expanding the fossil fuel investment ban for $200 billion of the city’s $275 billion in pension assets. He would block future private investments in midstream and downstream fossil fuel infrastructure, not just in companies that own fossil fuel reserves.
Plan trustees have the final say, but the proposal’s chances are good: the 2023 Net Zero Implementation Plans they endorsed have already generated $11 billion in renewables investments toward a 2035 target of $50 billion, and led to successful shareholder campaigns to enhance big bank disclosures and reduce utility emissions.
Brad Lander, NYC Comptroller: “Climate risk is financial risk, and we have a fiduciary duty to our beneficiaries to take that risk seriously as we make long-term investment decisions.”
3. Dominion’s New Long Term Plan Leans on Gas, Backtracks on Commitments
Yet again, “data centers” are the excuse for climate backsliding by a major utility.
Dominion Energy, Virginia’s monopoly utility, has released its new 15-year Integrated Resource Plan (IRP). Dominion says the plan depicts an “all of the above” energy plan with 3.5 GW of new offshore wind, 12 GW of new solar, and 4.5GW of new battery storage—and 6GW of new polluting gas.
These investments chart less progress toward the requirements of Virginia’s 2020 Clean Economy Act (VCEA). The VCEA requires 100% carbon-free energy by 2050, a target that would preclude any conventional gas generation.
What’s changed? New demand driven by data center growth. Currently, there are no requirements for data centers to ensure that their needs are met with clean energy in alignment with the VCEA.
Also on the line, ratepayer protections: Dominion’s IRP projects staggering costs to Virginia ratepayers. A typical family could see their bill skyrocket from $142.77 to $214.24 per month. Dominion’s IRP spotlights an important issue for regulators and legislators around the country as ratepayers are increasingly on the hook to pay for utility upgrades that serve industrial customers.
4. Oil and Gas Lobbyists Are Giddy at the Prospect of Trump 2.0
Newly uncovered docs show the industry prepared a detailed roadmap for Trump to kill landmark climate rules and quash Biden executive orders.
Researchers at Fieldnotes obtained documents from Trump-aligned oil and gas lobbying group AXPC that outline how the industry plans to roll back climate mitigation and environmental protection regulations under a second Trump administration.
The methane emission rule, Paris Agreement participation, evidence-based decision making — it’s all on the chopping block, according to the AXPC roadmap, which is so extreme that even ExxonMobil felt the need to publicly clarify that, actually, they support methane regulation.
This comes after a spring Mar-a-Lago dinner where Trump asked industry execs for $1 billion in exchange for a promise to kill the energy transition.
David Doniger of the NRDC Action Fund: Trump “promised to grant their wishes … [a]nd this is their wish list.”
5. Oklahoma’s Treasurer Sued Again About ESG Policies As State Legislators Review Controversial Law
Treasurer Todd Russ is accused of hiding communications with outside influence groups about “ESG.”
Treasurer Todd Russ and his chief of staff have been sued under the Open Records Act for concealing communications with outside influence groups about “anti-ESG” policies.
Also this week, legislators in the OK House Banking, Financial Services, and Pensions Committee reaffirmed their commitment to the state’s controversial anti-ESG law at a one-sided interim study hearing on October 23, Oklahoma Watch reports. Many witnesses at the hearing are connected to fossil fuel-funded groups. Also, interim study author Representative Mark Lepak is the ALEC Oklahoma state chair.
The hearing and lawsuit come after a federal judge blocked the state’s Energy Discrimination Elimination Act (EDEA) earlier this year. The controversial EDEA cost the state at least $185 million and blocked municipalities from completing infrastructure projects. There have already been several proposals to amend the law this year.
ASSESSMENTS SHOW THE CORPORATE ENERGY TRANSITION IS UNDERWAY
The latest Climate Action 100+ survey of disclosures shows that companies are increasingly taking climate change seriously and adapting their business models to accommodate risks and reduce emissions:
65% of the survey’s 168 “focus” companies have reduced emissions intensity, although few are yet on a pathway toward a 1.5 degree target.
90% of all companies assessed say their boards are involved in setting climate risk mitigation policy.
Most companies are partially aligned with Paris Agreement commitments.
Room for improvement: power companies aren’t aligning their coal capacity with their stated emissions reduction goals.