Last week New York Times published Trump’s ‘Energy Dominance’ Doctrine Is Undermined by Climate Change.  (H/T Matthew Kahn) Excerpts below in italics with my bolds

“Climate change disrupts everything, including Trump’s agenda,” said Alice Hill, a research fellow at the conservative Hoover Institution think tank who served as senior director for resilience policy on the National Security Council under President Barack Obama.

When it comes to fossil fuel production, the disruptions are particularly serious. And there’s a fundamental irony at play. Even as emissions from the burning of fossil fuels are warming the planet, the consequences of that warming will make it harder to drill for oil, mine for coal and deliver fuel through pipelines.

Energy systems in the Southeast are particularly vulnerable, the report said, with some 200 power plants and oil refineries exposed to flooding from hurricanes and fiercer storm surges. Scientists estimate, if sea levels rise nationally 3.3 feet (a figure it describes as on the “high end of the very likely range” for what the country could see by 2100), it could expose dozens of power plants currently considered to be in safe zones to risks of 100-year floods. That would jeopardize about 25 gigawatts of operating power capacity, or power for about 18 million homes.

Along the Gulf Coast — home to a significant proportion of the United States oil production and refining industry — energy infrastructure faces a similar and more immediate risk. A sea level rise of less than 1.6 feet could double the number of refineries in Texas and Louisiana vulnerable to flooding by the end of the century.

Yet energy analysts cautioned against expectations that the effects of climate change will cause irreparable harm to the fossil fuel industry or make oil, gas and coal production fundamentally unattractive to investors. Sarah Ladislaw, an energy analyst at the Center for Strategic and International Studies, noted that the oil and gas sector has a long history of managing risks, including figuring out how to operate in politically unstable countries and prodding governments to loosen regulations they find too burdensome.

Climate change will add “headwinds” to fossil fuel companies, make production more costly in some areas and less competitive in others, Ms. Ladislaw said. But, she added, “If you’re waiting for climate impacts to be the end of the oil and gas industry, that’s not going to happen.”

Despite the US now leading the world in fossil fuel production, warmists dream of  bringing down the oil majors.  The scenario is expressed in all its glory in the legal documents produced  in recent years, in support of shareholder proposals meant to financially weaken Exxon, Shell, BP, etc.  But Ms. Ladislaw is correct,  too many unlikely things have to happen for this dream to come true.

Now let’s unbundle the chain of suppositions that comprise this scenario.

• Supposition 1: A 2C global warming target is internationally agreed.
• Supposition 2: Carbon Restrictions are enacted by governments to comply with the target.
• Supposition 3: Demand for oil and gas products is reduced due to restrictions
• Supposition 4: Oil and gas assets become uneconomic for lack of demand.
• Supposition 5: Company net worth declines by depressed assets and investors lose value.

1.Suppose an International Agreement to limit global warming to 2C.

From the supporting statement to the Exxon shareholder proposal, attorney Sanford Lewis provides these assertions:

Recognizing the severe and pervasive economic and societal risks associated with a warming climate, global governments have agreed that increases in global temperature should be held below 2 degrees Celsius from pre-industrial levels (Cancun Agreement).

Failing to meet the 2 degree goal means, according to scientists, that the world will face massive coastal flooding, increasingly severe weather events, and deepening climate disruption. It will impose billions of dollars in damage on the global economy, and generate an increasing number of climate refugees worldwide.

Climate change and the risks it is generating for companies have become major concerns for investors. These concerns have been magnified by the 21st Session of the Conference of the Parties (COP 21) in Paris, where 195 global governments agreed to restrict greenhouse gas (GHG) emissions to no more than 2 degrees Celsius from pre-industrial levels and submitted plans to begin achieving the necessary GHG emission reductions. In the agreement, signatories also acknowledged the need to strive to keep global warming to 1.5 degrees, recognizing current and projected harms to low lying islands.

Yet a careful reading of UN agreements shows commitment is exaggerated:
David Campbell (here):

Neither 2°C nor any other specific target has ever been agreed at the UN climate change negotiations.

Article 2 of the Paris Agreement in fact provides only that it ‘aims to strengthen the global response to the threat of climate change … including by the holding the increase to well below 2°C’. This is an expression, not of setting a concrete limit, but merely of an aspiration to set such a limit. It is true that Article 2 is expressed in a deplorably equivocatory and convoluted language which fails to convey this vital point, indeed it obscures it. But nevertheless that is what Article 2 means.

Dieter Helm (here):

Nothing of substance has been achieved in the last quarter of a century despite all the efforts and political capital that has been applied. The Paris Agreement follows on from Kyoto. The pledges – in the unlikely event they are met – will not meet the 2C target, shipping and aviation are excluded, and the key developing countries (China and India) are not committed to capping their emission for at least another decade and a half (or longer in India’s case)

None of the pledges is, in any event, legally binding. For this reason, the Paris Agreement can be regarded as the point at which the UN negotiating approach turned effectively away from a top down approach, and instead started to rely on a more country driven and hence bottom up one.

Paul Spedding:

The international community is unlikely to agree any time soon on a global mechanism for putting a price on carbon emissions.

2: Suppose Governments enact restrictions that limit use of fossil fuels.

Despite the wishful thinking in the first supposition, the activists proceed on the basis of aspirations and reporting accountability. Sanford Lewis:

Although the reduction goals are not set forth in an enforceable agreement, the parties put mechanisms in place for transparent reporting by countries and a ratcheting mechanism every five years to create accountability for achieving these goals. U.N. Secretary General Ban Ki-moon summarized the Paris Agreement as follows: “The once Unthinkable [global action on climate change] has become the Unstoppable.”

Now we come to an interesting bait and switch. Since Cancun, IPCC is asserting that global warming is capped at 2C by keeping CO2 concentration below 450 ppm. From Summary for Policymakers (SPM) AR5

Emissions scenarios leading to CO2-equivalent concentrations in 2100 of about 450 ppm or lower are likely to maintain warming below 2°C over the 21st century relative to pre-industrial levels. These scenarios are characterized by 40 to 70% global anthropogenic GHG emissions reductions by 2050 compared to 2010, and emissions levels near zero or below in 2100.

Thus is born the “450 Scenario” by which governments can be focused upon reducing emissions without any reference to temperature measurements, which are troublesome and inconvenient.

Sanford Lewis:

Within the international expert community, “2 degree” is generally used as shorthand for a low carbon scenario under which CO2 concentrations in the earth’s atmosphere are stabilized at a level of 450 parts per million (ppm) or lower, representing approximately an 80% reduction in greenhouse gas emissions from current levels, which according to certain computer simulations would be likely to limit warming to 2 degrees Celsius above pre-industrial levels and is considered by some to reduce the likelihood of significant adverse impacts based on analyses of historical climate variability. Company Letter, page 4.

Clever as it is to substitute a 450 ppm target for 2C, the mathematics are daunting. Joe Romm:

We’re at 30 billion tons of carbon dioxide emissions a year — rising 3.3% per year — and we have to average below 18 billion tons a year for the entire century if we’re going to stabilize at 450 ppm. We need to peak around 2015 to 2020 at the latest, then drop at least 60% by 2050 to 15 billion tons (4 billion tons of carbon), and then go to near zero net carbon emissions by 2100.

Note:  In  the run up to COP24 in Katowice, IPCC stalwarts increased the ambition to 1.5C of additional warming, which translates to 430 ppm.  Presently Mauna Loa reports 407 and rising.

And the presumed climate sensitivity to CO2 is hypothetical and unsupported by observations:

3.Suppose that demand for oil and gas products is reduced by the high costs imposed on such fuels.

Sanford Lewis:

ExxonMobil recognized in its 2014 10-K that “a number of countries have adopted, or are considering adoption of, regulatory frameworks to reduce greenhouse gas emissions,” and that such policies, regulations, and actions could make its “products more expensive, lengthen project implementation timelines and reduce demand for hydrocarbons,” but ExxonMobil has not presented any analysis of how its portfolio performs under a 2 degree scenario.

Moreover, the Company’s current use of a carbon proxy price, which it asserts as its means of calculating climate policy impacts, merely amplifies and reflects its optimistic assessments of national and global climate policies. The Company Letter notes that ExxonMobil is setting an internal price as high as $80 per ton; in contrast, the 2014 Report notes a carbon price of $1000 per ton to achieve the 450 ppm (2 degree scenario) and the Company reportedly stated during the recent Paris climate talks that a 1.5 degree scenario would require a carbon price as high as $2000 per ton within the next hundred years.

Peter Trelenberg, manager of environmental policy and planning at Exxon Mobil reportedly told the Houston Chronicle editorial board: Trimming carbon emissions to the point that average temperatures would rise roughly 1.6 degrees Celsius – enabling the planet to avoid dangerous symptoms of carbon pollution – would bring costs up to $2,000 a ton of CO2. That translates to a $20 a gallon boost to pump prices by the end of this century… .

Even those who think emissions should be capped somehow see through the wishful thinking in these numbers. Dieter Helm:

The combination of the shale revolution and the ending of the commodity super cycle probably point to a period of low prices for sometime to come. This is unfortunate timing for current decarbonisation policies, many of which are predicated on precisely the opposite happening – high and rising prices, rendering current renewables economic. Low oil prices, cheap coal, and falling gas prices, and their impacts on driving down wholesale electricity prices, are the new baseline against which to consider policy interventions.

With existing technologies, it is a matter of political will, and the ability to bring the main polluters on board, as to whether the envelope will be breached. There are good reasons to doubt that any top down agreement will work sufficiently well to achieve it.

The end of fossil fuels is not about to happen anytime soon, and will not be caused by running out of any of them. There is more than enough to fry the planet several times over, and technological progress in the extraction of fossil fuels has recently been at least as fast as for renewables. We live in an age of fossil fuel abundance.

We also live in a world where fossil fuel prices have fallen, and where the common assumption that prices will bounce back, and that the cycle of fossil fuel prices will not only reassert itself but also continue on a rising trend, may be seriously misguided. It is plausible to at least argue that the oil price may never regain its peaks in 1979 and 2008 again.

A world with stable or falling fossil fuel prices turns the policy assumptions of the last decade or so on their heads. Instead of assuming that rising prices would ease the transition to low carbon alternatives, many of the existing technologies will probably need permanent subsidies. Once the full system costs are incorporated, current generation wind (especially offshore) and current generation solar may be out of the market except in special locations for the foreseeable future. In any event, neither can do much to address the sheer scale of global emissions.

4.Suppose oil and gas reserves are stranded for lack of demand.

Sanford Lewis:

Achievement of even a 2 degree goal requires net zero global emissions to be attained by 2100. Achieving net zero emissions this century means that the vast majority of fossil fuel reserves cannot be burned. As noted by Mark Carney, the President of the Bank of England, the carbon budget associated with meeting the 2 degree goal will “render the vast majority of reserves ‘stranded’ – oil, gas, and coal that will be literally unburnable without expensive carbon capture technology, which itself alters fossil fuel economics.”

A concern expressed by some of our stakeholders is whether such a “low carbon scenario” could impact ExxonMobil’s reserves and operations – i.e., whether this would result in unburnable proved reserves of oil and natural gas.

Decisions to abandon reserves are not as simple or have the effects as desired by activists.

Financial Post (here):

The 450 Scenario is not the IEA’s central scenario. At this point, government policies to limit GHG emissions are not stringent enough to stimulate this level of change. However, for discussion purposes let’s use the IEA’s 450 Scenario to examine the question of stranded assets in crude oil investing. Would some oil reserves be “stranded” under the IEA’s scenario of demand reversal?

A considerable amount of new oil projects must be developed to offset the almost 80 per cent loss in legacy production by 2040. This continued need for new oil projects for the next few decades and beyond means that the majority of the value of oil reserves on the books of public companies must be realized, and will not be “stranded”.

While most of these reserves will be developed, could any portion be stranded in this scenario? The answer is surely “yes.” In any industry a subset of the inventory that is comprised of inferior products will be susceptible to being marginalized when there is declining demand for goods. In a 450 ppm world, inferior products in the oil business will be defined by higher cost and higher carbon intensity.

5.Suppose shareholders fear declining company net worth.

Now we come to the underlying rationale for this initiative.

Paul Spedding:

Commodity markets have repeatedly proved vulnerable to expectations that prices will fall. Given the political pressure to mitigate the impact of climate change, smart investors will be watching closely for indications of policies that will lead to a drop in demand and the possibility that their assets will become financially stranded.

Equity markets are famously irrational, and if energy company shareholders can be spooked into selling off, a death spiral can be instigated. So far though, investors are smarter than they are given credit.

Bloomberg:

Fossil-fuel divestment has been a popular issue in recent years among college students, who have protested at campuses around the country. Yet even with the movement spreading to more than 1,000 campuses, only a few dozen schools have placed some restrictions on their commitments to the energy sector. Cornell University, Massachusetts Institute of Technology and Harvard University are among the largest endowments to reject demands to divest.

Stanford Board of Trustees even said:

As trustees, we are convinced that the global community must develop effective alternatives to fossil fuels at sufficient scale, so that fossil fuels will not continue to be extracted and used at the present rate. Stanford is deeply engaged in finding alternatives through its research. However, despite the progress being made, at the present moment oil and gas remain integral components of the global economy, essential to the daily lives of billions of people in both developed and emerging economies. Moreover, some oil and gas companies are themselves working to advance alternative energy sources and develop other solutions to climate change. The complexity of this picture does not allow us to conclude that the conditions for divestment outlined in the Statement on Investment Responsibility have been met.

Update:  Universities are not the exception in finding the alarmist case unconvincing, according to a survey:

Almost half of the world’s top 500 investors are failing to act on climate change — an increase of 6 percent from 236 in 2014, according to a report Monday by the Asset Owners Disclosure Project, which surveys global companies on their climate change risk and management.

The Abu Dhabi Investment Authority, Japan Post Insurance Co Ltd., Kuwait Investment Authority and China’s SAFE Investment Company, are the four biggest funds that scored zero in the survey. The 246 “laggards” identified as not acting hold $14 trillion in assets, the report said.

Summary

Alarmists have failed to achieve their goals through political persuasion and elections. So they are turning to legal and financial tactics. Their wishful thinking appears as an improbable chain of events built upon a Paris agreement without substance.

Last word to David Campbell:

International policy has so far been based on the premise that mitigation is the wisest course, but it is time for those committed to environmental intervention to abandon the idea of mitigation in favour of adaptation to climate change’s effects.

For more on adapting vs. mitigating, see Adapting Works, Mitigating Fails

 

How climate finance ‘flows’ around the world is an informative article from CarbonBrief.  Excerpts below in italics followed by a comment from Bjorn Lomborg.

Climate finance is one of the bedrocks of negotiations at the United Nations Framework Convention on Climate Change (UNFCCC), including the “COP24” talks taking place this month in Katowice, Poland.

“Climate finance” refers to money – both from public and private sources – which is used to help reduce emissions and increase resilience against the negative impacts of climate change.

Rich countries have promised they will provide $100bn a year in climate finance to poorer nations by 2020. The UNFCCC’s recent biennial assessment found this sum had reached $75bn in 2016, a step forward compared to the $65bn given in 2015.

The OECD, a Paris-based intergovernmental economic organisation, asks its 36 member countries to report on their foreign aid, including climate finance. The data captures climate finance that is both bilateral (country to country) and multilateral (via international institutions) It also gives detailed information about funded projects. (The OECD calls this database “climate-related development finance” rather than strictly climate finance).

Key takeaways

• Donor governments gave climate finance totalling $34bn in 2015 and $37bn in 2016, according to OECD estimates (note that this is not a full estimate of money counting towards the $100bn pledge – see below for more).
• Japan was the largest donor, giving $10.3bn per year (bn/yr) on average over the two years. It was followed, in order, by Germany, France, the UK and the US.
• India was the largest recipient on average, receiving $2.6bn/yr. It was followed, in order, by Bangladesh, Vietnam, the Philippines and Thailand
• The single largest “country-to-country” flow was an average yearly $1.6bn from Japan to India.
• The US was the top contributor to the multilateral Green Climate Fund (GCF) in 2016. (However, the US has now ended its support for the GCF).
• Around $16bn/yr went to mitigation-only projects, compared to $9bn for adaptation-only projects.
  Around 42% of the finance consisted of “debt instruments”, such as loans.

Implications

It is important to note that the OECD database does not claim to capture all climate finance counting towards the $100bn. The totals of the data given here add up to $37bn, well below the $47bn the OECD recently estimated in a separate, top-down overview of public climate finance from developed to developing countries in 2016. The OECD also put public climate finance at $55bn in 2017. However, no project-level database for 2017 has been released yet.

The values represent money committed by governments or agencies on the basis of a firm written obligation and backed by available funds. Therefore, it does not represent pledges.

As the first chart above shows, not all climate finance goes straight from one country to another. Instead, a sizeable wedge goes via international institutions, such as multilateral climate funds and multilateral development banks (MDBs). The breakdown of the $5.1bn climate share of contributions to these bodies is shown in the second diagram above.

It shows, for example, that the Green Climate Fund (GCF), which was established with a mandate specifically to leverage climate finance towards the $100bn pledge, received an average $1.7bn per year in 2015 and 2016. Japan, the UK and the US contributed the most.

The Paris Agreement says that scaled-up financial resources “should aim to achieve a balance between adaptation and mitigation”. As is shown in the OECD data (and elsewhere) this is not close to being the case, with almost double the amount going to mitigation-only projects compared to adaptation-only ones.

Discussions on climate finance are currently ongoing at this year’s climate conference in Katowice, Poland, as part of the Paris “rulebook”. Sticking points include accounting rules and the extent to which developed countries should promise concrete sums of climate finance years ahead of time. Some countries are also pushing for talks to start on a new climate finance goal, due to begin in 2025.

One further complication is that all of the above numbers assess only public finance from developed to developing countries. This does not account for all of the money going towards tackling climate change, such as private finance, in-country spending or flows from one developing nation to another, such as support being offered by China. This is often referred to as “South-South” finance.

The UNFCCC biennial report gives an estimate that includes all of these flows and puts overall global climate finance at $680bn in 2015 and $681bn in 2016, a 17% increase on 2013-2014 levels. The growth was largely driven by high levels of new private investment in renewable energy, the report says.

Climate Money Could Be Better Spent

Bjorn Lomborg When it comes to climate change, let’s get our priorities straight

We must also bear in mind that global warming is not the planet’s only challenge. We often hear that it is the defining issue of our time, but it is no such thing. By the 2070s, the IPCC — the U.N. climate change panel — estimates that warming will cost between 0.2 and 2 percent of global GDP. This is certainly a problem, but not the end of world.

Speaking of climate change in catastrophic terms easily makes us ignore bigger problems, including malnutrition, tuberculosis, malaria and corruption. The World Health Organization estimates that climate change since the 1970s causes about 140,000 additional deaths each year, and toward the middle of the century will kill 250,000 people annually, mostly in poor countries. This pales in comparison with much deadlier environmental problems such as indoor air pollution, claiming 4.3 million lives annually, outdoor air pollution killing 3.7 million and lack of water and sanitation killing 760,000. Outside of environment, the problems are even bigger: Poverty arguably kills 18 million each year.

Every dollar spent on climate change could instead help save many more people from these more tractable problems. The current approach to subsidize solar and wind arguably saves one life across the century for every $4 million spent — the same expenditure on vaccinations could save 4,000 lives. Each person — and the next president — needs to decide his or her legacy.

Postscript: Financing for Climate Aid is a Fraction of the Full Cost of Climate Crisis Inc.

A fuller accounting of the climate crisis industry is more like 2,000,000,000,000 US$ per year (2 Trillion)
See Climate Crisis Inc. Update

 

As noted before, the left uses social pressure to force value-laden decisions onto other people. This has been going on for awhile regarding investment decisions by wealth managers, including huge pension funds. The politically correct (scientifically corrupt) bias is to divest of fossil fuel companies in hopes of ensuring a future climate favorable to humans. Now comes some push back from actuaries seeing this pressure as narrow and subversive of other important social concerns.

Chris Seekings writes in The Actuary (UK) Pensions and Lifetime Savings Association rejects climate change law for investment decisions Excerpts in italics below with my bolds.

The UK’s pension fund trade body has argued that new regulations governing how trustees invest £1.5trn in assets should exclude explicit reference to climate change.

The Pensions and Lifetime Savings Association (PLSA) said including climate change specifically in a new law could “confuse” trustees by unintentionally narrowing their focus.

This could cause them to disregard other environmental, social and governance (ESG) considerations that may be more relevant to their portfolios, such as resource depletion or human rights.

This is despite the PLSA reiterating its belief that climate change poses a substantial risk to the business models of firms in almost every sector, threatening the stability of the financial system.

“It is important that pension schemes consider risks related to climate change as part of their investment strategies, however, this is clearly not the only ESG factor to consider,” the PLSA said.

“We believe that picking out any one factor as a specific example may lead trustees to assume that is the only, or most important, factor to consider, when others might be more relevant.”

This comes in response to a consultation by the Department for Work and Pensions into new sustainability regulations for workplace pension funds, which closed on 16 July.

The PLSA also rejected proposals that would see trustees prepare a statement outlining how they take account of scheme members’ views, saying they were “neither practical nor purposeful”.

It argued that members should not be expected to be investment experts, and that trustees should invest in the best interest of members even if it “runs counter to strongly-held beliefs”.

Lawyers at ClientEarth, which co-produced a climate risk report with the PLSA in 2017, said rowing back on the “crucial” government proposals would be “hugely irresponsible”.

“Major financial institutions and world experts recognise climate risk as the most significant financial risk to the economy,” said ClientEarth finance lawyer, Alice Garton.

“Human rights abuses and resource depletion are crucial ESG issues, but what the PLSA seems to have overlooked, is that a changing climate underpins and intensifies these risks.”

ClientEarth exemplifies the alamist drive to reduce everything down to their one obsession with CO2.  It is good to see them confronted by other well-intentioned people who understand that important problems and concerns suffer from the extreme (and ineffectual) focus on fossil fuels.  Maybe some are listening to Bjorn Lomborg after all.

 

From Climate Home is this post today by Megan Darby 8 takeaways from the Green Climate Fund meltdown  Excerpts in italics below with my bolds and images.

The UN’s flagship climate finance initiative had a public setback this week. What went wrong, what are the political implications and what happens next?

The UN’s flagship climate finance initiative had a major setback this week, with the board failing to agree on any big ticket decisions.

Longstanding tensions at the Green Climate Fund came to a head in Songdo, South Korea, as it opened talks on raising a new round of contributions.

On top of that, the head of the secretariat abruptly resigned, adding top level recruitment to the fund’s woes.

As the dust settled, Climate Home News spoke to several participants and observers about what went wrong, the fallout and next steps. Here are eight takeaways.

1. Absent Oquist

The meeting got off to a bad start when the Nicaraguan co-chair failed to show up. Ok, so things were pretty bad back home, with anti-government protests turning violent.

But it was ironic, given Paul Oquist had done a major U-turn to get the job. He notoriously refused to endorse the Paris Agreement in 2015, saying it was too weak. Nicaragua only joined last year when it became apparent Oquist otherwise had no chance at leading the GCF board.

In his absence, developing country board members complained they had not been properly consulted on the agenda, kicking off a protracted procedural dispute.

2. Trump towers

After president Donald Trump made clear he had no plans to put any more money into the GCF, you may wonder why the US still has a seat on the board.

Trump sizes up the benefits were Paris Accord to actually succeed.

Well, the country has already handed over $1 billion and Geoffrey Okamoto is the Trump appointee charged with seeing it is spent wisely. But he can afford to be provocative, having no stake in the fund’s sustainability.

His insistence that the replenishment process should be “donor-driven” did not go down well, on a board deliberately structured to give the developing world an equal say. Nor did his lobbying to end talks on time, while others were trying to salvage some agreement.

3. Fundraising

If there was any doubt on where the talks got stuck, a glance at the video page should dispel it. There are no fewer than six sessions recorded on “matters related to replenishment”, spanning more than 24 hours.

At heart, it is a rich-poor fight of the kind familiar to anyone who follows UN climate negotiations. Donor countries try to attach conditions to funding, while beneficiaries demand they quit stalling and deliver.

In previous meetings, the board has tended to push through some headline outcomes – usually project approvals – at the last minute, while deferring contentious policy decisions. This time round, representatives from Canada and Finland as well as the US were not prepared to just muddle through.

4. Performance review

Before it can raise new money, the fund will need to show donors what it has done with the initial round of contributions. This and other preparatory work is expected to take six months or so.

“If there is one thing we need to decide this time, it is to start a review, because that is a precondition to replenishment processes,” said Germany’s Karsten Sach in the meeting.

The problem was in deciding who should carry out the review. Most saw it as the natural remit of the fund’s independent evaluator Jyotsna Puri, but a handful of developing countries wanted to outsource it. So here too, there was no agreement.

5. Bamsey bails

After a weary-looking chair admitted defeat on replenishment, he dropped a bombshell: the fund’s top executive Howard Bamsey resigned with immediate effect.

Nobody blamed Bamsey for the chaos, which was essentially political, or cast doubt on his explanation the move was for “pressing personal reasons”. The Songdo-based role had kept him away from his family in Australia. (He could not be reached for further comment.)

But the timing took some – including the secretariat’s communications team – by surprise. He had been expected to oversee the replenishment process before leaving. His replacement must take on the heavy lift of fundraising and resolving a backlog of governance issues, while navigating the heated boardroom politics.

6. Projects in limbo

The collapse means a three-month delay for 11 projects bidding for nearly $1 billion of GCF money. Solar panels in Tonga, water management in the Guatemalan highlands and climate finance upscaling across 17 countries are some of the interventions that will just have to wait.

“The people and communities the GCF is meant to support – those who are most vulnerable – are the ones who suffer the most when progress is delayed,” said Action Aid’s Brandon Wu.

It does nothing to help the fund’s reputation for being slow to get money moving. Then again, with a cash crunch looming, the fund cannot afford to make cavalier spending decisions.

7. Political fallout

It comes in a critical year for the UN climate process. Ministers are due to take stock of global action at the Cop24 negotiations in Katowice, Poland this December.

Climate finance is a key part of that. The industrialised world has promised to mobilise $100 billion a year by 2020. Many countries’ climate plans hinge on that support.

The GCF is not expected to deliver all that investment, but is a totem of international cooperation. If it breaks down, it bodes poorly for the Paris Agreement.

8. Optimism

Despite the public meltdown, everyone CHN contacted was hopeful of getting things back on track. There is time for the fund to redeem itself before Cop24, at the next board meeting in October. Behind the scenes, its advocates will knock some heads together in the coming months.

While finance people may be horrified at the inefficiency and game-playing, those coming from a climate negotiations background see the occasional political upset as par for the course.

“Anything about new money is always very thorny,” said Meena Raman of the Third World Network. “I don’t think we have given up on [the GCF] and I don’t think anyone should.”

Footnote:  The last takeaway is wishful thinking from Climate Home, who are desperately hopeful that Paris Accord and the Green Fund succeed, despite the obvious signs of collapse.  Staying hopeful is also a signal of virtue.

Politicians and media pundits like to say that Climate Change is the biggest threat to modern society. I am coming around to agree, but not in the way they are thinking. I mean there is fresh evidence that we can defeat radical Islam, but we are already losing to radical climatism.  I refer to climate alarm and activism, which has come to dominate the environmental movement and impose an agenda for social re-engineering.  And now we have fresh evidence that even capitalists are working to undermine the infrastructure supporting modern civilization.

As we approach the year 2020, we confront the spectacle of financiers raiding shareholder wealth in order to cripple the Energy Industry, seen as threatening the climate.  2020 used to indicate perfect eyesight, so that perceptions could be trusted.  This is the opposite:  People who should know better have drunk climatist koolaid and are now running the asylum.

Dan Eberhart exposes this latest twist in his Forbes article Corporate Resolutions On Social Issues Serve Activists, Not Shareholders  Excerpts in italics with my bolds.

America’s growing energy dominance is helping transform our economy and revitalize the forgotten parts of our nation.

Through innovation and free-market principles, America’s oil and natural gas sector have moved us from an age of scarcity to a future of abundance. As a nation, we are once again the world’s biggest producer, with all of the economic, trade and national security benefits that portends.

But there is a move afoot by wealthy investment firms and environmental activists to undermine that success and turn back to a time of scarcity by making climate change an issue in the boardrooms of energy producers big and small. Under the guise of socially responsible investing or ESG – environmental, social and governance – they are attempting to “decarbonize” our economy one corporation at a time.

America’s success in the energy sector is directly attributable to the strength of our economic freedom and competitive markets – just look at Venezuela, Angola, Mexico, Iran, Libya or Russia for the grim alternative.

The numbers are astounding. Domestic oil production reached 10.9 million barrels a day this month and is expected to continue its ascent to record-setting levels well into next year, according to the U.S. Energy Information Administration (EIA). By 2019, surging domestic production is expected to drive down our use of imported oil to the lowest level since 1959.

The use of hydraulic fracturing to squeeze ever more oil and gas from tight shale rock is a key driver of the energy boom. Production from America’s seven major shale formations is forecast to hit 7.2 million barrels a day by the end of this month, according to EIA.

It’s the communities in and around these formations – located almost exclusively in what are often derided as “fly-over states”– that are seeing the everyday benefits of jobs, rising wages and increasing confidence in the economy. The resurrection of the energy sector is turning small towns once on the verge of becoming ghost towns into bustling centers of activity.

There’s no guarantee the good times will continue, though, especially if companies stop searching for new supplies of oil and gas. For those who subscribe to the ideas of socially responsible investing, the end of energy dominance can’t come soon enough.

Proxy advisory firms Glass Lewis, ISS and others are increasingly advising their large shareholder clients to turn America’s boardrooms into a battleground over climate change. In the process, they are undermining the financial stability of traditional energy companies by attempting to force directors to invest in renewable energy instead of fossil fuels.

Shareholders are, of course, within their rights to propose resolutions and pursue changes to the way corporations are governed. But, increasingly, the aim of these resolutions has shifted from securing better returns to achieving political change when our political leaders have disagreed with the direction these activists wish to go.

From the perspective of corporate leaders, this new frontier of so-called social responsibility looks more like the age of proxy pirates, who unfurl the Jolly Roger and swing aboard the boardroom deck intent on striking fear in the hearts of the captains of industry.

These attacks on corporate governance and fiduciary responsibility were once rare but are growing in frequency. In the early 2000s during the era of “peak oil” – when many believed our oil supplies were running out on their own – less than 200 shareholder proposals each year focused on environmental or social factors, according to Proxy Preview.

Over the past decade, the number of shareholder proposals motivated purely by political aims has increased in lockstep with our growing energy security. And the trend is growing. According to the Institutional Shareholder Services, more than two-thirds of the proposals filed this year were related to social or environmental pet causes.

The rising prevalence of climate-risk resolutions threatens to destabilize America’s energy sector, reversing the benefits of energy dominance and forcing change regardless of the economic and security costs to society.

Oil and gas projects take years, sometimes decades, to develop. If companies don’t invest today, consumers may find themselves paying more for imported energy.

The efforts of investment firms like BlackRock, Vanguard and State Street are distorting the market and scaring off investment that will, if allowed to continue unanswered, result in future supply shortages and higher prices for consumers.

Dan Eberhart Bio
I am CEO of Canary, one of the largest privately-owned oilfield services companies in the United States. I’ve served as a consultant to the energy industry in North America, Asia and Africa. My commentaries have been published in The Hill, Real Clear Energy, and the Economist. I have appeared on Fox News, CNN and CNBC. I am the author of The Switch. I was honored to be named to Hart Energy’s “30 Under 40” list and to be included on several U.S. trade missions to sub-Saharan Africa. I have undergraduate degrees in economics and political science from Vanderbilt University and a law degree from Tulane Law School. A Georgia-native, I currently live in Phoenix, Arizona, with my wife and daughter.

Comment:  I am all for Corporate Responsibility, which used to mean doing due diligence to get the facts and act accordingly as a reasonable good citizen.  Instead, people are falling prey to ideologues and investors are being steered toward con artists.  Behind all of this are the Climatists, true believers in the unproven notion that humans control the climate and not in a good way.

The Climatist Game Plan (From Previous post Climatist Manifesto)

Mission: Deindustrialize Civilization

Goal: Drive industrial corporations into Bankruptcy

Strategy: Cut off the Supply of Cheap, Reliable Energy

Tactics:

• Raise the price of fossil fuels
• Force the power grid to use expensive, unreliable renewables
• Demonize Nuclear energy
• Spread fear of extraction technologies such as fracking
• Increase regulatory costs on energy production
• Scare investors away from carbon energy companies
• Stop pipelines because they are too safe and efficient
• Force all companies to account for carbon usage and risk

Progress:

• UK steel plants closing their doors.
• UK coal production scheduled to cease this year.
• US coal giant Peabody close to shutting down.
• Smaller US oil companies going bankrupt in record numbers.
• Etc.

Collateral Damage:

• 27,000 extra deaths in UK from energy poverty.
• Resource companies in Canada cut 17,000 jobs in a single month.
• Etc.

For more info on progress see: http://business.financialpost.com/fp-comment/terence-corcoran-clean-green-and-catastrophic

Summary:

Radical climatism is playing the endgame while others are sleeping, or discussing the holes in the science. Truly, the debate is over (not ever having happened) now that all nations have signed up to the Paris COP doctrine. Political leaders are willing, even enthusiastic dupes, while climatist tactics erode the foundations of industrial society.  Deaths and unemployment are unavoidable, but then activists think the planet already has too many people anyway.

ISIS was an immediate threat, but there is a deeper and present danger already doing damage to the underpinnings of Life As We Know It. It is the belief in Climate Change and the activists executing their game plan.  Make no mistake: they are well-funded, well-organized and mean business.  And the recent behavior of valve-turners, acting illegally to shut off supplies of fossil fuel energy, shows they are willing to go very far to impose their will upon the rest of us.

 

 

Shell Shareholders Vote 94% Against Climate Target-Setting Resolution

On May 22, 2018 one of the first skirmishes went badly for climatists, though journals like the Guardian gave no such impression:
Shell investors revolt over pay and maintain pressure over climate change; Oil firm grilled over carbon emissions, but defeats motion calling for tougher targets.

The resolution (“2DS”) represents a new front in attempts to constrain oil majors since it seeks authority to set operational goals in reference to the Paris accord, normally the discretion of management. BTW this type of resolution requires 75% approval, and only got 6%.

Proxy advisors exercise great influence in these fights and are coming under increasing scrutiny and criticism for promoting causes against the financial interests of shareholders. In this case some may be taking notice that virtue signaling is not free of consequences. Independent European proxy advisory group ECGS recommended investors back the climate resolution, but major advisers Glass Lewis and ISS opposed it. The results show no major institutional investor (including Norwegian wealth fund) gave support.

The background and context for shareholder climate activism comes from Harvard Law School forum on Corporate Governance 2018 Proxy Season Preview  Excerpts with my bolds.

2017 was breakout year for climate change campaigns with three landmark majority votes asking Exxon Mobil, Occidental Petroleum, and PPL to report on how they plan to adjust their business models in line with the Paris Accord’s goal of limiting global warming to 2° Celsius (“2° scenario” or “2DS”).

The results reflect a sea change in the attitude and voting practices of several major asset managers—BlackRock, Vanguard Group and Fidelity Management & Research—which for the first time supported some of the climate change resolutions last year. Of the three, Fidelity made the greatest shift in its voting, backing every one of the 2DS resolutions it voted on, while BlackRock and Vanguard only endorsed the two at Exxon and Occidental.

Other institutional investors could follow suit, particularly as a result of pressure from their own shareholders and clients. Last year, Walden Asset Management withdrew proposals at BlackRock, Vanguard, and JPMorgan Chase after the firms agreed to review inconsistencies between their proxy voting records and their public stance on climate change. Walden and other filers have similar resolutions pending this year at Bank of New York Mellon and Cohen & Steers and withdrew a third at T. Rowe Price Group. Franklin Resources, which has received proxy voting review resolutions every year since 2014, wasn’t retargeted in 2018 because it improved its approach by voting for 24% of climate risk proposals in 2017, compared to 10% in 2016.

The proxy advisors have also amended their voting policies for 2018 to reflect their general support of resolutions to disclose climate-related risks. ISS’s policy now extends to proposals on how the company identifies, measures and manages such risks, in keeping with the recommendations of the TFCD, while Glass Lewis will largely back requests for climate change scenario analyses at companies in extractive or energy-intensive industries.

All of this has galvanized shareholder activists, who have filed a new round of 2DS proposals for 2018 with the expectation of generating a higher number of favorable votes or encouraging pro-action by companies. In addition to last year’s three majority vote companies, Duke Energy and Marathon Petroleum have produced or committed to producing climate impact reports, even though 2017 proposals received less than majority support. Several utilities targeted in 2018—CMS Energy, DTE Energy and WEC Energy Group—have also agreed to publish climate assessments.

Even so, not all company responses have satisfied investors. Exxon’s newly released report has already drawn criticism from proponents for concluding that aggressive climate policies pose little risk to its reserves because the demand for fossil fuels will remain strong for decades. Individual investor Steven Milloy went a step further by characterizing these reporting exercises as mere “greenwashing”  to improve companies’ public image. In a proposal at Exxon that was later withdrawn, he asserted that many voluntary activities and expenditures touted as protecting the climate are a waste of corporate assets that fail to yield any meaningful benefits to shareholders, public health, or the environment. As a case in point, two years after BP and Royal Dutch Shell shareholders overwhelmingly passed 2DS resolutions, the companies still disclose only minimal information on how they are mitigating climate risks, and they have yet to set greenhouse gas (GHG) reduction targets or markedly improved their investments in low-carbon technology.

Although 2DS will be the most-watched environmental category this year, other climate-related resolutions could generate significant support. As You Sow and Miller/Howard Investments have filed resolutions at nine oil and gas producers to report on their efforts to monitor and minimize methane leakage. Prior support on these proposals has been strong, averaging 31.7% in 2017, including two resolutions that received votes in the 40% range.

Aside from energy firms, proponents are targeting a broad range of industries with resolutions to set goals to reduce GHG emissions or increase renewable energy sourcing. In the past, these measures have averaged support in the 20% range, though several this year have already yielded commitments from AES, American Electric Power, and Western Union. A proposal variation favored by Jantz Management and Amalgamated Bank—to assess the feasibility of achieving net-zero GHG emissions by a specific date—continues to be excludable as ordinary business.

Resources:

Fund Managers Should Focus on Returns, Not Political Ideals RealClearMarkets

This trend, while relatively new, is alarming and it differs significantly from traditional activism. While traditional activist shareholders used the proxy proposal process to advance views that differed from management on what was best for the company, they never did anything that would undermine the reason for their investment, which was to maximize shareholder value. In contrast, the new wave of shareholder activists, have a fundamentally different goal; to exploit the proxy proposal process to drive wider societal change.

Pensioners Pay for Climate Activism

We all care about the environment and our own social causes, but an increased focus on issues that have no concrete connection to value has proven costly for the retirees who rely on their pension fund for their livelihood and the taxpayers that backfill their underperformance.

Now the nation’s largest passive-investment fund is moving toward implementing the same types of policies as the pension funds that happen to provide it billions of dollars in business each year, and millions of everyday investors could be affected. Anyone with an investment account should take note.

Climate Shell Game

Shell Resolution:  Shareholders support Shell to take leadership in the energy transition to a net-zero-emission energy system. Therefore, shareholders request Shell to set and publish targets for reducing greenhouse gas (GHG) emissions that are aligned with the goal of the Paris Climate Agreement to limit global warming to well below 2°C.

This shareholder resolution is intended to express shareholder support for a course towards a net-zero-emission energy system. The why of a course towards a net-zero-emission energy system is clear: increasing costs of the extraction of fossil fuels, decreasing costs of generating renewable energy, and the global political pledge to stop global warming. The how and the what are up to the management of Shell. It is up to them to set GHG emission reduction targets and to develop activities to attain these targets.

We the shareholders request that the company publish company-wide greenhouse gas (GHG) emission reduction targets according to the following 3 scopes:

Scope 1: direct emissions from the facilities under Shell’s operational control or the equity boundary,
Scope 2: indirect emissions from the facilities of others that provide electricity or heat and steam to Shell’s operations,
Scope 3: emissions that Shell estimates come from the use of Shell’s refinery products and natural gas products.

How Climate Law Relies on Paris

On the same day POTUS announced US withdrawal from Paris accord, a majority of Exxon Mobil shareholders approved a resolution asking management to assess the value of corporate assets considering a global move toward a low-carbon future. Here is the resolution, filed by the New York State Comptroller:

RESOLVED: Shareholders request that, beginning in 2018, ExxonMobil publish an annual assessment of the long-term portfolio impacts of technological advances and global climate change policies, at reasonable cost and omitting proprietary information. The assessment can be incorporated into existing reporting and should analyze the impacts on ExxonMobil’s oil and gas reserves and resources under a scenario in which reduction in demand results from carbon restrictions and related rules or commitments adopted by governments consistent with the globally agreed upon 2 degree target. This reporting should assess the resilience of the company’s full portfolio of reserves and resources through 2040 and beyond, and address the financial risks associated with such a scenario.

The Perpetrators: Huge Fund Managers like BlackRock and Vanguard apply Proxy Power against companies in their portfolios.

Reports such as these have been appearing in the media:

BlackRock Wields Its $6 Trillion Club to Combat Climate Risks

Big investors press major companies to step up climate action

‘Money talks’: A $1.2 trillion fund manager is about to pull investment from companies that won’t act on climate change

BlackRock’s Message: Contribute to Society, or Risk Losing Our Support

The irresponsible behavior by these perps is explained by Tim Doyle at Crain’s newsletter: BlackRock mustn’t mimic underperforming NYC pension funds. Excerpts below with my bolds

Financial firms and fund managers must focus on returns, not political and social causes

Earlier this year, BlackRock CEO Larry Fink released his annual letter to CEOs, in which he called for a greater focus on “societal impacts” by the companies in which BlackRock invests. The lengthy letter went into considerable detail to explain the firm’s position, but failed to specify how this initiative will be carried out and what it means for the millions of hardworking Americans investing in BlackRock’s passive index funds.

But what is really behind this call to action? And why are passive-fund managers becoming active?

BlackRock’s newfound focus comes at a time when pension funds—such as the New York City Employment Retirement Systems and California Public Employees Retirement System (CalPERS)—are taking an increasingly aggressive position toward investments that align with social and political agendas, with returns often taking a backseat.

In New York today, the city’s contribution to its pension funds were $9.3 billion in fiscal 2017, up from $1.4 billion in 2002. The city’s budget will soon allocate more spending on pension costs than on social services (excluding education), while the funds are estimated to be at least $65 billion in the red, with a weighted average funded ratio of only 62%, or 10% below the national average. These are alarming figures.

Ironically, as the pension system struggles to meet its obligations, city Comptroller Scott Stringer is ramping up the funds’ focus on matters that on their face have little to do with performance and much more to do with public relations, submitting 92 separate shareholder proposals to 88 different companies in fiscal year 2017, the majority focused on giving large passive funds and pensions special status to elect directors and on social and environmental issues.

Stringer even stated in his inaugural address that he wants to “remake the office of comptroller into a think tank for innovation and ideas” and recently came out in support of fossil-fuel divestment at the city’s pension funds—another politically motivated move that could cost taxpayers billions.

The same can be seen at the nation’s largest public pension fund. CalPERS has increased its environmental and social investing and activism while converting a $3 billion pension surplus in 2007 to a $138 billion deficit today. CalPERS leaders have also taken an increasingly active public role, using the fund’s environmental and social platform to push a larger agenda on the world stage, all while struggling to meet its obligations.

Despite poor returns, these funds carry a large influence on companies, like BlackRock, that manage trillions in pension fund money, pressuring them to also take an aggressive stance on these issues. CalPERS, for instance, has paid BlackRock millions of dollars in fees and is negotiating with the company over management of the fund’s $26 billion private-equity program. BlackRock also voted in support of a CalPERS-sponsored climate-related proposal for the first time in 2017.

These are no small matters for a company that manages roughly $6 trillion in assets, the large majority of which are passive investments meant to track an index for steady value creation, not to act as active managers to push political and societal agendas unrelated to returns.

Since BlackRock’s announcement, its CEO has made a number of public appearances but has yet to reassure those who have placed trust in his firm’s passive-investment vehicles. After all, passive investors are looking to make gains based on the market, not pick winners and losers based on the social and political influences of mismanaged pension funds. Instead, the firm’s inability to share concrete details about the path forward creates more confusion for investors, who are worried what this new focus on “social impact” will mean for their retirement funds.

We all care about the environment and our own social causes, but an increased focus on issues that have no concrete connection to value has proven costly for the retirees who rely on their pension fund for their livelihood and the taxpayers that backfill their underperformance.

Now the nation’s largest passive-investment fund is moving toward implementing the same types of policies as the pension funds that happen to provide it billions of dollars in business each year, and millions of everyday investors could be affected. Anyone with an investment account should take note.

Tim Doyle is vice president of policy and general counsel at the American Council for Capital Formation.