Just a few years ago, ESG was all the rage in the banking and investing community as globalist governments in the western world focused on a failing attempt to subsidize an energy transition into reality. The strategy was to try to strangle fossil fuel industries by denying them funding for major projects, with major ESG-focused institutional investors like BlackRock and State Street, and big banks like J.P. Morgan and Goldman Sachs leveraging their control of trillions of dollars in capital to lead the cause.
But a funny thing happened on the way to a green Nirvana: It turned out that the chosen rent-seeking industries — wind, solar and electric vehicles — are not the nifty plug-and-play solutions they had been cracked up to be.
Even worse, the advancement of new technologies and increased mining of cryptocurrencies created enormous new demand for electricity, resulting in heavy new demand for finding new sources of fossil fuels to keep the grid running and people moving around in reliable cars.
In other words, reality butted into the green narrative, collapsing the foundations of the ESG movement. The laws of physics, thermodynamics and unanticipated consequences remain laws, not mere suggestions.
Making matters worse for the ESG giants, Texas and other states passed laws disallowing any of these firms who use ESG principles to discriminate against their important oil, gas and coal industries from investing in massive state-governed funds. BlackRock and others were hit with sanctions by Texas in 2023. More recently, Texas and 10 other states sued Blackrock and other big investment houses for allegedly violating anti-trust laws.
As the foundations of the ESG movement collapse, so are some of the institutions that sprang up around it. The United Nations created one such institution, the “Net Zero Asset Managers Initiative,” whose participants maintain pledges to reach net-zero emissions by 2050 and adhere to detailed plans to reach that goal.
The problem with that is there is now a growing consensus that a) the forced march to a green energy transition isn’t working and worse, that it can’t work, and b) the chances of achieving the goal of net-zero by 2050 are basically net zero. There is also a rising consensus among energy companies of a pressing need to prioritize matters of energy security over nebulous emissions reduction goals that most often constitute poor deployments of capital. Even as the Biden administration has ramped up regulations and subsidies to try to force its transition, big players like ExxonMobil, Chevron, BP, and Shell have all redirected larger percentages of their capital budgets away from investments in carbon reduction projects back into their core oil-and-gas businesses.
The result of this confluence of factors and events has been a recent rush by big U.S. banks and investment houses away from this UN-run alliance. In just the last two weeks, the parade away from net zero was led by major banks like Goldman Sachs, Morgan Stanley, Citigroup, Bank of America, Wells Fargo, and, most recently, JP Morgan. On Thursday, the New York Post reported that both BlackRock and State Street, a pair of investment firms who control trillions of investor dollars (BlackRock alone controls more than $10 trillion) are on the brink of joining the flood away from this increasingly toxic philosophy.
In June, 2023, BlackRock CEO Larry Fink made big news when told an audience at the Aspen Ideas Festival in Aspen, Colorado that he is “ashamed of being part of this [ESG] conversation.” He almost immediately backed away from that comment, restating his dedication to what he called “conscientious capitalism.” The takeaway for most observers was that Fink might stop using the term ESG in his internal and external communications but would keep right on engaging in his discriminatory practices while using a different narrative to talk about it.
But this week’s news about BlackRock and the other big firms feels different. Much has taken place in the energy space over the last 18 months, none of it positive for the energy transition or the net-zero fantasy. Perhaps all these big banks and investment funds are awakening to the reality that it will take far more than devising a new way of talking about the same old nonsense concepts to repair the damage that has already been done to the world’s energy system.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
The Arizona Free Enterprise Club released a statement on Wednesday severely criticizing the Arizona Corporation Commission (ACC). The statement came after the ACC, which is charged with protecting Arizonans from a non-competitive energy industry, voted to abdicate its duty by allowing formulaic rates that increase automatically year over year, as opposed to every increase being subject to public scrutiny and requiring approval.
The vote on Tuesday was carried 3-2 with commissioners Anna Tovar and Lea Márquez Peterson dissenting. According to the ACC, its policy statement “allows regulated utilities to propose formula rates in future rate cases. Under this approach, the ACC reviews and accepts as the rate a formula for calculating the utility’s cost of service, including clear definitions of inputs to that formula and a process for updating rates every year as the utility’s costs change.”
The commission claimed, “Formula rates will still be monitored closely to ensure that the utility does not over-earn relative to the cost of service for providing service (plus a reasonable return on invested capital), while continuing to provide service safely and reliably.”
The Arizona Free Enterprise Club responded in a statement saying:
“Following contentious double digit rate hikes being approved and ESG Resource Plans committed to going ‘Net Zero’ by 2050 being rubber stamped, the Commission has rushed through approving new rules masquerading as a mere ‘policy statement’ that could insulate utilities and the Commission from having to face ratepayers in future rate cases. The ‘policy statement’ would depart from traditional rate making and pursue ‘formula based rates’ offloading risk from investors to ratepayers and baking in automatic rate increases with little transparency or opportunity for ratepayer engagement.
“The only support for this ‘policy statement’ came from the utilities themselves. The Commission is charged to protect ratepayers by regulating the utilities, not the other way around. The Commission should pump the brakes, not rush through major rulemaking decisions in a lame duck session.
“The Arizona Free Enterprise Club is committed to protecting ratepayers, ensuring affordable and reliable energy in Arizona. We will continue to work to ensure utilities will not be able to force their captive ratepayers to foot the bill, especially through automatic rate hikes, for their costly goal to go ‘Net Zero’ by 2050 by shuttering reliable sources of energy generation to build out expensive and unreliable wind, solar, and battery storage projects.”
Attorney Dan Pozesfsky of Arizona’s Residential Utility Consumer Office (RUCO), expressed a similar view according to 12News saying, “Trying to implement formula rates through a policy statement rather than through rules is inappropriate, illegal and in this case denies due process.”
The outlet reported that the ACC, ignoring its own plans for the vote, rushed to schedule it noting that in a previous meeting Commission Chairman Jim O’Connor had told stakeholders, “Give us feedback. Bring us guardrails.” He added, “I eagerly look forward to that kind of input at our next workshop.” However, no workshop occurred and no published legal opinions were issued.
Diane Brown of the nonprofit Arizona PIRG Education Fund stressed that the vote was conducted with critical questions about the scheme remaining unanswered. She said, “This is precisely to me why it was so important to have the legal memo that this Commission said they would get. While there are statements that there will be increased transparency, I’m not seeing evidence of that. It is troubling to me that we haven’t heard from the ALJ (administrative law judge). We have not heard from Staff.”
Another Arizona governing body has intervened in a critical issue in place of the state’s attorney general.
Last week, the Arizona Corporation Commission (ACC) intervened in a matter at the Federal Energy Regulatory Commission (FERC), protesting BlackRock, Inc.’s Request for Reauthorization and Extension of Blanket Authorizations to own utilities. The Environmental Social Governance (ESG) – related filing was led by a coalition of state attorneys general from around the nation and the ACC.
The coalition requested that FERC decline to approve BlackRock’s application unless the following four conditions are met:
“The Commission must require that Applicants, including all affiliates and subsidiaries, limit their collective ownership to 20% or less of the shares of each FPA-covered utility.
“Applicants must function only as passive investors.
“Applicants must hold the shares subject to their fiduciary duties to their investors, including the duty to act in the sole financial interest of the investors.
“The Commission should require specific reports by Applicants of every instance when the asset managers voted contrary to the recommendation of utility management on a shareholder proposal or board of director nomination, as well as an explanation of how such votes were consistent with the asset manager’s commitments to FERC.”
Freshman Commissioner Kevin Thompson, who pushed hard for the commission to join the legal protest, told AZ Free News, “We need utilities to make decisions based on what makes the most sense for ratepayers and the integrity of our grid, not the policy goals of ESG-minded asset management cartels. This Commission is taking a more proactive role in federal matters that impact Arizona ratepayers and our grid because FERC and other federal agencies have rapidly been exerting their influence in matters that should be left up to state regulators and our utilities.”
Joining the Arizona Corporation Commission on the filing were the States of Utah, Arkansas, Florida, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Texas, Virginia, and Wyoming.
The Corporation Commission’s involvement with this coalition mirrors the Arizona Legislature’s repeated efforts the past two years to join with other state officers in attempts to defend laws and protect the interests of their constituents. Both the Commission and the Legislature have been forced into acting as the state’s defacto attorney general due to Arizona’s top prosecutor, a Democrat, being unwilling to stand against certain infractions or questions of legality for state and federal laws.
The intervention into the ESG-related matter marks another instance of leadership by Arizona Republicans on this issue. The ESG movement has sought to advance an environmental agenda to bring an end to traditional and reliable energy investments across the country and world, and many have challenged the legality of such efforts in various industries. Before the current Democrat administration, the state had a Republican Attorney General Mark Brnovich, who led a handful of early ESG skirmishes. Arizona Treasurer Kimberly Yee has also joined other state financial officers over the years to oppose pro-ESG actions.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
A new survey conducted by Bain & Co. finds a rising percentage of energy executives willing to recognize the reality that the world will fail to achieve the “net zero by 2050” drop-dead goal pushed by the globalist community.
Bain & Co. surveyed more than 600 executives in oil and gas, utilities, chemicals, mining, and agribusiness during last November’s COP28 conference in Dubai and over the weeks following that event.
2050, of course, is the alarm-driven drop-dead date given to us by the UN Intergovernmental Panel on Climate Change (IPCC) as the year we must achieve global net zero carbon emissions to prevent disastrous levels of global warming. But everyone knows that such alarmist projections have always been quite malleable and tend to shift to later dates in time once it becomes clear that the predicted disasters by certain dates aren’t actually coming about. You know, like all those alarms about the end of snow, the melting of the polar ice caps, Greenland’s ice shelf sliding off into the ocean, and Manhattan being inundated by rising sea levels. Al Gore kind of stuff.
Similarly, Bain & Co. finds that a rising percentage of energy executives now expect the ballyhooed “net zero” date to be pushed well past 2050, with fully 62% now anticipating it won’t be reached before 2060 or even later. That number is up from just 54% expressing the same opinion a year ago, and we can be sure it will keep rising in every subsequent year as the impossibility of reaching that 2050 goal becomes increasingly obvious to even the truest of true believers.
Here is how Bain puts it in its press release: “Clearly, the longer that executives on the front lines of the energy transition grapple with the challenges of putting decarbonization plans into action, the more sober they’re getting about the transition’s practical realities.”
Yes, pesky practical realities do have a way of intruding on the fantasy thinking that underlies so much of the energy transition’s prevailing narratives. In its next paragraph, Bain cites factors like rising interest rates and growing concerns about lack of “policy stability” in the US and other western democracies, i.e., democratic elections, as factors causing more and more of these executives to become skeptical about achieving the alarmist goals.
But weren’t those and other factors completely foreseeable to anyone who understands how the world really works? Of course, they were, but we must recognize that the key decisions related to this heavily subsidized transition are not being made by such people, but by politicians and bureaucrats. And therein lies the real trouble. Politicians look at impractical “solutions” like wind, solar, and electric vehicles and see shiny objects that they might be able to leverage with voters. Whether or not the solutions have any practical value is a secondary thought if they consider it at all.
We see this survey’s findings now reflected in remarks by industry executives at this week’s CERAWeek conference in Houston. CEOs from companies like Saudi Aramco, ExxonMobil, Shell, and others stated their views that the world will require more and more oil, natural gas, and coal for decades to come, and discussed their plans to rededicate more of their capital budgets to their core businesses and less to pleasing ESG investors by throwing away money at unprofitable green ventures.
Reality is setting in, slowly but surely. When Energy Secretary Jennifer Granholm tells an interviewer from E&E News that the Biden administration is trying to bring about “a managed transition,” as she did this week, more and more smart people in the energy space are coming to realize the threat that really represents.
Speaking to the CERAWeek audience Monday, Granholm claimed strong public support for the Biden Green New Deal agenda, saying, “Consumers are calling for change. Communities are calling for change. Investors are calling for change.” Again, Bain finds a rising percentage of executives actually in the business increasingly skeptical any of that is accurate.
What we are seeing here is a return to energy realism in the business community. That’s good news for everyone, whether the Biden administration and its alarmist supporters approve of it or not.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
A vote by the Arizona Corporation Commission (ACC) earlier this week moved to limit energy companies’ push to meet Environmental, Social, Governance (ESG) goals.
The ACC voted 4-1 on Tuesday to draft rules to repeal existing rules and mandates for renewable energy as well as electric and gas energy efficiency: the Renewable Energy Standard and Tariff (REST) Rules and the Energy Efficiency Standards (EE), also known as the Demand Side Management (DSM). Per the commission, the rules and mandates for REST and EE/DSM resulted in incentives for renewable energy projects and services, since utilities were required to file proposals describing REST compliance.
Commissioner Ana Tovar was the sole “no” vote on the motions. The standards behind EE/DSM expired in 2020, but previous commissions didn’t repeal the rule.
The commission noted in Wednesday and Thursday press releases that the rules, tracing back to 2006 for REST and 2010 for EE/DSM, have cost customers nearly $3.4 billion through corresponding surcharges. REST surcharges have cost ratepayers nearly $2.3 billion, while EE/DSM surcharges cost nearly $1.1 billion.
Commissioner Nick Myers said in Wednesday’s press release that the rules and mandates were unnecessary and would result in a drastic cost increase to consumers.
“I believe it is time for the Commission to consider repealing these rules and mandates that appear to unnecessarily drive-up costs,” said Myers. “Utilities should select the most cost-effective energy mix to provide reliable and affordable service, without being constrained by government-imposed mandates that make it more expensive for their customers.”
In Thursday’s press release, Chairman Jim O’Connor — who filed the motion to repeal REST — said that the commissioners from nearly 20 years ago were “well-intentioned” in their vision for reducing the state’s carbon footprint through the REST rules, but that no cost controls were ever implemented, at the detriment of ratepayers.
“In 2006 when the REST rules supplanted the EPS rule, concerns by the dissenting Commissioner cited the lack of cost control measure that would negatively impact ratepayers, and the then-Chairman Hatch-Miller intended that the Commission review annually whether it was in the best interest of the ratepayers. Those reviews never occurred and costs were never considered,” said O’Connor.
O’Connor further remarked that contracts in pursuit of environmental mandates ultimately burdened the ratepayers.
“We began the steps needed to repeal a rule that has cost ratepayers billions of dollars in out of market priced contracts,” said O’Connor. “Mandates distort market signals and are not protective of ratepayers.”
Commissioner Kevin Thompson — who filed the motion to repeal EE/DSM — stated in the press release that the repeal marked a victory for ratepayers, and the end of “feel-good programs” that lack affordability and reliability.
“Arizona utilities have collected over a billion dollars in ratepayer surcharges for efficiency initiatives that have done little to avoid the need for new generation and have benefitted a select few,” said Thompson. “Energy efficiency programs are routinely pushed by vocal special interest groups where the economic benefits favor a small group of customers, and the large majority of ratepayers foot the bill.”
The entire rulemaking process will take over a year, according to commission staff. The REST and EE/DSM repeal are part of a greater, five-year review of existing ACC rule packages.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
