Top Six 2020 Trends To Watch In Energy Infrastructure

In 2019, Delve’s energy team tracked nearly 10,300 instances of activism against more than 100 energy infrastructure projects, companies, and financiers – a 54% increase in observed instances from 2018. Below is our analysis on the key trends from that data to help energy professionals protect their projects and interests in 2020. If you have questions about this analysis, or would like to discuss other public affairs challenges facing your organization, feel free to contact our analyst team.


1. 2019 Saw A Rise In Nationally-Backed But Locally-Coordinated Activism In Traditionally Fossil Fuel-Friendly Texas And Louisiana Against Both Midstream and Downstream Infrastructure Projects, And The Rise Is Likely To Continue In 2020.

As we wrote at this time last year, the strategic and professionalized nature of 21st century activism means “regions critical to America’s shale boom are now a target of opportunity for anti-fossil fuel activism,” including “places not traditionally considered ripe for” such efforts, “including fossil fuel-friendly Texas.” Over the course of 2020, that prediction proved correct.

In Texas, opposition to pipeline projects has risen as local activist groups, backed by national environmentalists, have forged alliances with landowners and “delayed or impeded” major projects. This activism has expanded beyond midstream to include liquified natural gas (LNG) export terminals, such as the proposed projects at the Port of Brownsville for which the Sierra Club and other activists have recently asked the Federal Energy Regulatory Commission (FERC) to reconsider permitting approvals.

In neighboring Louisiana, activists are targeting petrochemical companies with increasing intensity and new backing from national and global voices as Hollywood actors draw renewed attention to the industry and local activists testify before Congress against “Cancer Alley,” a name that caught on in the 1980s to describe the area between Baton Rouge and New Orleans that contains numerous industrial plants. The term is making a comeback as evidenced by ProPublica’s investigative reporting initiative (in partnership with two local publications) called “Polluter’s Paradise” and two high profile marches through that area of Louisiana organized by the local grassroots Coalition Against Death Alley (CADA), which has attracted attention and support from national environmental groups and was covered in Rolling Stone. The failure of activists to stop the Bayou Bridge Pipeline has also contributed to this effort, as the anti-pipeline activists shifted their attention to the approval process for a new Formosa Plastics plant in St. James parish, as well as other complexes already in operation.

We expect momentum to continue to build in 2020 as grassroots activists further build relationships and increase coordination with prominent national environmental groups. Such developments could impact the interests of companies beyond just petrochemicals that are operating in the Gulf Coast region, as the activist infrastructure is in place to oppose relicensing and permitting renewals, expansion permits, as well as ongoing social permission, including local and state support for the Industrial Tax Exemption and similar measures.

2. In 2019, Energy Activists’ Efforts Shifted In Earnest To Target The Last Mile For Natural Gas.

When Berkeley, California last summer became the first city to ban natural gas in the United States, the decision could have been excused as an outlier rather than the start of a key trend. However, it spurred a number of other cities to explore and implement bans, incentives, and other methods to discourage natural gas use in homes and buildings, with Brookline, Massachusetts becoming the first city in that state to ban new gas hookups last November. Dozens of cities in California, Massachusetts, and Washington are watching legal reviews and challenges of these two bans, with plans to follow suit in 2020.

However, it is not just in traditionally liberal states where these policies are gaining traction. Municipalities in about half of the states in the U.S., including energy-friendly red states such as Colorado and Texas, have indicated a significant level of interest in such bans or in favoring building electrification. In part driven to reduce carbon emissions in the wake of the Paris Climate Agreement, like-minded city and state policymakers are also capitalizing on the groundwork laid by large environmental groups such as the Sierra Club, 350.org, Natural Resources Defense Council, and others providing message amplification, organizing support, tactical expertise, and particularly in the case of Michael Bloomberg’s Beyond Carbon initiative – as we warned last spring – lots of financial resources to promote anti-gas and building electrification policies across the country.

In 2020 and beyond, we expect anti-gas and building electrification policies at the local levels, spurred on by national activist groups and allied local politicians, to become a key forefront in efforts to eradicate fossil fuels usage – even though there are no suitable alternatives for communities. Activists have succeeded in delaying some energy infrastructure projects, but they have realized they cannot always stop them in the Trump era, which has led to a new focus on restricting consumer demand for natural gas.

As these developments continue to unfold, building electrification and natural gas bans will move toward being front and center in the public debate, particularly because most 2020 Democratic presidential candidates have incorporated such policies into their climate proposals.

3. The 2020 Presidential Campaign Is Putting Fossil Fuels On The Ballot Like Never Before And It Could Lead To An Existential Crisis For The Industry’s Survival.

Elizabeth Warren has called for a ban on fracking and has joined others in excluding natural gas from her clean energy plan (despite its significant contribution toward reducing carbon emissions), building electrification has become a policy foundation for ambitious (if unrealistic) climate action, and all aspects of the development, production, transportation, financing, and distribution of America’s oil and gas resources have come under attack.

Candidates have even targeted FERC’s regulatory power by proposing to overhaul it in order to “orient its mission to fighting climate change,” rather than remain focused on ensuring “economically efficient, safe, reliable, and secure energy for [American] consumers.” This shift would transform the industry from the inside out and cause untold damage to the economy, national security, and Americans’ quality-of-life. Perhaps most disconcerting are the calls to jail oil and gas executives from the likes of both Joe Biden and Bernie Sanders.

However, even if a Democrat does not win The White House, the ideas stated on the campaign trail can still influence policy outcomes in the near and long term and amplify anti-industry messaging, which can foster an increasingly hostile environment at the state and local levels and among dedicated energy activists, as well as shape broader public perceptions about the industry and its contributions to U.S. prosperity and security.

4. Whether Democrats Take The White House Back Or Not, Policy And Regulatory Pressures Have Shifted To The State And Local Levels – And The Courts.

As The White House continues to roll back regulations, state and local leaders in increasing numbers are stepping up to further activist agendas. Thirteen states and three U.S. territories have pledged to target renewable portfolio standards of 50% or greater (at least some of which exclude key renewables like nuclear, hydro, and biogas); more than 40 major U.S. cities are part of nongovernmental coalitions committed to addressing climate change as part of the Carbon Neutral Cities Alliance, C40, and the American Cities Climate Challenge; twenty-four governors are “leading the country in combatting climate change” as part of the U.S. Climate Alliance; more than 400 U.S. “Climate Mayors” have committed to climate action, and 221 mayors are part of the Sierra Club’s pledge for a community-wide transition to 100% renewable energy.

All of this state and local organizing means the risk landscape has fundamentally changed for companies producing, transporting, and providing energy to Americans and the world. Meanwhile, state attorneys general continue to utilize their power to combat climate change by taking to court corporate interests they deem responsible for enabling it (despite a setback in New York last year). Large environmentalist funders such as Bloomberg Philanthropies have capitalized on this trend by providing financial support to third-party programs and positions within state attorney general offices to further their agendas, and programs such as the NYU Law School State Energy and Environmental Impact Center’s fellows program has funded similar positions in nine states and the District of Columbia.

Additionally, state and local policymakers – enabled by emboldened activism and social pressures – are taking steps across the country that make the policy and regulatory environments in their jurisdictions less energy friendly, such as the decision by Colorado’s commission regulating oil and gas drilling to bring increased scrutiny on well setbacks despite voters rejecting a similar proposal at the ballot box less than one year earlier.

Ensuring positive outcomes and good relationships with federal regulators is no longer enough in 2020, as pro-energy federal leadership is spurring greater fights at the state and local levels. Whether or not Democrats’ influence in Washington remains contained to the House, this trend will only continue well into the future.

5. These Local And State Fights Are Being Driven By A Surge Of Next Generation, Disruptive Energy Activists That Heighten The Political And Reputational Risks Facing The Energy Industry This Year And Beyond.

In mid-2018, Extinction Rebellion did not exist. Now, it has nearly 500 affiliates across more than 70 countries and is shutting down traffic and causing other disruptions in major cities in Europe and the U.S. Domestically, the youth-led Sunrise Movement’s organic and viral climate campaign has engaged and mobilized students, ultimately being instrumental in promoting the Green New Deal and climate change as a critical issue for policymakers – going so far as to stage sit-ins at House Speaker Nancy Pelosi’s office and elsewhere to push sympathetic politicians to take more strident action.

The vast mobilization of students defined the climate protests of 2019, culminating in the Global Climate Strike that was the largest protest in history. Led by Greta Thunberg, her recognition as TIME’s person of the year proves the impact this new generation is having on energy activism. This past year has showcased organic and energized activism and this new generation of voices are reshaping the environmental movement to be more extreme and confrontational.

These efforts have put the energy industry’s issues front and center in the public arena and shifted socially acceptable viewpoints in some communities. The past year was only a preview of what is to come, however, as well-established environmental groups leverage this energy and significant new funding sources, in particular Michael Bloomberg’s commitment to provide significant funding to the Sierra Club and other groups as part of the Beyond Carbon initiative he announced last spring.

With stronger capabilities and rapidly growing local grassroots movements commanding more attention on energy issues in the public arena, energy activism is more sophisticated and disruptive than ever before – and with new groups, and a new generation, gaining influence, new methods of opposing the industry will follow.

6. As The Next Generation Energy Activism Has Shifted Social Attitudes, A Wide Range Of Financial Institutions Have Followed Suit, Bringing New Scrutiny And Restrictions To Fossil Fuel Investments.

The broader political environment, one where activist-enabled divestment campaigns pressured financial institutions and university endowments and pension plans, has changed the way financial institutions do business with the industry and is having ripple effects across sectors. A sign of this impact is demonstrated by the launch this month of “Stop the Money Pipeline,” a new campaign targeting specific banks, insurance companies, and asset managers that fund fossil fuel projects. Beyond the decisions by several insurance companies serving the fossil fuels industry to limit or stop offering coverage, there are new pressures from employees seeking to change their companies’ business decisions, such as workers in Big Tech who are advocating for their employers to take more aggressive steps to combat climate change.

Whether directly pressured by activists or not, financial institutions have given into these growing social pressures and have adapted to avoid this risk, mainly by proactively implementing more scrutiny of climate impacts in their operations and by planning to reduce the amount of capital available for private equity investments in fossil fuels. For example, the world’s largest multilateral lender, the European Investment Bank (EIB), announced a new energy lending policy that will bar investments in most fossil fuel projects, including those that use natural gas, by 2021. The landmark decision may have global implications, with other institutions following suit.

Mark Carney, who warned major corporations of the need to document their climate change-related impacts as Bank of England governor, has since been appointed to become United Nations climate finance envoy. Meanwhile, in the U.S., Federal Reserve policymakers are considering a “green interest rate” that would be imposed to counter the effect climate change has on U.S. GDP.

While these ideas are still in the planning stages, they represent a key trend that highlights how emboldened activism – and particularly the simple threat of it – has impacted more than just the financial sector and energy industry, and has fundamentally altered the broader operating environment.


Need help navigating these and other political and reputational challenges in the energy industry and beyond? The team at Delve can help you by providing deep dive foundational research to understand the stakeholders, risks, and challenges you face, as well as monitoring programs that help you anticipate and prevent such risks from impacting your interests.

TL;DR: Are You Ready For IMO 2020, Corporate’s Candidate Play, And Artificial Intell-inois

Here’s what you need to know…

Are you ready for “the biggest change in oil market history”? If not, you may be in for a surprise next year. On January 1, 2020, a mandate will take effect impacting maritime trade and it is not getting the public attention it deserves. With more than 90% of the world’s trade carried by sea, the ramifications will be far-reaching, which is why the United Nations’ International Maritime Organization (IMO) 2020 emission standards should be on your radar. Here’s what you need to know about this new rule and what it can mean for your organization’s operating landscape:

  • What Is IMO 2020? IMO 2020 is a nickname for the mandate taking effect on January 1, which will require the more than 39,000 ships and tankers that sail international waters to either switch to lower-sulfur diesel fuels or alternative fuels, or adopt technologies that help their fleets reduce their sulfur emissions to meet the new standard. In 2016, the IMO made the decision to reduce the acceptable sulfur content in shipping fuels from 3.5% to 0.5%, in part because the standard fuel used by the world’s fleet produces 90% of the world’s sulfur emissions. In fact, 15 of the largest ships produce more sulfur than all of the world’s automobiles combined. The fuel change is supported by more than 170 countries, including the U.S.
     
  • Shipping Costs Are About To Go Up For Businesses And Consumers: Maritime shipping is “by far” the most cost-effective way to move goods and raw materials, and the industry has been preparing its fleets to pass police inspections and avoid having vessels impounded when the mandate takes effect. It’s estimated that the container industry will spend approximately $10 billion to comply, with the two largest carriers – A.P. Moller-Maersk and MSC – incurring added costs of $2 billion each. These costs will go toward the added expense of switching to IMO 2020-compliant fuels such as cleaner low sulfur fuel or liquified natural gas (LNG), estimated to be 50% more expensive than current fuels, or toward installing costly exhaust scrubbers that remove sulfur oxides from current fuels (and that require ships to be taken out of service to install). According to consulting firm AlixPartners, the shipping industry will need to impose fuel surcharges ranging from 30% to 40% to offset the costs of compliance, which could increase the costs of goods by 5% to 10%.
     
  • A Cold Winter Could Mean A Fuel Shortage: There is expected to be an oversupply of high-sulfur fuel oil and a demand for IMO-compliant products, which will put pressure on the refining industry to produce more low-sulfur fuels. Energy companies with refining capacity are well-positioned to take advantage of this need, as well as companies already producing low-sulfur crude and LNG, particularly as the shipping industry expands LNG-powered vessels. With IMO 2020 coming during the U.S. winter heating season, timing “could not be worse” should it be a very cold winter, and a surging American energy industry already facing challenges due to takeaway capacity, anti-fossil fuel activists, and their like-minded policymakers in elected office, may well create a shortage of needed fuel both domestically and for the shipping industry.
     
  • Does IMO 2020 Help Or Hinder Outstanding Trade Deals? With negotiations for a U.S.-China trade agreement ongoing, the approaching mandate may put added pressure on both sides to come to an agreement before the end of the year in order to help minimize any disruption stemming from increased shipping costs that carry the vast majority of goods between the countries. Corporate interests operating in both countries could make a last-minute lobbying push to finalize the deal, and given the strength of the U.S. economy compared to that of China, the latter may want to remove further uncertainty by coming to an agreement. Regarding USMCA, while maritime shipping is not as critical for moving goods throughout North America, the approaching mandate could similarly influence corporate interests and policymakers to want to come to a breakthrough before the end of the year, or else risk the possibility that the Administration will follow through on its threat to withdraw from NAFTA – thereby adding further uncertainty to global trade.
     
  • What Might The Mandate Mean For The Global Economy? When the supply of compliant fuels tighten and costs increase, the result could be fuel prices that increase by 20% to 30% as maritime fuel buyers are put in “direct competition with trucking, planes, trains, and other forms of transportation.” That can lead to more expensive prices for other modes of transportation, and in a globalized world that benefits from business travel, these increased costs could impact companies’ bottom lines in a range of industries. In addition, the mandate is likely to negatively impact Middle Eastern oil producers, like Saudi Arabia, who rely heavily on high-sulfur crude. With rising geopolitical tensions in the region and continuing challenges for the Saudi state oil company as it seeks to go public, it remains to be seen how the global economy will respond to IMO mandate-driven developments in the Middle East.

The “brick wall” of IMO 2020 has been built over the past two years, and if they haven’t yet, companies and organizations will need to run through it or find a way around it. For such an impactful regulation, the mandate has not gotten the attention it deserves, and it serves as an instructive lesson on how obscure multilateral organizations (to say nothing of the myriad of regulations made by federal agencies) can have large consequences. Going forward, the best protection against such consequences is to proactively monitor developments through the lens of a company’s or organization’s risk – and therefore anticipate the actions and better influence them to a favorable outcome for their interests.

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CORPORATE’S CANDIDATE PLAY

The world’s largest retailer is taking a local approach when it comes to politics in its hometown. With seven of nine seats on the Seattle city council up for election, Amazon invested nearly $1.5 million dollars in an effort to support business-friendly candidates that may be more open to their interests. The council, which has included vocal company critics that enjoy the support of national politicians such as Sens. Bernie Sanders and Elizabeth Warren, has promoted policies targeting the company from increased taxes to mandated employee benefits.

When the dust settled, two of Amazon’s candidates won and we can speculate that it will have more success as it continues to invest in running candidates in key elections. This may in turn lead to a trend of corporate interests investing beyond general industry advocacy efforts and more in campaigns and candidates to protect and advance their interests when faced by governments filled with hostile policymakers.  

ASTHMA SUFFERERS FACE GREEN PERIL

Climate change could soon force people living with asthma to make a life or death decision – whether they want to or not. A new study by Cambridge University researchers claims asthma has a carbon footprint “as big as eating meat” because inhalers release greenhouse gases linked to climate change. The researchers argue patients should switch to “greener” medications and that these patients should become vegetarian to reduce their environmental impact.

However, switching to a new type of inhaler can create health complications and is simply not an option for all patients – which may be why researchers also are putting pressure on pharmaceutical companies to find ways to reduce their carbon footprints. The beginning of the evaluation of medications and treatments through the lens of climate change that people living with illnesses depend on represents a worrying trend, and if patients and companies that use and produce such medications do not prepare to defend these treatments, pressure could build for government to force patients to change medicines, even if it impacts their health.

ARTIFICIAL INTELL-INOIS

Companies have increasingly started using artificial intelligence (AI) in the hiring process to help screen the deluge of candidates that apply to any single posting. Some algorithms seek to infer characteristics about job performance through facial and voice recognition technology that examines traits such as brow raising, eye widening, use of language, and other verbal skills, spurring ethical and legal concerns. In response, the state of Illinois has adopted legislation to limit facial recognition use, citing possible discrimination on the basis of race and gender and biases toward previously successful candidates that could lead to homogeneity in employees.

Illinois’ law is the first of its kind and will go into effect on January 1, 2020, likely serving as a model for similar laws in other states and potentially for future regulation at the federal level. For companies producing this technology, those using it, as well as policymakers and regulators, the implications of Illinois’ law will serve as an important test case as we move deeper into the 21st century.

ON-CAMPUS LIVING VOTES

The most important battleground in next year’s election may not even be a state. Political groups on both sides of the aisle are honing in on college campuses in the hopes that student turnout could impact tight races in swing states. The tactic was recently used in 2018 by now-Democratic presidential candidate Tom Steyer’s NextGen group, which spent $38 million on campus voter participation efforts and is expected to be active again in 2020. Meanwhile, conservative groups such as Turning Point USA are currently outspending their counterparts on the left.

While politics on campus is nothing new, the concerted effort by political groups to swing (and there are even reports to suppress) college voters suggest that campaigns believe they can get more students to register using their campus address than in the past, rather than remaining registered back home as has been traditionally the case. If successful in securing results in coveted swing states, this tactic will make campaign professionals in the future think twice about shaking off the views of vocal students or conceding their votes to a particular party.

TL;DR: Sue And Settle Gets Lit, Blurred Campaign Lines, And What You Don’t Say

Here’s what you need to know…

Last week, the Interior Department announced that it is creating a website to publicly disclose attorneys’ fees paid out by the agency in legal settlements, bringing light to a previously non-transparent practice that the public is largely unaware of. The agency’s decision to bring transparency and accountability to a practice that has funneled millions of taxpayer dollars – not to efforts and initiatives that further the Interior Department’s mission, but rather to activist interest groups to cover attorneys’ fees they incur for suing that very same agency and advancing their policy priorities  – should be welcome news for those who care about the agency’s mission, good government proponents, and all taxpayers.

Here’s what you need to know about the Interior Department’s push to illuminate so-called “sue and settle” practices targeting it, and what this means for corporate and cause organizations engaged in the public policy debates entangled by this tactic:

  • So, What Is Sue And Settle? Sue and settle refers to the strategy in which a special interest group files a lawsuit against a federal agency to force it to adapt their policy interests and priorities. Instead of take their case to court, the group comes to a settlement agreement with the agency, negotiated “behind closed doors” and with no public participation, that advances their interests. Further, this practice circumvents the transparency and accountability that comes with the normal legislative and rulemaking process.
     
  • Bringing Light To Sue And Settle Practices Is A Priority In This Administration: In a TL;DR edition from October 2017, we wrote about the Environmental Protection Agency (EPA) directive ending sue and settle practices against it, speculating that Cabinet officials in their respective agencies would follow EPA’s lead. That is exactly what happened when Interior released an order in September 2018 outlining steps it would take to promote “transparency and accountability in consent decrees and settlement agreements,” of which one of those steps included the creation of a “publicly accessible ‘Litigation’ webpage that is prominently linked to the Office of the Solicitor’s homepage.” Last week’s announcement of a memo by Interior’s Principal Deputy Solicitor Daniel Jorjani in response to the September order states that a webpage will be developed “within 30 days” that will list details of legal settlements and cases. In the words of a Department official, “only by shining a light on this process can you decide if [your tax money] is being put to good use.”
     
  • What Is Notable About Interior’s Announcement? While the Department of Treasury’s Judgment Fund database already tracks what federal agencies disburse in attorneys’ fees from settlements, it does not always list plaintiffs’ names or their legal counsel. Interior’s website is expected to provide more details about its legal settlements and cases, of which it should have a large dataset to choose from because it paid out nearly $14 million to groups suing it during the previous Administration – the most of any agency. By providing more detail about its settlements and cases in the public arena, and in particular the exact amounts of taxpayer dollars disbursed to who or what organizations and why, Interior can shed a light on the motivations and true nature of some of the most prominent activist interest groups engaging in today’s public policy debates.
     
  • Exposing The True Nature Of Oppositional Forces: Simply stated, the recourse available to help individuals, small businesses, and groups to recoup legal costs for defending their rights has been coopted for profit by professionalized and savvy activist interest groups. Environmental groups have been especially successful at suing federal agencies to increase regulation and then collect taxpayer dollars to cover their attorneys’ fees, which according to a 2016 investigation resulted in federal agencies paying out more than $49 million to lawyers who sued the previous Administration under the Clean Air, Clean Water, and Endangered Species Acts. This includes large and financially successful activist groups such as Earthjustice, whose sole purpose is to aid activist groups in taking legal action against government. Earthjustice received more than $2.3 million from taxpayers for suing the Interior department in 2016 despite having net assets totaling $68 million the year before – hardly a ragtag group in need of coerced taxpayer subsidies.
     
  • What Insights Can Be Leveraged From This Information? For companies and industry groups in the energy, financial services, chemical, and manufacturing sectors – and others that find themselves targeted and pressured by environmental activists –understanding the funding, coordination, and key stakeholders behind lawsuits against federal agencies on their issues is a crucial component of risk analysis, particularly as sue and settle has become a popular strategy for special interest groups seeking to force agencies to adopt regulations without gaining voter approval at the ballot box or going through the regulatory process set by Congress.

Interior’s move to open up public access to the details of its legal settlements and cases will help shine light on how such avenues are being weaponized by activist interest groups to target companies and industry groups, as well as force policy implementation on the American public regardless of the judgement and direction of their elected representatives. This sunshine provides an opportunity to better understand and address the risk faced from special interest activist groups wielding this tactic. In today’s politicized environment, having this information advantage can mean the difference between achieving public policy objectives or not.

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BLURRED CAMPAIGN LINES

A super PAC supporting Washington Governor Jay Inslee’s presidential campaign has blurred the lines of legality regarding campaign finance. Described by critics as “probably within the letter of the law,” the Act Now On Climate PAC has found a way to share critical voter information with Inslee’s campaign by running hundreds of pro-Inslee Facebook ads which link directly to the campaign website, allowing the latter to view exact data on the success of each ad broken up by user age, gender, and location without ever communicating with the PAC directly.

While pushing the envelope just far enough to give the campaign an edge at a time when data is more valuable than ever, this tactic could also be leveraged in opponent messaging to raise questions among the electorate of unfair or improper coordination, despite such coordination being apparently, technically legal. But, for that to happen, Inslee would first have to separate himself from the slew of candidates running for the nomination. More likely, such tactics could easily proliferate to other campaigns and become a common technique to push the boundaries of existing campaign law.

SWEET CHERRY PIE

The wait is over: President Donald Trump’s Food and Drug Administration (FDA) is taking steps to finally get big government out of America’s baked goods. In case you didn’t already know, current FDA regulations state that a frozen cherry pie must contain no less than 25% cherries by weight, with no more than 15% of those cherries being blemished. These rules have long provoked the ire of bakers across the country, who say the hardline standards can prevent innovation and spark unnecessary lawsuits (see: Cheezy lawsuits).

The Trump Administration’s push for broad deregulation is made of a series of small changes that affect the bigger picture of the U.S. economy. While a marginal shift in a small market might not seem significant to the average citizen, it could be the difference between whether a business succeeds or fails.

DEVIL IN THE MANDATE DETAILS

With the question of climate change looming larger over the U.S. each year, a debate has persisted: what should be done about it? A common answer to that question has been the increased use of renewable energy mandates, which require a portion of a state’s electricity to come from renewable sources such as wind and solar power.

A recent study from the University of Chicago, however, claims that these policies not only significantly increase electricity prices, but also reduce carbon emissions far less effectively than alternatives. As these discussions rage on in Congress and across the country, it is important for policymakers and stakeholders to have the full range of information required to make an intelligent, effective decision on the problems they wish to solve and avoid implementing ineffective “solutions” that have unintended negative consequences on jobs, families, and businesses. As always, the devil is in the details.

BE CAREFUL WHAT YOU DON’T SAY

Sir Roger Scruton, a conservative English philosopher, recently experienced firsthand the full power of social media mob justice. Within hours of a report alleging Scruton made “outrageous remarks” rife with anti-Semitism and Islamophobia, Scruton was sacked, and his character assassinated. The Twitter posse was still patting itself on the back when the “outrageous remarks” themselves were released in a video. What did Scruton say to deserve such blowback? It turns out, nothing at all: his actual words were distorted beyond recognition, and those who spread the initial claims were forced to apologize, but the damage had been done.

Scruton’s story is a cautionary tale that feels all too familiar. Whether due to ill-intent or simple recklessness, social media has become an optimal environment for damaging claims—true or false—to spread like wildfire. The ability to provide a quick, factual response to potential threats becomes more valuable every day, not only for individuals, but for companies who find their reputations under attack as well.

TL;DR: Bloomberg’s Beyond Carbon Is A Big Deal, Scooter Surveillance, And Innocent Until Predicted Guilty

Here’s what you need to know…

After seriously exploring the possibility of running for president as a Democrat in 2020, former New York City mayor Michael Bloomberg announced last month that he will be one of the few Democrats not pursuing the nation’s highest elected office. For those who appreciate the freedom to enjoy a large soft drink or exercise their Second Amendmentrights, this was welcome news. However, Bloomberg made clear that he will not be heading quietly into retirement. Instead of The White House, he announced a new initiative to bring his talents – and estimated $55 billion fortune – to bear on a new “grassroots effort” called Beyond Carbon “to begin moving America as quickly as possible away from oil and gas and toward a 100 percent clean energy economy.” Bloomberg’s launch of Beyond Carbon is a big deal, and most of the media coverage missed its serious public policy and business implications.

With the enthusiasm surrounding the Green New Deal, which has become a household name and supported by a plurality of voters despite its lack of detail, Bloomberg’s involvement means that not only the energy industry, but potentially millions of people whose jobs are at stake, must begin preparing for a major public policy fight. Here’s what you need to know about Beyond Carbon:

  1. Beyond Carbon Is Bloomberg’s Latest Well-Funded Effort: To gauge the impact of Bloomberg harnessing the energy of the Green New Deal, it is best to examine the success he has achieved with his existing Beyond Coal campaign, which will be expanded under Beyond Carbon. Over the past decade, Bloomberg has committed more than $100 million to the Sierra Club’s effort to retire every U.S. coal-fired power plant. This campaign has been remarkably successful, having helped close over half of the country’s coal power plants. Given how much he has spent on environmental and gun control efforts to date, as well as how much he was preparing to spend on 2020 presidential politics, it can be expected that significant resources will be brought to bear on this new anti-carbon initiative.
     
  2. Cleaner Carbon Is No Longer Welcome In The Clean Revolution: Not long ago natural gas was considered to be the cornerstone of the clean energy revolution. The move beyond coal to now target any carbon-emitting fuel, including natural gas, is endemic of a rising attitude among environmental activist groups that any fossil fuel use must be rapidly eliminated in its entirety. Particularly with a benefactor like Bloomberg, who is flush with cash and a veteran of waging vigorous issue campaigns, there is no reason to believe that this effort will stop at natural gas. And it does not matter that there are few if any readily available clean alternatives that can provide reliable and consistent energy, as demonstrated by the challenges facing state governments across the U.S. increasingly setting 100 percent renewable energy goals that ignore this reality.
     
  3. Beyond Carbon Is Beyond Affordable: While Bloomberg can afford the costs of moving beyond carbon, most Americans cannot. Issue campaigners, such as those pushing for unrealistic renewable energy goals, give little regard to the unsustainableand unnecessary costs that their policies have and the impact on cost-of-living, quality of life, job prospects, taxes, and more. Instead of standing for election and winning a mandate, Bloomberg and other activists like Tom Steyer choose manipulative issue campaign efforts where the subsidies and costs fall on those who can least afford them without having to secure a mandate at the ballot box first. A recent example of this untenable position is the bankruptcy of California’s Pacific Gas & Electric (PG&E). Moody’s recently estimated that PG&E, one of the country’s largest utilities, pays an estimated $1.4 billion annual in above-market renewable power purchase agreements that were created to help achieve the state’s renewable energy goals. Such costs are born by ratepayers and taxpayers and are a drag on jobs and economic growth.
     
  4. It’s Time For Energy To Defend Its Reputation And Future – For All Our Sakes: For the energy industry, now is a moment of truth. Rather than provide concessions and placate environmental activists backed by a few well-placed billionaires, now is the time to gear up to address this threat to the industry, the economy, and the millions of families who depend on these jobs. This is a major public policy fight against an opposition that sees no legitimate purpose for fossil fuels, and no amount of money spent on conservation initiatives or corporate social responsibility programs will change their minds, or their ultimate objective. If the industry does not stand up now for the legitimate purpose they serve, and high quality of life that their products make possible, no one will. With Bloomberg’s declaration of war, even a negotiated surrender is no longer an option.

To protect their interests, energy companies must aggressively defend their industry – and the prosperity it provides to millions, if not billions, of people around the world – against the well-funded and well-organized efforts targeting it. If they choose not to, Bloomberg’s decision to not run for president (irrespective of new rumors that he may change his mind and reverse course) may ultimately prove to be one of the most consequential moments for America’s future, regardless of who wins the presidency in 2020.

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SCOOTER SURVEILLANCE

Electric scooters have multiplied by the thousands in urban areas around the U.S., and so have the political and reputational risks for local governments and companies in this very new industry. The Los Angeles Department of Transportation (LADOT), eager not to let a good craze go to waste, last year told scooter suppliers that they would soon be required to provide the agency with location data of their user’s rides, or they would face strict permit and fleet size regulations.

While the agency says it keeps a lock on customer privacy, the actual details are somewhat murky: LADOT recently partnered with a third-party data aggregation company, Remix, that will analyze consumers’ scooter riding patterns for an undisclosed purpose. Just as one should put on a helmet before renting a scooter, those public and private entities rushing in to capitalize on the scooter obsession should pause to consider the increased web of risks they face from the burgeoning space so that they may better anticipate and overcome challenges when they inevitably arise.

DOGGED PURSUIT OF THE FACTS

Not every place you see on your map is what it seems. In the case of Patrick’s Park in San Francisco, it may not even be a real place at all. One pet owner named a small green parcel of land, previously unnamed, unmappable, and forgotten between notable locations, on Google Maps after his dog so that friends could meet up there.

It then took on a life of its own, first becoming an underground tourist destination, and then the location for an elaborate “St. Patrick’s Day Dog Parade” with pet industry influencers, a costume contest, music, and more to solidify its status as a real place. This light and comical episode demonstrates the convenience and connections that the internet brings to everyday life, yet also serves as a reminder of the important role that highly-trained analysts play in assessing real information from multiple sources in dogged pursuit of the facts, rather than just believing whatever pops up on Google.

INNOCENT UNTIL PREDICTED GUILTY

With the backlog of U.S. security clearances piling due to an “antiquated” system of background checks, a new project in the works from the U.S. Defense Security Service (DSS) seeks to not only paint a picture of an individual’s past behavior; it could theoretically be used to indicate a person’s future as well. The DSS project’s pilot test will collect massive amounts of data on individuals including internet browsing data, tax records, and travel plans to form a “digital footprint” of a person.

Altogether, these “digital footprints” create a complex network of standard human behavior ready for analysis by artificial intelligence (AI) programs. Small deviations in an individual’s routine could inform employers of an employee’s higher likelihood of stress, secrecy, or other undesirable traits. While this may in theory help bring the clearance process into the 21st century and lessen the backlog, it raises questions about whether its predictions are accurate or not (and AI platforms have already been found to have a racial and gender bias, adding a discrimination element to the equation); if such an algorithm is therefore a good idea; and, what the recourse would be for those who feel that their reputations are unfairly maligned.

FACEBOOK’S NEW RESEARCH TOOL

Directly in the crosshairs of government regulators looking to bring some transparency to the depths of social media, Facebook hopes to beat them to the punch with a new research tool that can help users anticipate and understand how advocacy networks are trying to influence them using the platform. The tech giant recently launched an advertising transparency page allowing curious minds to search a database of active advertisements, when they were created, and the pages that manage them. Political and issue ads will show a wealth of detail in terms of the ad’s funding sources and its overall visibility on the site.

It’s unclear whether this self-regulation will be enough to stave off politicians who want to hold Facebook accountable for its immense power, but it may be viewed as a good start. In the meantime, as fake accounts and others whose motivations and backgrounds may be different than they appear perpetuate on social media platforms, understanding who or what is behind what you see online will remain an important skill.

Understanding the networks of influence fuels renewable energy project success

Challenge: Getting infrastructure projects built is harder than ever – even when those projects advance clean energy goals. Without the community’s trust and support, projects can experience costly delays and disruptions. That’s why an energy developer turned to Delve to help them understand the range of stakeholders engaging in the permitting and approval processes for their project.

Solution: We identified the key elected and appointed officials in the communities where permitting was needed, as well as the stakeholders who could influence them. We then researched these officials’ background and record, including past votes and comments on energy issues and infrastructure projects, community involvement, and centers of influence around them, to understand who would be an ally and who would need more persuasion on the value of the project.

Results: Our analysis helped the company secure allies and anticipate opposition by informing the company’s messaging campaign and engagement plan. When executed, this strategic plan enabled the company’s public affairs team to build trust with the local communities and win support for their project plans.

 

 

 

 

 

TL;DR: France’s Carbon Tax Revolution, Investing In Vice Or Virtue, And Robocopping Robocalls

Here’s what you need to know…

Those pushing for a Green New Deal here at home should be careful what they wish for – just look at what’s been happening in France. On November 17, 282,000 protesters showed up in high-visibility yellow vests in Paris to protest the government’s recent carbon tax, which has been followed by weeks of riots resulting in the most violent rally to hit Paris in decades. Here is what you need to know about the underlying global trend that this revolt against carbon taxation reveals:

  1. What Is Happening? French President Emmanuel Macron supports policies to reduce climate change, and despite France’s already relatively low-carbon economy, has proposed further lowering carbon emissions through a fuel tax, as well as other measures such as incentives for people to buy electric vehicles. Macron’s carbon tax would raise an estimated 8 billion euros annually but create an only “minuscule global benefit.” It would also raise the cost of living in an already struggling economy, the bulk of which would be bared by rural and working-class citizens who depend on cars to get to work. Over the past few weeks, the “Gilet Jaunes,” or yellow vests, have angrily protested against the carbon tax and Macron’s perceived disconnectedness from his working-class and rural constituents. More than 260 people have been wounded, at least three have died, and more than 400 were arrested after violence sparked, rocks were thrown, tear gas was used, and monuments were vandalized.
     
  2. How Has The Government Responded? Bold environmental policies were at the heart of Macron’s political agenda when he rose to power 18 months ago, yet the riots are the latest episode highlighting his government’s underachievement on this front. While he has shown “little willingness to compromise” in the face of the protests, Macron’s government this week announced that it has suspended the tax for six months to allow for public discussion. Prime Minister Edouard Philippe said anyone would have “to be deaf or blind” not to see or hear the anger that led to the protests that rattled the capital city, and that “No tax merits putting in danger the unity of a nation,” leaving it an open questions as to whether or not Macron’s climate policies will have any traction with the French public, especially because opponents of the tax do not want “a delay,” but rather “the cancellation of the planned tax increase” altogether.
     
  3. What Does This Mean For Climate Agendas Around The World? The events in France demonstrate the complications for policymakers proposing climate agendas that voters do not believe justify polices that would raise the cost of living and hurt the economy, a trend that has been seen globally. In Canada, Ontario is suing to block a federal carbon tax, and in Germany the government’s planned transition to renewable energy is facing political difficulties. In the U.S., voters in Washington state defeated a carbon tax on the ballot this year that would have started at $15 per ton of emissions and increase by $2 annually. Additionally, despite building support from the incoming Democratic majority in Congress for robust action on a Green New Deal, the lessons of France’s carbon tax revolution is that voters need to support such action – which remains to be seen domestically thus far.
     
  4. What Does This Mean For Future Carbon Pricing Efforts In The U.S.? Carbon pricing appears to have been gaining traction lately, most recently with a bipartisan group of lawmakers in the House of Representatives introducing the first carbon pricing legislation in a decade.  Yet, the Paris riots show that the cost of carbon pricing policies cannot be borne by the citizens least able to afford it. As organizations like the Climate Leadership Council have noted, the proceeds from such a carbon fee would need to be “returned to the American people” if the concept is going to gain popular support and keep the cost consumers pay for energy from skyrocketing. Others, such as the Alliance for Market Solutions, have argued that a price on carbon would need to be revenue-neutral and replace, not add to, existing regulations on pollution. Either way, both proposals work toward addressing the underlying inequities driving the unrest in France, but they face stiff resistance from environmentalists like those pushing for a Green New Deal.

While panic over climate change will continue to be a recurring trend, even though many of the most dire predictions have proved to be false, such alarmist predictions  – and the pushing of aggressive policies to prepare for those scenarios that allow the brunt of the costs to be borne by citizens least able to afford them – result in too high a cost. To make progress on addressing climate change concerns, policymakers would do well to always have the Paris riots on their minds.

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INVESTING IN VICE OR VIRTUE?

With the remarkable rise of environmental, social, and governance (ESG) factors in investing, you would be wrong to think that ESG couldn’t get much higher. In fact, the $8 billion socially responsible investment industry is having difficulty defining the burgeoning cannabis industry.

As it has grown, cannabis is causing investors to grapple with whether it is similar to “sin” stocks that they try to avoid – like alcohol and tobacco – or, whether its medicinal purposes mean that it is an ethical investment. Depending on their particular criteria, ESG-focused investors are determining what companies they can invest in, especially because the “opportunity for growth is just too strong” to ignore.

While ESG investors have laid out principles to position themselves as pure and socially-conscious, some of their actions are driven by what is currently on the political agenda they support. That was fine when “sin” industries were on the opposing side of that agenda but investing in cannabis poses a conflict they did not anticipate, a challenge companies trying to appease these investors have confronted all too often.

ROBOCOPPING ROBOCALLS

Next week, the Federal Communications Commission (FCC) will vote on a measure that is meant to combat mobile phone spam including robocalls and spam texts, and as with anything the regulator does these days, it’s controversial. The measure comes after a letter FCC Commissioner Ajit Pai sent to the CEOs of major U.S. mobile providers earlier this month urging them to take steps to create a system to authenticate calls and end nuisance calls.

Yet, in the wake of the hysteria surrounding the FCC’s repeal of net neutrality rules, Pai’s proposal to classify text messaging as an information service, rather than a telecommunications service, so that phone carriers can block spam texting, has raised concern from some consumer advocacy groups and at least one fellow commissioner, who fear the regulation could lead to censorship controlled by the providers. Regardless of the outcome of next week’s measure, the increasing public attention and criticism focused on curbing robocalls suggests that the public policy debate on this issue may become heated – and that heightened political and reputational risk is the new operating normal for the FCC.

PLAYING THE LONG GAME

Securities and Exchange Commission (SEC) member Robert Jackson Jr. threw a wrench into Silicon Valley’s plans last week when he criticized a proposal for a “Long-Term Stock Exchange” (LTSE). The LTSE, which is a planned new public market designed to foster long-term growth for startups by awarding shareholders additional voting powers the longer they hold stock, has won support from prominent techies including venture capitalist Marc Andreesen and LinkedIn cofounder Reid Hoffman, and the Trump Administration has also signaled interest in promoting such long-term investing.

According to Jackson, however, “Research has made clear that loyalty share structures often make it virtually impossible for investors to hold executives accountable.” Although opposition and wariness from institutional investors mean that the LTSE will not be approved at this time, the public conversation is indicative of a growing desire in the world of capital to move away from the breakneck, short-term incentives of most public markets and towards a culture of strategic, long-term investment.

FROM DESIGNER GENES TO DESIGNER BABIES?

The Director of the National Institutes of Health joined the rest of the scientific community last week in roundly condemning the work of a Chinese scientist who recently “created” the world’s first gene-edited babies. In a statement, the Director lambasted the experiment and other such “epic scientific misadventures.” The misadventure in question, though almost universally disavowed, may bear some positive fruit by hastening a long-overdue discussion in the scientific community: how can scholars or governments regulate science to enforce bioethical standards as technology develops?

Some scholars want a central body to review experiments for ethical concerns, while others are seeking clearer guidelines for gene editing in particular, although the most relevant factor in any ethical standard will always be the character of the government involved. While the United States may establish strict rules tied to funding mechanisms in its own jurisdiction, regimes like China’s will enforce or relax restrictions based on the long-term goals of their ruling elite, posing continued operational challenges for companies that operate globally.

California Governor Jerry Brown

TL;DR: California Keeps It 100, Copyright Or Wrong, And It’s Crypt-On

Here’s what you need to know…

Earlier this month, California Governor Jerry Brown signed into law SB 100, the country’s most aggressive, and somewhat controversial, climate bill. SB 100 mandates that the Golden State generate 100% of its energy from emissions-free sources by 2045. Along with this bill, Governor Brown also signed an executive order for the state to achieve carbon-neutrality by that same year and negative greenhouse gas emissions thereafter. California’s approach to state-driven climate policy will be the framework for other states to follow suit, so understanding what’s happening will be imperative for policymakers and business leaders going forward – whether they have a California address or not:

  • How Did We Get Here? California has long pushed policies to address climate change, already having met a goal to achieve 1990 level greenhouse gas emissions by 2020. However, fueled by anger at President Trump’s environmental policies, the state has taken on an even-higher profile from fuel efficiency standards to clean air policies. While other states and cities have also enacted 100% renewable energy goals, California is the world’s fifth largest economy and its climate policies are considered a bellwether for economic growth, meaning that the regulatory framework underlying SB 100 could find itself applied elsewhere.
  • What Challenges Are There To Implementing This Policy? SB 100 is the “most ambitious clean energy goal in the country,” and there are a number of obstacles to its successful implementation, particularly as it relates to the gap between today’s technology and that needed to make these clean energy goals a reality. For example, while California has mandated that utilities install energy storage systems to store extra solar power derived when the sun is shining, these solutions are still developing, pointing to a large renewable energy gap for the foreseeable future that will likely increase the cost of energy for residents as utilities pass on the added costs of complying with the law. Additionally, the state has previously opted to close its last nuclear power plant, and carbon-capture technology that could qualify as a zero-carbon resource has not yet achieved widespread use, further raising concerns that energy costs will balloon and become less reliable.
  • How Have Environmental Activists Responded? Natural gas and other fossil fuels will remain a core component of reliable energy for the state, which may be part of the driving force behind environmental activists who have criticized and protested Governor Brown as not going far enough with his climate change agenda. Fair or unfair, the message is clear: regardless of reality, existing technology, and steps for cleaner, more efficient energy, environmental activists cannot be appeased or satiated unless fossil fuels are eliminated in their entirety. This is an instructive lesson for policymakers and corporate leaders exploring ways to make concessions to environmental activists in the hope they will lessen political and reputational pressure targeting them and their interests.

Although just signed into law, SB 100 has other states such as Massachusetts, New York, Oregon, Washington, and Pennsylvania already making plans to follow California’s lead. The Golden State’s push for ambitious emissions-free energy shows that local and regional leaders are ready to take policy issues into their own hands, and today’s age of heightened environmental activism increases the likelihood that state-driven climate policies will be more than simply a California issue – which should give companies an incentive to engage in public policy debates in their states now so that they will be prepared for attempts by policymakers and activists to implement their own climate agendas.

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COPYRIGHT OR WRONG?

The European Union this month passed a controversial copyright law, and the fallout from the new directive suggests that passing the measure may have been the easy part. In particular, critics of the law say that it “would normalize censorship and restrict internet freedom” by preventing users from being able to post content such as links, memes, and “snippets of music and film” that have generally been protected as fair use. It would also make platforms like Facebook and YouTube directly liable for the content they host, rather than the individual users, and make those companies compensate the publishers and creators of content if it is shared on their platforms.

Further, critics of this heavy-handed approach argue that the result will be widespread censorship as platforms apply automatic filters to takedown content that could violate the new directive. Whether right or wrong, the EU’s copyright law marks a new frontier in tech regulation, raising questions about how U.S.-based Big Tech will adapt and how imperfect technologies to block and hinder protected content – used by the companies themselves – will impact free speech, competition, and the open sharing of ideas and viewpoints.

WHEN AIR BECOMES REGULATION

Dubbed the “pollution police,” sensors are being attached to Google Street View cars that measure air pollution. While it started as an experiment in Denver four years ago, Google has now expanded this operation to 50 cars across cities in the U.S. and the world – which will help lead to a more robust dataset than ever before. When measured, pollution is often only measured in a few locations per city, a troublesome fact as levels can vary within the span of a single block.

Google plans on sharing its pollution data publicly and give access to researchers and cities, allowing them to “understand where that pollution is and who it’s affecting, and then really be able to take action,” which could mean that this new data will be used by policymakers to justify more regulations, or used by activists to pressure companies and governments. If Google’s program is successful, drivers, businesses, builders, and homeowners should be prepared for the environmental regulations that may follow and the associated costs that may come with it.

FOIA FOR SECRET BALLOTS

Across Michigan, local clerks are working to fulfill a request from the out of state United Impact Group LLC under Michigan’s Freedom of Information Act seeking ballot and voting data from the 2016 presidential election. Last month, the state Attorney General’s office deemed such information to be “open record,” meaning that voter names and addresses will be turned over to the group, prompting concern from some fulfilling the FOIA requests that United Impact Group may be able “to match envelopes to ballots to be able to determine who voters voted for.”

United Impact Group, which was discovered to be a part of Democratic super PAC Priorities USA, says the request will help “inform and bolster future voter right protections” and be used for future lawsuits against voter identification laws. This example serves as a reminder that public records requests provide actionable information that can be leveraged to provide an information advantage, and more importantly, that submitting and analyzing FOIA requests are a crucial tool for achieving objectives in the political, policy, and business environments.

IT’S CRYPT-ON

Earlier this year we portended a “coming worldwide crypto[currency] crackdown,” and a recent ruling by a federal judge suggests that greater regulation is indeed on the way. While top Securities and Exchange Commission (SEC) officials have pledged “to crack down on fraud in the virtual coin market” and make so-called initial coin offerings (ICOs) subject “to the same laws the agency uses to regulate stock offerings,” the judge’s ruling applying securities regulations to cryptocurrency investment products is the first time a federal court has weighed in on the matter.

The broadening of existing SEC laws to be applied “flexibly” to ICOs has generated criticism from stakeholders in the cryptocurrency industry, which will increase the pressure for Congress to create statutory clarity for ICOs directly. When it comes to the early stages of constructing a crypto regulatory framework, one thing is clear: it’s crypt-on.

Regional industry coalition discovers it is funding its own opposition

Challenge

Several foundations were presenting themselves to a regional industry coalition’s corporate members as friendly partners on corporate sustainability initiatives. The coalition leadership suspected there was more to the foundations than met the eye. We were commissioned to investigate the activities of these foundations, which groups they were funding, and how the various foundations and other groups were connected and related.

Solution

We dug in deep to discover which groups were getting funded by the foundations and what initiatives were their true focus. We then mapped the network of activist groups connected to these foundations and presented a comprehensive report of these relationships and groups to the coalition leadership.

Although these foundations claimed to be working in good faith with coalition member companies, they were in fact funding much of the opposition to the industry group’s business goals with regulatory and legislative agencies. Our network map clearly showed how their member corporations were unknowingly funding their own opposition.

Results

With a full picture of the network of partnership and funding taking place, we provided the information needed for industry coalition’s leadership to shift their member’s funding efforts to foundations and causes that supported their interests.

 

TL;DR: The War On Plastic, Deepfakes, And VC Data Mining

The War On Plastic, Deepfakes, And VC Data Mining

Here’s what you need to know…

First with bags and now straws, a full war on plastic is sweeping the nation and the globe. The current media storm is warning people to “stop sucking,” and cities and companies are listening and making plans to, or have already banned, plastic straws. Even celebrities like Calvin Harris and Tom Brady have inserted themselves in the debate, making this movement not only mainstream, but trendy. With plastic under threat, do the facts match the rhetoric? Before resigning yourself to that paper straw, here is what you need to know:

  • How Did We Get Here? Viral social media memes about “trash islands” in the PacificOcean being tied to plastic use, upsetting video of a plastic straw harming wildlife, and last year’s #StopSucking campaign were all notable components of bringing this issue to prominence. Further, Starbucks’ recent announcement that it will eliminate all plastic straws in its stores worldwide by 2020 is only the latest factor fueling this narrative targeting plastic straws. In fact, Starbucks’ decision came right after Seattle banned plastic straws and other single-use plastics citywide, a trend that has garnered support across the U.S. and the world.
  • What Do The Facts Say? As we wrote in a previous edition of TL;DR, outlets such as The New York Times, National Geographic, and The Wall Street Journal cite the statistic that Americans use 500 million straws a day to substantiate anti-plastic policies, yet the source of this statistic was a nine-year-old elementary school student’s unconfirmed phone study. In that edition, we wrote that “a more credible estimate … of the amount of straws Americans throw away is 172 million each day.” When considering that plastic straws make up only 4% of plastic trash by piece, and only “2,000 tons of the nearly 9 million tons of plastic waste that yearly hits the waters,” the focus on straws appears misplaced. Additionally, despite the urgency paid to banning plastic straws in the U.S., a more effective place to begin to reduce plastic pollution may be overseas, as five Asian countries dump more plastic into the ocean than all other nations combined.
  • Are There Unintended Consequences From These Bans? Fast-moving policy debates driven by a viral narrative tend to ignore not only the facts, but the unintended consequences of hastily-implemented policies. Regarding single-use plastic straws, bans are drawing fire from advocates for Americans with disabilities, who depend on plastic straws to be able to eat and drink safely, without compromising privacy and dignity. Also, in the case of Starbucks’ ban of plastic straws, the lids the company plans to replace them with would actually increase the amount of plastic used. The company has responded by pointing out that the new lids are recyclable unlike the straws, yet this is cold comfort because most recycled refuse still ends up in a landfill. Lastly, with proposed alternatives like paper straws costing “maybe 10 times” more than plastic straws and proving ineffective, higher costs will likely be passed on to customers.
  • How Could Plastic Pollution Actually Be Addressed? A good first step would be to stop with the hysteria, and instead focus on the concrete policy steps that can actually address the end goal: less plastic pollution. With coastal countries in southeast Asia the origin of the vast majority of plastic pollution because of a combination of a growing consumer class and poor waste management systems, helping those countries create effective garbage collection and disposal systems could go a long way toward this goal. Other tactics to reduce plastic pollution include efforts in Asia to increase the usage of water-filtration units to cut down on bottled water consumption, or simply limit providing plastic straws to customers if they ask. Ultimately, the most immediate and effective way to positively impact the amount of plastic pollution may be simple: don’t be a litterbug.

Activists have called straws a “gateway plastic,” and indeed, are setting their sights on companies and governments to continue to push their agenda – facts be damned. In the words of one straw ban supporter, who does not “want the corporations to feel like they’re getting off easily just by eliminating plastic straws,” this is only the beginning. To stay ahead of the curve, those under fire in the public arena will need to leverage the facts of this issue to overcome their public affairs challenges.

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CORPORATIONS VS. THE DEEPFAKE

With impressive advancements in artificial intelligence (AI) continuing at a rapid pace, politicians and political campaigns are not the only ones who need to be wary of the threats from fake videos and recordings; the corporate world should take note, too. In a viral video where he imitated former President Barack Obama, comedian Jordan Peele demonstrated how AI can create fake videos that make the subjects in those videos appear to say or do something they have not.

These so-called “deepfakes” are a threat to politicians and campaigns, as opponents could weaponize fake videos to obfuscate the truth and undermine their target. However, the private sector should proactively prepare for the political and reputational risks stemming from this AI threat as well, since nefarious actors could utilize deepfakes to oust an executive, devalue a stock’s price, or damage a company’s reputation in the public arena.

MORE ELECTRICITY, PLEASE

Largely due to the expected adoption of electric vehicles over the next three decades, a new study by the Department of Energy’s National Renewable Energy Laboratory (NREL) finds that electricity demand could increase by as much as 38% by 2050. Considering that the United States already had the world’s largest decline in carbon emissions in 2017, such a development points toward an encouraging trend that can be lauded by both free-market enthusiasts and conservationists alike, particularly as America’s natural gas boom continues to decrease coal usage to meet this demand.

As the policy discussion turns to improving existing utility infrastructure, environmentalist opposition to fossil fuels – the largest sources of energy for generating electricity in the U.S. – could potentially lead to disruptions and delays that ironically hinder the future for which they advocate.

ALL FOR KAVA-NAUGHT?

Well, this is awkward. Twenty-one newspapers across the country were “duped,” publishing identical letters signed by different individuals bashing Supreme Court nominee Judge Brett Kavanaugh and asking the American people “to take the for-sale sign off our democracy.” Interest groups opposing Kavanaugh’s nomination have denied responsibility, which is understandable given that admitting to being the mastermind of this spectacular AstroTurf campaign fail would be embarrassing.

For the rest of us, we received a near-flawless case study in how not to achieve your public affairs objectives. In the event your opposition is a worthier adversary, you can call Delve to help expose the strategies and tactics of any influence campaign arrayed against your interests.

ADVENTURES IN VENTURE CAPITAL 

Finally, some light will be shed on a discrete industry largely unknown to the public. We are not talking about competitive intelligence for public affairs however, but venture capital (VC). Stanford University’s Venture Capital Initiative has been “steadily amassing a deep and unprecedented database to figure out how VC really works,” which will not only provide insights as to how these firms make decisions, but also some of the best practices they have used to successfully fund and grow startups – notable given the record $23 billion invested by VCs in the second quarter of 2018.

Stanford’s data set includes tens of thousands of contracts between VC firms and the companies they invest in, with less than 1,000 of those having actually been analyzed for insights because they have “to build a whole infrastructure with lawyers, data scientists, and dozens of research assistants who help … read them.” This suggests that more insights are forthcoming as these documents are evaluated, and also demonstrates something the analysts in the Delve research bullpen know well: collection is easy; analysis is hard.

Trans Mountain Protester

TL;DR: Pipelines Get Political, Too Big To Punish, And Death, Taxes, And Oppositional Forces

Pipelines Get Political, Too Big To Punish, And Death, Taxes, And Oppositional ForcesTrans Mountain Protester

Here’s what you need to know…

This week, thousands of energy professionals from around the world are descending upon Washington, DC for the World Gas Conference. Held every three years, this is the first time the conference will be held “in a country that is both the world’s largest gas consumer and gas producer,” suggesting the United States has a bright energy future ahead if it can continue to safely extract resources and bring them to market.

However, in a new Morning Consult piece coinciding with the conference, Delve CEO Jeff Berkowitz writes that the continuing politicization of pipelines, regardless of what kind of fossil fuel they are transporting, poses challenges to harnessing this energy future. Especially in light of activism in British Columbia that led to Canada’s proposed $4.5 billion takeover of the Trans Mountain pipeline expansion, the energy industry needs to adapt to the reality that pipelines have gotten political.

  • How Did We Get Here? Pipeline projects used to be non-controversial, with much of the opposition against them due to localized NIMBY-ism. All that has changed in today’s New Age of Activism though, where opposition has become increasingly professionalized, digitized, and globalized in an effort to delay and disrupt pipeline projects by politicizing staid bureaucratic processes and taking their case to the courts of both law and public opinion. As protests targeting the Trans Mountain pipeline expansion intensified to the point where it has some wondering if it is the “next Standing Rock,” Canadian Prime Minister Justin Trudeau blamed the uncertainty caused by activists for making the project “too risky for a commercial interest” to build. Trudeau’s ironic about-face highlights that pipelines are not just “too risky,” but have become too political – even for the famously adaptive politician.
  • This Did Not Begin With Trans Mountain: Since the Keystone XL pipeline inspired a chain of activists around The White House in 2011, energy activism has grown increasingly prevalent in the political landscape, even becoming a political litmus test for Democratic candidates up and down the ticket. It then continued with the massive protests against the Dakota Access pipeline that began in the Fall of 2016, and since then has metastasized to other projects around the continent. Trans Mountain is simply the latest casualty of activist efforts.
  • Welcome To The New Normal: Keystone XL, Dakota Access, and now Trans Mountain are not aberrations, and activist pressure on banks and financial institutions to divest from fossil fuel companies demonstrates the savvy tactics posing risk to the industry going forward. This is the new normal. With the trends pointing toward increased tension, confrontation, and uncertainty, the energy industry must manage and mitigate the political and reputational risk of energy activism, or else risk financial consequences that can hurt the economy and national security of the countries in which it operates.
  • How Can Companies Adapt To This New Operating Environment? Existing initiatives focused on community engagement and being-a-good-neighbor policies will always have a role to play in getting pipelines built. Yet, what today’s operating environment also requires is a vigilant and proactive strategy to anticipate and mitigate the public affairs challenges of energy activism. This strategy must include understanding the networks of activism arrayed against infrastructure projects and taking steps to address them, before activists show up at construction sites and regulatory meetings, delay and disrupt pipelines, and negatively impact not only a company’s bottom-line – but also a country’s economic and national security.

Activist pressure has only continued to increase in the wake of the Canadian government’s decision to purchase the Trans Mountain expansion, reminding us that companies are not the only ones facing increased political and reputational risks, and that there is little to suggest that activism will stop until fossil fuel usage is entirely (and impractically) stopped. Read the entire op-ed in Morning Consult here.

News You Can Use

DEATH, TAXES, AND OPPOSITIONAL FORCES

They say nothing is certain but death and taxes, although might we suggest another: oppositional forces. Ironically, both death and oppositional forces are key to an ongoing policy debate. Aquamation, also known as water cremation, is a method of body disposal that is legal in 15 states. While supporters consider it to be “kinder” than embalming or cremation, as well as the “most environmentally friendly method of death care,” opponents – ranging from casket-makers to the Catholic Church – have mobilized against efforts enabling its spread.

After supporters spent $40,000 lobbying one state legislature to legalize aquamation, they were dismayed when a lawmaker who was also a casket-maker derailed the initiative with a viral floor speech comparing the process to “flushing” a loved one. The takeaway? That in today’s policy environment, shoe-leather lobbying in and of itself is not enough, particularly when you can count on death, taxes, and oppositional forces. 

NOT WAYFAIR WINDS AND FOLLOWING SEAS

The President may see it as “a big, big victory”, but the Supreme Court’s Wayfair decision giving state and local governments the ability to start collecting sales taxes from online retailers seems like a big, big headache for pretty much everyone else. As foreshadowed in a previous TL;DR, the ruling may lead to an open season for politicians to implement new revenue schemes and push the limits of their taxing authority.

Not only will companies and consumers have to adapt to a patchwork of state-specific laws in the absence of congressional action, small online businesses may even find themselves in local courthouses far from their location fighting the expansive new tax laws. Consumers may also begin seeing new numbers popping up in their online shopping carts and possibly even with their streaming services. Sometimes, the Court’s ruling enables clarity at the federal level on a public policy question. In this case, Wayfair instead may make that even more unlikely as state and local governments get used to the idea of a new source of revenue.

TOO BIG TO PUNISH?

In an investigative piece, CQ Magazine’s Mike Magner argues Wall Street regulators have been taking it to small firms, and in comparison, letting the big banks off the hook. Magner and Georgetown Law Professor Urska Velikonja dug into Security and Exchange Commission (SEC) enforcement data of the 1,620 cases the regulatory agency has settled since 2008, determining that 762 of those cases would have “triggered automatic” penalties under the Dodd-Frank law regulating financial institutions. However, the SEC passed on enforcing these automatic penalties in 26 percent of these cases, most of which involved most major banks and financial institutions rather than smaller firms.

The reasons cited for the disparate treatment included the reluctance to punish a large firm for the bad actions of a few individuals, the generally “more robust compliance systems” that large institutions can afford to have in place, and the negative impact such penalties could have on the financial system as a whole. Regulations such as Dodd-Frank were put in place to hold major banks and financial institutions more accountable and ensure no future financial crisis is caused by their irresponsibility, but this data shows the law aimed at addressing their past missteps may have instead hurt small banks on which many Americans depend.

PEOPLE ARE POLICY

While hundreds of key positions in the Administration remain unfilled after more than 500 days in office, the gears of government are grinding – and the people in place are the ones who are determining the direction of policy. For one example, look no further than The New York Times’ feature on the Heritage Foundation, a think-tank that has provided a list of conservatives “to serve in a post-Obama government,” and that has accomplished an impressive 64% of its policy agenda in the first year of the Administration.

The impact of people on policies and organizations is something we here at Delve are very familiar with, which is why we created our special report on understanding the Administration staffers in place last year.  Because then and now, when navigating complex policy issues in a challenging environment, insights into key stakeholders are key to achieving one’s public policy objectives.