Archive for category: Energy & Utilities

Trends in Energy: What To Expect in 2021

1. Biden Administration Makeup Signals a Whole of Government Approach to Climate

Greens Groups Look To Exert Influence In Biden Administration In Traditional Energy Positions And Beyond. As President-elect Biden began the process of selecting his senior White House staff and Cabinet nominees, environmental groups were assessing potential appointees across all parts of the government through green lenses. In October, we wrote about how pressure from environmentalists could pose challenges for a Biden Administration’s climate goals by blocking prospective appointees who have the knowledge and experience to achieve those goals over their corporate ties. Now, as some environmental groups push climate purity tests, division has arisen amongst the groups about how to best exercise their influence. Still, it is clear that expectations from environmentalists are playing a significant role in influencing the makeup of all parts of a Biden Administration. In November, the Stop The Money Pipeline Coalition wrote to the President-elect calling on him to “ensure that all financial-sector appointees to your administration are fully vetted regarding their commitment to shifting at full speed into economic principles and practices which completely support renewable energy and fully divest from fossil fuels.” Biden’s selection of Michael Regan as EPA Administrator-designate, instead of the presumed frontrunner Mary Nichols, shows how much influence environmental advocates are already wielding in Biden world. As Biden continues to fill out his government, expect that influence to extend throughout the incoming administration.

Biden’s Early Nominees Show “There Is Literally Something For Every Agency To Do” On Climate.  As Biden continues to look to environmental activists to build his government, even pulling from their ranks, it is increasingly clear Biden will take a whole of government approach to climate issues.  Biden’s recent appointment of former Secretary of State John Kerry as his climate envoy will add significant environmental focus to the State Department and National Security Council. Xavier Becerra, Biden’s choice for the Department of Health and Human Services, created the first “environmental justice bureau” within California’s Department of Justice and can be expected to be similarly environmentally engaged at HHS. Biden’s nominee for USDA, former Iowa Governor Tom Vilsack, is also expected to play a role in the administration’s climate policy, including in plans to ban new fracking permits on federal lands. Reportedly, the USDA’s role in climate policy made the job more appealing to Vilsack. Biden’s selection of Pete Buttigieg as Secretary of Transportation further cements that “the Transportation Department under Mr. Biden is expected to play a newly climate-centric role,” given Buttigieg’s campaign commitments on vehicle emission standards and reaching carbon neutrality by 2050. As Evergreen Action’s Sam Ricketts noted, on climate policy, “there is literally something for every agency to do” in a Biden administration. With Biden’s selection of NRDC president Gina McCarthy as domestic climate coordinator, the President-elect gets an ambitious climate regulator with expertise in the workings of the federal government, who has proven unafraid to push for aggressive regulatory action, with or without Congressional direction.

Biden’s Environmental Staffing Indicates Significant Access For Activists. Gina McCarthy, the President and CEO of NRDC, won’t be the only green activist staffing Biden’s Energy and Environmental posts. Biden’s EPA transition team is being led by Patrice Simms, an attorney with Earthjustice, “which has filed over 100 lawsuits against President Donald Trump’s administration.” Michael Regan previously led the Environmental Defense Fund’s climate and clean energy work, and Brenda Mallory, Biden’s pick to head the White House Council on Environmental Quality (CEQ), is currently the Director of Regulatory Policy at the Southern Environmental Law Center. As the President-elect continues to fill out the agencies most directly in charge of energy and environmental regulations, it is increasingly clear climate activists will have direct access to some of Biden’s most senior advisors and cabinet officials.

2. Air Pollution and Fencline Activism Will Take on an Increasingly Prominent Role in Infrastructure Permitting

Fenceline Opponents Of Infrastructure Are Increasingly Citing Environmental Justice Concerns When Opposing Air Permits. More and more, activists are referencing environmental justice (EJ) concerns when fighting air permits for infrastructure development. Local opponents of infrastructure development, often supported by large national environmental groups, have been publicly fighting air permits citing EJ concerns across the country. In Louisiana, a judge recently delayed a permit for construction of a plastics plant, telling the state Department of Environmental Quality and company lawyers that updated “air permits must have a complete EJ analysis.” In New Mexico, two attorneys with the New Mexico Environmental Law Center are opposing air quality permits for an asphalt plant citing EJ concerns. In New York, opponents of a power plant along the Hudson river are pointing to EJ provisions in the state’s recently passed Climate Leadership and Community Protection Act, and their efforts are being amplified by national organizations like Food & Water Watch.

With EJ Featuring More Prominently In Permitting Fights, Green Groups Look To Regulators And Legislators For Codification. As New York activists cite the EJ provisions in the state’s new climate law, across the country, green groups are lobbying for similar provisions to be included at the state and national level. In September, New Jersey Governor Phil Murphy signed legislation to “require mandatory permit denials if an environmental justice analysis determines a new facility will have a disproportionately negative impact on overburdened communities.” Highlighting the legislation, the Sierra Club New Jersey chapter criticized Governor Murphy for allowing two Newark industrial facilities to continue with the permitting process. At the national level, the NRDC recently called for the Biden EPA to address EJ concerns by “vigorously control[ing] air pollution from industrial facilities, freight, heavy-duty trucks, fleets, ocean going vessels and locomotives.”  NRDC’s advocacy comes with claims that the COVID-19 pandemic has most impacted “highly segregated and polluted communities.” Such health claims will likely be highlighted in upcoming calls for regulating emissions including methane and ethylene oxide, and, befitting the expected whole of government approach to climate issues, Transportation Secretary-designate Pete Buttigieg has pledged scrutiny on urban highways over EJ concerns, tweeting that the Administration “will make righting these wrongs an imperative.

3. Natural Gas’s Future Is Increasingly Unclear, at Home and Abroad

As The Biden Administration Is Inaugurated, Natural Gas Opponents Have Growing Momentum. The fight over natural gas bans and electrification, which swept across the nation in 2020, is set to gain more ground in the new year. In Massachusetts, state lawmakers have passed legislation that could clear the path for local gas bans in the state. In Washington, legislation developed by Governor Jay Inslee “would require all new buildings in Washington to be zero-carbon by 2030 and seek to eliminate fossil fuel consumption in existing buildings by 2050.” Beyond local building electrification efforts, across the country opponents of natural gas have fought new infrastructure development, even when it would reduce existing emission levels. Among other places, such fights have arisen in Newburgh, New York, at Ohio State University, and in North and South Carolina, where Sierra Club has criticized Duke Energy plans to replace coal burning with gas. Opponents of gas infrastructure will have an ally in President Biden, who supports a 100% clean grid in 15 years, and during the campaign supported “direct cash rebates and low-cost financing to upgrade and electrify home appliances.” Biden’s Department of Energy could also expedite electrification efforts without Congress’s help by updating existing building and appliance efficiency standards.

As The EU Advances Its Green Deal, The Future Of LNG In Europe Is Clouded. As Europe continues to push for a Green Deal that will “impose wrenching change on the EU,” the future of American LNG exports to the continent is rapidly growing cloudier. In November, French power company Engie “halted negotiations on a multibillion dollar contract to import U.S. liquified natural gas.” Despite the State Department advocating for the deal, the French government ultimately walked away from the proposal due to “concerns that U.S. natural gas was too dirty.” The deals cancellation is cause for concern that Europe’s climate aspirations might hamper future exports of American LNG. These concerns are amplified by American green groups’ opposition to future LNG exports, and the opacity of the incoming Biden Administration’s views.

These Anti-Fossil Fuel Efforts Comes As More Businesses Are Beginning To Question The Path To Climate Goals As Global Economy Struggles To Recover From COVID-19. As local gas bans spread across California, the California Restaurant Association (CRA) continued its legal fight against the city of Berkeley’s gas ban, gaining support from national trade associations including the National Association of Homebuilders, the National Association of Manufacturers, the Air Conditioning, Heating and Refrigeration Institute, and the Hearth, Patio & Barbecue Association. Similarly, the local Golden Gate Restaurant Association (GGRA), which has previously supported surcharges meant to help fight climate change, in November, opposed a gas ban in San Francisco, citing the impact on small businesses. Outside of the US, two of the UK’s most famous architecture firms created a splash in December when they exited a pledge to reduce the architecture and construction industry’s emissions by nearly 40%. Foster + Partners and Zaha Hadid Architects both withdrew from Architects Declare, apparently over a disagreement about building lucrative airport projects and “their contribution to carbon-heavy international travel.” As the global economy works to recover from the COVID-19 pandemic, more businesses will begin to weigh the feasibility of both self-imposed and statutory climate goals, and the use of natural gas is likely to remain at the center of many of these conversations.

4. Financial Regulatory Fights Over Fossil Fuels Will Take Center Stage in 2021

Financial Regulators Continue Engaging On Climate Issue As Biden Administration Takes Shape. In October we wrote about the trend of increasing climate scrutiny from financial regulators and the potential for more financial regulation of the energy industry. In November, the Office of the Comptroller of the Currency (OCC) advanced a rule seemingly intended to discourage such efforts. The rule would prohibit large U.S. banks from refusing to lend to entire categories of lawful businesses, such as oil and gas, simply because they might be controversial or out of current public favor. Elsewhere, however, financial pressure on fossil fuels continued as New York Comptroller Tom DiNapoli announced in December a “target of getting the state’s $226 billion pension fund’s portfolio to net-zero emissions by 2040.” The Federal Reserve also made climate headlines in December with its decision to join a “three-year-old network of central banks working to manage climate-related risks to the financial system.” The decision signals the Fed “may get more active [on climate] in other ways, especially as incoming President Joe Biden makes nominations to the board.”

Biden Administration Set To Increase Financial Scrutiny On Fossil Fuels As Industry Promotes Stronger ESG Standards. As the Fed signals increased financial scrutiny of fossil fuels, the Biden Administration has indicated it is also likely to take regulatory action to add financial pressure to fossil fuels. During the campaign, Biden’s climate plan included a pledge to require “public companies to disclose climate risks and the greenhouse gas emissions in their operations and supply chains.” As the new Congress begins, Congressional Democrats will push for similar regulations on the banking industry with calls for the Biden Administration to force “lenders to abide by disclosure rules and stress tests to make sure they aren’t the source of a new crisis.” Congressional Democrats may have found their champion in Janet Yellen, Biden’s nominee for Treasury Secretary, who is a supporter of a carbon tax and seems set to bring Treasury’s clout into the climate debate. With federal and state governments set to take more aggressive action in the area, industry has already begun to show how it can engage productively on such issues. In December, the Energy Infrastructure Council (EIC), which represents companies that develop and operate energy infrastructure, “released the first-ever Midstream ESG Reporting Template,” setting an early example for how energy firms can proactively influence the conversation and inform investors regarding their sustainability initiatives.

5. Will Bezos Surpass Bloomberg as Climate Activism’s Biggest Benefactor in 2021?

In 2020, Bezos Entered The Climate Philanthropy Mainstream, And 2021 Could Make Him Its Largest Benefactor, Fueling Energy Activism To Even More Aggressive Levels. In February 2020, Amazon founder Jeff Bezos announced the launch of a new group, Bezos Earth Fund, which he said would provide $10 billion for “scientists, activists, NGOs – any effort that offers a real possibility to help preserve and protect the natural world.” The announcement immediately places Bezos at the level of long-time climate activism funder Michael Bloomberg, whose funding for Beyond Coal, Beyond Carbon, and other such initiatives have totaled more than $150 million, with $500 million more pledged through 2022. In November 2020, Bezos revealed the first round of organizations receiving funding from Bezos Earth Fund. While The Atlantic noted, “The fund portended a revolution,” the first round of giving left critics are wondering if Bezos played it too safe, as the first round of Earth Fund disbursements largely went to the most established and well-funded environmental organizations, such as ClimateWorks, Energy Foundation, Environmental Defense Fund, Natural Resources Defense Council, and the Rocky Mountain Institute. In Bezos’ defense, Daniel Firger, who oversaw billionaire Mike Bloomberg’s climate philanthropy, noted, “It’s hard to write an eight-figure check to any but the biggest, most established grantees.” Given that reality, as Bezos looks to dole out the next round of Earth Fund donations in 2021, he could quickly surpass Michael Bloomberg as environmental activism’s leading benefactor, and the beneficiaries are likely to be the oil and gas industry’s already well-established detractors.

Trends in Energy Infrastructure: October Update

Rockefeller Oil Heirs Add More Fuel to the Divestment Fire Amidst Increased Financial Activism Among Business Community

Rockefeller Family Founds BankFWD In Newest Divestment Push. The Rockefeller family and its associated funds have long been aggressive funders of environmentalism and supporters of the divestment movement. For years, the Rockefeller Brother’s Fund (RBF) funded 350.org, the campaign group which has become a champion of divestment. RBF divested itself from fossil fuels in 2014, and the Rockefeller Family Fund followed suit in 2016. In September 2014, Bill McKibben, founder of 350.org called RBF’s decision to begin divesting “one of the most important moments in the whole divestment campaign.” Now, the Rockefeller family is renewing its divestment activism with the formation of BankFWD, which is co-chaired by three members of the family, each of whom is on the board of different family trusts. BankFWD plans to pressure major banks to stop investing in fossil fuels by aiming to press wealthy individuals to “sign a pledge that they will press their banks to phase out fossil fuel investments.” While the group is still in its early stages, it is recruiting from the Rockefeller family’s wealthy network, and the group’s co-chairs have already directly met with some of the banks they plan to target. As BankFWD grows in size, expect these activists to publicly pressure financial institutions to reach Net Zero in investing, and call for more climate reporting, whether by government mandate, or shareholder initiative.

New CFTC Report A Harbinger Of Increased Climate Scrutiny From Financial Regulators. On September 9, 2020, a Commodity Futures Trading Commission subcommittee published a report recommending the U.S. establish a price on carbon, arguing “all relevant federal financial regulatory agencies should incorporate climate-related risks into their mandates,” and urging “financial supervisors” to “require banks and nonbank financial firms to address climate-related financial risks … in a way that is appropriately governed by corporate management,” among other recommendations. The report was approved by more than two dozen financial institutions, including Citi, JP Morgan, and Morgan Stanley, who supported “the overarching goal” of the report. CFTC’s report could be a sign of things to come for financial regulators, especially the SEC. In September, the Securities Exchange Commission (SEC) advanced a rule to make it more difficult for activist investors to press companies with ESG related shareholder investments. Despite the rule’s passage by a 3-2 vote, SEC Commissioner Allison Herren Lee’s op-ed in The New York Times days later, which cited the CFTC report, indicated the issue is far from settled. Should Democrats gain more control in Washington after next month’s election, this issue is likely to be at the top of their agenda with support from Senators like Elizabeth Warren (D-MA).

Growing Climate Consciousness Adds Pressure To Insurance And Legal Industries. September also saw nearly 60 climate conscious businesses, including Ben and Jerry’s and Patagonia, call for the U.S. insurance industry to “[limit] fossil fuel investments and underwriting.” Axios recently reported on the recent slew of corporate climate actions, and claimed the trend may be more serious than in the past, as businesses believe “young, dynamic, and intelligent job candidates want to work for a company that is leading on climate.” These businesses may be correct, as more than 600 law students recently pledged to boycott the law firm Paul, Weiss, Rifkind, Wharton & Garrison, unless it ceases providing legal services to Exxon. As the corporate world and those seeking to enter it continue to engage more seriously on climate issues, more scrutiny and demands to drop support for fossil fuel firms will increasingly becoming a norm, rather than an outlier.

While Focus Is on the Outcome of the Presidential Election, State, and Local Races May Have a Greater Impact on Future of Energy Infrastructure Development

Environmental Activists Now Targeting, And Winning, Down Ballot Races. As much of the nation’s attention is consumed by the presidential election, what happens down ballot could have a more direct and immediate impact on energy infrastructure development. Over the last several years, environmental groups have targeted lower profile races in order to elect “Green New Deal Champions” up and down ballot, and the impact is already being felt. For example, in 2017, the Sierra Club San Francisco Bay Chapter endorsed Kate Harrison for city council. Two years later, in July 2019, the Berkeley City Council passed legislation put forward by Councilwoman Harrison to become the first city in the nation to ban natural gas in new buildings, setting off a trend across the country. In 2019, Brookline, Massachusetts followed Berkeley’s lead, passing a ban on oil and gas infrastructure in new buildings. Lisa Cunningham, a co-petitioner for the bylaw, is a member of “Mothers Out Front,” an activist group with anti-natural fossil fuel ties to Sierra Club and Rocky Mountain Institute. In the 2020 election, the Sunrise Movement has gotten a lot of attention for its role in Senator Markey’s primary victory over Representative Joe Kennedy, but has gotten far less attention for its role in supporting progressives in state and local primaries in Colorado, New York, and Kentucky. In places like North Carolina and Pennsylvania, attorney general races have become a focal point for environmentalists. In Pennsylvania, incumbent AG Josh Shapiro won his 2016 election after threatening to “hold the Big Oil and Gas companies criminally liable,” and with the support of environmental activists in the state. In North Carolina, incumbent Attorney General Josh Stein, who has challenged both Duke Energy and the Trump Administration on environmental issues such as coal-ash and the Clean Water Act, boasts endorsements from the Sierra Club, North Carolina League of Conservation Voters, and Southern Alliance for Clean Energy.

Michigan Joins States To Commit To Carbon Neutrality On Aggressive Timelines, As States And Localities Pursue Climate Lawsuits. As down ballot races grow more environmentally focused, state and local policymakers are more able than ever to influence and disrupt environmental policymaking. In September, Michigan Governor Whitmer committed the state to carbon neutrality by 2050, joining eight other states with carbon neutrality pledges, and city and county governments across the country have jumped on the electrification trend. Over the past few years, states and localities have begun testing a new tactic in their battles against energy producers: lawsuits against oil and gas companies for allegedly misleading the public about the dangers their products caused related to global warming. In October, the Supreme Court announced it would soon put this trend in the spotlight. Next year, the high court will hear a case brought forth by Baltimore that could have major implications for whether similar cases would be considered in federal or state courts in the future. As former-President Obama observed, “elections have consequences.” Even if President Trump is reelected in November, state and local officials will continue to be able to obstruct efforts to promote infrastructure development.

How Pressure From the Left Could Make It Harder for a Biden Administration To Achieve Climate Goals

Environmentalists Are Trying To Block Potential Nominees They View As Insufficiently Aggressive On Climate Change. As one high profile utility executive quipped last year, “you can legislate physics, but physics still follow their own rules.” Now, progressive groups may be trying to prove him wrong. Respected public policy observers like Washington Post’s David Ignatius believe “America’s next president must continue Obama’s progress on clean energy” and have highlighted the work of then-Energy Secretary Ernest Moniz as “arguably President Obama’s best Cabinet appointment.” Progressive groups, however, have targeted the former Energy Secretary and other Democratic leaning policy officials due to their lack of fealty to progressives’ desired steps on climate. For environmentalists, Moniz’s “fact-based, technology-respecting” approach to reducing carbon emissions is unacceptable. Rather, those pushing Biden’s transition team claim “an incumbency of old ideas (like ‘all of the above’ energy policy) must end.” This pressure comes amidst a broader effort to purge the Biden transition of corporate and industry experts with knowledge and experience in the policy areas for which Biden might hope to enlist them. The result may be a mismatch between policy demands and expectations, and the reality of what can be achieved by an administration made up of ideologues who lack the necessary experience to advance a president’s agenda. After years of suggesting an unqualified cabinet leads to ineffective governance, progressives may want to reconsider their opposition to the candidates who could effectively advance their desired goals.

Jockeying For Nominations Begins With Energy Industry Opponents Positioning Themselves For Environmental Posts. Despite people within Biden’s camp remaining tight-lipped about who might get  important cabinet and administration nominations should Biden win, (including potentially for a Climate Czar,) the jockeying has already begun for a number of environmental posts. Billionaire environmental activist and one time presidential candidate Tom Steyer has reportedly expressed interest in a position in a Biden administration. Politico recently reported that three New Mexican lawmakers, Rep. Deb Haaland and Sens. Tom Udall and Martin Heinrich, have positioned themselves as potential Interior Department leaders. Each of the three have opposed fossil fuels despite their state’s reliance on the oil and gas industry, with Haaland serving as the vice-chair of the House Natural Resources Committee and a member of the Biden campaign’s Climate Engagement Advisory Council amidst both of those bodies advancing initiatives within the framework of the Green New Deal and both Udall and Heinrich cosponsoring Senator Ed Markey’s Green New Deal legislation. While we likely will not know who a President Biden would nominate until sometime after the election, we do know environmentalists will be working to make any Biden cabinet as progressive as possible, and there will be a “rich talent pool” for Biden to pick from. As the old saying goes, in Washington, people are policy.

At the start of 2020, Delve analysts identified the top six trends in energy infrastructure to watch over the year. While 2020 has brought unexpected challenges, we are looking back, now more than halfway through the year, on how some of our predictions have changed and how they still ring true in this “new normal.” In July, Part 1 of this mid-year update explored how COVID-19 has impacted the first three trends we identified for the year. This update examines the remaining trends, including how regulatory pressures have continued their shift to state and local levels, the mainstreaming of next generation, more disruptive energy activism, and the growing pressure facing financial institutions from both ends of the political spectrum.

4. Whether Democrats Take the White House Back or Not, Policy and Regulatory Pressures Have Shifted To State and Local Officials – And the Courts

With now over three years of the Trump Administration cutting regulatory red tape, state and local officials have taken up the environmental mantle to advance the climate issue on their own. Following efforts by the Sierra Club, by the end of 2019, seven states, plus D.C., and Puerto Rico had made commitments to 100% renewable energy on aggressive timelines. This year, states have continued that trend. In April, Virginia added its name to the list when Governor Northam launched Clean Energy Virginia, which includes requiring all carbon emitting sources of electricity in the state to be out of service by 2045. Lawmakers in Massachusetts could soon decide to add the commonwealth to the list as well, as they face mounting pressure from activist groups to pass an aggressive 100% renewable plan that would require all of the commonwealth’s electricity to be renewable by 2035 and all heating and transportation energy to be renewable by 2045.

City governments are joining these governors in taking aggressive climate actions. The Sierra Club’s “Ready for 100” pledge closed out its commitment drive with the support of 226 mayors from across the United States, and more than 400 mayors have joined the bi-partisan Climate Mayors, a network that is “working together to demonstrate leadership on climate change. Earlier this year, Miami and Phoenix added their names to a list of U.S. cities in C40 Cities, a global group of cities committed to achieving the goals of the Paris Climate Agreement, bringing the total count of U.S. cities in the group to 14.

State Attorneys General are also taking up the climate fight. Since the onset of the Trump Administration, AGs in a number of states have fought the Administration’s regulatory rollbacks, and the AGs from Washington, D.C. and Minnesota recently have reinvigorated the effort to take energy producers and production to court for “covering up climate change for decades.” The two AGs filed lawsuits against Exxon Mobil, Shell, BP, Chevron, and Koch Industries. In June, Massachusetts Attorney General Maura Healey furthered another line of attack on fossil fuels, petitioning the state Department of Public Utilities to investigate the future of natural gas in the state and to “work with stakeholders to develop a nation-leading regulatory and policy roadmap that protects customers during the necessary transition away from reliance on natural gas and other fossil fuels.” This move comes on the heels of Brookline, MA banning new natural gas hook ups last fall, with several other Bay State municipalities awaiting this guidance requested by Healey before moving forward with similar bans. Activist AGs have also seized on the COVID-19 pandemic as a means to push their environmental agenda. In May, 11 attorneys general called on FERC to “impose immediate moratorium on approving fossil-fuel projects until coronavirus crisis is over.”

To help aid in these various legal fights, former New York City Mayor, Michael Bloomberg, has directed funding toward the State Energy & Environmental Impact Center at the NYU School of Law to provide legal support to state attorneys general in “defending and promoting clean energy, climate and environmental laws and policies.” If Joe Biden is elected in November, his Administration may very well provide further backing to these legal efforts as well. However, regardless of who sits in the White House in 2021, state and local governments are rapidly picking up issues that have been traditionally handled by federal regulators. The new age of energy activism has already made local policymakers and regulators into standard bearers in the climate fight, and public affairs professionals need to recognize that traditional DC focused lobbying efforts and relationship building are no longer enough to protect their companies’ interests and advance their business objectives.

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 2019, we saw a new generation of voices begin to reshape the environmental movement by tapping into young voters’ “existential anxiety,” to engage a more confrontational and disruptive activist. While organizations such as the Natural Resource Defense Center, Sierra Club, and other traditional, established groups remain, these groups are now the moderates in the fight against climate change. In 2020, this trend has continued with the rapid growth and acceptance of next generation environmental activism. Today, Extinction Rebellion, or XR, the radical UK-based climate group has grown to has more than 1,000 groups, from nearly 500 at the beginning of the year. Here in the United States, the Sunrise Movement’s organic and viral climate campaign has engaged and mobilized students and has been instrumental in promoting the Green New Deal and making climate change a critical issue for policymakers through untraditional tactics like a November 2018 sit-in at House Speaker Nancy Pelosi’s office that was joined by freshman Congresswoman Alexandria Ocasio Cortez (D-NY).

Despite the COVID-19 pandemic putting a halt on much of American life through the start of the new year, Sunrise has continued to engage young activists through their Sunrise School which has regular training sessions and connects activists around the country. These new activists have the ability to scale quickly, adapt to whatever their circumstances, and utilize tactics that used to be considered outside the mainstream, pandemic or not. More importantly, however, they are no longer just sitting outside the elected officials’ offices protesting, but being invited into the room with a seat at the table. For example, Democratic Presidential nominee Joe Biden included Varshini Prakash, co-founder of the Sunrise Movement, on his campaign’s climate task force, which is also co-chaired by Rep. Ocasio-Cortez. Beyond the White House, Sunrise is developing an effective political operation down ballot, endorsing “Green New Deal Champions” and getting their supporters to make calls for their preferred candidates. In many cases, they’re winning. In two years, Sunrise has gone from staging protests in Speaker Nancy Pelosi’s office, to helping shape the Democratic Party’s climate platform and helping pick the winners in Democratic primaries. As these next generation activists are able successfully elect more “Green New Deal Champions,” their impact will only grow following the 2020 election.

The increased disruptiveness of these next generation activists has also incorporated a broader set of progressive groups than previously focused on environmental issues. The Democratic Socialists of America, for example, have prioritized environmental justice and “Energy Democracy,” both as a national organization and by a number of their local affiliates. DSA chapters have led efforts to municipalize utilities in Chicago, Massachusetts, Rhode Island, and California, and have taken part in “Energy Democracy” coalitions in traditionally conservative states like Alabama. The group argues such municipalization is necessary to shut down fossil fuels and shift generation to 100% renewables, putting forth a set of guiding principles for what it calls an “Ecosocialist Green New Deal.” These principles include decarbonizing the economy fully by 2030 by nationalizing fossil fuel providers and phasing them out while establishing public ownership of all utilities and the electric grid. Much like the XR and Sunrise, DSA too has grown despite the pandemic, with The Atlantic reporting, “the Democratic Socialists of America have an estimated 10,000 new members … that organizers attribute, in part, to the coronavirus pandemic.” As these groups and their allies further advance into the mainstream of environmentalist efforts, industry public affairs professionals will have to adapt how they protect energy projects from these disruptive efforts to influence policy and regulatory decisions.

6. Financial Institutions Have Responded To Shifting Climate Opinion With Dramatic New Environmental Policies, But These Concessions Have Only Increased Pressure From Across The Political Spectrum

Despite Blackrock’s pledge early this year to make “sustainability” the firm’s “new standard for investing,” activists still targeted the firm. Meanwhile, the “Stop the Money Pipeline” campaign that launched in January has targeted specific banks, insurance companies, and asset managers that fund fossil fuel projects. JPMorgan Chase was one of the first targets of this initiative, with demands the bank divest from fossil fuels and calls for customers to close their accounts. In July, Morgan Stanley announced it would become the first major U.S. bank to publicly disclose how much its loans and investments contribute to climate change. The bank was quickly joined in this commitment by Bank of America and Citi.

These broader climate commitments follow announcements earlier this year to stop providing financing for Arctic drilling. Morgan Stanley, UBS, Wells Fargo, and Goldman Sachs all announced they will no longer invest in or support oil projects in the area. These announcements came after a group of Senate Democrats wrote a letter to a group of major financial institutions demanding they stop funding such projects. Following Morgan Stanley’s announcement, the Sierra Club noted Bank of America “is only remaining major us bank without a commitment not to fund arctic drilling.”

Pressure from policymakers goes both ways, however. In response to this shift by financial institutions, a group of Congressional Republicans wrote a letter to President Trump arguing, “Wall Street’s big banks … should not be able to reap the benefits of participating in federally guaranteed loan programs laid out in the CARES Act … while simultaneously targeting American energy companies and workers.” In turn. the Trump Administration announced the Treasury Department will “take a serious look at these banks’ actions,” while “The OCC [Office of the Comptroller of the Currency] intends to seek additional information from the banks involved to understand the rationale for these decisions as well as their effect on our national economy and local communities.”

Separately, the Department of Labor took aim at the increasing investor focus on social impact with a regulatory proposal to add specific requirements for fiduciaries considering Environmental, Social, and Governance (ESG) oriented investments. The proposal “reiterates that fiduciaries are prohibited from disregarding pecuniary considerations to instead pursue ESG-related considerations.” This move by Labor was widely seen as a reaction to heightened pressure to place ESG concerns at the forefront of investing. The move comes as a “group of large investors,” including “more than three dozen pension plans, fund managers and other financial institutions,” called on regulators to “explicitly integrate climate change across your mandate.” In addition, a group of activists, including Amazon Watch, Greenpeace USA, League of Conservation Voters, Natural Resources Defense Council, and Oxfam, wrote a letter to Federal Reserve Chairman Jerome Powell and New York Fed  President John Williams urging the Fed to end its purchases of energy sector corporate bonds. The letter claims, “Through these purchases, the [Federal Reserve] Board is potentially exposing the public to financial losses through credit risk, market risk, and operational risk due to exacerbation of the climate crisis.”

Shareholder activism focused on climate risk has increased this year, with shareholder activist group As You Sow forcing votes by shareholders in several major oil firms on proposals to disclose climate change risks to petrochemical facilities. In May, a majority of Phillips 66 investors supported the proposal, but investors for both Chevron and Exxon Mobil rejected the proposals. While Chevron’s shareholders rejected the climate risk proposal, they did approve a proposal that requires additional climate-related lobbying disclosures, include “a [Board of Directors report within the next year describing how the company’s lobbying activities ‘align with the goal of limiting average global warming’ to a level prescribed by the Paris climate accord.”

The successful proposal won praise from sustainability group Ceres, which claimed the move “puts Chevron, and companies everywhere, on notice that investors view lobbying as a critical part of a company’s core climate strategy.” Indeed, the proposal is just one recent example of the increasing scrutiny by activists on how consistent companies’ lobbying and public affairs efforts are with the climate commitments they make. With the abundance of public information now available to hold firms accountable, press releases are no longer enough to satisfy activists, and companies will have to be deliberate and thoughtful on how their business objectives align with the principles and promises they adopt under activist pressure.

At the start of 2020, Delve analysts identified six trends in energy infrastructure to watch over the year. While 2020 has brought unexpected challenges that no one anticipated, as we look back at those key trends six months later, it is clear that although some of these trends have accelerated and shifted, the challenges for the industry still ring true in this “new normal.” This month and next, we will explore COVID-19 and its impact on the industry and policy debate across these key trends.

1. The Rise in Nationally-backed but Locally Coordinated Activism in Traditionally Fossil Fuel-friendly Jurisdictions Along the Gulf Coast Against Both Midstream and Downstream Infrastructure Projects Continues Unabated by Pandemic or Other Shifts in Public Debates

At the beginning of the year, based on analysis of 2019 data, it was clear that activism targeting both midstream and downstream infrastructure projects in traditionally fossil-fuel friendly Texas and Louisiana was likely to increase in 2020. Through the first half of the year, that trend has continued unabated by the COVID-19 or other social unrest. Activists dedicated to the cause remain dedicated to the cause, and have found creative ways to continue their efforts against the industry.

In Texas, the Save RGV (Rio Grande Valley) from LNG coalition, which includes local Texan groups as well as national and international organizations such as the Sierra Club, Rainforest Action Network, and even Friends of the Earth France, has continued its efforts against  proposed LNG terminals in the state and associated pipeline projects. Last year, Save RGV from LNG wrote a report warning banks and investors of the reputational risks associated with investing in LNG projects in the Rio Grande Valley, and proudly proclaimed that pressure from activists convinced international bank BNP Paribas to divest from Texas LNG. The Sierra Club and other activists also asked the Federal Energy Regulatory Commission (FERC) to reconsider permitting approvals for some of the projects. This year, the Sierra Club joined local groups in filing lawsuits challenging permits issued by FERC. Activists in Texas are also receiving technical support from groups like the Environmental Defense Fund (EDF), which in April released a study with Harvard University, Georgia Tech and the SRON Netherlands Institute that claimed oil and gas operations in the Permian Basin “are releasing methane at twice the average rate found in previous studies of 11 other major U.S. oil and gas regions.”

In Louisiana, after failing to stop the Bayou Bridge Pipeline, activists last year shifted their focus to the state’s petrochemical industry, resurrecting the “Cancer Alley” rallying cry of decades past. Now they have seized on the COVID-19 pandemic to get their message out. Following the release of an early study from Harvard University linking air quality and the Coronavirus pandemic, activists in the state modified the “Cancer Alley” moniker to “Coronavirus Alley,” with national groups like the Sierra Club promoting the label. Activists have continued to promote the study, despite concerns raised over the studies lack of a peer review. In April of this year, Congressman Cedric Richmond responded to a letter from the Coalition Against Death Alley, an activist coalition opposing the state’s petrochemical industry, stating he had called on Congress to establish a select committee to investigate disparities linked to COVID-19 health outcomes, and stated he is working on legislation to provide “protection and direct funding for communities around facilities.”

Despite the pandemic causing lockdowns in large parts of the country, on the ground activism against the  petrochemical industry the state has not slowed; in many cases activists have simply been more creative about organizing. In April, the Louisiana Bucket Brigade, an organization opposed to the state’s petrochemical industry, hosted a socially distant protest in front of a facility. The organization livestreamed the event on Facebook to supporters who chose not to attend, highlighting these organizations’ ability to blend social media with on-the-ground activism. Activists have also gathered together to hand out facemasks and Mother’s Day lunches accompanied by protest yard signs to raise awareness of their opposition efforts. Similarly, across the country, activists have used in-car protests as a means to shut down traffic and bring attention to their causes. In addition to the continuing on the ground activism taking place, groups like the Sunrise Movement have created activism schools to help students learn how to “take action online and in-person while social distancing.” As the pandemic and societal unrest continues to influence the ongoing conversation in the country, activism is traditionally fossil fuel states continues, and in many cases does so more creatively in order to seize the moment.

2. Energy Activists Continue to Target the Last Mile for Natural Gas, but the Pandemic Has Broadened and Accelerated Activist Pressures on Utilities

In 2019, “keep it in the ground,” and “stop the pipelines” efforts were joined by a new strategy to target end-users of natural gas by pushing for bans or other electrification initiatives at the municipal or state level to address “building emissions.” In July 2019, Berkeley, California became the first city to ban natural gas and started a nationwide trend. Since then, 30 cities in California have committed to going gas-free, and across the county the movement is picking up steam. In New York City, Mayor Bill De Blasio announced in February he would work with the city council to develop legislation prohibiting the use of natural gas and fuel oil in large buildings. Even in fossil fuel-producing states like Colorado have joined the effort. The city of Boulder is providing incentives for building electrification, and has instituted a mandate that new or reconstructed houses larger than 5,000 square feet be net-zero. Boulder’s “Energy manager for climate initiatives” claimed that “in 2020, our goal will be to lower the net-zero requirement to 3,000 square feet.”

Recently Rob Jackson, a professor at Stanford University who leads the Global Carbon Project said that “dozens for sure, likely hundreds” of jurisdictions would pass gas bans and pro-electric legislation this year. These efforts have been coordinated by national environmental organizations like The Rocky Mountain Institute, The Sierra Club, Physicians for Social Responsibility, and Mothers Out Front, who earlier this year published a new study on “health and air quality impacts and solutions” regarding gas stoves. Activists can be expected to connect such indoor air quality claims with concerns over respiratory infectious diseases like Coronavirus, as they are already expressing worry over the increased exposure due to lockdowns.

As the COVID-19 pandemic set off lockdowns across the country, activists have seized on utility shutoffs and public power as another opportunity to further their demands for green energy. Activists have begun to claim energy is a human right and bring scrutiny to bear on how utilities are treating customers impacted by the pandemic and ensuing lockdowns. Groups like the Energy and Policy Institute are maintaining a live tracker of utilities that have and have not suspended disconnects and advocacy groups across the county pushing Congress and state officials for a moratorium on shut-offs for low-income consumers.

While many of these calls have been matched by utilities taking responsible steps to provide forbearance and good will, that may not be sustainable as the economic challenges of the lockdowns continue, and a number of policymakers are listening to the activists. Activists are leveraging their claim of energy as a human right to call for “power for the people,” accelerating an already existing push for municipalizing electric utilities across the country. These municipalization efforts have frequently been led by progressive groups like the Democratic Socialists of America, and almost always, these cries for public power are framed as necessary to attain their aggressive renewable energy goals.

3. While 2020 May Not Be the Climate Change Election Democrats Were Hoping For, the Election Is Pointing a Spotlight at Environmental Justice as the Politics of Climate Change Works Its Way Into the COVID-19 Debate

Just five months ago, it seemed all but certain that the 2020 presidential campaign would dominate the news cycle through the November election. While “energy dominance” has brought positive policy opportunities for the industry, it has also furthered more aggressive opposition. In that vein, Democrats had hoped to make 2020 the climate change election. Though of course a number of other issues have, at least temporarily, refocused former Vice President Joe Biden’s and President Donald Trump’s campaigns, environmental activists and some of Joe Biden’s former primary competitors have continued to apply pressure to the Democratic nominee on environmental issues even as the pandemic took center stage. At a March debate, after taking jabs from Senator Bernie Sanders, Biden muttered “no new fracking” without additional context. The Biden campaign later attempted to walk back the comment, telling reporters after the debate that he was restating his existing policy pledge to block new oil and gas drilling on public lands. Since becoming the presumptive nominee, however, Biden has signaled a willingness to use “unfettered discretion” to reject infrastructure projects, and “hold polluters accountable for the damage they’ve caused.”

While Biden has tried to appear moderate on energy issues to appeal to rust belt voters, those helping him develop his policy positions and prepare for a potential administration do not match that perception. Biden has assembled what one environmental consultant has called the “Climate Dream Team for Democrats,” a Climate Task Force whose co-chairs include U.S. Rep. Alexandria Ocasio-Cortez (D-NY), the sponsor of Green New Deal legislation, and former Secretary of State John Kerry, an architect of the Paris Climate Accord. In addition, Biden added Sunrise Movement co-founder Varshini Prakash to his climate team. The people helping to drive policy in a campaign are often the same people ending up in the Administration, and in any administration, people are policy.

The climate change debate has also found its way into the presidential politics of pubic health in the age of COVID-19. On the Biden campaign website, a page devoted to the candidate’s plans to fight COVID-19 states the need to “fight climate change as a driver of health threats,” with the candidate claiming, “The link between climate change and health security is well-documented and will create a growing threat to Americans. A Biden Administration will recommit the United States to the Paris Agreement on day one and lead an effort to get every major country to ramp up the ambition of their domestic climate targets.”

While climate change may not be the headline wedge issue in the current campaign debate, if COVID-19 subsides in the fall, climate change could return to the forefront. Even if it does not, expect Democrats to weave climate change and related issues – air quality, water quality, and environmental justice – into the campaign discussion around public health and beyond. Industry will need proactive responses to this debate without become partisan.

As trends in energy infrastructure continue to evolve in response to the COVID-19 pandemic, the 2020  election, and other shifts in public debate, activism has shifted. Much of this shift has been led by a next generation, disruptive energy activism, pushing policy and regulatory pressures to the state and local levels and to the financial industry. Next month we will explore how COVID and societal unrest has accelerated and impacted the push to fight energy infrastructure at the local level and how today’s energy activists include a broad range of groups that might not have previously engaged in energy infrastructure fights.