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,, 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.

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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.