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.

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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.