Sunday, January 26, 2020

Oil companies going Green

They're scared of CO2 regulation.  But, regardless of "renewable" fancies, the demand for oil and natural gas will still be there -- and there will still be a buck in it.  And if governments legislate harshly enough to cause public inconvenience, they will be thrown out

The threat that financial institutions will refuse to lend for fossil fuel projects is a real one but China is always looking for good overseas investment opportunities so that alone will put a big hole in the bucket.  China is very hard to bully, as Mr Trump has found

Occidental Petroleum has a compelling riposte to Greta Thunberg’s signature rebuke in Davos, that “nothing is being done” about climate change.

It also has a grim warning for those of its peers in the fossil industry (a minority) that persist in thinking that business can go on as usual with just a few tweaks here and there: a slew of major oil and gas companies will disappear in the Great Disruption of the coming decade, and it says they will deserve their fate.

“We’re fighting for our industry’s life,” said Vicki Hollub, Occidental’s chief executive, speaking at the World Economic Forum in Davos.

The political landscape has suddenly changed beyond recognition and the world’s governments are about to clamp down drastically on carbon emissions, led by Europe. She said the laggards will be punished mercilessly.

Her emblematic Houston-based fossil company aims to achieve the impossible: to become net carbon negative on all its operations and the oil it sells in order to insulate itself against the enveloping climate backlash. Her premise is that financial markets will simply ‘disfund’ those companies that refuse to do likewise.

The imperative for Big Oil is to confound the critics by offering Negative Oil. “The ones that don’t get on board will be the ones that don’t survive, and I am convinced that markets will make that happen,” she said.

Lord Greg Barker, chairman of EN+ Group, has an equally surprising story to tell. He heads the biggest aluminium producer outside China, leader of a smelting industry deemed to be beyond the pale by climate activists.

Yet it is going to roll out its first sheets of carbon-free aluminium as soon as 2021. Over 95pc of the group’s base power already comes from green hydro.

The Russian-owned EN+ has developed an ‘inert anode’ technology that cuts CO2 emissions from the smelting process itself to zero, and will ultimately lead to net “negative aluminium”.

The task is to make it fully workable on a large scale. A carbon price would make that much easier by setting the global rules and drawing in billions of green funding.

Epoch change

“The 2020s are going to be very different to the last decade. People who think that is going to be just a slow continuation, of gradually getting used to the climate agenda, are in for a big shock,” he told a Davos forum.

Mark Carney, the Governor of the Bank of England, said the $110 trillion alliance of global asset managers and investors now demanding decarbonisation – or at least a proper audit of carbon risk –  had just grown to nearer $120 trillion with the Damascene conversion of BlackRock’s Larry Fink. When the world’s biggest fund manager speaks, markets listen.

"We are seeing a fundamental reshaping of the financial system. What the market will do is to pull forward the adjustment," he said in Davos.

Companies that fail to take climate change seriously will go bankrupt and it could happen sooner than widely supposed. The Governor fears a Lehmanesque “Minsky Moment” for the international system if this is not handled in an orderly fashion.

Occidental says it is already injecting 20m tonnes of CO2 each year into rock formations within the Permian Basin in Texas. “This is equivalent to taking four million cars off the road,” she said.

It is the start of a massive expansion of carbon capture and storage. Ultimately this brings into view the Holy Grail of negative emissions.

Mrs Hollub said more CO2 is sequestered in the process of enhanced oil recovery than is later burned by cars and aircraft in transport fuel. For the world as a whole it is akin to a closed loop. 

“A lot of people don’t understand how you can put CO2 into an oil reservoir and generate lower carbon oil, but you can have net negative reservoirs. The challenge we face is getting people to understand the good things that we are doing,” she said.

“The Permian Basin has the capacity to store 150 gigatonnes of CO2. That would be 28 years of US emissions. That’s the prize,” she said.

Occidental’s ‘green’ strategy will not convince those who have lost all trust in the fossil industry and wish to shut it down entirely but it does show the moral complexity of the energy debate.

The more far-sighted oil and gas companies are an integral part of the net-zero transition. They bring the world’s best engineers to the task.

Environmental Schumpeterism

Lord Barker, who used to run the UK’s climate policy as a minister, said there are going to be spectacular winners and losers over the 2020s. Climate science has raised the stakes abruptly and political patience has snapped.

“This is where the rubber really hits the road. There are going to be stranded assets; there are going to price shocks, and I think we’re going to see carbon pricing. Those companies that don’t recognise the carbon intensity of their business are going to be left on the sidelines,” he said.

Lord Barker said the old debate about whether poorer countries should be given a free pass on coal power and rising emissions had been overtaken by market forces. New renewable power is in any case cheaper in most places than new coal plants.

“We have to have an honest conversation with developing economies like India and China: you can’t keep a manufacturing model and supply world markets if it is based on coal. Either you need CCUS (carbon capture) or you accept that it will shrink.”

“Investors now thinking about where to put their money in the 2020s won’t put it in carbon-intensive in economic models that rely on coal, that is the reality of investment flows. There isn’t a future for carbon intensive industries.”

Rachel Kyte, the World Bank’s former climate chief, was brutally clear: “the 2020s are going to be disruptive. You either capture carbon or you don’t put carbon molecules up there at all. You will be regulated on that basis.”

“The current incumbents won’t be the incumbents in 2030 unless they are very smart. Some are going to make it. Some aren’t,” she said.


Peer-reviewed Study: Recent data on plant growth shows a net benefit, not a "social cost" of carbon dioxide emissions

The latest peer-reviewed studies show that carbon dioxide emissions are twice as powerful a plant food as previously assumed in the Cost-Benefit analysis of CO2 used by the U.S. Government. As a result, for the next 30 years, the Social Cost of Carbon under reasonable assumptions about CO2-based warming will be negative ... meaning that CO2 is a benefit to the economy, not a cost.

That's the conclusion of a just-published peer-reviewed journal article by CO2 Coalition and Competitive Enterprise Institute Senior Fellow Patrick Michaels and co-authors Kevin Dayaratna of the Heritage Foundation and Ross McKitrick of the University of Guelph, Ontario. 

The paper, titled Climate sensitivity, agricultural productivity and the social cost of carbon in FUND, was published in Environmental Economics and Policy Studies January 18, 2020.

Via email from

Treasury Secretary Just Stated Obvious About Teen Environmental Oracle Greta Thunberg & the Left Is Melting Down

You'd think Treasury Secretary Steve Mnuchin had pulled a Harvey Weinstein, Jeffrey Epstein, or Bill Clinton, judging by the reaction by the Left.

But no.

Reporters and other Leftists were scandalized – How Dare You! –that Mnuchin stated what all the world can see but fails to say out loud: Greta Thunberg is a kid who needs a little more seasoning before lecturing the world on economic theory.

He did it with one joke about the leftist teenage environmental oracle who went to Davos to demand the world function without fossil fuels.

Here's what Mnuchin had the temerity to say in answer to this question: "Does Greta Thunberg's call for an end to fossil fuel investment threaten U.S. economic growth?"

Stand back for the answer, the flames might singe your eyebrows or calve a glacier or something. CNBC reports Mnuchin told a scrum of reporters:

“Is she the chief economist or who is she? I’m confused,” Mnuchin said, before adding this was “a joke. That was funny.”
“After she goes and studies economics in college she can come back and explain that to us,” Mnuchin said.

Greta huffed – or was it her father? He and climate activist Adarsh Prathap ghostwrite some of her social media – that she's in her gap year before college, thank-you-very-much:

"In June, Bloomberg reported that Thunberg had graduated from secondary education with 14 As and three Bs. Thunberg reportedly took home Bs in Swedish, physical education, and home economics, according to Bloomberg. While those are solid grades for anyone, let alone a student repeatedly missing school to protest in front of Swedish Parliament, Thunberg reportedly told the Swedish newspaper Dagens Nyheter that she likely would have pulled off straight As had it not been for her weekly climate strikes."
I mean, after looking at those credentials. A 'B' in Home Ec?

Mnuchin later said that "our environmental policies are misunderstood." He said the president is in support of clean air and clean water and he got out of the Paris Accord because it was bad for the U.S. economy.


Why the capitalist class has gone green

Our rulers promote eco-austerity to disguise their own failure to improve living standards.

It has become something of a running joke that every year, the international political and business elites hop in their private jets to the World Economic Forum in Davos, Switzerland to discuss… climate change. Last year, some 1,500 jets were taken to the usually sleepy Swiss ski village. At the same event, broadcaster Sir David Attenborough was interviewed by His Royal Highness Prince William.

Donald Trump may have put a fly in the ointment by using his Davos address to denounce the ‘prophets of doom’ of the environmental movement, rejecting their ‘predictions of the apocalypse’. But climate change nevertheless remained at the top of the agenda, and this time the world’s super-rich and powerful were given a stern telling-off by Greta Thunberg. The organisers at Davos have asked all delegates to go carbon-neutral by 2050.

Trump was essentially correct to say the gloomsters have got it wrong in the past when predicting ‘overpopulation’, ‘mass starvation’ and the ‘end of oil’. But one thing he got very wrong – and he is far from alone in this – was his assertion that the climate agitators who want to ‘destroy the economy’ are somehow ‘radical socialists’. A cursory glance at the super-rich delegates around the room should have put paid to any notion that there is something radical or socialist about the environmental movement. Environmental activists were not only protesting outside the World Economic Forum, but many were also invited inside, including delegates from Extinction Rebellion.

And this is nothing new. The World Economic Forum began in 1971, but has been discussing the ‘climate emergency’ since only its third annual meeting in 1973. Aurelio Pecci was an Italian industrialist who founded the influential Club of Rome think-tank, which includes among its members businessmen, heads of state and former heads of state from every continent, high-ranking civil servants, scientists and economists. Pecci was invited to Davos to deliver a speech on the Club of Rome’s report, The Limits to Growth, which argued that global economic growth would soon become environmentally unsustainable. The Limits to Growth later became the best-selling book on environmentalism ever printed.

Companies have long been keen to brand themselves as sustainable and eco-friendly, even those which sell fossil fuels. BP Amoco rebranded as Beyond Petroleum in the year 2000. Canadian research firm Corporate Knights – the self-professed ‘voice of clean capitalism’ – recently produced its 16th annual ranking of the 100 most sustainable companies with over $1 billion in revenue. In first and third place were former oil companies Ørsted and Neste respectively.

In recent weeks, Goldman Sachs has announced that it will no longer invest in Arctic oil or coal-power stations. Larry Fink, head of BlackRock, the world’s largest money manager with $7 trillion worth of holdings, recently defined climate change as the world’s biggest threat to profit. BlackRock says it will invest in more sustainable companies. These moves are partly a result of pressure from some institutional investors who are more sensitive to politics than most bankers. The Government Pension Investment Fund of Japan – the world’s largest pool of retirement savings – pulled $1.5 trillion out of BlackRock, citing environmental and social concerns. It is estimated that around $12 trillion worth of institutional investment has been ‘divested’ from coal.

But the reason the capitalist class has embraced environmentalism goes far beyond branding. Even the potential of some money drying up (and pots of state money appearing for clean energy) are not the biggest factors. Most significant is the capitalist class’s loss of faith in itself and in its ability to grow the economy and raise living standards. It has been clear for the past 40 years that while global growth has transformed the lives of billions in the global South, growth in the West has been depressed. Low productivity growth, low investment and low wage growth, especially when compared with the postwar boom, have become depressing features of all the major Western economies. These problems were exacerbated by the 2008 crash. The capitalist class has not been delivering the goods for a very long time – and they know it. As Politico reported from Davos last year, ‘the global winners here in Switzerland aren’t so sure they’re up to the task of running the world anymore’.

Environmentalism, however, offers a way out. As George Monbiot memorably described it, environmentalism is a ‘campaign for austerity’. Environmentalists urge us to think of less as more and of ‘small as beautiful’. In short, to lower our expectations and our collective horizons. Environmentalism denigrates progressive aspirations for a world of abundance as ‘unsustainable’. To be well-fed, well-travelled and even to have children invites condemnation in the topsy-turvy world of environmentalism.

Climate-change activists have made carbon dioxide public enemy No1. But CO2 emissions are really just a proxy for industrial development. The fact that African countries produce less CO2 is indicative of their lower levels of development than the West – and the dreadful poverty this entails for many of their inhabitants. In Britain, the Conservative government celebrates a 38 per cent reduction in carbon emissions since 1990. But while energy efficiency has improved enormously, a still significant amount of emissions reductions is down to deindustrialisation. While Britain’s economy has grown overall, you don’t need to be a Ken Loach aficionado to understand the destructiveness that the closure of factories and mines has had on certain communities.

Overall, the ‘climate emergency’ bolsters the business elite who can no longer justify its elevated position in society by pointing to better living standards.


Australia: Land-clearing laws blamed for Kangaroo Island bushfires:

Native vegetation laws that prevent farmers from clearing land and the extent and adequacy of controlled winter burns will form a key part of a major South Australian government inquiry into the summer bushfire crisis.

Premier Steven Marshall’s commitment comes as the mayor of fire-ravaged Kangaroo Island, former Liberal MP Michael Pengilly, lashed out at the “idiocy” of the state’s Native Vegetation Act, saying the destruction of more than half the island this month “proves the old adage ‘burn or be burned’”.

“We used to be able to burn to protect ourselves and regenerate the native vegetation, and that’s what has gone,” Mr Pengilly said.

“That’s the ridiculous part. We have to have common sense across the country. What has been put in place, particularly in SA through the Native Vegetation Act, has just allowed everything to get out of control.

“We have massive loads of fuel that haven’t been touched. It is an offence for a farmer to burn off a little patch of scrub and try to keep something in the back pocket for when there is a proper fire.

“And now it’s gone, the whole bloody lot. It’s like we have been sitting on dynamite. I am not saying anything would have stopped that fire but the fuel load made it worse. The idiocy of the Native Vegetation Act is that it has stopped any serious kind of control for four decades. And today, well, here we are.”

The Weekend Australian travelled to Kangaroo Island this week and also visited the fire-affected Adelaide Hills wine region with Mr Marshall, who confirmed that issues relating to land clearing and burn-offs had been raised with him by many affected landowners.

“There obviously has to be a huge review into every aspect of the bushfires,” Mr Marshall said.

“We will be reviewing not only all of our fires here in SA but taking note of the reviews that are done interstate. If we can learn to be more ­resilient in the face of bushfires that’s precisely what we will do. There is plenty of time for that ­review and it will be done fully.

“All of the prescribed burns and cold burns that were in the schedule on Kangaroo Island were completed ahead of the fires.

“Whether they were adequate is something that will be part of the report. We will go back and look at whether the regime we had in place was enough.”

Mr Marshall said he understood the anxieties of farmers over land clearing but also noted that the January fire that emerged from the Flinders Chase National Park and tore east across the island was of a magnitude the island had never experienced.

He said he had been told by the Country Fire Service that in some cases the fire was spotting 2km to 5km ahead of the front, meaning even a radical increase in land clearing may not have stopped the inferno from spreading.

“This was different from the 2007 fires on KI which were a slow burn,” he said. “I’m not sure what would have helped on January 3. It was absolutely catastrophic.”

The Premier appointed himself Tourism Minister this month to ­elevate the status of the portfolio as it is battered by cancellations and in some areas closures of attractions and the loss of infrastructure.

This week he launched the #bookthemout campaign urging Australians to visit Kangaroo ­Island and the Adelaide Hills.

“We are really proud that we were the first to get on the front foot with this type of campaign,” he said. “Tourism operators have been doing it extraordinarily tough as a result of cancellations and it is ­important that we tell the story … that places like Kangaroo Island and the Adelaide Hills need all the support they can get.”



For more postings from me, see  DISSECTING LEFTISM, TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC and AUSTRALIAN POLITICS. Home Pages are   here or   here or   here.  Email me (John Ray) here.  

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