Monday, May 16, 2022

Green killing machines: EU prepares to abandon environmental impact assessment for renewables

The plans could “result in the occasional killing or disturbance of birds and other protected species”, according to EU draft.

Companies would be allowed to build wind and solar projects without need for an environmental impact assessment

The EU is preparing to loosen its environmental regulations as it seeks to replace Russian fossil fuels with renewable energy and imported hydrogen power.

Companies in the bloc would be allowed to build wind and solar projects without the need for an environmental impact assessment, according to draft proposals obtained by the Financial Times that call for the fast-track permitting of renewable projects in designated “go-to” areas.

The EU’s 27 member states, which control energy policy, would be obliged to earmark a sufficient number of these areas to meet the bloc’s renewable energy targets. A “strategic” impact assessment would be needed before an area was selected.

“Lengthy and complex administrative procedures are a key barrier for investments in renewables and their related infrastructure,” according to the draft. The plans could “result in the occasional killing or disturbance of birds and other protected species”, it added.


More voters are concerned about rising energy costs than climate change, according to a Rasmussen Reports poll

Eighty-two percent of likely U.S. voters are “concerned” about rising energy and gasoline prices, including 60 percent who are “very concerned.” Sixty percent of voters would support a law that would “dramatically increase oil and gas drilling in the United States,” 47 percent who say they would “strongly favor” such a law.

Only 34 percent of voters think Congress and President Joe Biden should focus policy on “limiting carbon dioxide emissions in an attempt to reduce climate change,” while 52 percent of voters say they should focus more on increasing oil and gas drilling to help ease energy prices.

Unsurprisingly, Democrats are more likely to want U.S. leaders to focus on reducing climate change, at 54 percent. In contrast, 74 percent of Republicans and 54 percent of unaffiliated voters think increasing oil and gas drilling should take priority.

“When push comes to shove, polls consistently show energy and economic security trump climate change for a majority of the public when asked which is more important,” said H. Sterling Burnett, director of Arthur B. Robinson Center on Climate and Environmental Policy at the Heartland Institute. “Oil and gas remain, for the foreseeable future, vital to maintaining our present standard of living and lifestyles and to ensure continued economic and national security. This Heartland/Rasmussen poll indicates the public understands that fundamental fact.”

However, the survey found that half of voters believe climate change will likely be “catastrophic for humans, plants, and animals within the next 100 years” — a percentage largely driven by Democrats and unaffiliated voters. Seventy-one percent of Democrats, 29 percent of Republicans, and 49 percent of unaffiliated voters consider it “somewhat likely.” Half of Democrats believe a catastrophic impact from climate change is “very likely” within 100 years, though just 9 percent of GOP voters and 30 percent of unaffiliated voters share that view.

Overall, 42 percent of likely voters do not believe climate change will be catastrophic within 100 years, including 24 percent who say it is “not at all likely.”

“Despite three decades of propagandizing, just 50 percent of those surveyed believe climate change poses a real threat to humans or the environment over the next 100 years,” Burnett said in a statement. “By contrast, a strong majority of Americans support government policies that would expand oil and gas production, regardless of climate change.”

According to the poll report, majorities of every political and racial category are “at least somewhat concerned about rising energy and gasoline prices.” Men (56 percent) are more likely than women (48 percent) to believe Congress and Biden should focus on drilling.

Voters under 40, unmarried and childless voters, and Biden’s strongest supporters are more likely to believe climate change is an imminent threat. Voters who make more than $200,000 are also less likely to believe Congress and Biden should focus more on drilling to reduce energy prices.

Rasmussen Reports and the Heartland Institute polled 1,004 likely U.S. voters between April 28 and May 2. The survey has a margin of error of ± 3 percentage points with a 95 percent level of confidence.


Heatwaves in the Antarctic

This month’s BBC Climate Check focuses on the Antarctic. According to the BBC’s spiel: ‘As the planet warms, one of the biggest challenges Antarctica faces is climate change. BBC Weather’s Sarah Keith-Lucas explains how rising temperatures are affecting the frozen continent.’

Keith-Lucas starts by falsely claiming that the region is warming at three times the global average. In fact, scientific studies have shown that most of the continent has been getting colder, not warmer. Even the Antarctic Peninsula, which went through a warming spell at the end of the 20th century, has not got any warmer since 1998. These inconvenient facts rather undermine the rest of her video!

She goes on to report on one day of slightly less cold weather in March, which was the result of an ‘atmospheric river’, an intrusion of mild, damp air from Australia. Although this was clearly a meteorological event, Keith-Lucas dishonestly conflates it with global warming.

She says ‘scientists agree’ that global warming is making Antarctic heatwaves more common and severe. As we know, there are plenty of junk climate scientists who will say things like this for media attention, but the data says otherwise. For instance, at the Amundsen-Scott Base at the South Pole, there is no evidence of daily temperatures going through the roof. Indeed the warmest day was in 1984, if you can describe minus 13.9C as ‘warm’.

image from

BBC’s Bogus Antarctic Heatwave Scare

Despite that atmospheric river, temperatures this March for the month as a whole at the South Pole were below average, and the lowest since 2014.

Naturally, Keith-Lucas conjures up visions of melting ice caps and sea level rise. What she does not tell viewers is that the Antarctic icecap has actually been growing since we began to measure it, and sea ice is also on an increasing trend.

Once again, the BBC Climate Check has little do with ‘facts’: it is merely propaganda.


How the ESG Movement is Shooting Itself in the Foot

Reputational risk is the wonderfully vague term that is being used more and more to justify decisions to terminate a business relationship when an objective reason is unavailable. According to an excellent article in the Georgia Law Review, "Regulating Bank Reputation Risk," the concept of reputational risk really took off in the 1990s when federal regulators were looking for a way to incorporate subjective policy and social considerations when examining financial institutions.

The first phase of using reputational risk as a regulatory tool culminated in Operation Choke Point, which was a joint effort of the Treasury Department and the FDIC to target certain undesirable, but legal, businesses. The exposure of Operation Choke Point ended the direct use of reputational risk by regulators to force behaviors at individual banks, but the concept was so powerful it continued to incubate and expand. Today, large banks and big corporations are using the reputational risk tool to drive social-justice policies.

As pointed out in the Georgia Law Review article, the reputational risk tool heavily relies on the concept of stakeholder capitalism. Initially, the stakeholder in question was the regulator itself, but just as the power of reputational risk was becoming evident, so too was the role of stakeholders. The concept of stakeholder capitalism has continued to grow and now is an important element of the environmental, social, and governance (ESG) movement.

Like reputational risk, “stakeholders” is a subjective and malleable concept to drive social and political ends. The trick is to broaden the search for stakeholders to identify groups sympathetic to the political cause, but not so broad as to identify stakeholders who oppose, or are harmed by that political cause. Stakeholder capitalism, a cottage industry, had been born.

Weaponizing reputational risk has almost exclusively been used to isolate and punish conservatives and to advance progressive causes, but it may just swing the other way. Are there stakeholders, such as public pension beneficiaries and taxpayers, who may be harmed by certain political or ideological actions? Public pension fiduciaries may soon be looking to distance themselves from advisors leading them down the ESG path.

As I wrote here, public pension plans, public university endowments, and state trust funds are powerful tools to implement ESG investments and Net-Zero 2050 initiatives. Several states have moved to divest public funds from fossil fuels, leaving their pension plans on the outside looking in as share prices of many fossil-fuel companies have posted nice returns in a challenging market so far in 2022.

State and local pension plans are primarily defined-benefit plans and the fiduciaries for these plans are generally held to a higher standard of conduct. This makes sense because the participants in these plans have little to no input or knowledge of plan investment decisions and rely heavily on the prudence of the fiduciaries. These fiduciaries are supposed to act in the sole interest of the plan participants consistent with the goals as documented for each plan. Public funds are subject to the laws and rules of each state and the individuals responsible to manage these funds are fiduciaries who owe certain duties and obligations to the beneficiaries of the particular fund. The fiduciaries also have personal liability for their actions or inactions managing the fund whether they are aware of this or not.

Private qualified retirement plans are subject to the Employee Retirement Income Security Act of 1974 (ERISA), a statute so long that only the Internal Revenue Service Code is longer. These plans are regulated by the IRS, the Department of Labor (DoL) and other federal agencies. The Employee Benefit Security Administration under DoL is considering revisions to the definition of fiduciary duties to include a consideration of climate impacts and other ESG factors in making investment decisions. This focus on ESG investing follows Executive Order 14030 from the Biden administration and would give fiduciaries of private retirement plans some regulatory protection when using ESG criteria for plan investments. However, this revised definition would not apply to fiduciaries of state and local pension plans.

The ESG movement is well established in boardrooms of large corporations and on Wall Street. ESG proponents see the vast wealth held by state public investment funds and want to use those assets to remove any remaining barriers to the Great Reset. The fiduciary statutes in the 50 states may be the last meaningful roadblock to the brave new ESG world.

And, the use of other people’s money (public funds) by the large money managers to push environmental and social policy comes at a time when the majority of public pensions are underfunded, putting fiduciaries pushing ESG investing in a tough spot. Many plan fiduciaries want to follow the ESG movement, to be seen as one of the cool kids, but there is a potential downside risk. We live in a litigious society.

State statutes vary but generally the fiduciaries of public funds must make decisions solely in the best interest of beneficiaries of the public fund, this is referred to as the Duty of Loyalty. Most states adhere to a version of the prudent person standard to evaluate fiduciary decisions and fiduciaries must also be mindful of the costs incurred in managing the fund.

At first blush, it is hard to see how an ESG-motivated investment policy, such as divesting from coal, fits within these state fiduciary rules. Is that decision solely in the best interest of the plan beneficiaries? For example, as of May 2, 2022 the S&P 500 has a year-to-date return of negative 13.78 percent while ARCH Resources was up nearly 70 percent over the same period. This is just an isolated snapshot, but it does illustrate the real-world impact of fiduciary investment decisions.

Knowing that state fiduciary statutes are a sticky wicket for fiduciaries of public investment funds, the academic world has been hard at work over the past decade arguing for the necessary evolution of these antiquated fiduciary rules. A review of these efforts is provided in a work titled "The Origins of ESG in Pensions: Strategies and Outcomes." The efforts outlined in this report seek to broaden the number of stakeholders who must be considered when operating a public investment fund. The aim of those seeking to evolve fiduciary duties is not simply to allow fiduciaries to incorporate ESG into investment decisions, but to require them to do so.

Institutional money managers are all on the ESG bandwagon and they have the ears of fiduciaries in all 50 states. Fiduciaries across the country are investing billions of public dollars with ESG goals in mind. Time will tell whether these investment bets pay off for these plans, but it is important to note that pension beneficiaries do not need to worry about the investment returns because their earned benefits will be paid to them one way or another. However, taxpayers in each state must understand they are the guarantee behind these plans. If the assets in these plans are not sufficient to pay out the promised benefits, the taxpayer will be called on to backstop these pensions.

So, taxpayers, watch your public pension plans carefully. Watch the investment decisions that are being made and the expenses incurred. Talk to your lawmakers and ask how your public investment funds are doing. Before you are asked to bail out any of these funds, it would be a good idea to see if the fiduciaries in your state have any personal liability for their actions. Who did they listen to and what was the result?

Have the academics succeeded in evolving the role and duties of fiduciaries to allow for more enlightened ESG sensibilities? Time will tell, and the answer could be costly one way or the other. If you are a fiduciary of a public fund, you cannot delegate away your fiduciary responsibilities and there are many questions you should ask of the money managers and other advisors you rely on, but the most important question is one you have to ask yourself, “do I feel lucky?”




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