'Ask Not', Revolutionary Power & Biden's climate finance executive order

The newsletter for people "woke" on carbon and climate.

Issue No. 78

Welcome to the latest issue of Carbon Creed - a curated newsletter for people “woke” on carbon and climate. 

The energy world of the past 150 years was forever changed this week.


Watershed defeats for Shell, Exxon, and Chevron corporate leadership on climate change demonstrate how fast the landscape is shifting for oil-and-gas companies under pressure from environmentalists, investors, politicians and regulators to transition to cleaner forms of energy.

In a first-of-its-kind rul­ing, a Dutch court at The Hague found that Shell is par­tially re­spon­si­ble for cli­mate change, and or­dered the com­pany to sharply re­duce its car­bon emis­sions. Hours later in the U.S., an ac­tivist in­vestor won at least two seats on Exxon’s board, a his­toric de­feat for the oil gi­ant that will likely re­quire it to al­ter its fos­sil-fuel fo­cused strat­egy. Finally, Chevron shareholders backed a call for the company to cut emissions from the end-use of its fuels with 61 percent supporting the petition. For more detailed information check out Politico.

We are witnessing an epoch energy transition that will change the future of human society. 100 years ago we transitioned from the horse and buggy to the internal combustion engine. Today we are transitioning to a new era - the age of electrification and decarbonization.

If you have an opinion on any topic covered in this newsletter, please feel free to send me an email at mcleodwl@carboncreed.com. 

Thank you for your viewpoint and the value of your time.

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QUOTES

Climate quotes and sayings that will inspire you

Ask not what your country can do for you—ask what you can do for your country.
- John F Kennedy

Credo: Put others before yourself - follow the silver rule. WLM

“Only when the last tree is cut, only when the last river is polluted, only when the last fish is caught, will they realize that you can't eat money.”
- Native American proverb

Credo: Remember the Lorax.

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”
- Mark Twain

Credo: Carbon neutrality 2050 - pause and reflect on that.


BOOKS

Revolutionary Power

By Shalanda H. Baker


“Our most economically distressed neighbors pay too much to keep their households afloat, and they have been willfully ignored as others move into the clean energy future.” So writes Shalanda Baker, in her ground breaking book Revolutionary Power.

Baker speaks from experience garnered early in her legal career working on energy project finance. Along the way, she learned that energy development favors those with political and economic power while even “clean” energy projects are often undertaken at the expense of the less powerful: the people of a small town in southern Mexico, for example, who were being displaced by a wind farm.

Revolutionary Power insists on a course that incorporates “an approach of justice first in pursuit of averting catastrophic climate change rather than one of climate first, justice later.” This justice is largely intended to level a distinctly uneven field. Why do poor neighborhoods seldom feature solar panels? Because, writes the author, the models for financing solar power privilege the well-to-do over the poor, a situation that could change if utility companies allowed month-by-month payment, as with any utility bill. On that score, the financial structure of most utilities, demanding shareholder returns, does not favor clean energy so much as it does cheap energy—if that happens to come from fossil fuels, so be it.

In the book, Baker proposes decentralized, publicly owned renewable systems that feature the further benefit of being capable of operation in situations of natural disaster: A hurricane can knock out a centralized grid but not necessarily a solar panel or wind tower. The author’s proposals center on “five key areas as ripe for community intervention and structural change,” including moving quickly toward clean energy, developing equitable community energy policies, and easing the “energy burden” so that it becomes affordable to all constituencies—and so that utilities are rewarded for going not just for cheap, but also clean sources.

[This post was adapted from the original found at Kirkus Reviews]

Creed Comments: Revolutionary Power is a playbook for the energy transformation complete with a detailed analysis of the key energy policy areas that are ripe for intervention. Baker tells the stories of those who have been left behind in our current system and those who are working to be architects of a more just system.

Climate change will force us to rethink the way we generate and distribute energy and regulate the system. But how much are we willing to change the system? This unique moment in history provides an unprecedented opening for a deeper transformation of the energy system, and thus, an opportunity to transform society.  I plan to read Revolutionary Power this summer - I hope you’ll join me.


INSIGHTS

Biden issues Executive Order on climate-related financial risks

The White House has issued an Executive Order expressing its policy "to advance consistent, clear, intelligible, comparable, and accurate disclosure of climate-related financial risk. including both physical and transition risks."

“Our pensions, our savings, our future livelihoods depend on the financial sector to build a more sustainable and resilient economy. We all need to have the best tools, the best data to make well informed decisions.''
- Secretary of the Treasury Janet Yellen


Specifically, the Executive Order (EO) on Climate-Related Financial Risk will:


Develop a Whole-of-Government Approach to Mitigating Climate-Related Financial Risk. The Executive Order requires the National Climate Advisor and the Director of the National Economic Council to develop, within 120 days, a comprehensive government-wide climate-risk strategy to identify and disclose climate-related financial risk to government programs, assets, and liabilities. This strategy will identify the public and private financing needed to reach economy wide net-zero emissions by 2050 – while advancing economic opportunity, worker empowerment, and environmental mitigation, especially in disadvantaged communities and communities of color.

Encourage Financial Regulators to Assess Climate-Related Financial Risk. The Executive Order encourages the Treasury Secretary, in her role as the chair of the Financial Stability Oversight Council, to work with Council members to assess climate-related financial risk to the stability of the federal government and the stability of the U.S. financial system. Additionally, in her role as the chair, she should work with member agencies to consider issuing a report, within 180 days, on actions the Council recommends to reduce risks to financial stability, including plans that member agencies are taking to improve climate-related disclosures and other sources of data, and to incorporate climate-related financial risk into regulatory and supervisory practices.   

Bolster the Resilience of Life Savings and Pensions. The Executive Order directs the Labor Secretary to consider suspending, revising, or rescinding any rules from the prior administration that would have barred investment firms from considering environmental, social and governance factors, including climate-related risks, in their investment decisions related to workers’ pensions. The order also asks the Department to report on other measures that can be implemented to protect the life savings and pensions of U.S. workers and families from climate-related financial risk, and to assess how the Federal Retirement Thrift Investment Board has taken environmental, social, and governance factors, including climate-related risk, into account.

Modernize Federal Lending, Underwriting, and Procurement. The Executive Order directs the development of recommendations for improving how Federal financial management and reporting can incorporate climate-related financial risk, especially as that risk relates to federal lending programs.  It also requires consideration of new requirements for major federal suppliers to disclose greenhouse gas emissions and climate-related financial risks and to ensure that major federal agency procurements minimize those risks.

Reduce the Risk of Climate Change to the Federal Budget. The Executive Order ensures that the federal government is taking steps to be fiscally responsible in response to the significant risk that unmitigated climate change poses to the federal budget through increased costs and lost revenue. The Executive Order directs that the federal government develop and publish annually an assessment of its climate-related fiscal risk exposure. It also directs the Office of Management and Budget to reduce the federal government’s exposure through the formulation of the President’s Budget and oversight of budget execution.


The implications of the Executive Order for the private sector are significant, including:

  • Mandatory Rules on Climate Disclosure – This Executive Order further bolsters the SEC’s recent efforts to evaluate whether corporate disclosure rules should be expanded to explicitly cover ESG risks including those relating to climate.

  • Federal Procurement – The Executive Order calls on the Federal Acquisition Regulatory Council to consider amendments to the Federal Acquisition Regulation (FAR) that would require “major federal suppliers,” public and private, to disclose their greenhouse gas emissions and climate risks and set science-based reduction targets. Federal agencies would in turn use this information in their purchasing decisions, giving preference to bids and proposals from suppliers with a “lower social cost” of greenhouse gas emissions.

  • Standardization of Disclosure – As governments around the world continue to implement climate risk disclosure requirements, the push for a global standard under which to report will likely increase in order to harmonize the numerous voluntary standards that currently exist.

Creed Comments: The Biden Administration has stayed true to its commitment to make carbon and climate central to all policy decisions. They are leading on climate here in the U.S. and setting the pace for the international community.

For example, on the same day the Executive Order was issued, the G7 agreed to halt international financing of coal projects. This followed on the heels of the International Energy Agency’s May 2021 special report concluding that, in order for the global energy sector to reach net-zero emissions by 2050, there must be “no investment in new fossil fuel supply projects, and no further final investment decisions for new unabated coal plants.”

No mistaking what’s happening - the great energy transition has arrived and the Biden Administration is leading the way..


RESOURCES


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