Ida's wrath, "Drought, Flood, Fire" and Engine No. 1 eyes Chevron
The newsletter for independent thinkers on carbon and climate.
Welcome to the latest issue of Carbon Creed - a curated newsletter for independent thinkers on carbon and climate.
Hurricane Ida’s wake killed more people in the Northeast than on the Gulf Coast.
The death toll from Ida continued to swell Friday, a day after the hurricane-turned-tropical storm swept through the Northeast on a destructive path north from Louisiana’s Gulf Coast.
At least 49 people were killed after torrential rain pounded New Jersey, New York, Pennsylvania and Connecticut, ripping through buildings, sparking massive flooding and leaving hundreds of thousands of people without power.
More deaths could still be linked to the downpour, which ended Thursday. As New Jersey’s fatality total rose to 25 overnight — all related to flooding — Gov. Phil Murphy (D) said he expected that number to grow further. Six people in the state remained missing as of Friday.
Since Ida made landfall in Louisiana on Sunday, August 29th as a Category 4 hurricane, more than 60 storm-related fatalities have been reported across eight states. Roughly 10 tornadoes also touched down, including one that caused the Northeast’s first-ever “tornado emergency,” the most dire type of alert the National Weather Service can issue.
Officials linked the tragedy to climate change and promised to improve infrastructure ahead of future storms. New York Gov. Kathy Hochul (D) tweeted that “record-breaking floods are the new normal” and said she had asked staff to draft an “after-action report” to examine the state’s preparation for the storm.
“No longer will we say, ‘Yeah, that won’t happen again in our lifetime,’” Hochul told reporters Friday. “This could literally happen again next week.”
Creed readers understand that climate change is happening now, not in the distant future. We are at the beginning of the transition, and it does not get easier. As a species, we need effective leadership on carbon to avoid slipping into an irreversible cycle of climate induced crisis.
We promise to keep you posted on the latest carbon policy, information and market insights as they happen.
If you have an opinion on any topic covered in this newsletter, please feel free to send me an email at email@example.com.
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Climate quotes and sayings that will inspire you
(source: Union of Concerned Scientists)
“For the rainy season that will come next year, one thatches the roof this year.” - Ethiopian proverb
Credo: Invest in climate infrastructure before the storm comes.
“If you really think that the environment is less important than the economy, try holding your breath while you count your money.” - Dr. Guy McPherson
Credo: The climate and the economy are not a zero-sum game.
“I have long understood that climate change is not only an environmental issue – it is a humanitarian, economic, health, and justice issue as well.” – Frances Beinecke
Credo. We are all connected - one people, one planet.
Drought, Flood, Fire
By Chris Funk
Climate change is no longer a distant worry, discussed solely among scientists and environmentalists. Climate change is happening now, and it’s hurting millions of people and costing billions of dollars annually.
But the Earth is an astoundingly complex system, and tracing a line from greenhouse gas emissions through natural disasters and all the way to their effects on people is tough even for scientists, let alone the general public. Meeting that challenge is the driving force behind “Drought, Flood, Fire , by UC Santa Barbara’s Chris Funk, which aims to demystify how climate change contributes to catastrophes.
“The two main goals of the book are to communicate how climate change is really impacting us now, and then explain why that is happening,” said Funk, director of UCSB’s Climate Hazards Center. Rather than making a pronouncement on climate change from on high, Funk sought to discuss and explain the mechanisms driving it so that readers can understand the process for themselves.
The author draws upon climate data, economic impact assessments and personal accounts to explain the effects climate change is having on individuals, communities and entire societies. From 2015 to 2021, for instance, the amount of the Earth’s surface that is exceptionally warm shot from 8% to 24%, he said. And the costs of extreme events have ballooned. As described in the first chapter, the amount of weather-related damages have quadrupled since 1980, with estimated costs for 2017 and 2018 totaling $653 billion. “We’re getting to a point where the real-world cost of weather and climate hazards is approaching the cost of dealing with climate change itself,” Funk said.
“There is an old-school perception of climate change — still common among some scientists — that climate change will manifest as a ‘bathtub’ warming: a slow, gradual increase in temperatures everywhere at the same time,” Funk said. “But as a climate hazard scientist, I know that this conception is wrong. I know that this perception blunts our ability to predict and anticipate extreme events.”
Instead of thinking of climate change as a slowly warming bathtub, Funk compares it to a seesaw, alternating between highs and lows as heat and moisture circulate around the globe. “A common misconception is that global warming will just simply lift that seesaw straight up,” he said. “Whereas the latest research emphasizes that the seesaw is actually swinging up and down more violently.”
Rather than target climate cynics, Funk aimed his book toward those who are interested in understanding the impacts of climate change.
For instance, warm air can hold more moisture than colder air, a simple fact with profound implications. This increased capacity cuts both ways: It means the atmosphere can dump more water in wet regions and soak up more moisture from dry ones. As a result, climate change looks different depending on where you live.
The systems that transfer energy around the globe are behaving differently than they used to. While average temperatures are increasing overall, this extra energy is not necessarily distributed evenly. For example, rising temperatures have helped create a huge high-pressure dome over the Western U.S., pushing the jet stream north into Canada, Funk explained. To the east of this dome, the jet stream can bring arctic air into Eastern North America. This can help explain why the American West has been ravaged by droughts and megafires while flooding and polar vortices have battered the Midwest and East Coast.
Creed Comments: This is a book that I could share with climate lukewarmers. You know, the folks that say they believe climate change is real, but don’t know if humans are causing it (eyes rolling). Funk has several great analogies that help explain the connections between weather and climate (e.g., seesaw vs bathtub). I’ve got a friend whom I think will be open to the methods presented herein. Read it for yourself and let me know what you think.
(source: Financial Times)
Engine No. 1 eyes Chevon as the next climate proxy target
In recent weeks, Chevron executives met with representatives of Engine No. 1, the investment firm that led the successful fight to win three seats on Exxon’s board, people familiar with the matter said. Chevron shared some of its plans to reduce carbon emissions during the talks, which were described as cordial.
Engine No. 1 is considering whether to target a major oil company once again, and other investors have been in touch with the hedge fund about organizing a group to purchase Chevron shares, sounding out if there is interest in launching a second major campaign, people familiar with the matter said. Engine No. 1 hasn’t made any decision about another campaign, one of the people said.
Chevron has studied Engine No. 1’s campaign against Exxon, and its rival’s defeat crystallized the urgency in communicating its energy-transition plans, people familiar with the matter said. Chevron’s board met in person for the first time this summer since the onset of the pandemic. Topics of discussion included the Exxon-Engine No. 1 proxy fight, according to people familiar with the meeting.
Chevron has been developing its energy-transition strategy since the pandemic began. In coming weeks, it plans to announce more-ambitious carbon-reduction targets than those it has previously laid out, people familiar with the matter said. The company is also evaluating the addition of a new director with environmental expertise to its board, the people said.
Engine No. 1’s success has rippled across the energy sector, spurring Exxon’s competitors to take a closer look at the environmental impact of their strategy, leadership and board makeup.
Actions of the Biden administration are adding to the pressure companies face regarding climate change. Public companies might soon be required to disclose in regulatory filings more information about climate-related risks—including the emissions from the products they produce—under a proposal being formulated by the Securities and Exchange Commission.
Chevron Chief Executive Mike Wirth has branded the company’s strategy as “higher returns, lower carbon.”
The company plans to present more details on its energy-transition plans at an event later this month, which executives view as an opportunity to articulate the oil company’s future as some question the role of fossil fuels in coming decades, people familiar with the matter said.
Chevron’s planned carbon commitments will stop short of a so-called net-zero pledge to reduce emissions, one of the people said. Beginning last year, several large European oil companies including BP PLC and Royal Dutch Shell PLC made such a commitment to zero out emissions produced by the assets they own. Mr. Wirth has called such targets aspirational and said the company won’t set targets for which it doesn’t have a plan to achieve.
Exxon Chief Executive Darren Woods in 2020 called such targets a “beauty competition.” The company is now considering making a net-zero pledge, The Wall Street Journal reported last month.
Historically, activist investors have accumulated large stock positions in target companies to give themselves more votes at the companies’ annual meeting, where shareholders cast ballots based on how many shares they own.
Engine No. 1 was successful against Exxon despite owning only about $50 million of the company’s shares, roughly 0.02% of the stock outstanding. It was able to persuade other investors to support its board slate by arguing that Exxon had squandered billions of dollars on low-return oil megaprojects that left the company saddled with debt, in addition to expressing concern about Exxon’s energy-transition strategy, saying it lacked a realistic blueprint for navigating a global transition to cleaner energy sources.
Exxon at the time said Engine No. 1’s board candidates were unqualified and defended the company’s strategy, which it said would increase earnings and investor payouts over time, while reducing debt.
Engine No. 1 owns a tiny amount of Chevron’s stock in its recently created exchange-traded fund, around $600,000, according to regulatory filings. Chevron has a market capitalization of around $189 billion. Essential to any campaign against Chevron would be the ability to sway some of its largest institutional investors. Vanguard Group, BlackRock Inc. and State Street Corp. , which together control more than 20% of Exxon’s shares, all voted for some of Engine No. 1’s candidates. The firms are also Chevron’s three largest shareholders.
Chevron could be a tougher target than Exxon in some respects. Chevron has been more frugal with its capital in recent years and has about $35 billion in debt, versus Exxon’s roughly $57 billion. Engine No. 1 frequently compared Exxon and Chevron during the proxy campaign, noting the latter’s superior returns.
Still, some investors want Chevron to do more. Nearly 61% of Chevron’s shareholders voted in support of a proposal that it cut emissions created from use of its products, which Chevron had urged investors to reject. The proposal doesn’t require Chevron to set a specific, binding target for such a reduction. Like Exxon, Chevron has eschewed investments in renewable energy, focusing instead on biofuels, hydrogen and lowering the carbon footprint of fossil fuels.
[This post was adapted from the original written by Christopher M. Matthews and Emily Glazer for the Wall Street Journal]
Creed Comments: Engine No. 1 is establishing a reputation as the climate champion of shareholders in the energy industry. Their strategy was brilliantly executed with Exxon. We are anxious to see how it goes with Chevon.
The Keeling Curve a daily record of global atmospheric CO2 concentration.
Congressional Policy Tracker a summary of current federal energy legislation.
Click Clean your favorite apps and tech company clean power rankings.
Advancing Inclusion Through Clean Energy Jobs a report by the Brookings Institute.
Understanding ESG a series of ESG-focused thought leadership webinars for business and investors, presented by Baker McKenzie.
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