A Growing Climate Market
Terry H. Schwadron
Feb. 8, 2021
When Joe Biden issued executive orders in recent days to hasten a turn to renewable energy sources — positioning change as a move for Climate and for Jobs — there was immediate blowback from Republicans who saw him as “demonizing” oil and gas interests and heeding the political money that supports them.
Knee-jerk critics that included politicians and pundits were quick to point out that stopping the Keystone pipeline project will halt 11,000 construction jobs, for example, and that Biden halts to new ocean drilling will adversely affect potential jobs in Alaska and Louisiana, without noting that Biden is talking about creating millions of jobs in energy fields, car and battery manufacture, infrastructure adaptations and investments in community training in places like Pennsylvania, West Virginia or Texas that may have adverse immediate effects.
But what the criticisms did not note is that oil and gas companies themselves are powering much more aggressive investment in solar, wind and biothermal energy sources.
Indeed, the free marketplace on whose efforts the fossil-fuel policy opposition seems to rely so heavily is speaking out forcefully for a changed attitude towards seeing the job and profits ahead in solar panels and battery development already being pursued much more heavily by China and other foreign nations.
Then General Motors weighed in, announcing that it would phase out petroleum-powered cars and trucks and sell only vehicles that have zero tailpipe emissions by 2035. Certainly, it was an important business statement that drew corresponding promises from other automakers, but it also was confirmation that the marketplace sees profit ahead in climate-related policy. Still, the announcement, years in the making, seemed to blindside rivals, said The New York Times.
Yet, I’ve heard no Republicans standing up to criticize GM, which plans to build its electric cars in U.S. plants, meeting federal environmental regulations and reducing harmful emissions. That seems reserved only for the radical Left.
While still proportionately small, each of the six “super-majors” among oil companies — BP, Shell, Chevron, Total, Eni and Exxon –have pumped billions into clean energy projects. Again, no Republican criticisms.
In other words, the marketplace is anticipating these changes rather than being dragged into them. Business sees tons of development and manufacture work ahead on everything from battery storage to cars to electrified highways.
It seems a missed opportunity for both the Biden’s team and
Republican opponents to emphasize that what they seek is not some wild change, but accelerating what already is a business truth out there.
The White House explanations came closer than the critics to justifying an acceleration towards development of federal electric car fleets and incentives for public-private partnerships for new energy sources. Biden himself and his various spokespeople all put the energy and climate concerns into job development terms, noting that jobs in renewable energy already dwarfs the dwindling numbers in coal, fracking and oil.
Still, there is a lot of criticism coming from Rep. Steve Scalise, R-La., on behalf of oil-rich states, Alaska Republicans backing new oil ocean drilling and even Sen. Joe Manchin, D-WVa., who represents his own coal-mining state and its neighbors.
But from where I sit, the criticism ignores the drive coming from businesses themselves. Coal has been all but eliminated as the source of electric power plants, and remaining coal is being shipped to China as almost a sole customer. Coal has been replaced by natural gas, a resource we have in good amount, but that requires fracking techniques that are causing earthquakes in sizeable numbers.
Oil prices have been declining since 2014, the Financial
Times reports, and “resisting the pathway towards renewables has been recognized as both futile and bad business.” Further downturns from Covid-19 effects on travel and airline fuel have pushed oil companies towards reexamining investments in renewable sources and largely foregoing those leases in Alaskan waters, for example.
Gradual, but Definite Trends
Of course, the changes will not be overnight, and oil and gas remain in demand for fuel for transportation, heat, and manufacturing. But with prices capped by the ready availability of supplies — not least from the United States — investments in the development of more oil resources will be difficult to justify. Plus, those
reserves that can be developed at current prices are concentrated in the Middle East and other unstable areas such as Venezuela and Libya or controlled state companies inaccessible to international companies.
Energy newsletters say two-thirds of senior oil and gas professionals report that their organization is actively adapting to a less carbon-intensive energy mix in 2021, up from just 44% in 2018. Some 57% plan to increase investment in renewables, about half expect to increase investment in green or decarbonized sources.
Looking at the problems as a whole is why we elect politicians, of course, not their insistence on seeing only information that confirms their prejudices. There is a distinct air of even political logic of looking to develop jobs and skills that the business world wants rather than to hope that we can stick our heads in oil sands for the long term.
Each day seems to underline the failure of those of our leaders who refuse to start with fact — election results fact, scientific fact or now business fact. The proposals of aspirational green new deals actually conform more to our emerging free energy marketplace than the insistence on finding some magic way to clean coal or denying that carbon pollutes.
The only surprise is that quite apart from the environmental aspirations, these business realities are not at the heart of our explanations about why we need to be adjusting our governmental policies.