The other dirty gas – Bank exposure - Uber and Lyft

From: POLITICO's The Long Game - Tuesday May 11,2021 04:06 pm
Presented by JPMorgan Chase & Co.:
May 11, 2021 View in browser
 
The Long Game header

By Catherine Boudreau and Lorraine Woellert

Presented by JPMorgan Chase & Co.

First this: Colonial Pipeline, which delivers 45 percent of the East Coast’s fuel, should be back online by the end of the week, but expect more of these dramas—with more disastrous effects—as ransomware becomes big business . DarkSide, which is spinning itself as a moral-minded good guy who just made a mistake, has a press office, makes charitable donations and partners with legitimate companies. The Justice Department in April created a task force to root out and respond to ransomware after what was the worst year ever for attacks. An estimated 2,400 companies, governments, hospitals and schools were hit.

THE BIG IDEA

Dairy cows in Ashford, Kentucky.

Dairy cows in Ashford, Kentucky. | Dan Kitwood/Getty Images

THE OTHER DIRTY GAS — Methane — that toxic stuff of leaky pipelines, cow flatulence and garbage dumps — has catapulted into the global spotlight as policymakers look beyond carbon in their quest to slow climate change.

The United Nations has issued an urgent call to action. U.S. lawmakers restored Obama-era restrictions on methane emissions late last month. Even Vladimir Putin is banging the drum.

The confluence of events has pushed global warming’s onetime bit player onto center stage. Policymakers eager to act on the urgency of climate change have recognized that reducing methane emissions is relatively easy and inexpensive, to a point, and could make a big dent in pollution and improved health outcomes.

The U.N. on Thursday said that cutting methane emissions from leaky natural gas pipelines, livestock and waste dumps is one of the most powerful levers the world has to slow global warming. Those steps alone could cut methane emissions as much as 45 percent this decade, the U.N. concluded.

Unlike carbon dioxide, which hangs in the atmosphere for hundreds of years, methane breaks down after a decade. The fossil fuel industry has the equipment to detect and repair leaks, which would save it money in the long run. Satellite technology has made it easier to find methane hot spots in places such as Russia, China, the U.S. and Canada, which has upped pressure on pipeline and coal operators. The gas also can be captured from commercial, residential and agricultural waste streams.

The health benefits are numerous, too. Methane contributes to smog that hovers above industrial sites and cities. Capturing methane could reduce deaths by 250,000 people every year, according to the U.N.

Here’s the catch: Those readily available solutions will slash methane emissions by about only 30 percent this decade. The other 15 percent and beyond, which the U.N. said is required to put the world on track to reach its Paris Climate Agreement goals, is much trickier, especially when it comes to U.S. politics.

“The long term is all about agriculture,” said Drew Shindell , chair of the scientific advisory panel of the Climate and Clean Air Coalition, a U.N.-backed group that helped lead the methane assessment. “For many people in North America, that means eating more fruits and veggies and less red meat.”

Shindell’s team reviewed research from the EPA and other sources that evaluated ways to mitigate methane emissions from livestock. The approaches included changing cattle breeds, altering their diets and installing biogas digesters that turn manure into energy.

These are good ideas worth adopting, but effective only on the margins, Shindell said.

Red meat is political red meat in Washington. Almost nothing gets Americans more riled up than the threat of Big Government or foreign do-gooders policing their cheeseburgers. Fewer than 100 days into Joe Biden’s administration, the president’s climate agenda was dragged through the virtual mud after a British tabloid and right-wing media falsely claimed that the administration wanted Americans to stop eating red meat.

Plant-based meat alternatives are gaining market share, but account for just a tiny fraction of the $308 billion global beef industry. Money is pouring into development of lab-grown meat, but it will be a long time before it‘s affordable to the average consumer, who might not want to eat the stuff anyway.

Beef consumption is projected to grow globally by nearly 9 percent by 2030, according to the Agriculture Department.

Shindell said researchers don’t know what would convince people to change their diets. Sin taxes like those imposed on sugary drinks and cigarettes might work, but “getting that passed by U.S. lawmakers seems improbable,” he said.

That leaves fossil fuels. The Oil and Gas Climate Initiative, a group of 12 chief executives from ExxonMobil, Saudi Aramco and other majors, has pledged to achieve “near zero” emissions by 2025.

BP on Monday said it would remain a member of the American Petroleum Institute in part because the lobbying group endorsed methane regulation, a reversal of the group’s support for deregulation under former President Donald Trump.

API said it’s working with the Biden administration on regulations for new and existing sources of methane. The group is making more timely repairs of leaky equipment and managing flares, in which the gas in crude oil is burned off. Globally, flaring decreased 5 percent last year, and 32 percent in the U.S., mainly due to decreased oil demand, according to the World Bank.

In Russia, Putin devoted a large portion of his speech at Biden’s climate summit to methane, even suggesting a 50 percent reduction target.

The European Union, the world’s biggest importer of natural gas, is clamping down on methane, too, and by the end of the year is expected to propose environmental standards.

 

A message from JPMorgan Chase & Co.:

Disproportionately, Black- and Latinx-owned businesses have felt the impacts of the Covid-19 pandemic. And while the pandemic certainly highlighted racial inequities, it didn’t create them. Black people represent nearly 13 percent of the U.S. population, but only 4 percent of the country’s small business owners. JPMorgan Chase is committed to growing minority-owned businesses through providing small business support and increasing supplier diversity. Learn How.

 
YOU TELL US

Spring? Summer? No, our favorite time of year is proxy season. What shareholder meetings are you watching? Find us ESG geeks at cboudreau@politico.com and lwoellert@politico.com or on Twitter at @ceboudreau and @Woellert. FOMO? Subscribe to The Long Game.

 

SUBSCRIBE TO "THE RECAST" TODAY: Power is shifting in Washington and in communities across the country. More people are demanding a seat at the table, insisting that politics is personal and not all policy is equitable. The Recast is a twice-weekly newsletter that explores the changing power dynamics in Washington and breaks down how race and identity are recasting politics and policy in America. Get fresh insights, scoops and dispatches on this crucial intersection from across the country and hear critical new voices that challenge business as usual. Don't miss out, SUBSCRIBE . Thank you to our sponsor, Intel.

 
 
Sustainable Finance

ENERGY EXPOSURE — Banks and their Wall Street brethren are second only to fossil fuels when it comes to scrutiny from climate change activists. Now comes data showing that bank loans to energy companies have been shrinking for more than a year amid price volatility and pressure from climate-conscious investors.

Data compiled by S&P Global Market Intelligence shows that outstanding loan volume to energy players has shrunk at nearly all big lenders since at least late 2019. Energy companies are paying down their debt and have less need for credit as prices rise. But banks also are trying to limit their exposure to the relatively volatile sector, according to S&P’s Robert Clark.

“Banks may not be actively cutting back on their exposure, but they’re not trying to increase their exposure either,” Clark said in an interview. “You’ve got some of the largest banks, like Wells Fargo, that have made commitments to net-zero emissions by the middle of the century. Gradually, they’re going to have to cut back exposure to this sector.”

And when they do, they’re going to need new places to deploy all that capital.

“They don’t want to pull back too quickly because they can’t deploy into other sectors, at least not that quickly,” Clark said. “It’s going to take a number of years to significantly cut back the exposure or at least eliminate it.”

S&P looked only at the biggest energy lenders and only at outstanding loans, not untapped lines of credit or corporate bonds.

Bank loans to energy companies are shrinking

This is interesting: The loan data is available only because swings in fossil fuel prices made it material to banks’ bottom lines, leading them to report it beginning in late 2019. Typically it’s not reported, Clark said. The pandemic has prompted some banks to disclose exposure to health care and restaurant sector debt, too, he said.

The biggest U.S. banks, including Bank of America, Citigroup and JPMorgan Chase, have pledged to disclose the carbon footprint of their operations and lending portfolios and are aiming to achieve net-zero carbon emissions by midcentury.

The SEC wants them to go a step further and disclose any risks presented by climate change.

Coda: An April report from the CDP, which collects voluntary corporate reporting on climate risk, concluded that the global goal of net-zero emissions will be impossible without action from the financial sector.

 

Advertisement Image

 
CORPORATE PROMISES

Uber and Lyft have vowed to have all-electric fleets in North America and Europe within nine years. But the ride-hailing apps won’t meet those targets, in part because they’re investing little to none of their own capital to help drivers afford more expensive EVs, Bloomberg found . Both companies said they’re just one piece of a broader push to spur interest among drivers. Automakers, charging companies and policymakers also need to step in, they said.

Delaware launched an experiment eight years ago to promote sustainable capitalism. The state, where more than two-thirds of Fortune 500 companies are headquartered, came up with a “public benefit” corporate structure for businesses that go beyond growing their bottom lines. But only nine companies have reorganized or gone public under the structure, and ESG-minded investors pushing the idea have been met with resistance from skeptics who view it as a marketing ploy. E&E News has the story.

AROUND THE WORLD

CAN JAPAN’S KOIZUMI SAVE COP26? — Japanese Environment Minister Shinjiro Koizumi has been drafted by organizers of this year’s U.N. climate summit to work alongside Singapore’s Grace Fu to solve the thorniest topic at the talks: governance of international carbon markets, POLITICO’s Ryan Heath reports. Brazil has stopped a deal at the past two climate conferences, and Koizumi is seen as having a good relationship with his Brazilian counterpart, Ricardo Salles. U.S. climate envoy John Kerry is working on Salles as Biden contemplates a climate bargain with Brazil.

NETHERLANDS BUOYS CARBON CAPTURE — The Dutch government has granted $2.4 billion in subsidies to a consortium of oil majors, including Royal Dutch Shell and ExxonMobil, for what is set to become one of the largest carbon capture and storage projects in the world, the Port of Rotterdam told Reuters. Shell, Exxon, Air Liquide and Air Products had requested the subsidies in January for a project to capture CO2 emitted by factories and refineries in the port area and store it in empty Dutch gas fields in the North Sea.

Speaking of Exxon Legal & General Investment Management will vote against Exxon’s board of directors at the company’s May 26 shareholder meeting. The investment group, which has an 0.6 percent stake in the energy company, will join CalSTRS and other investors to back a slate put forward by activist group Engine No. 1, citing concerns about the company’s transition from fossil fuels. “We’ve been publicly disappointed with the pace of change at Exxon compared to its peer group,” John Hoeppner, LGIM head of stewardship, told The Long Game.

 

A message from JPMorgan Chase & Co.:

The Covid-19 pandemic has taken a toll on minority-owned small businesses, forcing a disproportionate amount of Black and Latinx business owners to shutter their doors. But this recent crisis didn’t create these racial inequities – rather, it exacerbated them. And to facilitate an inclusive economic recovery, public and private sector leaders must confront these systemic issues head on.

“Now more than ever, businesses have a responsibility to step up and help solve pressing societal challenges,” says Ted Archer, head of business development for global supplier diversity at JPMorgan Chase. “The existing racial wealth gap puts a strain on families’ economic mobility and limits the U.S. economy from reaching its full potential.”

As part of a recently announced $30 billion business commitment to reduce systemic racism and advance racial equity, JPMorgan Chase is committed to growing minority-owned small businesses by providing small business support and increasing supplier diversity. Read More.

 
WHAT WE'RE CLICKING

— U.S. farm pollution, mainly from livestock production, causes 17,900 premature deaths each year, according to a first-of-its-kind study published by the Proceedings of the National Academies of Sciences on Monday. The Washington Post explores the findings.

— California's coffers soared to a more than $75 billion surplus thanks to a progressive income tax structure that leans heavily on top earners in Silicon Valley, POLITICO’s Kevin Yamamura reports.

— Bill Gates goes low tech. His $2 billion energy fund has invested in an Ireland-based company trying to decarbonize cement, the building material that accounts for 8 percent of global carbon emissions, Bloomberg reports.

 

SUBSCRIBE TO WEST WING PLAYBOOK: Add West Wing Playbook to keep up with the power players, latest policy developments and intriguing whispers percolating inside the West Wing and across the highest levels of the Cabinet. For buzzy nuggets and details you won't find anywhere else, subscribe today.

 
 
 

Follow us on Twitter

Catherine Boudreau @ceboudreau

Lorraine Woellert @Woellert

 

Follow us

Follow us on Facebook Follow us on Twitter Follow us on Instagram Listen on Apple Podcast
 

To change your alert settings, please log in at https://www.politico.com/_login?base=https%3A%2F%2Fwww.politico.com/settings

This email was sent to by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA

Please click here and follow the steps to .

More emails from POLITICO's The Long Game