Daily on Energy: BlackRock may not be as aggressively green as advertised

Reuters reported that BlackRock executives told elected officials and other energy industry stakeholders in Texas earlier this year that they want the state’s oil and gas firms to “succeed and prosper” and that the firm would keep doing business with them.

“We will continue to invest in and support fossil fuel companies, including Texas fossil fuel companies,” the memo said.

Why Texas: Texas is the nation’s oil and gas bellwether. Its wells accounted for 43% of crude oil production in 2020, more than four times the share that came from no. 2 producing state North Dakota. It also led the pack as top natural gas producer the same year.

At the same time, the state has been ahead of the curve in putting pressure on the financial sector to shirk environmental, social, and governance standards designed to divest from or avoid altogether the fossil fuel industry as a part of a climate change mitigation strategy.

A new state law prohibiting state entities from signing contracts worth more than $100,000 with companies that “boycott” fossil energy firms went into effect in September, and several state legislatures are following suit in current legislative sessions.

Where BlackRock is: Chairman and CEO Larry Fink assessed last year the economy is on the brink of “a fundamental reshaping of finance” and pushed companies in his 2021 annual letter to CEOs “to disclose a plan for how their business model will be compatible with a net-zero economy,” which in general entails the displacement of fossil fuels.

Since then, even with sustained pressure by green activists to cut the financing cord to oil and gas projects (and major wins by the same), Fink has kept one foot in the fossil fuel door.

In December, BlackRock became involved in a $15.5 billion deal to help finance natural gas pipelines in Saudi Arabia.

Fink said at the time that “responsibly-managed natural gas infrastructure has a meaningful role to play in this transition,” which is similar to the case natural gas industry groups make about the fuel.

In his newest letter to CEOs, Fink said businesses “cannot be the climate police.” It was a comment meant to assert the need for green government policies rather than an argument that businesses shouldn’t go green themselves.

In any case, the firm has shown it’s not prepared to go green at the rate many green groups demand.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

BIDEN TEAM WARNS RUSSIAN INVASION ‘IMMINENT’: The Biden administration is not buying Russia’s assertions that it’s pulling back from the Ukraine border. More than that, President Joe Biden and UN Ambassador Linda Thomas-Greenfield both said this morning they expect an invasion to occur in short order.

“They have not moved any of their troops out. They’ve moved more troops in, number one,” Biden told reporters. “Number two, we have reason to believe they are engaged in a false flag operation.”

Thomas-Greenfield said Russia is “moving toward an imminent invasion.”

Russia also expelled U.S. Deputy Chief of Mission to Russia Bart Gorman, which the State Department called an “escalatory step.”

Biden and co. have warned frequently that humanitarian costs associated with an invasion would be severe, as would the disruption to oil and gas supplies.

“Every indication we have is they’re prepared to go into Ukraine,” Biden said outside the White House this morning. Still, he told reporters, he believes a diplomatic solution is still possible, adding: “there is a path. There is a way through this.”

EU now more energy secure: After weeks of energy diplomacy involving the State Department, European officials, and major gas producers and customers, EU Commission President Ursula von der Leyen now says the bloc is “rather on the safe side,” now that Japan agreed to allow diversion of some of its contracted liquefied natural gas cargoes to the EU in the event of pipeline disruptions

LAWMAKERS AGREE RFS NEEDS WORK: Democrats and Republicans on the Senate Environment and Public Works Committee took up the Renewable Fuel Standard yesterday for the first time since 2016, largely agreeing that the biofuel blending program has major shortcomings.

“I still support the goals of the Renewable Fuel Standard,” said Chairman Tom Carper, but he added that EPA has been too slow to approve new blends of biofuels for eligibility under the program’s requirements and that high costs for Renewable Identification Numbers — which enable refiners to demonstrate compliance with the program’s requirements — have hurt refineries.

Democrats have been making that case at least as far back as October, when New Jersey’s congressional delegation wrote Administrator Michael Regan asking for relief as refiners struggled with a 1,800% percent increase in RIN prices.

Republican lawmakers especially want to see the Biden administration reconsider exemption requests by small refineries to the standard’s requirements, something the Trump administration did at high rates. The Biden EPA has proposed denying all outstanding exemption requests.

UK’S ROW OVER FRACKING: Britons are being slammed by energy prices so high that some industrial groups are warning their members may have to shutter operations, and a number of Tory lawmakers want the conservative government to lift a ban on fracking in order to produce more gas at home and bring prices down.

But some others inside the government, including minister of State for the Pacific and the International Environment Zac Goldsmith, have rejected the idea. Goldsmith has asserted that building out wells would not get support from local residents where such wells would be sited.

Michael Stoppard, London-based chief strategist of global gas for IHS Markit, noted the split among the conservatives, whose ranks include Prime Minister Boris Johnson — who is very hawkish on climate change — and Tory backbenchers who are wary of Johnson’s approach to displacing fossil fuels. That divide, and opposition from other parties and localities, makes it unlikely for the fracking moratorium to be lifted, he said.

“While it could reduce reliance on imported gas, it would be unlikely to make the country self-sufficient in natural gas,” Stoppard told Jeremy. “Prior to the moratorium, progress on fracking was very slow, largely because of complex and long drawn-out permitting procedures. The U.K. does not have an onshore supply chain with rigs like the U.S. waiting to be deployed.”

NATURAL GAS OUTPUT HEADED FOR RECORD, TOO: Alongside crude oil, the Energy Information Administration projects domestic natural gas production will climb this year and reach a record in 2023.

EIA expects producers to average 104.4 billion cubic feet of gas per day in 2022, and the average is expected to rise to 106.6 billion cubic feet per day next year. The growth will be driven by production from gas-rich Appalachian and Permian Basin shale.

Gas demand remains strong globally, especially in Europe and Asia, and producers intend to capitalize on the $25 per MMBtu prices both markets are supporting.

LNG surging on European demand: Domestic liquefaction facilities are all over the gas craze. Total U.S. LNG feedgas demand hit a record high of of 13.34 billion cubic feet per day on Jan. 20, according to the American Gas Association.

Europe now has the prevailing customer base for U.S. LNG. Whereas some 60% of LNG shipments ended up in Asia in June 2021, as of this month, Europe is receiving more than 70% of U.S. LNG volumes, per Platts Analytics.

BIDEN TO ANNOUNCE $1 BILLION GREAT LAKES CLEANUP EFFORT: Biden will travel to Loraine, Ohio, this afternoon, where he is slated to announce $1 billion in infrastructure funds for the cleanup and restoration of the Great Lakes.

The funds will help accelerate the cleanup and restoration of what EPA has identified as “Areas of Concern” in the Great Lakes region by the year 2030.

Speaking to reporters ahead of the announcement, one EPA regional administrator praised news of the new initiative, describing it as progress that “would have been inconceivable just a few years ago.” (Read more from the Washington Examiner’s Christopher Hutton.)

ZINKE ‘REPEATEDLY’ VIOLATED ETHICS RULES, IG REPORT FOUNDS: Former U.S. Interior Secretary Ryan Zinke repeatedly violated federal ethics rules during his tenure, according to a report from federal investigators, including using his position to improperly advance a real estate project in his hometown of Montana and lying to a department ethics official about his involvement.

The Interior Department’s inspector general report, released yesterday, “cites 64 emails and text messages between August 2017 and July 2018 and says Zinke ‘may have used’ federal resources for personal financial gain,” the Washington Examiner’s Ryan King reports.

The IG report says Zinke continued to communicate with real estate developers about the Whitefish, Montana, project for roughly a year after taking office, and later misrepresented the situation when he was asked about it by a designated agency ethics official.

Zinke is currently running for Congress in Montana, and his campaign has attempted to dismiss the report, calling it a “political hit job.”

CASSIDY BLOCKS BIDEN EPA NOMINEES OVER CARBON CAPTURE DELAYS: Louisiana Republican Sen. Bill Cassidy announced a hold yesterday on all four of President Biden’s EPA nominees, citing frustration with the agency delaying approval for carbon capture wells in his state.

Cassidy, one of 19 Republican senators to approve the $1 trillion infrastructure bill last fall, described Louisiana as the “ideal location” to store carbon underground. Cassidy took aim at the EPA for its so-called “unnecessary” delays in approving the state’s application to permit carbon sequestration wells, which have reportedly not moved forward since October.

“We have met the requirements, and we have the workers, capacity, and resources to begin this process,” he said in a statement. “All that’s needed is the green light from the Biden administration.” Shortly after, Cassidy met with Regan to discuss the status of the application. 

NEPA MOVING FASTER UNDER BIDEN? A new study found that federal agencies have been issuing decisions on infrastructure permits faster than average under Biden by a period of nearly four months. E&E News reports: “Federal environmental scrutiny can take years and span administrations. [Ted Boling, who led the study], looked at final decisions made under the current leadership. The time it took agencies to arrive at a ‘record of decision’ from a ‘notice of intent” decreased by 3.6 months compared to a previous average, according to his calculations. The time it took from final environmental impact statement to record of decision also went down.”

“They seemed to be operating with greater efficiency,” Boling told E&E News. “A transition year is always topsy-turvy, but there does seem to be timeliness of particular infrastructure development.”

NEPA is a 1970s law requiring the federal government to conduct a thorough environmental review of projects like pipelines, bridges and highways. The Trump administration tried to speed up the review process to lower costs for developers.

Those changes drew criticism from many environmental groups, who said they downplayed climate concerns and sidelined public input. At the same time, though, some have argued that review times must be decreased to allow for the construction of clean energy infrastructure. In other words, Biden on this issue faces tension between boosting renewable energy and fulfilling promises to help people and places hurt by pollution.

The Rundown

Axios U.S. sea levels to rise by a foot through 2050, causing “profound” flooding

Financial Times US coal companies defy obituaries with ‘amazing’ results

The Hill Green groups press for progressive upset in Texas House race

Calendar

THURSDAY | FEB. 17

1:00 p.m. The House Subcommittee on Energy and Mineral Resources will host a remote hearing on climate adaptation science at the U.S. Geological Survey.