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JPMORGAN’S BIG CLIMATE TEST: How JPMorgan Chase handles fossil fuel clients like ExxonMobil will be a huge test of whether it’s serious about aligning its financing with the Paris climate agreement, environmental activists say.
For now, environmentalists are cautiously celebrating JPMorgan’s new commitment, announced late Tuesday, as a sign Wall Street is changing in respect to climate change. Just last month, Morgan Stanley announced its own climate commitment to strive for net-zero financed emissions by 2050.
“There’s a good chance that these kinds of commitments are on the path to becoming the new normal,” Ben Ratner, a senior director with Environmental Defense Fund+Business, told Abby. All eyes are now on other big banks, such as Citigroup, Bank of America, and Wells Fargo, to say how they’re going to approach climate change, he added.
The commitment from JPMorgan, however, is particularly significant because it’s been the biggest financier of fossil fuels in recent years. A report in March from the Rainforest Action Network, Sierra Club, and several other environmental groups found JPMorgan invested $268 billion in coal, oil, and gas between 2016 and 2019, 36% more than the second biggest fossil fuel financier.
What JPMorgan is pledging to do: The bank said Tuesday it would align its financing with the goals of the Paris Agreement, including by helping clients invest in low-carbon technologies.
As part of that effort, JPMorgan will set interim 2030 targets for its financing portfolio on a sector-by-sector basis focusing on oil and gas, utilities, and automakers. It will evaluate clients’ carbon intensity, and it is launching a dedicated Center for Carbon Transition to support long-term climate strategies and carbon disclosure. More details will be unveiled in the bank’s latest climate report coming out next year.
JPMorgan also says it will advocate for “market-based policy solutions” to address climate change, including pricing carbon, and support nascent low-carbon technologies.
“While the world has a long way to go, we at JPMorgan Chase want to do more,” Daniel Pinto, the bank’s co-president and CEO of its corporate and investment bank, said in a statement. “That means working with clients, policymakers, and advocates to transition our economy and turn the goals of Paris into a reality.”
As always, the devil is in the details: Environmentalists say they’ll be looking for tangible progress from the bank, as early as this year.
“[I]f JPMorgan Chase is serious about aligning with Paris, it must immediately stop financing expansion of fossil fuels and deforestation,” said Paddy McCully, climate and energy director for the Rainforest Action Network, in a statement.
That could mean dropping oil and gas clients who aren’t addressing climate change. Just this week, Bloomberg News found in leaked internal documents that ExxonMobil had plans to dramatically increase greenhouse gas emissions over the next few years.
Ultimately, for JPMorgan to meet the goals it’s now setting out for itself, it won’t be able to afford continuing to fund massive fossil fuel development because its lending book will essentially need to balance out as net-zero by 2050, Ratner said.
“They need to be on a credible trajectory to get there starting ASAP,” he added. “So JPMorgan won’t be able to afford to write loans to companies that burst JPMorgan’s carbon bubble.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). 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.
GREEN NEW DEAL LIBERAL SEEKS TO UPSET FRED UPTON IN MICHIGAN: Jon Hoadley, a 37-year-old liberal, is pushing an agenda to confront climate change aggressively as a wedge issue to defeat longtime Republican incumbent Rep. Fred Upton in a purple district of southwest Michigan, Josh reports this morning.
Hoadley’s embrace of the progressive Green New Deal might seem like a risk to score an upset in a district, Michigan’s 6th, bordering Indiana, and which President Trump flipped in 2016 after it backed former President Barack Obama in 2008 and 2012. The race is rated lean Republican by the Cook Political Report and Sabato’s Crystal Ball.
But Hoadley is betting voters of both parties can identify with the effects of climate change fueling extreme weather, which he says have disrupted the work of farmers in the district who grow corn, potatoes, blueberries, and apples.
“The climate crisis is here in southwest Michigan too,” Hoadley told Josh in an interview.
A test for Republicans too: Upton, the former chairman of the Energy and Commerce Committee, helped lead the GOP’s messaging shift on climate, so this is an early test of whether it’s registering with voters in purple suburbs.
“He’s been there for 34 years and decided in year 33, when he doesn’t have the gavel, that we should start to take baby steps?” Hoadley said. “This is why people are so frustrated. He has had an opportunity to create change for years.”
API EXPANDS AD CAMPAIGN IN BATTLEGROUND STATES: The American Petroleum Institute is expanding an ad campaign in key battleground states, with the oil and gas industry seeking to provide “balance” in the energy debate in the final weeks before the election.
API is spending seven figures on the digital campaign, dubbed “Conversations and Consequences,” which highlights “practical” solutions to climate change, and seeks to lay out the “harmful” effects of policies like a federal leasing ban, which Joe Biden has proposed.
API supports federal spending on clean energy technologies such as carbon capture, but generally opposes anything that would reduce the use of fossil fuels.
OIL DEMAND PICKS UP: U.S. oil demand increased last week to 18.3 million barrels per day from 17.4 million b/pd the week prior, the EIA reported Wednesday in its Weekly Petroleum Status report.
The week ending Oct. 2 was a rare one in recent months that saw gasoline consumption, diesel, and jet fuel demand all rise at the same time. But oil demand remains about 14% below the same week last year.
EIA also reported a 0.5 million barrel increase in commercial crude inventories after weeks of declines.
OUTLOOK FOR NATURAL GAS: Households that primarily heat with natural gas will pay 6% more during what’s expected to be a cold winter this year because of higher energy consumption as people stay put during the pandemic, the EIA projected Tuesday in its short-term Energy Outlook.
Natural gas prices fell this summer during the pandemic to the lowest level in 25 years, but rising demand this winter and reduced production will cause prices to rise beginning in 2021.
That means coal will become more competitive as an electricity source, leading to a 19% rise in production next year after a 26% decline this year.
CORPORATE SOLAR BOOM: Growth in corporate solar capacity saw its second largest year on record in 2019, with 1,286 megawatts of new solar installed by companies, according to the latest data released Wednesday by the Solar Energy Industries Association.
Big tech companies and major retailers still dominate in terms of solar capacity installed, with Apple and Amazon keeping their No. 1 and No. 2 spots for top corporate solar users. Other companies saw big jumps in 2019, with Walmart increasing its solar use by 35% last year bringing it up to the third largest corporate solar user in the U.S. That means more than 7.2 million people each week shop at a Walmart store that has solar power, SEIA says.
Abigail Ross Hopper, SEIA’s president and CEO, also pointed to increasing solar installations from smaller companies. Two-thirds of the installed solar capacity in 2019 came from companies not on the Fortune 500 list, and they chose solar because they’re finding it cheaper, Hopper told Abby.
That economic calculus to move to solar will be especially important in 2020, she added, as companies are looking at tighter budgets amid the pandemic. “For so many companies, energy costs are one of their biggest expense items,” Hopper said. “To be able to have that locked in at a low rate, especially in uncertain economic times, has real value.”
BLM’S SHODDY WORK ON PANDEMIC ROYALTY RELIEF: The Bureau of Land Management gave oil and gas companies relief from paying their full royalty rates for some leases on federal lands without knowing whether or not the relief was actually necessary to keep wells operating amid the pandemic, the Government Accountability Office said Tuesday.
“As a result, royalty relief may have gone to companies that would not have shut down their wells without the relief,” said Frank Rusco, GAO’s director of natural resources and environment, in prepared testimony for the House Natural Resources Committee. The GAO estimates the federal government missed out on roughly $4.5 million in royalty revenue for May and June of this year due to the relief granted.
The GAO also found that BLM applied the royalty relief inconsistently across states, in part because there was no clear guidance from headquarters about how and whether to grant the relief. For example, the Montana/Dakotas BLM office approved 95% of the applications it received for relief, while the Colorado office only approved 5% and the New Mexico office approved none, the GAO said. In total, five BLM state offices granted relief for 581 oil and gas leases (out of a pool of applications for 1,689 leases).
PENDLEY’S EXPANSIVE FINGERPRINTS: A coalition of 60 environmental groups compiled a list of plans and decisions overseen by Trump’s public lands chief William Perry Pendley that they say should be invalidated after a federal judge ruled he was working in the post illegally.
The groups in a letter Tuesday noted Pendley’s involvement as leader of the Bureau of Land Management in resource management plans across the West, environmental studies in the Arctic, regulations for oil and gas leasing, rulemaking for timber and recreation, and hundreds of personnel decisions.
Brian Morris of the United States District Court for the District of Montana in his ruling said any function or duty Pendley performed as acting director without Senate confirmation “would have no force and effect and must be set aside as arbitrary and capricious.”
The Interior Department is appealing the ruling, and secretary David Bernhardt has said environmentalists’ “hopes and dreams are about to be crushed” if they think Pendley’s actions would be nullified.
BIDEN’S CLIMATE PLANS ARE GIFT TO CHINA, CONSERVATIVE GROUP SAYS: Biden’s plans to move aggressively toward renewable energy and electric cars would jeopardize national security by making the U.S. dependent on China for critical minerals and clean energy technologies, says Power the Future in a new report Wednesday shared first with us.
The group, which calls itself the voice of energy workers, notes China currently dominates the market for many of the critical minerals, like rare earth elements, needed for solar panels, wind turbines, and electric car batteries. China is also far outperforming the U.S. in producing those clean energy technologies, the report says.
Daniel Turner, Power the Future’s founder and executive director, says the U.S. should focus on its strength, which is the coal, oil, and natural gas it has in abundance. He told Abby he doesn’t buy Biden’s “made in America” pledges, suggesting Biden would yield to environmentalists’ views against expanding mining and production of critical minerals in the U.S.
The coronavirus pandemic, during which China has restricted access to personal protective equipment, should be a wake-up call to the threat posed by relying on China, he added. “What is China going to do when the vast majority of our economy is powered by their technology?” he said.
DEMOCRATS RAISE ALARM EPA COULD WITHHOLD FUNDS FROM CITIES: The EPA is weighing withholding funds from several cities to comply with Trump’s directive not to support cities that “permit anarchy” — a move Senate Democrats say put human health and the environment at risk.
“We have learned that EPA, in its internal meetings related to the policy, has begun to identify funding sources that could be subject to the directive, some of which are vital for the provision of safe drinking water and the remediation of contamination,” wrote seven senators, led by top Senate Environment Committee Democrat Tom Carper and Senate Minority Leader Chuck Schumer.
The senators, in a letter to EPA Administrator Andrew Wheeler, cite internal agency meetings where officials have discussed withholding funds from Seattle, Portland, New York City, and Washington, D.C. The senators warn pulling that funding could result in a “collective loss of more than a billion dollars of funding intended to clean up contamination and drinking water.”
BREATH OF FRESH AIR: Cities have an opportunity to lock in cleaner air that has resulted from the shut down in travel during the coronavirus pandemic, the Rocky Mountain Institute said in a report Wednesday.
The environmental research group said cities, particularly help low-income areas exposed to pollution, should electrify residential and commercial buildings by phasing out the use of fossil fuels; accelerate EV deployment through expanded charging stations while also reducing reliance on vehicles by improving public transit and reclaiming street space for pedestrians; invest in urban greening; and push utilities to transform their electricity mix to cleaner sources.
EYES ON RECORD-BREAKING HURRICANE: With nearly two months left in the Atlantic hurricane season, Hurricane Delta is expected to make landfall on the mainland United States later this week, the 10th storm this season to do so.
Delta’s landfall would mark the most named storms — hurricanes, tropical storms, or otherwise — to hit the U.S. since 1916, when nine storms barraged the country, according to the Weather Channel.
The storm has rapidly strengthened since it formed and is projected to be the third major storm to make landfall as a Category 2 hurricane, according to ABC News. It is expected to restrengthen in the Gulf of Mexico on Thursday before downgrading to a Category 2 storm by the time it is projected to hit Louisiana Friday night.
Bloomberg Exxon, oil rivals shield their carbon forecasts from investors
Washington Post How the Cares Act poured millions into corporate hands with no strings attached
Reuters Sole survivor? Saudi Aramco doubles down on oil to outlast rivals
Los Angeles Times What caused California’s rolling blackouts? Climate change and poor planning
WEDNESDAY | OCT. 7
9 p.m. University of Utah in Salt Lake City. Vice President Mike Pence and Sen. Kamala Harris face off in the vice presidential debate.
THURSDAY | OCT. 8
10 a.m. The International Energy Forum will hold a virtual roundtable session on the impact of the coronavirus pandemic in the energy, aviation, and tourism sectors.
TUESDAY | OCT. 13
2 p.m. The National Hydropower Association in partnership with ClearPath hosts a virtual event titled, “What does the 2020 Election mean for Clean Energy?”