Over the last two years, some of the world’s most powerful and influential bankers and investors have argued that climate change poses a grave threat to financial markets and that nations must switch urgently from using fossil fuels to using renewables.
In 2019, the Federal Reserve Bank of San Francisco warned that climate change could cause banks to stop lending, towns to lose tax revenue, and home values to decline. Last year, 36 pension fund managers representing $1 trillion in assets said climate change “poses a systemic threat to financial markets and the real economy.”
And upon taking office, President Joe Biden warned government agencies that climate change disasters threatened retirement funds, home prices, and the very stability of the financial system.
But a major new staff report from the New York Federal Reserve Bank throws cold water on the over-heated rhetoric coming from activist investors, bankers, and politicians. “How Bad Are Weather Disasters for Banks?” asks the title of the report by three economists. “Not very,” they answer in the first sentence of the abstract.
The reason is because “weather disasters over the last quarter century had insignificant or small effects on U.S. banks’ performance.” The study looked at FEMA-level disasters between 1995 and 2018, at county-level property damage estimates, and the impact on banking revenue.
The New York Fed’s authors only looked at how banks have dealt with disasters in the past, and what they wrote isn’t likely to be the final word on the matter. The United Nations Intergovernmental Panel on Climate Change and most other scientific bodies predict that many weather events, including hurricanes and floods, which cause the greatest financial damage, are likely to become more extreme in the future, due to climate change.
And in February, The New York Times quoted one of six United States Federal Reserve governors saying, “Financial institutions that do not put in place frameworks to measure, monitor and manage climate-related risks could face outsized losses on climate-sensitive assets caused by environmental shifts.”
But the Fed economists looked separately at the most extreme 10 percent of all disasters and found that banks impacted not only didn’t suffer, “their income increases significantly with exposure,” and that the improved financial performance of banks hit by disasters wasn’t explained by increased federal disaster (FEMA) aid.
In other words, disasters are actually good for banks, since they increase demand for loans. The larger a bank’s exposure to natural disasters, the larger its profits.
Happily, the profits made by banks are trivial compared to rising societal resilience to disasters, which can be seen by the fact that the share of GDP spent on natural disasters has actually declined over the last 30 years.
While scientists expect hurricanes to become five percent more extreme they also expect them to become 25 percent less frequent, and now, new data showglobal carbon emissions actually declined over the last decade, and thus there is no longer any serious risk of a significant rise in global temperatures.
Banking Against Growth
Biden nominee Saule Omarova said she wants to bankrupt energy companies
The real risk to banks and the global economy comes from climate policy, not climate change, particularly efforts to make energy more expensive and less reliable through the greater use of renewables, new taxes, and new regulations.
“For policymakers,” warned the three economists writing for the New York Fed, “our findings suggest that potential transition risks from climate change warrant more attention than physical disaster risks.”
While they may seem like outliers, they are far from alone in expressing their concern. The second half of the quote by the Fed governor about climate change, which was hyped by The New York Times, warned that banks “could face outsized losses” from the “transition to a low-carbon economy.” (My emphasis.)
And, now concern is growing among members of Congress about the dangers of over-relying on weather-dependent energy, with some members citing the New York Fed’s report after The Wall Street Journal editorialized about it last week .
Proof of the threat to the economy from climate policy is the worst global energy crisis in 50 years. Shareholder activists played a significant role in creating it, according to analysts at Goldman Sachs, Bloomberg, and The Financial Times, by reducing investment in oil and gas production, and causing nations to over-invest in unreliable solar and wind energies, which has driven up energy prices, and contributed significantly to inflation.
And yet a crucial Biden Administration nominee for bank regulation has openly said she would like to bankrupt firms that produce oil and gas, the two fuels whose scarcity is causing the global energy crisis. Progressive academic, Saule Omarova, nominated by Biden, said recently that “we want [oil and gas firms] to go bankrupt” and that “the way we basically get rid of these carbon financiers is we starve them of their source of capital.
Omarova is not an outlier. The Biden Administration’s Financial Stability Oversight Council (FSOC) is advocating 30 new climate regulations that should be imposed on banking. Many analysts believe the US Securities and Exchange Commission will require new regulations. The goal is to radically alter how America’s banks lend money, the energy sector, and the economy as a whole.
And former Bank of England chief, Mark Carney, co-chair of the Glasgow Financial Alliance for Net Zero, has organized $130 trillion in investment and said recently that his investors should expect to make higher, not lower, returns than the market. How? In the exact same way Omarova predicted: by bankrupting some companies, and financing other ones, through government regulations and subsidies.
Carney created the Glasgow Financial Alliance, or GFANZ, with Michael Bloomberg, and they did so under the official seal of the United Nations. “Carney said the alliance will put global finance on a trajectory that ultimately leaves high-carbon assets facing a much bleaker future,” wrote a reporter with Bloomberg. “He also said investors in such products will see the value of their holdings sink.”
What’s going on, exactly? How is it that some of the world’s most powerful bankers, and the politicians they finance, came to support policies that threaten the stability of electrical grids, energy supplies, and thus the global economy itself?
The Unseen Order
Tom Steyer, Michael Bloomberg, and George Soros
Three of the largest donors to climate change causes are billionaire financial titans Michael Bloomberg, George Soros, and Tom Steyer, all of whom have significant investments in both renewables and fossil fuels.
Soros is worth $8 billion and recently made large investments in natural gas firms (EQT) and electric vehicles (Fisker), Bloomberg has a net worth of around $70 billion and has large investments in natural gas and renewables, and much of Steyer’s wealth derives from investments in all three main fossil fuels—coal, oil, and natural gas — as well as renewables.
All three men finance climate activists and politicians, including President Biden, who then seek policies — from $500 billion for renewables and electric vehicles over the next decade to federal control over state energy systems to banking regulations to bankrupt oil and gas companies — which would benefit each of them personally.
Bloomberg gave over $100 million to Sierra Club to lobby to shut down coal plants after he had taken a large stake in its replacement, natural gas, and operates one of the largest news media companies in the world, which publishes articles and sends emails nearly every day reporting that climate change threatens the economy, and that solar panels and wind turbines are the only cost-effective solution.
Soros donates heavily to Center for American Progress, whose founder, John Podesta, was chief of staff to Bill Clinton, campaign chairman for Hillary Clinton’s presidential campaign, and who currently runs policy at the Biden White House. So too does Steyer, who funds the climate activist organization founded by New Yorker author Bill McKibben, 350.org, which reported revenues of nearly $20 million in 2018.
The most influential environmental organization among Democrats and the Biden Administration is the Natural Resources Defense Council, NRDC, which advocated for federal control of state energy markets, the $500 billion for electric cars and renewables, and international carbon markets that would be controlled by the bankers and financiers who also donate to it.
In the 1990s, NRDC helped energy trading company Enron to distribute hundreds of thousands of dollars to environmental groups. “On environmental stewardship, our experience is that you can trust Enron,” said NRDC’s Ralph Cavanagh in 1997, even though Enron executives at the time were defrauding investors of billions of dollars in an epic criminal conspiracy, which in 2001 bankrupted the company.
From 2009 to 2011, NRDC advocated for and helped write complex cap-and-trade climate legislation that would have created and allowed some of their donors to take advantage of a carbon-trading market worth upwards of $1 trillion.
NRDC created and invested $66 million of its own money in a BlackRock stock fund that invested heavily in natural gas companies, and in 2014 disclosed that it had millions invested in renewable funds.
Former NRDC head, Gina McCarthey, now heads up Biden’s climate policy team, and Biden’s top economic advisor, Brian Deese, last worked at BlackRock, and almost certainly will return at the end of the Biden Administration.
Money buys influence. In 2019, McKibben called Steyer a “climate champ” when Steyer announced he was running for president, adding that Steyer’s “just-released climate policy is damned good!” And in 2020, McKibben wrote an article called, “How Banks Could Bail Us Out of the Climate Crisis,” for The New Yorker, which repeated the claim that extreme weather created by climate change threatens financial interests, and that the way to prevent it is to divert public and private money away from reliable energy sources toward weather-dependent ones.
Forms filed to the Internal Revenue Service by Steyer’s philanthropic organization, the TomKat Charitable Trust, show that it gave McKibben’s climate activist group, 350.org, $250,000 in 2012, 2014, and 2015, and may have given money to 350.org in 2013, 2016, 2017, 2018, 2019, and 2020, as well, because 350.org thanked either Steyer’s philanthropy, TomKat Foundation, or his organization, NextGen America, in each of its annual reports since 2013.
At the same time, McKibben’s motivations are plainly spiritual. He claims that various natural disasters are caused by humans, that climate change literally threatens life on Earth, and is thus “greatest challenge humans have ever faced,” a statement so unhinged from reality, considering declining deaths from disasters, declining carbon emissions, and the total absence of any science for such a claim, that it must be considered religious.
McKibben first book about climate change, The End of Nature, explicitly expressed his spiritual views, arguing that, through capitalist industrialization, humankind had lost its connection to nature. “We can no longer imagine that we are part of something larger than ourselves,” he wrote in The End of Nature. “That is what this all boils down to.” Indeed, for William James, the belief in “an unseen order” that we must adjust ourselves to, in order to avoid future punishment, is a defining feature of religion.
Climate change is punishment for our sins against nature — that’s the basic narrative pushed by journalists, climate activists, and their banker sponsors, for 30 years. It has a supernatural element: the belief that natural disasters are getting worse, killing millions, and threatening the economy, when in reality they are getting better, killing fewer, and costing less. And it offers redemption: to avoid punishment we must align our behavior with the unseen order, namely, a new economy controlled by the U.N., bankers, and climate activists. Unfortunately, as is increasingly obvious, the unseen order is parasitical and destructive.
When Nuclear Leads, the Bankers Will Follow
Former German Chancellor Angela Merkel, French President Emanuel Macron, and U.S. Energy Secretary Jennifer Granholm
The unseen order of bankers, climate activists, and the news media is so powerful that it is difficult to imagine how it could ever be challenged.
The financial might of the climate lobby covers the wealth not only of billionaires Soros, Steyer, and Bloomberg, but also $130 trillion in investment funds, including many of the world’s largest pension funds, such as the one belonging to California public employees. The climate lobby’s political power is equally awesome, covering the entirety of the Democratic Party and a significant portion of the Republican Party, and most center-Left parties in Europe.
And all of that is sustained by cultural power, which has led many elites to view climate change as the world’s number one issue, has convinced half of all humans that climate change will make our species extinct, and has served as the apocalyptic foundation for Woke religion.
But serious cracks in the foundation are growing. The global energy crisis has revealed for many around the world the limits of unreliable renewables, with European governments having to subsidize energy to avoid public backlash, President Biden and other heads of state opening up emergency petroleum reserves, and all nations begging OPEC to produce more energy.
The blackouts and rising unreliability of electricity in California, along with the work of the pro-nuclear movement over the last 6 years, has resulted in a growing number of Democrats supporting nuclear energy. Energy Secretary Jennifer Granholm last week publicly urged California Governor Gavin Newsom not to close California’s Diablo Canyon nuclear plant, the signature nuclear plant Environmental Progress has been trying to save since 2016. Democratic support in particular for nuclear is growing.
And alternative media including Substack, podcasts, and social media platforms are increasingly providing a counterweight to the mainstream news media, exposing a huge number of issues that the media got wrong in recent years, and amplifying alternative voices.
Nowhere is the change occurring faster than in Europe, where energy shortages are affecting heating, cooking, and electricity supplies in ways that undermine the legitimacy of the banker-led climate efforts. In Britain, private energy companies have gone bankrupt, forcing the government to bail them out. For-profit energy companies, like banks, ultimately depend on taxpayers, who are also voters.
Outgoing German Chancellor Angela Merkel, who led her nation’s exit from nuclear energy, acknowledged that Germany had been defeated in its anti-nuclear energy advocacy at the European Union level, and that nuclear would finally be recognized as low-carbon.
And French president Emanuel Macron, under pressure from the political right as voters look to elections next year, gave a passionate speech in favor of nuclear energy last month, announcing $35 billion for new reactors.
As the world returns to nuclear, policymakers, media elites, and climate advocates will be increasingly confronted with the question of why consumers and taxpayers will benefit from a global carbon trading scheme and more weather-dependent renewables, particularly at a time of declining global emissions from the continuing transition from coal to natural gas, reduced deforestation, and increased reforestation.
Simply building more nuclear power plants means there is no climate change justification for weather-dependent renewables, which actually require greater use of natural gas, in order to deal with the high amount of unreliability.
Nuclear power goes with slow and patient capital. The obvious funders of a nuclear expansion in the West would be the pension funds, which need the secure return on investment that major construction and infrastructure projects provide, and which unreliable renewables, as the energy crisis shows, do not.
And though the news media is currently ignoring the New York Fed’s report, reporters will not be able to continue spreading misinformation about climate change indefinitely. Increasingly, they, and thus policymakers and the public, will be forced to confront facts inconvenient to their narrative, including that humans are adapting remarkably well to climate change, that renewables make energy unreliable and expensive, and that only nuclear can achieve sustainability goals of reduced emissions, material throughput, and land use.
As people ask, “How Bad Are Weather Disasters?”, not just for banks, but for all of us, the answer will increasingly come back, “Not very.”
Cenovus Energy to buy remaining stake in Toledo refinery from BP for $300 million
CALGARY — Cenovus Energy Inc. has reached a deal with British energy giant BP to buy the remaining 50 per cent stake in the BP-Husky Toledo Refinery for $300 million.
The Calgary-based oil producer has owned the other 50 per cent of the Ohio-based refinery since its combination with Husky Energy in 2021.
Cenovus says its U.S. operating business will take over operations when the transaction closes, expected before the end of the year.
The company says the Toledo refinery recently completed a major, once in five years turnaround to improve operational reliability.
It says the transaction will give Cenovus an additional 80,000 barrels per day of downstream throughput capacity, including 45,000 barrels per day of heavy oil refining capacity.
The deal brings Cenovus’ total refining capacity to 740,000 barrels per day.
Alex Pourbaix, Cenovus president and CEO, says fully owning the Toledo refinery provides an opportunity to further integrate the company’s heavy oil production and refining capabilities, including with the nearby Lima Refinery.
“This transaction solidifies our refining footprint in the U.S. Midwest and increases our ability to capture margin throughout the value chain,” he said in a statement.
This report by The Canadian Press was first published Aug. 8, 2022.
Companies in this story: (TSX:CVE)
The Canadian Press
Surprise Senate vote would overturn Biden environmental rule
By Matthew Daly in Washington
WASHINGTON (AP) — In a surprise victory for Republicans, the Senate on Thursday voted to overturn a Biden administration rule requiring rigorous environmental review of major infrastructure projects such as highways, pipelines and oil wells — an outcome aided by Democratic Sen. Joe Manchin of West Virginia.
Manchin, a key player on energy and climate issues and a swing vote in the closely divided Senate, joined Republicans to support the measure, which was approved 50-47. The vote comes as Manchin has proposed a separate list of legislative measures to speed up federal permitting for major projects in return for his support of a Democratic bill to address climate change.
Republicans voted unanimously to overturn the Biden permitting rule, while Manchin was the only Democrat to support it. Three senators were absent: Republican John Cornyn of Texas and Democrats Patrick Leahy of Vermont and Jeff Merkley of Oregon. The vote sends the measure to the Democratic-controlled House, where it is unlikely to move forward.
Still, the vote signaled strong Senate support for action to reform the often onerous federal permitting process, which can take up to eight to 10 years for highways and other major projects. Streamlining federal review is a top Manchin and GOP priority that is not shared by most Democrats.
Sen. Dan Sullivan, an Alaska Republican, sponsored the measure to overturn the Biden rule, saying new regulations under the National Environmental Policy Act, or NEPA, will further bog down the permitting process and delay critical infrastructure projects the country needs.
The Biden rule — which overturns an action by the Trump administration loosening environmental reviews — requires regulators to consider the likely impacts on climate change and nearby communities before approving major projects. The new requirement “is going to add to the red tape” that prevents major infrastructure projects from being approved in a timely manner, Sullivan said.
While President Joe Biden has called infrastructure a priority — and pushed for a $1 trillion bipartisan infrastructure law passed last year — the new NEPA rule actually “makes it harder to build infrastructure projects” in the United States, Sullivan said.
“The only people, in my view, who really like this new system are radical far-left environmental groups that don’t want to build anything … and probably the Chinese Communist Party,” he said on the Senate floor. China and other competitors likely “love the fact that it takes 9 to 10 years to permit a bridge in the U.S.A.,” Sullivan said.
The White House strongly opposed the measure and threatened a veto if Congress approves it.
“This action would slow the construction of American infrastructure, lead to the waste of taxpayer resources on poorly designed projects and result in unnecessary and costly litigation and conflict that will delay permitting,” the White House said in a statement Thursday.
Manchin countered that, “for years I’ve worked to fix our broken permitting system, and I know the (Biden) administration’s approach to permitting is dead wrong.”
Manchin called Thursday’s vote “a step in the right direction” but said the measure likely “is dead on arrival in the House. That’s why I fought so hard to secure a commitment (from Democratic leaders) on bipartisan permitting reform, which is the only way we’re going to actually fix this problem.”
The new rule, finalized this spring, restores key provisions of NEPA, a bedrock environmental law that is designed to ensure community safeguards during reviews for a wide range of federal projects, including roads, bridges and energy development such as pipelines and oil wells. The longstanding reviews were scaled back under former President Donald Trump in a bid to fast-track projects and create jobs.
The White House Council on Environmental Quality said in implementing the new rule that it should restore public confidence during environmental reviews. The change could speed development by helping to “ensure that projects get built right the first time,” said CEQ Chair Brenda Mallory.
Projects approved by the Trump administration were frequently delayed or defeated by lengthy court battles from groups challenging environmental reviews as inadequate.
Manchin, who brokered a surprise deal last week on climate legislation with Senate Majority Leader Chuck Schumer, said he’s won promises from Biden and Democratic leaders in Congress to pursue permitting reforms in the Senate to speed approval of projects in his energy-producing state and across the country. Manchin’s wish list includes swift approval of the controversial Mountain Valley natural gas pipeline in his home state and Virginia. The pipeline is nearly complete but has been delayed for years by court battles and other issues.
Manchin’s list includes a number of proposals supported by Republicans, including a two-year deadline on environmental reviews; changes to the Clean Water Act; limitations on judicial review; and prompt action on projects determined by the Energy secretary to be in the national interest.
Environmental groups have decried Manchin’s proposals as counter-productive to the climate legislation and a threat to the environment and communities where projects would be built.
Madeleine Foote, deputy legislative director of the League of Conservation Voters, dismissed the Senate vote Thursday as “nothing more than a Republican-led stunt to appease their fossil fuel-industry allies.”
Foote and other environmentalists said strong NEPA review is needed to ensure that those most affected by an energy project have a say in the projects built in their communities.
“Thorough, community-based environmental reviews are critical to helping eliminate environmental racism and making sure low-income communities and communities of color are protected from polluters who want to build dirty, toxic projects in their backyards,” Foote said.
She called on Congress to approve the Manchin-Schumer climate bill as soon as possible. Schumer said votes on the bill are likely this weekend.
Kabir Green, director of federal affairs at the Natural Resources Defense Council, another environmental group, said Americans are “seeing the effects of climate change in catastrophic detail, from the heat waves in Texas to wildfires in New Mexico to the devastating flooding in Kentucky. But the Senate is voting to prevent the federal government from considering climate change when making decisions. This makes no sense.”
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