Welcome to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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TSwift offsets Super Bowl pollution
Aiming to appease critics of her nonstop private jet use — including a college student using publicly available flight logs whom she has threatened to sue — Taylor Swift bought double the necessary carbon offsets for her ongoing tour. The problem is, double may not be enough to offset the actual emissions produced when Swift flew from Japan to Las Vegas for the Super Bowl; there are persistent questions about the overall usefulness and validity of carbon credits and offsets.
Coming to Swift’s rescue was Global Citizen, whose Michael Sheldrick argues that there are real benefits to the system of offsetting emissions via credits for planting trees and other activities believed to reduce pollution. Offsets can help keep forests standing and fund indigenous communities seeking to preserve biodiversity, for example.
Either way, despite all the attention on the superstar, there were 882 other private planes that also flew into Las Vegas for wings n kicks. Tut tut.
Private Equity Data Portal
A group of researchers launched the Private Equity Energy Tracker last week, making public the energy portfolios of eight major private equity firms in North America that are typically difficult to access due to regulatory loopholes. The firms collectively invested in at least 116 fossil fuel companies, the data show, including some of the largest fossil fuel assets in the world — undermining claims that these PE titans are serious about investing in the energy transition. A good tool for journalists, investors, policymakers, regulators, and others.
With predictions that peak oil is only years away, the race to consolidate in the Permian Basin continues. Yesterday, Diamondback Energy and Endeavor Energy Resources announced a $26 billion merger which, if approved by regulators and shareholders, would bring the combined company’s output to 816,000 barrels of oil and gas a day.
Could this somehow be good for the climate? That depends on who you ask. Andrew Logan, senior director of oil and gas at Ceres, says yes because larger companies have bigger budgets for monitoring and emissions-control measures, are less reactive to short-term price trends, and are better positioned to invest in energy transition technologies. However, larger companies also have more money for lobbying, public relations, litigation, and an even stronger interest in pumping until the last drop.
Exxon’s unprecedented move to circumvent the Securities and Exchange Commission and head straight to a ‘friendly’ judge in North Texas with its lawsuit challenging a shareholder proposal might be starting to backfire. The oil giant’s refusal to drop the suit — and to pursue legal fees and other relief after the climate emissions target proposal was withdrawn and a motion to dismiss was filed — drew the ire of several powerful and influential investorshareholdergroups.
Exxon’s aggressive suit and claims didn’t sit well with the head of the world’s largest sovereign wealth fund either. Norway’s trillion-dollar oil fund’s chief executive called it a “worrying development” with “implications for shareholder rights.”
A new report released by IEEFA last week should also alarm investors with the basic fact that fossil fuels underperform the market. At its core, Exxon is attempting to silence shareholder proposals its C-suite executives don’t like as part of a larger legal strategy.
Billions of insurance risks in fossil fuels
North Carolina residents may be feeling momentary relief after the state insurance commissioner rejected a 42% rate increase, but America isn’t safe from the growing insurance affordability crisis. Last Thursday, U.S. Treasury Secretary Janet Yellen told the Senate Banking Committee that the absence of affordable insurance means both households and banks with exposure to loans should be worried about the financial risks of uninsured losses. Homeowners in Texas are already acutely aware of looming insurance premium hikes according to a recent survey, which found 89% of respondents are concerned about the increased risk of natural disasters on insurance affordability.
As for insurers, West Coast regulators warned them in a recent analysis that they could face billions of dollars in losses if they continue to invest in the industries causing climate change. While the “stress test” is a step in the right direction, experts are urging regulators to go beyond calling out the problem by requiring insurers to implement rigorous plans for the transition to a clean-energy economy.