Apple backs wide emissions disclosure rules

(Reuters) -Apple Inc on Tuesday called for the U.S. Securities and Exchange Commission (SEC) to require companies to disclose far-reading emissions information such as how customers use their products, according to a tweet from Apple Vice President Lisa Jackson.

The comments by the iPhone maker mark the most specific prescription to date from a large public company about what disclosures are needed, said Veena Ramani, senior program director for Ceres, a Boston-based climate advocacy group.

The SEC last month said it will seek input on how companies might report on their greenhouse gas emissions and other climate factors.

Investors have poured money into funds that use environmental, social and governance factors to pick stocks, but a lack of common standards has made it hard to compare issuers’ operations.

Jackson, a former U.S. environmental regulator, in her tweet included a statement that Apple “believes that the SEC should issue rules to require that companies disclose third-party-audited emissions information to the public, covering all scopes of emissions, direct and indirect, and the value chain.”

An Apple spokeswoman confirmed the phrasing referred to so-called Scope 3 emissions like those resulting from the use of a company’s products by other parties. While that can be simple for technology or finance companies to provide, calls to publish the data can be controversial for other industries.

In reporting its Scope 3 emissions in January for the first time, oil major ExxonMobil Corp wrote that the data “is less certain and less consistent because it includes the indirect emissions resulting from the consumption and use of a company’s products occurring outside of its control.”

Various other business leaders have previously called for mandatory climate disclosures including Larry Fink, CEO of top investor BlackRock Inc. In February, BlackRock also urged heavy polluters to disclose their Scope 3 emissions to investors, like the Task Force on Climate-Related Financial Disclosures has also recommended.

In addition, Apple was among hundreds of companies that on Tuesday pressured the administration of U.S. President Joe Biden to slash greenhouse gas emissions.

Reporting by Ross Kerber in Boston Additional reporting by Stephen Nellis in San FranciscoEditing by Bill Berkrot and Matthew Lewis

Citi adds ESG scores to data platform for climate-conscious investors

(Reuters) – Citigroup has added environmental, social and governance (ESG) scores to its securities services data platform for clients to track the sustainability exposure of their portfolio holdings, the U.S.-based banking group said on Thursday.

For the Citi Velocity Clarity platform, the lender said it analyzes “multiple sustainability measures” provided on a daily basis by the ESG insight company Arabesque S-Ray, and will work with clients to include more data from other providers.

“The ability to understand ESG exposure has become imperative across the entire industry as investors, advisors and regulators are increasingly asking for transparency from asset managers and asset owners,” said Fiona Horsewill, global head of data for Citi securities services.

Along with growing investor concerns over climate change, Citi has introduced several measures in its green push, including plans last month to merge three of its investment banking groups into one.

Volvo, SSAB plan first fossil-free steel trucks on road to carbon neutrality

STOCKHOLM (Reuters) – Swedish truck maker AB Volvo and steel maker SSAB have signed an agreement to produce the world’s firstvehicles made of fossil-free steel, the companies said on Thursday.

Volvo plans to start production this year of prototype vehicles and components from steel made by SSAB using hydrogen produced from renewable energy. Small-scale serial production will start in 2022.

“This is an important step on the road to completely climate-neutral transport,” Volvo CEO Martin Lundstedt said.

The vehicles and machines will be emissions-free in operation, Volvo said, without specifying how they would run, while adding the company is reviewing all the materials used in their construction to eliminate anything based on fossil fuels.

It will be sourcing steel from green steel venture HYBRIT – which is owned by SSAB, Swedish state-owned utility Vattenfall and Swedish miner LKAB.

Last August, it began test operations in Lulea, Sweden, to replace coking coal, traditionally needed for ore-based steel making, with fossil-free electricity and hydrogen, which in turn is produced using only renewable power. [L8N2FX3LV]

China’s Geely Holding, which has a stake in AB Volvo, owns Volvo Cars, which it has said will be fully electric by 2030. [L2N2KZ10C]

Patchy corporate climate disclosure prompts G20 watchdog to act

LONDON (Reuters) – G20 companies will face common disclosure requirements on climate change risks under plans by the Financial Stability Board, which coordinates financial rules for the group.

In the latest sign of how policymakers want faster action to replace the patchy progress seen so far, the FSB said on Tuesday that said it will set out in July ways to promote consistent, high-quality climate disclosures.

Investors have long called for globally comparable disclosures to stop so-called greenwashing, where firms exaggerate their responses to climate change or underplay how global warming is likely to affect their business.

Although recommendations by the FSB’s Task Force for Climate-related Financial Disclosures (TCFD) are being applied by some companies, they are voluntary and critics say they lack detail, while implementation has been patchy.

While the 27-member European Union is pushing ahead with reforms to define which investments are “sustainable” and how to disclose them, the FSB said it would build on the TCFD recommendations.

The FSB, whose members include central banks, financial regulators and treasury officials from G20 countries, said it backed plans by the IFRS Foundation for a global sustainability reporting standards board based on the TCFD recommendations initially.

Given a proliferation of work on climate disclosures, the FSB said there was a need for a “strategic vision, good coordination, and clear communication to the G20 and the public” and it will present a multi-year roadmap this summer.

“This will leverage work being carried out by standard setting bodies and international organizations while simultaneously using our mechanisms to identify vulnerabilities and build consensus on ways forward,” it said.

The FSB and the Network for Greening the Financial System, a forum of central banks and financial regulators for climate related issues, will also work with each other.

Analysis: Sheen comes off green in crowded climate investment space

LONDON (Reuters) – The booming market in green finance faces a test this year as more investors balk at lofty share price tags even on loss-making companies and a gradual economic recovery from the pandemic boosts returns on conventional energy assets.

Driven by government promises to deliver a low carbon recovery, flows into funds investing on environmental, social and corporate governance (ESG) principles doubled last year from 2019 to $326 billion, Morningstar data showed.

But that has also made ESG one of the most crowded trades, BofA’s latest investor survey released on Tuesday found, while the supply of green securities has failed to keep pace with demand.

Emmanuel Cau, head of European equity strategy at Barclays, has warned of a “regime change” if the cycle were to turn in favour of value sectors, which benefit from economic recovery, and away from high-quality, high-value assets that are more sensitive to higher bond yields.

Cau last year cut his overweight recommendation on ESG utilities and last month upgraded conventional energy stocks to overweight, citing depressed investor positioning and the sector’s ability to capitalise on a post-pandemic recovery.

While most investors see the green investing trend as here to stay, they have grown wary after the huge price run-up.

“Valuations in the (green) sector are significantly higher than what we want to pay so we won’t allocate as much as we’d like to,” Justin Onuekwusi, fund manager at Legal & General Investment Management, said.

Supply of clean energy assets, meanwhile, shows signs of becoming less tight.

Refinitiv data indicates equity raising by sustainable companies totalled $6.6 billion year-to-date, a 28% increase on year-ago levels, although it is still only 2.5% of total activity.

In the green bond market too, there are hints of a strong increase in supply this year after last year’s scarcity brought into focus the so-called greenium – the extra premium investors have to pay to secure a green bond.

Following last year’s heavily oversubscribed green bond issues, Nordic bank SEB predicts green bond sales will double this year to $500 billion. France tapped green markets on Tuesday, while the European Union and Britain are prepping deals.

Cumulative green bond issuanceThank, used for funding projects such as clean energy, surpassed $1 trillion in December, according to the Climate Bonds Initiative, though Spain’s BBVA estimates this is under 1% of the global bond market.

Such has been the supply-demand imbalance that the market value of renewables developer EDPR rose in January above that of its parent EDP.

The picture, says NN Investment Partners senior portfolio manager Oskar Tijs, is best described as euphoria.

“Companies, which in many cases have been lagging for years because their earnings were low or negative, have performed… Money flows have been so strong that in some cases, you can question if it is still reasonable,” Tijs said.

HARD TO SUSTAIN

At the height of the pandemic last year, more than 80% of sustainable equity indices outperformed non-ESG peers, the Institute of International Finance estimates.

Rising prices led one-year forward price-earnings multiples on a basket of 35 green stocks to expand by 24 points in the last year, analysis by Morgan Stanley found. Multiples at non-green peers expanded by two points.

Yet Refinitiv IBES data going back to 2016 shows two of last year’s top performing green stocks – fuel cell makers Plug Power and FuelCell Energy – have never turned a profit and are not expected to do so for years.

Carmaker Tesla enjoyed its first profit in 2020 and solar firm Enphase has been profitable for two years.

Yet these shares have rallied between 400% and 1000% in the past year.

Sharon Bentley-Hamlyn, investment director at Aubrey Capital Management, has 2%-3% of her portfolio in green energy.

“We’d love to have more but it’s difficult to find stocks that meet valuation criteria. We like to buy at 1.5-times PEG ratio or less but many of them are trading near 2-times,” she said, referring to the metric measuring share price, earnings and future growth prospects.

“You don’t want to bet the ranch on these types of businesses which are still loss-making.”

Graphic: EDPR’s market cap exceeds its parent company –

Reuters Graphic

THE CRAZY GREENIUM

Investors often have to pay extra for green bonds, especially in sectors in which such issues are scarce and this greenium applies even when a green bond has a longer maturity than mainstream issues.

Dutch mail carrier PostNL’s 2026 green bond offers 41 basis points over swaps – a measure of a bond’s credit risk – 5 bps less than a mainstream bond maturing two years earlier..

Daimler’s 2030 green issue pays 10 bps below a conventional bond due earlier that year.

“This is crazy. You move along the curve, you take more risk, you get paid less,” said Shanawaz Bhimji, senior fixed income strategist at ABN AMRO.

Green issuers in the euro investment-grade market last year conceded an average 8 bps “new issue premium,” ABN AMRO estimates, less than half that paid across the broader market.

And investor demand exceeded issuance 5.5 times on average in 2020, versus four times on non-green bonds, ABN said.

Graphic: Cheaper for companies to issue green bonds –

Reuters Graphic

For all the mounting caution, James Palmer, BofA’s head of EMEA equity capital markets sees supply-demand mismatches supporting prices for a while yet.

He is busy discussing with companies that own sustainable businesses “whether they can and should separate them to get the valuations that the market is prepared to afford”.

Mining magnets: Arctic island finds green power can be a curse

COPENHAGEN (Reuters) – In the tenth century, Erik the Red, a Viking from Iceland, was so impressed with the vegetation on another Arctic island he had found he called it “the green land.” Today, it’s Greenland’s rocks that are attracting outsiders – superpowers riding a green revolution.

The world’s biggest island has huge resources of metals known as ‘rare earths,’ used to create compact, super-strong magnets which help power equipment such as wind turbines, electric vehicles, combat aircraft and weapons systems.

The metals are abundant globally, but processing them is difficult and dirty – so much so that the United States, which used to dominate production, surrendered that position to China about 20 years ago.

As Greenland’s ice sheet and glaciers recede, two Australia-based mining companies – one seeking funding in the United States, the other part-owned by a Chinese state-backed firm – are racing for approval to dig into what the U.S. Geological Survey (USGS) calls the world’s biggest undeveloped deposits of rare earth metals.

The contest underscores the polluting side of clean energy, as well as how hard it is for the West to break free of China in production of a vital resource. Rare earth metals have many uses, and last year China produced about 90% of them, according to Toronto-based consultancy Adamas Intelligence. As U.S.-China tensions mount, President Joe Biden’s administration said last month it will review key U.S. supplies, including rare earths, to ensure other countries cannot weaponise them against the United States.

Each Greenland mine would cost about $500 million to develop, the companies say. Both plan to send mined material away for final processing, an activity that is heavily concentrated in China. The only rare earth mine now operating in the United States – Mountain Pass in California – is partly owned by a Chinese state-backed company that currently sends material mined in the U.S. to China for processing.

The Greenland sites are less than 16 km (10 miles) from each other at the southern tip of the island, near a UNESCO World Heritage Site. Debate on them has triggered a political crisis in the capital of Nuuk, forcing a general election on the island of 56,000, due in April. Many Greenlanders, while concerned about pollution, feel mining is key to develop their fragile economy. In a 2013 poll, just over half said they want raw materials to become the country’s main source of income.

The country may ultimately back either project, both, or neither, but for those Greenlanders open to mining, the two proposals boil down to a choice between one mine that would not produce radioactive material, and another that would.

The first mine, a private initiative from an Australian geologist who has presented it to U.S. officials, would not involve nuclear material. It has won preliminary environmental approval, but it needs cash and a processing plan.

The second one has already spent more than $100 million preparing to mine, has proven processing technology through its Chinese partner, and won initial political support from Greenland’s coalition government. But its plans include exporting uranium, a nuclear fuel, to China, and it recently ran into strong opposition, including from residents of the nearby town of Narsaq.

“As indigenous people we have lived in harmony with nature for many, many years,” said Mariane Paviasen, an opposition lawmaker who lives in the town. “We use these lands to hunt and fish.”

Greenland, a self-governing territory of the Kingdom of Denmark, has a gross domestic product of around $3 billion – similar to Andorra and Burundi. With its people living mostly on fishing and grants from Copenhagen, its government is keen to attract foreign investments.

It does not have an estimate for royalties from the first project, but expects around 1.5 billion Danish crowns ($245 million) each year from the Chinese-linked one – equivalent to roughly 15% of public spending.

Greenland’s government did not respond to requests for comment for this story. Acting Minister of Resources Vittus Qujaukitsoq said last month that if Greenlanders suddenly decide they don’t want the second project, “we’ll make a fool of investors. The credibility of the whole country is at stake.”

STRATEGIC RESOURCES

Greenland’s rare earth metals are also a chance for America and Europe to regain control of a strategic resource.

The island’s potential as a source of the raw materials needed for renewable energy technologies gained momentum in 2010, when China threatened to cut off its supply of rare earth metals to Japan, and tightened quotas to international buyers.

Prices for some of the metals have jumped in recent months, driven by surging demand for electric vehicles as well as concerns that Beijing may restrict sales.

Greenland’s position near the eastern flank of the United States makes it a sensitive location. Former U.S. President Donald Trump offered to buy the island in 2019, and he was not the first U.S. president to do so: In 1946 Harry S. Truman offered Denmark $100 million for it. A defence treaty between Denmark and the United States dating back to 1951 gives the U.S. military almost unlimited rights there, and Greenland houses the northernmost U.S. military base.

Friedbert Pflüger, a senior fellow at the Atlantic Council think tank, says the revenues generated by a major mine could give its owner leverage over policies in Greenland, and a strong Chinese presence there may pose strategic threats.

“The very presence of Chinese companies in Greenland could be used as justification for China to intervene,” said Pflüger, a former German politician and ex-deputy defence minister.

China’s foreign ministry said in a statement that such comments politicise economic and trade issues through “groundless speculation,” adding “China has always supported Chinese companies to carry out foreign economic cooperation in accordance with market principles and international rules.”

The U.S. State Department said: “We encourage our allies and partners to carefully review any investments… that could give China access to critical infrastructure in ways that compromise their security or allow China to exert undue, adverse influence over their domestic economies.”

Denmark, which handles foreign affairs and defence for Greenland, has in the past headed off Chinese involvement in infrastructure projects, which government sources say was because of security concerns. Foreign Minister Jeppe Kofod declined to comment on the security implications of China’s involvement. But he told Reuters that Copenhagen’s close ties with the United States “should not be seen as an obstacle to commercial investments in Greenland.”

China is a member of the International Atomic Energy Agency, so it can import uranium from Greenland. But since the fuel is used in nuclear weapons, that would be sensitive. Copenhagen, which has the final say, declined to comment.

TRUMP’S OFFER

Trump’s offer for Greenland aimed to help address Chinese dominance of rare earth supplies. Those involved say he was partly following up on talks between U.S. officials and a privately held company called Tanbreez Mining Greenland A/S. Tanbreez is the owner of the first Greenland site – Kringlerne, or Killavaat Alannguat in Greenlandic.

The company’s owner, Australian geologist Greg Barnes, told Reuters he had met U.S. officials weeks before Trump made the offer, and the company website shows Barnes with them and the former U.S. ambassador to Denmark on a site visit. The USGS confirmed its officials had visited the site in 2019; Washington and a representative for the former president declined to comment.

Barnes said he had put A$50 million ($38.6 million) of his own cash into the Greenland project. New York-based investment banker Christopher Messina, managing director at capital markets advisory services firm Mannahatta Partners, is trying to assemble more financing. He says Kringlerne is “such a huge deposit that what comes out of it could satisfy manufacturing demands in the U.S. for years to come.”

Whether or not that pans out, Barnes says the metals produced by his project can be processed outside China, although he has not yet decided where, and declined to say at what cost.

He said the royalties it would generate for Greenland would be roughly the same as those promised by the China-linked plan. “We’ve managed to get our capital costs down without Chinese technology,” Barnes told Reuters.

The only major plant outside China that does the complex work of separating individual rare earth elements is in Malaysia. But others – including the Mountain Pass mine in the United States – are planning or have started to build such facilities.

“For the foreseeable future, China is going to be the major player in all of these supply chains simply because it’s so far advanced and because it’s not stopping and waiting for alternatives to catch up,” said Ryan Castilloux, head of Adamas.Slideshow ( 4 images )

Tanbreez says half the rare earth metals it mines would be lanthanum and cerium – relatively plentiful metals used in telescope lenses and auto catalysts to cut emissions. About a fifth would be yttrium, which is in demand for lasers and the superconductors used in quantum computing.

Neither of the Greenland projects would be pollution-free. Both plan for mined rock to be locally crushed and separated into concentrates to send for final processing.

Tanbreez’s mining waste will be piped to a lake which, while it does not contain fish, feeds a river with a large population of Arctic char. Turbid water could impact the char, according to the company’s environmental report, which says it plans to dump some 550 tonnes a day of waste material into the lake and will dam it to prevent disruption downstream.

Tanbreez’s plan has passed the public consultations stage and received a government permit in September. Now the company is working on parliament approval.

“CRITICAL PERIOD”

Both the Greenland projects, though run from Australia, are part of a European Union initiative, the European Raw Materials Alliance, to boost Europe’s output of critical minerals and cut dependence on China for rare earth metals..

The alliance, funded by the EU, is coordinating investment and providing seed money for European mines, processing plants and industries such as magnets.

Last year, the EU kick-started 10 billion euros ($12 billion) of investment into rare earth and other green-energy-related projects, and it says its demand for rare earth metals could surge as much as tenfold by 2050. It says China currently makes up 98% of its supply.

“This is a very critical period of time,” says the Alliance’s head, Bernd Schäfer. “We in Europe are facing raw materials scarcity on many levels and also the need for action.”

The rival mountaintop site not far from Tanbreez is called Kvanefjeld, or Kuannersuit in Greenlandic. For John Mair, managing director of its owner, Greenland Minerals Ltd, it’s a world-class opportunity at the right moment.

Kvanefjeld’s main offer is neodymium, needed for wind turbines. Brussels says the EU’s demand for the metal may reach 13,000 tonnes per year by 2050, three times more than it used in 2015. Neodymium is also used in combat aircraft.

Greenland Minerals is a listed firm in which Chinese company Shenghe Resources is the biggest shareholder, with just under 10%. Shenghe, which also has a similar size stake in Mountain Pass, declined to comment for this story.

Greenland Minerals, which bought its concession from Barnes, says its planned mine will, at least initially, send minerals it produces to China for final processing. It says it plans to find a site in Europe, but has not said when.

The company has a strong hand. Back in 2011, the estimated costs for setting up Kvanefjeld were $2.3 billion. By 2019, these shrank to $505 million, the company says: Shenghe, whose biggest shareholder is a state-run Chinese mineral research institute, has helped boost efficiency.

But Greenland Minerals faces public opposition. It is one step behind Tanbreez in the environmental vetting process – and its ores include significant amounts of radioactive materials.

When Greenland Minerals embarked on public consultations this year, protests erupted. At one meeting in Narsaq on Feb. 10, locals both inside and outside the hall banged windows and played loud music to disrupt presentations.

As opposition mounted, a small pro-mining party, Demokraatit, triggered a general election by pulling out of Greenland’s coalition in early February.

Polls suggest Greenland’s main opposition party, Inuit Ataqatigiit (IA), which has a zero-tolerance policy for uranium, will become the biggest in parliament, so would be first to try to form a new coalition.

“Our aim,” IA lawmaker and Narsaq resident Paviasen told Reuters, “is to halt the (Kvanefjeld) mining project.” But IA says it has not expressed opposition to Tanbreez, which is seen as less of a threat to the environment.

Kvanefjeld would dump much more waste than Tanbreez – about 8,500 tonnes each day – into a lake on top of the mountain, the Greenland Minerals plan says.

Greenland Minerals says any increase in background radiation from its Kvanefjeld mine will be minimal. It plans to build a concrete 45-meter dam to contain the radioactive waste and to spray water on the ground to keep the dust from blowing away.

The dam will be built to international standards to “withstand even the worst imaginable seismic activity,” it said in a report submitted to Greenland’s government last year.

Even so, residents say they worry contaminated water will seep into nearby rivers or that the dam will fail entirely. They cite the collapse of a mining dam in Brazil two years ago that killed 270 people.

As the crisis has deepened, Greenland Minerals’ shares have dropped by more than 50%. If the mine goes ahead, Paviasen says, many people plan to move away.

Reporting by Jacob Gronholt-Pedersen in Copenhagen and Eric Onstad in London; Additional reporting by Ernest Scheyder in Houston, Humeyra Pamuk in Washington and Tom Daly; Edited by Sara Ledwith

From U.S. domination to energy transition, two years that changed oil

(Reuters) – Former U.S. Secretary of State Mike Pompeo took the stage at the world’s largest energy conference in 2019 to declare an age of U.S. dominance after a decade of rapid shale development made the United States the world’s top oil and gas producer.

Two years later, the oil industry is recovering from the worst recession it has ever experienced after measures to contain coronavirus stopped billions of people from traveling and wiped out one-fifth of worldwide demand for fuel. The U.S. fossil fuel industry is still reeling after tens of thousands of jobs were lost.

The pandemic has also accelerated the energy transition, interrupting a steady rise in fuel consumption that may have otherwise continued for several more years unabated. Oil demand may never recover from that hit. This year, the CERAWeek conference in Houston is entirely virtual and numerous panels are dedicated to the transition to the low-carbon economy of the future, hydrogen technologies and climate change.

Microsoft Corp co-founder Bill Gates, U.S. climate envoy John Kerry, and speakers from Amazon and renewable fuels giant Iberdrola are among the headline speakers.

“The tone is different: There’s one theme that permeates the entire conference and that is energy transition,” said CERAWeek Founder Dan Yergin, vice chair of IHSMarkit.

Last year’s conference was one of the first major global events to be canceled as the pandemic started to rage and quickly made it unfeasible to gather thousands of people from 85 countries at the conference venues.

Since that time, many of the world’s major oil companies have set ambitious goals to shift new investments to technologies that will reduce carbon emissions to slow global warming. U.K.-based BP Plc has largely jettisoned its oil exploration team; U.S. auto giant General Motors Co announced plans to stop making gasoline and diesel-powered vehicles in 15 years.

To be sure, the 2021 program includes oil leaders who typically appear at CERAWeek. They include Mohammed Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), and the chief executives of Exxon Mobil, Total, Chevron and Occidental Petroleum.

But they will participate in panels focusing on the energy transition. Barkindo will discuss what kind of a recovery oil and gas will have as future demand is challenged. BP’s Looney will join Andy Jassy, who is set to become Amazon.com Inc’s CEO later this year, on a panel about reinventing energy. Occidental CEO Vicki Hollub and Ahmed Al Jaber, United Arab Emirates minister of state, are slated to tackle cutting carbon emissions.

Oil companies have come under increasing pressure from shareholders, governments and activists to show how they are changing their businesses from fossil fuels toward renewables, and to accelerate that transition.

“This year’s program reflects the reality of the transition toward a net zero future,” said Julien Perez, vice president of strategy and policy for the Oil and Gas Climate Initiative, a consortium of major oil companies.

Yergin said Gates will discuss the difficulty in reducing emissions to slow temperature rise around the world. He is expected to focus on the technologies that are missing, but required, from the energy transition.

“You’ll often go to conferences where people say, ‘Hey, let’s get companies to report their emissions and somehow magically make the emissions go away, or we’ll just divest the stocks,’” Gates told Reuters in an interview earlier this month.

The reality, Gates said, is much tougher. Many heavy industries that use oil and gas are hard to shift away from those fuels, and that is where new technologies are needed. Steel, for instance, still relies on furnaces fired by metallurgical coal.

“If you’re a steel company, you’re going to report a very big (emissions) number. People still need basic shelter, and it’s unlikely we’ll stop building buildings.”

While the shared goal of carbon neutrality has now become widely accepted, finding the best way to reach that goal is much more difficult, Yergin said.

“Previous energy transitions unfolded over centuries. This is meant to unfold over less than three decades – that’s a really heavy lift,” he said.

By: Jessica Resnick-Ault

SEC launches review of companies’ climate risk disclosures

(Reuters) – The acting chair of the U.S. Securities and Exchange Commission (SEC) on Wednesday said the market regulator will review public companies’ climate risk disclosures and begin to modernize climate guidance that is now more than a decade old.

The agency’s staff will review the extent to which public companies address topics related to climate change matters and assess companies’ compliance with their disclosure requirements, Acting Chair Allison Herren Lee said in a statement.

The SEC will use the review to update guidance on climate change matters from 2010, taking into account developments of the last decade, Lee said.

Scientists’ warnings about risks from climate change have grown over the last ten years, but companies’ methodologies for calculating those risks are inadequate and inconsistent, advocates for more disclosure like the Center for American Progress have said.

The board of the International Organization of Securities Commissions separately on Wednesday said it sees an urgent need for globally consistent and reliable sustainability disclosures.

Lee herself has criticized the SEC’s lack of clear guidance on Environmental, Social, and Governance – known as ESG – disclosures, saying in August that many market participants use the rubric as a “significant driver in decision-making.”

U.S. oil industry seeks unusual alliance with Farm Belt to fight Biden electric vehicle agenda

The U.S. oil industry is seeking to forge an alliance with the nation’s corn growers and biofuel producers to lobby against the Biden administration’s push for electric vehicles, but is so far meeting a cool reception, according to multiple sources familiar with the discussions.

The effort marks an unusual attempt by the petroleum industry to cozy up to its long-time rivals, reflecting the scale of its concern over President Joe Biden’s sweeping measures to combat climate change and tamp down fossil fuels.

While the oil industry and biofuels producers are natural competitors for space in America’s gas tanks, they share a desire to ensure a future for internal combustion engines.

The effort also reflects the rapidly shifting political landscape in Washington: the oil industry’s once-mighty influence has waned since Biden replaced Donald Trump as president, but the farm belt remains a vital and powerful political constituency.

The American Fuel and Petrochemical Manufacturers oil refining trade group confirmed it has been contacting state and national representatives of the corn and biofuel industries in recent weeks to seek support for a policy that would reduce the carbon-intensity of transport fuels and block efforts to provide federal subsidies for electric vehicles.ADVERTISEMENTnull

That proposal would be an alternativ to Biden’s stated goal of electrifying the nation’s vehicle fleet and would ensure a continuing market for liquid fuels like gasoline and corn-based ethanol.

AFPM met in mid-January with some corn and biofuel industry lobbyists and some member refiners are hoping to host another meeting in February to discuss the future of liquid fuels.

“This whole idea was going to have to take a whole lot of time to gel, but we have made some progress,” said Derrick Morgan, senior vice president at AFPM.

The industry’s push to change the course of electric vehicle policy faces big headwinds: California has announced a ban on internal combustion engines by 2035, other states are considering similar measures, and auto-maker General Motors on Thursday announced it will produce only electric vehicles by then.Slideshow ( 2 images )

Geoff Cooper, head of the Renewable Fuels Association, a leading biofuel industry trade group, confirmed RFA representatives were invited to participate in the February meeting, but said his organization had not yet decided whether to attend.

“We weren’t born yesterday and we’re not going to let the oil industry play us like a fiddle,” he said. “They have a long history of pushing surrogates and proxies to the microphone to do their dirty work and we’re not interested in that.”

The National Corn Growers Association is also considering whether to send staff the February discussion, according to two sources familiar with the matter.

NCGA CEO Jon Doggett told Reuters no such meeting had been scheduled, and distanced his group from the idea of an oil-corn alliance. “I have nothing to do with any refining groups. We haven’t talked,” he said.

Asked if any of its state-level member organizations were considering attending, Doggett replied, “We have dozens of groups. I can’t know what all of them are planning.”

Sources said the biofuel and corn industry is reluctant to join with the oil industry on this issue not just because of its longstanding rivalry with refiners, but also because it does not want to publicly oppose the energy policies of the new president.

WHIPLASH IN WASHINGTON

The refining sector enjoyed a seat at the table under former President Donald Trump, who was keen to bolster the oil and gas industry.

Biden marks a complete reversal. He entered the White House promising measures to restrain the oil industry, from pausing new drilling leases on public lands to contemplating tougher limits on emissions.

Biden this week pledged to buy 645,000 electric cars for the government vehicle fleet as part of a broader plan to advance EVs through vehicle procurement, infrastructure development and subsidies, threatening the multi-billion dollar gasoline market.

AFPM’s Morgan said refiners are not scared of electric vehicles but dislike rigid government mandates. “What we have a problem with are heavy-handed mandates that take away consumer choice, either altogether or in large part. We don’t think that’s the right way forward,” Morgan said.

The oil industry believes carbon emissions from fuel can be reduced by requiring increased octane content, which makes gasoline burn cleaner. Ethanol is a popular octane booster.

The U.S. Renewable Fuel Standard currently requires refiners to blend biofuels like ethanol into fuels. As a result, most gasoline sold in the United States has about 10 percent ethanol in it. The biofuel industry has been pushing hard to ensure those mandates continue.

“It’s no surprise the oil industry all of a sudden wants to give us a bear hug. We produce lower carbon fuels. They don’t,” said Emily Skor, head of the biofuel group Growth Energy.

Biden sign ‘existential’ executive orders on climate and environment

US President Joe Biden has signed a series of executive orders aimed to address climate change, including a new ban on some energy drilling.

The orders aim to freeze new oil and gas leases on public lands and double offshore wind-produced energy by 2030.

They are expected to meet stiff resistance from the energy industry and come as a sea change from Donald Trump, who cut environmental protections.

Mr Biden will also label climate change a “national security” priority.

The Los Angeles Refinery, California's largest producer of gasoline
image captionThe Los Angeles Refinery, California’s largest producer of gasoline

The series of executive orders that Mr Biden is due to sign on Wednesday will establish a White House office of domestic climate policy and announce a summit of leaders in the movement to tackle climate change to be held in April.

Mr Biden will also call upon the US Director of National Intelligence to prepare an intelligence report on the security implications of climate change.

What will the orders do?

Mr Biden is using the power he has as president to make climate change a central issue of his administration. 

The executive orders and memorandum – which cannot go as far as congressional legislation in combating climate change – can be undone by future presidents, as he is currently doing to Mr Trump.

According to a statement from the White House, Mr Biden will direct the Department of the Interior, which oversees federal public lands, to pause oil and gas drilling leases on federal lands and water “to the extent possible” and to launch a review of existing energy leases.

Mr Biden aims to conserve at least 30 percent of federal lands and oceans by 2030.

According to the New York Times, fossil fuel extraction on public lands accounts for almost a quarter of all US carbon dioxide emissions.

Public lands are controlled by the federal government. Mr Biden’s order does not affect private property owners or state-held public lands.

Mr Biden’s “whole-of-government” approach, the White House says, will create the first-ever National Climate Advisor who will lead the office of Domestic Climate Policy at the White House.

Later today, Mr Biden’s envoy for climate – another new position – will join the White House press briefing. 

The orders also direct all federal agencies to develop plans for how climate change will affect their facilities and operations.

It also will require agencies to determine ways to help the public better access climate change forecasts and information. 

Mr Biden is also making it clear his administration will make decisions based on the best science available. 

He’s directed agencies to only make “evidence-based decisions guided by the best available science and data”.

Analysis box by Matt McGrath, environment correspondent

Pausing the extraction of oil and gas from federal lands is the Biden administration’s tremulous first step onto the toes of the US oil and gas industry.

Federal drilling is a key part of their output – providing around 22% of US oil production and 12% of gas, according to the American Petroleum Institute (API).

The API is unhappy with the move, suggesting that any ban will lead to greater reliance on imports as the US economy recovers and needs more energy.

But experts reject that argument, pointing out that drilling on public lands will likely continue to expand even if a moratorium becomes a ban.

That’s because only half of applications for extraction approved between 2014 and 2019 have actually been used.

Moving towards a ban on future federal leases fulfils a campaign pledge and will reassure environmentalists that Joe Biden is the real deal when it comes to climate change.

But making significant inroads into US carbon output will require more than executive orders and new regulations.

It will probably need legislation put before the Congress.

That will be the true test of the Biden climate commitment. 

What do the orders say about jobs?

Mr Biden’s fiercest critics say that his climate change initiatives will cut American jobs as the country already suffers from record unemployment numbers amidst the Covid-19 pandemic.

He received a storm of criticism for last week’s executive order halting construction of the Keystone XL pipeline, that would have transported oil from Canada through the US.

But the Biden White House is trying to get ahead of more criticism by addressing job creation in these new executive orders. 

His plan calls for the creation of new jobs in the environmental industry, and directs federal agencies to end fossil fuel subsidies and “identify new opportunities to spur innovation, commercialisation, and deployment of clean energy technologies and infrastructure”.

It calls for the creation of a “Civilian Climate Corps Initiative” – a jobs initiative that Biden officials say will “put a new generation of Americans to work conserving and restoring public lands and waters”.