O Death

IRINA SLAV

In February this year, Barclays announced it would stop direct financing for “energy clients, for upstream oil and gas expansion projects or related infrastructure.”

The bank followed a massively popular trend in the industry of boosting support for transition-related businesses at the expense of traditional energy because traditional energy was the new plague, at least reputationally speaking. There must have also been plans to profit from the transition, no doubt, because forecasts and projections said it would be profitable.

Fast forward five months and imagine my surprise when Barclays’ CEO, CS Venkatakrishnan told Bloomberg this week that banks couldn’t just quit oil and gas “cold turkey” and that the “reality is that for quite some time, fossil fuels will be with us.”

In the same report, Bloomberg graciously informed us that Barclays is not the only one having sort of second thoughts about this whole move away from oil and gas business, especially in the U.S. where trans-banks also encountered a pushback from Republican states accusing them, rightly, of discriminating practices.

Those second thoughts, of course, have a sound basis in balance sheets and central bank policies that have, to put it mildly, interfered with original transition plans. The transition, in other words, is not making the money it was supposed to be making. You’d think banks would quietly start moving away from it all, wouldn’t you?

Apparently not, if BlackRock is any indication. The asset manager this week launched not one, not two, but five new ETFs in Europe dubbed “climate transition” funds because, as I will never tire of repeating, words now don’t need to make sense, they only need to sound nice and right.

The climate transition funds focus on five geographical areas: there’s a global one, a European one, a eurozone one, a U.S. one, and a Japanese one, and this news is our weekly dose of hearty laughter so feel free. The idea that BlackRock believes you can make money from an ETF comprising “companies leading in the transition to a low-carbon economy”, per the FT, in places such as the eurozone and Japan is so absurd in light of their economic indicators that I don’t even know how to finish this sentence.

Yet the launch suggests there are still people with money to spare out there who share the belief, possibly because they believe forecasts coming out of places such as the IEA, Ember and scores of other climate NGOs are fact. I’m beginning to have certain suspicions about who funds those forecasts. I mean, it would only make sense for financial institutions who want to profit off the transition to pay for favourable forecasts but then again I’ve probably just read too much Agatha Christie.

While BlackRock bets on the hypothetical possibility that “The transition to a low-carbon economy is set to spur a significant reallocation of capital as energy systems and technologies continue to evolve and develop,” UK transition businesses are struggling to get their projects off the ground.

Almost two-thirds of such — onshore — projects have not survived beyond the planning stage over the last five years, the FT reported this week, illustrating the report with an an atrocious image of a solar/wind installation in Wales. The Welsh government has truly gone insane but enough about that.

Wind and solar developers in the parent country are having their projects rejected, returned for revisions, or they simply withdraw or abandon them, or let the permits expire. That must be the regulatory hurdles to the transition that executives have been complaining about. The fact there is still some sort of regulation on transition matters is certainly refreshing although both the Conservatives and Labour have promised to change that.

In some places there is even additional regulation that is threatening the livelihood of people who made the choice of profiting from the transition. It is with much pride that I bring you the news this place is Bulgaria, where solar installation owners have organised a national protest against the new rules.

The reason for the solar people’s anger is the introduction of a new methodology for pricing in what state news agency BTA has translated as “balancing electricity” and what I suspect means a fee for overloading the grid when there’s little demand and causing headaches for generators and grid operators.

Here’s a delicious quote: “The new balancing fee is almost as high as the price of the electricity produced and even exceeds it. For example, we invoice electricity at BGN 100/MWh and are invoiced between BGN 90 and BGN 105/MWh for balancing. In some cases we even have to make up the difference,” one of the organisers of the protest said.

Am I schadenfreundig? Yes, I am. I keep hearing about people suddenly interested in solar panels but not to satisfy their own energy needs, no. They are interested in putting up panels in order to sell the electricity into the grid and get rich.

They weren’t going to get rich even before the new methodology was introduced but now it seems that any income is off the table. One short order of greed retribution served. Tough luck and looming bankruptcies. Until the EU interferes, that is, which it likely will because how dare some national government pander to grid operators and non-solar generators.

While we bitter haters bask in the rays of gloathood, activists tirelessly work to find new things to fret about and spread the fretting far and wide. Remember that Canadian gag law on transition claims? Right, so that law and similar regulation elsewhere has apparently unleashed something activists are calling greenhushing and I have to hand it to them, while unoriginal, it is rather charming and also rhymes with greenwashing.

One green consultancy named ClimeCo recently published a report on greenhushing, saying that “Companies across the globe are stepping back from communicating sustainability goals amidst fears of heightening scrutiny from customers, regulatory bodies, and investors.”

Elaborating, ClimeCo wrote that “Rather than make exaggerated environmental claims, as in the case of greenwashing, some organizations are now deliberately under-communicating or not publicizing their environmental efforts whatsoever,” which is exactly what fellow Energy Realities gang member Tammy Nemeth said would happen because of course that’s what would happen when you’re making any perceived inaccuracy or exaggeration a punishable offence.

Because of this new greenhushing wave spreading across industries, poor investors will now receive a lot less transition information from potential investment targets and this is a really tragic emerging state of affairs that someone should do something about as soon as practically possible.

Climate action must move on, after all, even if the direction of this movement is perdition. Because, guess what, there’s not enough money. For some reason, transition cheerleaders believe that the more they repeat this, the more likely it is for the necessary money to spontaneously materialise in the right pockets.

I leave you with a random song from a random TV show that randomly popped into my head as I was writing this post.

Source: Irina Slav on energy