Bank of England head: Pension funds could be hit by ‘worthless’ fossil fuels by Oscar Williams-Grut, Yahoo Finance UK, December 30, 2019
Bank of England governor Mark Carney has warned pension funds they could be stung as fossil fuels investments become “worthless” over time.
Carney said in an interview on BBC Radio 4’s Today Programme on Monday that global targets to reduce emissions would render many fossil fuel companies and their assets worthless, as people ditch ‘dirty’ energy in favour of renewables.
“Up to 80% of coal assets will be stranded, up to half of developed oil reserves,” Carney said. “A question for every company, every financial institution, every asset manager, pension fund, or insurer: What’s your plan?” [HA! In Alberta, is Kenney’s plan is to steal pensions from hard working ordinary Albertans, hand over to AIMCo to feed the fossil fuel greed bleed?]
Carney said pension funds “could make [the] argument” to clients that it is better to ditch fossil fuels now, even as returns remain attractive.
“They need to make the argument, to be clear about why is that going to be the case if a substantial proportion of those assets are going to be worthless,” the outgoing Bank of England governor said.
Carney called climate change a “tragedy on the horizon” and said the financial sector was “not moving fast enough” to address it.
The comments came during a special edition of the Today Programme guest edited by teenage environmental campaigner Greta Thunberg.
Tackling climate change has been a major priority for Carney during his time at Threadneedle Street. The governor first raised the financial risk posed by warming temperatures in a speech in 2015 and has warned that firms “will go bankrupt” if they ignore climate risk.
The Bank estimates that as much as $20trn-worth of assets could be at risk from climate change.
More recently, the Bank of England has committed to introducing regular climate risk ‘stress tests’ for big banks. Carney, who is set to leave the central bank next March, is also set to become the UN’s Special Envoy for Climate Action and Finance when he leaves Threadneedle Street.
Others in the financial sector are also sounding the alarm on climate change. Marisa Drew, head of Credit Suisse’s impact advisory and finance division, told Yahoo Finance UK in November that investments could “go to zero quickly” if firms ignore the risks.
Pittsburgh’s fracking industry cut more than 400 jobs in 2019, with more cuts likely on the way by Ryan Deto, Jan 2, 2020, Pittsburgh City Paper
Last year, Pittsburgh’s fracking industry cut hundreds of jobs, and the outlook for 2020 could be even worse for the natural gas extraction field.
Local natural gas players like EQT, Range Resources, and CNX have cut a combined total of more than 400 jobs since January 2019.
EQT, which is headquartered in Pittsburgh, led the way with almost 300 job cuts last year. The energy company laid off about 100 last January and then announced an additional 196 job cuts last September.
CNX, which is headquartered in Washington County, cut 70 positions last year, while Range Resources cut 40 jobs from its Pittsburgh regional offices. Range Resources, a Texas company, also cut 50 jobs from its headquarters in Houston.
These job cuts have been blamed on an economic slowdown within the natural gas industry. According to Washington County’s Observer-Reporter, the number of drilling rigs operating in Pennsylvania has dropped from 47 to 24.
Analysts have noted that there is currently an oversupply of natural gas, meaning that more natural gas is being produced than demand requires, which leads to price drops. The prices have been dropping for the last four years, and the Wall Street Journal reported today that the slide is continuing into 2020. [In other words, industry is killing itself with its own instatiable greed]
Andy Brogan, head of the oil and gas global sector at accounting giant EY, recently told the Pittsburgh Business Timeshe doesn’t expect that slide to turnaround immediately but says it could bounce back.
“In the short term, the gas market is oversupplied and is likely to remain so for the next few years,” said Brogan. “It’s a cyclical business, and we’re at the bottom of the cycle.”
But the slowdown has created casualties. Energy giant Chevron announced last month they would be pulling out of the Pittsburgh region entirely. That means Chevron is leaving its regional offices in Coraopolis, and the fate of its 400 Pittsburgh area jobs is uncertain.
Since 2016, several large conglomerates have divested funds from the Appalachia natural gas region, and other companies have pulled out operations entirely, some of them losing millions of dollars.
The benefits for those working in ancillary industries might be less stellar than originally reported. From 2009-2016, there were about 7,000 jobs created in the extractive services field, the vast majority of these in fracking. However, energy companies like Range Resources promised that fracking would lead to a growth in manufacturing jobs.
From 2009-2016, the Pittsburgh region lost more than 10,000 manufacturing jobs.
However, the shrinking industry might get a boost from a newly constructed petrochemical facility coming to Beaver County. Shell is constructing a cracker plant, which will refine natural gas into to plastic pellets. The environmental concerns for fracking and cracker plants remain high, but the hope is that more cracker plants will increase demand for natural gas and those plastic pellets will create a plastics manufacturing sector.
But in places like Louisiana that have several petrochemical plants, its unclear if that has materialized, and these cracker plants haven’t helped increase demand for natural gas significantly. [Is industry’s brutal LNG push about feeding greed, desperately trying to drive up prices for public health harming frac’d natural gas?]
Because of the precarious future of natural gas, a political rift between leaders has emerged over the industry. Pittsburgh Mayor Bill Peduto has come out in opposition to future cracker plants in the region. He tweeted last week that fracking is over-capacity and that without a secondary market, like plastics, it will fail.
2019 WAS THE YEAR THAT FRACKING FELL APART, The argument about “natural gas” ended: it’s a disaster on every level by Eric de Place(@Eric_deP), December 27, 2019, Sightline Institute
If you’re desperate for good news about climate change, it helps if you have a sense of schadenfreude.
Probably the merriest fossil fuel stories of 2019 show the fracking industry on the verge of a meltdown.
Despite a raft of accounting gimmicks, the industry wasn’t able to hide the fact that it was drowning in red ink. By mid-year, Sightline’s Clark Williams-Derry reported that:
A cross-section of 29 fracking-focused oil and gas companies reported more than $2.5 billion in negative free cash flows in the first quarter of 2019. These results were even worse than in the fourth quarter of 2018…
And as the year went on, the frackers’ problems kept getting worse. By December, the oil and gas giant Chevron was forced to write down its assets by more than $10 billion, with industry analysts widely accepting that dozens of other companies in the sector would face a similar reckoning.
Whatever financial pain the industry is facing, though, looks like a flesh wound compared to the injury it has inflicted on the rest of us—and our environment. As Chevron tried to put on a brave face for investors, researchers at Stanford University dispelled the characterization of natural gas as a necessary “bridge fuel” to clean energy. Quite the opposite:
A surge in natural gas has helped drive down coal burning across the United States and Europe, but it isn’t displacing other fossil fuels on a global scale. Instead, booming gas use is fueling the global growth in greenhouse gas emissions, according to a new study by researchers at Stanford University and other institutions.
In fact, natural gas use is growing so fast, its carbon dioxide emissions over the past six years actually eclipsed the decline in emissions from the falling use of coal, the researchers found.
Consider also the grim news that came in December, when the National Academy of Sciences reported that a new satellite-based methane analysis determined that a single gas well blowout in Ohio last year was one of the largest methane leaks in US history. The New York Times reported:
The blowout, in February 2018 at a natural gas well run by an Exxon Mobil subsidiary in Belmont County, Ohio, released more methane than the entire oil and gas industries of many nations do in a year, the research team found. The Ohio episode triggered about 100 residents within a one-mile radius to evacuate their homes while workers scrambled to plug the well.”
The Ohio blowout released more methane than the reported emissions of the oil and gas industries of countries like Norway and France, the researchers estimated. Scientists said the measurements from the Ohio site could mean that other large leaks are going undetected.
When you sign up for fracking—”shale gas development,” as the industry likes to have it—that’s what you should expect. Not often, but not never.
Even when methane is not gushing skyward from ill-conceived fracking operations, it’s a persistent menace. As Sightline’s Tarika Powell explained in her three-part series on the topic, methane is like carbon dioxide on steroids. The whole notion of using gas a bridge fuel is alarmingly deceptive and understanding how methane works is a critical component of any coherent climate policy.
This year was also the year when the human and economic costs of fracked gas became abundantly clear. A suite of new expert analyses showed definitively that fracking is a clear danger to public health—and a costly one.
In a journal article published in Nature this month, economists at Carnegie Mellon University demonstrated that the shale gas boom in the Ohio Valley was a wrecking ball for communities and climate, not just a bust. Sitting atop the gas-rich Marcellus and Utica shale formations, it is one of the most intensively fracked regions of the world. That geology yielded short term profits for industry while exacting a terrible price from the public in the region.
For every three jobs created by the shale gas industry, someone’s life in Appalachia was cut short by a year.
This from an industry already responsible for thousands of premature deaths.
And the costs of air pollution from shale gas extraction exceeded the employment benefits by over $2 billion in the Ohio Valley, while the climate impacts add another $34 billion in estimated losses.
The findings were consistent with research published in May by economists at ECONorthwest who studied the costs of fracking in Pennsylvania. They found that the annual costs of fracking in the Keystone State are roughly $1.5 billion per year—the equivalent of 0.3 percent of the state’s GDP. If fracking there continues at current rates, they calculated that the costs would rise to $54 billion over the next 20 years. And that’s not even counting a whole range of costs that their study could identify, but not monetize. The true cost would add in cancer, cardiac conditions, occupational hazards, groundwater contamination, seismic activity, and much more.
Medical professionals did study all those destructive side effects in 2019 though, and they issued a grim prognosis. In a December paper published in the New England Journal of Medicine, four of the nation’s top public health experts warned about the dangers of gas, finding that: “gas is associated with health and environmental hazards and reduced social welfare at every stage of its life cycle.” They link it ground and surface water contamination, air pollution, radiation release, ecological damage, earthquakes, and on and on.
The Oregon and Washington Physicians for Social Responsibility reached much the same conclusion. In their hefty May 2019 report, they found: “the fracking process degrades the environment of surrounding communities through toxic contamination of air and water with hundreds of chemicals with known associations to cancer, heart and lung disease, developmental disorders, and poor pregnancy outcomes.”
These findings are in line with those of the national Physicians for Social Responsibility, which published a new new sixth edition of a compendium report on fracked gas. Reviewing more than 1,700 peer-reviewed studies and independent reports, they concluded that 84 percent found health harms related to fracking—and there is no evidence that fracking can operate without threatening public health directly or without imperiling climate stability upon which public health depends.
If 2019 was the year when the arguments in favor of fracked gas fell apart, 2020 will be the year when we have to start making tough decisions. Despite Washington Governor Jay Inslee’s opposition to several new fracked gas projects, the industry is still planning rapid expansion in the region. In fact, Cascadia’s gas industry got a late-year boost when the Puget Sound Clean Air Agency gave a green light to a new liquefied natural gas (LNG) facility in Tacoma, over the objection of the Puyallup Tribe. Still outstanding are final decisions about a giant LNG export project in Coos Bay, Oregon, and a huge gas-to-methanol refinery in Kalama, Washington, both of which have fallen far behind schedule.
As 2020 unfolds, communities across Cascadia will determine their stance on fracked gas.
But to date, even relatively modest community proposals—simply stopping the buildout of more new gas-delivery infrastructure—are met with outrage by the industry and developers alike.
With clear evidence about the menace fracked gas represents and with an industry falling apart economically, we should ring in the new year emboldened to stand our ground.
Refer also to:
Oil and gas industry seeks 2 billion-dollar tax break to lure LNG plants