Released August 16, 2023 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Climate change and environmental, social and governance (ESG) issues were never far removed from speaker presentations on the first day of EnerCom Incorporated's (Denver, Colorado) annual oil and gas conference in Denver. But several speakers addressed those topics more directly and thoroughly than others at the conference, which runs August 14-16.
The conference drew about 750 registrants, EnerCom officials told Industrial Info.
Such matters may be coming to a head soon, as the U.S. Securities and Exchange Commission (SEC), said in June that it plans to finalize its draft greenhouse gas disclosure rule in the fourth quarter, possibly October. That draft rule, released in early 2022, has drawn extensive public comment. For more on that draft rule, see March 23, 2022, article - Energy, Business Groups Slam SEC's GHG Disclosure Draft Rule.
A significant percentage of comments filed by businesses, including oil and gas companies, takes issue with the SEC's attempt to compel publicly traded companies to disclose their so-called Scope 1, Scope 2 and Scope 3 emissions of greenhouse gases (GHGs). Scope 3 emissions are created when a company's product is consumed by consumers or businesses. While there is broad agreement about how a company can measure its Scope 1 emissions, which are created when a company makes a good or service, the issue of Scope 3 emissions has had far less agreement.
In fact, a lawyer with Haynes and Boone LLP (Dallas, Texas) told Industrial Info in an interview at the EnerCom conference that if the SEC kept Scope 3 emissions in its final rule, the agency likely would lose at the U.S. Supreme Court, assuming the SEC's final rule is litigated.
"In 2022, when the Supreme Court struck down the EPA's ability to regulate greenhouse gas emissions from power plants, in West Virginia v EPA, it was because of the 'major question' doctrine, which holds that regulatory agencies are not permitted unilaterally to remake a significant portion of the economy unless Congress specifically delegates that authority to that agency." For more on that decision, see July 1, 2022, article - Supreme Court Kicks Clean Air Case Back to EPA.
But the lawyer said if the final SEC rule is limited to disclosing Scope 1 and Scope 2 emissions, it may survive a challenge at the highest court in the land.
Chris Wright, chief executive at Liberty Energy Incorporated (NYSE:LBRT) (Denver), devoted his August 14 lunch talk at the EnerCom conference to energy and climate change. Wright, who called himself a "climate realist," made it clear he thought climate change was real, and it was caused by human activity, including the burning of fossil fuels. But, he said, "investment decisions made under a misunderstanding of climate change is a problem."
Liberty provides oilfield services to 15% to 18% of all hydraulically fractured oil and gas wells in North America.
"Energy is the agent of change," Wright said August 14, and he listed three global energy crises, in order of importance: energy poverty; access to reliable, affordable and clean energy; and climate change. "Climate change dominates discussion today about energy, but it is a really small global issue."
On energy poverty, he said an estimated 2.5 billion people around the world--about one-third of the world's population--are hand-grinding food and cooking with wood or dung. Those people are exposed to numerous ailments, including respiratory problems, and have a far shorter life expectancy than those in the developed world. Each year, more than 3 million people die of indoor air pollution, he said, adding that worldwide, about 800 million live without any electricity, and an additional 1 billion only have access to low-wattage, intermittent power.
On the issue of having access to secure, affordable and reliable energy, he said high energy prices are a threat to human life. He estimated that 10% of Americans reported keeping their homes at an unsafe temperature. Last winter, he continued, 24% of Britons were unable to heat their homes to a safe temperature because the embargo against Russia, following its invasion of Ukraine, drove up energy costs.
Insufficient home heating, due to its cost, killed 68,000 more people in Great Britain last year than normally would have died naturally, Wright said. Although extreme summer weather has been prominently covered by the news media in recent years, he said that around the world, eight times as many people die of cold than heat. Again, high energy costs cause people to ration their energy use, with occasionally deadly consequences.
In the 19th century, wood was the dominant source of energy in the world, but that was displaced in the 20th century by coal, which Wright said is "cheap, cleaner than wood, and reliable." For all the current talk of an energy transition, he showed that the world has gone through several energy transitions in recent centuries: from wood to coal to oil.
Despite what he called all the "noise" about wind and solar, he said the world still gets 82.5% of its primary energy from hydrocarbons: coal, oil and gas. Thirty years ago, fossil fuels provided 87% of the world's primary energy. "We're not in our first energy transition," he said. Solar and wind are providing a rising share of the world's electricity, but electricity only accounts for about 28% of the world's primary energy.
People outside the energy industry often conflate "energy" and "electricity," or assume they are the same thing, he said.
"Burning fossil fuel absolutely contributes to climate change," Wright said. "I'm talking about coal, oil and gas." But he said "climate extremists" are wrong when they claim rising global concentrations of carbon dioxide (CO2) are leading to more extreme weather, more deaths, more destruction and "potentially the end of life on Earth."
He told the EnerCom lunch audience that worldwide hurricane and tornado severity has dropped or remained flat for the last century. And he said that far less land mass has been burned in 2020, when compared with 2000.
According to the National Oceanic and Atmospheric Administration (NOAA), which is part of the U.S. Department of Commerce, "there is no strong evidence of century-scale increasing trends in U.S. landfalling hurricanes or major hurricanes." However, the NOAA notes that "by some measures, U.S. landfalling tropical cyclone activity for 2004-2010 was the strongest in the records since the late 1800s."
Atmospheric concentrations have risen from about 280 parts per million (ppm) in the Industrial Age to about 420 ppm today, according to the NOAA.
While acknowledging that any deaths or destruction from natural catastrophes are regrettable, Wright also said, "Climate change is real," adding that the world can't build its way out of it by investing in wind, solar or batteries.
"Energy matters," he said in conclusion. "Energy access, security, reliability and affordability are urgent issues for the world's 8 billion people. Climate change is a gradual, slow-moving process that can only be addressed by ingenuity and technological advancement," mainly the wider use of nuclear power. "And forcing an energy transition threatens human progress and energy access, while having negligible impact on greenhouse gas emissions."
Climate change was a subset of issues discussed by a panel at the EnerCom conference. On that panel, Brian Cain, chief sustainability officer for Civitas Resources (NYSE:CIVI) (Denver), acknowledged that sometimes, government regulation can prod businesses to change the way they do business, in ways that improve the environment as well as their bottom line.
"I have seen the future and know which way environmental regulation is going--it's going to get tougher." Cain asked the Denver audience rhetorically: "If you could spend 1% of your earnings before interest, taxes, depreciation and amortization (EBITDA) to achieve best-in-class ESG performance, why wouldn't you?"
Cain's message August 14 at the EnerCom conference mirrored that from a talk he gave earlier this year at another conference held by EnerCom. For more on that, see May 1, 2023, article - Colorado Driller Urges Industry to Consider Long-Term Benefits of ESG.
His co-panelist, Anson Frericks, co-founder of Strive Asset Management (Columbus, Ohio), was having none of it. "ESG is just three letters," the free-market asset manager said. "It's virtue signaling and it's over-emphasized. ESG is not the best way to achieve (corporate) excellence." His remarks echoed his colleague Vivek Ramaswamy's speech to the EnerCon conference last August. For more on that, see August 12, 2022, article - Asset Manager Pushes Back on ESG Narrative.
"ESG is harmful to shareholder value because companies are being pushed, or are pushing, to adopt initiatives that allegedly benefit stakeholders, often at the expense of stockholders," Frericks said on Monday.
Frericks echoed an argument made in 1970 by Nobel Laureate Milton Friedman, that the only social responsibility profit-seeking businesses have is to increase shareholder wealth. He said the ongoing debate, termed by many as "shareholders vs. stakeholders," turned in 2019, when the Business Roundtable, a group of Fortune 500 CEOs, acknowledged businesses have a portfolio of obligations, including to stakeholders like employees, communities and the environment, in addition to rewarding those who hold its stock.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The conference drew about 750 registrants, EnerCom officials told Industrial Info.
Such matters may be coming to a head soon, as the U.S. Securities and Exchange Commission (SEC), said in June that it plans to finalize its draft greenhouse gas disclosure rule in the fourth quarter, possibly October. That draft rule, released in early 2022, has drawn extensive public comment. For more on that draft rule, see March 23, 2022, article - Energy, Business Groups Slam SEC's GHG Disclosure Draft Rule.
A significant percentage of comments filed by businesses, including oil and gas companies, takes issue with the SEC's attempt to compel publicly traded companies to disclose their so-called Scope 1, Scope 2 and Scope 3 emissions of greenhouse gases (GHGs). Scope 3 emissions are created when a company's product is consumed by consumers or businesses. While there is broad agreement about how a company can measure its Scope 1 emissions, which are created when a company makes a good or service, the issue of Scope 3 emissions has had far less agreement.
In fact, a lawyer with Haynes and Boone LLP (Dallas, Texas) told Industrial Info in an interview at the EnerCom conference that if the SEC kept Scope 3 emissions in its final rule, the agency likely would lose at the U.S. Supreme Court, assuming the SEC's final rule is litigated.
"In 2022, when the Supreme Court struck down the EPA's ability to regulate greenhouse gas emissions from power plants, in West Virginia v EPA, it was because of the 'major question' doctrine, which holds that regulatory agencies are not permitted unilaterally to remake a significant portion of the economy unless Congress specifically delegates that authority to that agency." For more on that decision, see July 1, 2022, article - Supreme Court Kicks Clean Air Case Back to EPA.
But the lawyer said if the final SEC rule is limited to disclosing Scope 1 and Scope 2 emissions, it may survive a challenge at the highest court in the land.
Chris Wright, chief executive at Liberty Energy Incorporated (NYSE:LBRT) (Denver), devoted his August 14 lunch talk at the EnerCom conference to energy and climate change. Wright, who called himself a "climate realist," made it clear he thought climate change was real, and it was caused by human activity, including the burning of fossil fuels. But, he said, "investment decisions made under a misunderstanding of climate change is a problem."
Liberty provides oilfield services to 15% to 18% of all hydraulically fractured oil and gas wells in North America.
"Energy is the agent of change," Wright said August 14, and he listed three global energy crises, in order of importance: energy poverty; access to reliable, affordable and clean energy; and climate change. "Climate change dominates discussion today about energy, but it is a really small global issue."
On energy poverty, he said an estimated 2.5 billion people around the world--about one-third of the world's population--are hand-grinding food and cooking with wood or dung. Those people are exposed to numerous ailments, including respiratory problems, and have a far shorter life expectancy than those in the developed world. Each year, more than 3 million people die of indoor air pollution, he said, adding that worldwide, about 800 million live without any electricity, and an additional 1 billion only have access to low-wattage, intermittent power.
On the issue of having access to secure, affordable and reliable energy, he said high energy prices are a threat to human life. He estimated that 10% of Americans reported keeping their homes at an unsafe temperature. Last winter, he continued, 24% of Britons were unable to heat their homes to a safe temperature because the embargo against Russia, following its invasion of Ukraine, drove up energy costs.
Insufficient home heating, due to its cost, killed 68,000 more people in Great Britain last year than normally would have died naturally, Wright said. Although extreme summer weather has been prominently covered by the news media in recent years, he said that around the world, eight times as many people die of cold than heat. Again, high energy costs cause people to ration their energy use, with occasionally deadly consequences.
In the 19th century, wood was the dominant source of energy in the world, but that was displaced in the 20th century by coal, which Wright said is "cheap, cleaner than wood, and reliable." For all the current talk of an energy transition, he showed that the world has gone through several energy transitions in recent centuries: from wood to coal to oil.
Despite what he called all the "noise" about wind and solar, he said the world still gets 82.5% of its primary energy from hydrocarbons: coal, oil and gas. Thirty years ago, fossil fuels provided 87% of the world's primary energy. "We're not in our first energy transition," he said. Solar and wind are providing a rising share of the world's electricity, but electricity only accounts for about 28% of the world's primary energy.
People outside the energy industry often conflate "energy" and "electricity," or assume they are the same thing, he said.
"Burning fossil fuel absolutely contributes to climate change," Wright said. "I'm talking about coal, oil and gas." But he said "climate extremists" are wrong when they claim rising global concentrations of carbon dioxide (CO2) are leading to more extreme weather, more deaths, more destruction and "potentially the end of life on Earth."
He told the EnerCom lunch audience that worldwide hurricane and tornado severity has dropped or remained flat for the last century. And he said that far less land mass has been burned in 2020, when compared with 2000.
According to the National Oceanic and Atmospheric Administration (NOAA), which is part of the U.S. Department of Commerce, "there is no strong evidence of century-scale increasing trends in U.S. landfalling hurricanes or major hurricanes." However, the NOAA notes that "by some measures, U.S. landfalling tropical cyclone activity for 2004-2010 was the strongest in the records since the late 1800s."
Atmospheric concentrations have risen from about 280 parts per million (ppm) in the Industrial Age to about 420 ppm today, according to the NOAA.
While acknowledging that any deaths or destruction from natural catastrophes are regrettable, Wright also said, "Climate change is real," adding that the world can't build its way out of it by investing in wind, solar or batteries.
"Energy matters," he said in conclusion. "Energy access, security, reliability and affordability are urgent issues for the world's 8 billion people. Climate change is a gradual, slow-moving process that can only be addressed by ingenuity and technological advancement," mainly the wider use of nuclear power. "And forcing an energy transition threatens human progress and energy access, while having negligible impact on greenhouse gas emissions."
Climate change was a subset of issues discussed by a panel at the EnerCom conference. On that panel, Brian Cain, chief sustainability officer for Civitas Resources (NYSE:CIVI) (Denver), acknowledged that sometimes, government regulation can prod businesses to change the way they do business, in ways that improve the environment as well as their bottom line.
"I have seen the future and know which way environmental regulation is going--it's going to get tougher." Cain asked the Denver audience rhetorically: "If you could spend 1% of your earnings before interest, taxes, depreciation and amortization (EBITDA) to achieve best-in-class ESG performance, why wouldn't you?"
Cain's message August 14 at the EnerCom conference mirrored that from a talk he gave earlier this year at another conference held by EnerCom. For more on that, see May 1, 2023, article - Colorado Driller Urges Industry to Consider Long-Term Benefits of ESG.
His co-panelist, Anson Frericks, co-founder of Strive Asset Management (Columbus, Ohio), was having none of it. "ESG is just three letters," the free-market asset manager said. "It's virtue signaling and it's over-emphasized. ESG is not the best way to achieve (corporate) excellence." His remarks echoed his colleague Vivek Ramaswamy's speech to the EnerCon conference last August. For more on that, see August 12, 2022, article - Asset Manager Pushes Back on ESG Narrative.
"ESG is harmful to shareholder value because companies are being pushed, or are pushing, to adopt initiatives that allegedly benefit stakeholders, often at the expense of stockholders," Frericks said on Monday.
Frericks echoed an argument made in 1970 by Nobel Laureate Milton Friedman, that the only social responsibility profit-seeking businesses have is to increase shareholder wealth. He said the ongoing debate, termed by many as "shareholders vs. stakeholders," turned in 2019, when the Business Roundtable, a group of Fortune 500 CEOs, acknowledged businesses have a portfolio of obligations, including to stakeholders like employees, communities and the environment, in addition to rewarding those who hold its stock.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
