Judge: Drilling Leases Need Climate Review Before Commencement // Vanguard Sticks to Fossil Fuels // Bullsh*t Transmission Fixes

Judge: Drilling Leases Need Climate Review Before Commencement

The department of the Interior must now analyze the climate impacts of new oil and gas drilling projects. This legal settlement will impact leasing on 4 million acres of federal land that spans five states.

Oilprice.com reports, "The U.S. District Court for the District of Columbia ruling comes after oil and gas industry groups failed to succeed with their motion to strike down three separate settlements arising out of lawsuits brought against the DoI by U.S. conservation groups."

This fight dates back nearly six years ago--before the Biden Administration took office. The whole issue kicked off "when conservation groups WELC and WildEarth Guardians sued the Department of the Interior over millions of federal acres that were leased to oil and gas companies in Colorado, Montana, New Mexico, Utah, and Wyoming."

US District Court Judge Rudolph Contreras "blocked drilling permits and required the DoI to do a more thorough environmental analysis that included GHG emissions." Friday's decision solidified this position despite pressure from the oil and gas industry.

The vice tightens around the Biden administration. Nothing but the absolute destruction of the oil and gas sector will please the environmental movement. Yet everyday Americans suffer the most from high energy prices. This decision comes when the US is sending record LNG imports to Europe to shore up their loss of Russian energy. The midterms take place in the fall and the consequences of energy decisions made today will likely ripple into the presidential election in 2024.

Will the American people still want to keep paying for these foreign policy decisions? And will they continue to see the green movement as well-meaning allies in the quest for a better world? We might find the answer in price-per-barrel. 

Vanguard Sticks to Fossil Fuels

Vanguard will not divest from oil, gas, and coal. The world's second-largest asset manager will continue to invest in new production projects in the fossil fuel industry. 

The Financial Times reports, "Chief executive Tim Buckley said the group, which manages $8.1tn for more than 30mn investors and is the largest investor in coal companies globally, was determined to safeguard its clients from climate risks but this would not require it to end new commitments to fossil fuel industries."

“Our duty is to maximise long-term total returns for clients. Climate change is a material risk but it is only one factor in an investment decision. There is already a pensions crisis and we have to make sure that climate concerns do not make that even worse,” Buckly told FT.

This is a strong statement given that Stuart Kirk of HSBC was just suspended for giving an internally vetted speech that accused central bankers and investors of overstating climate risks, myopically focusing on mitigation, and ignoring climate adaptation investment opportunities. 

It may appear that ESG's days are numbered. Certainly, it's facing a crisis of legitimacy. But green groups like Reclaim Finance are still planning on applying pressure to investors to get them on board with their net zero goals. 

“Asset managers need to send clearer signals to the fossil fuel industry. Any investor committed to achieving carbon neutrality by 2050 must immediately cease all investments in companies developing new oil and gas supply projects,” Lara Cuvelier from Reclaim Finance told FT. 

Vanguard itself does have its own net zero commitments. It has also invested in companies that have them. 

Buckley said, "More than 70 per cent of Vanguard’s index equity assets are invested in companies with publicly stated emission reduction goals. Over $1tn of those assets are invested in companies that have already committed to net zero targets."

Less heretical than Stuart Kirk, Vanguard seems to be navigating a middle path--adopting green targets where reasonable, but not betraying their responsibilities to do so. 

Bullsh*t Transmission Fixes

What's the difference between lying and "bullshit"? In his famous essay, On Bullshit, Harry Frankfurt sketches out some helpful distinctions. You cannot lie without regard for the truth. Indeed, a lie is meant to hide or misrepresent certain truths. In this way, lies always have a minimum fidelity to the truth. Bullshit, on the other hand, has far more freedom--it's not even interested in the truth. Frankfurt puts the difference this way:

"What bullshit essentially misrepresents is neither the state of affairs to which it refers nor the beliefs of the speaker concerning that state of affairs. Those are what lies misrepresent, by virtue of being false. Since bullshit need not be false, it differs from lies in its misrepresentational intent. The bullshitter may not deceive us, or even intend to do so, either about the facts or about what he takes the facts to be. What he does necessarily attempt to deceive us about is his enterprise. His only indispensably distinctive characteristic is that in a certain way he misrepresents what he is up to."

I hadn't thought about Frankfurt's essay until I read Steve Huntoon's recent comments on the Federal Energy Regulatory Commission's Notice of Proposed Rulemaking (NOPR) in RTO Insider. I remembered On Bullshit not because of what Huntoon had to say, but because of what he was looking at. 

FERC released its NOPR in April to reform its policies regarding Regional Transmission Planning and Cost Allocation. This serves as FERC's guidance for how transmission ought to be planned and who should pay for it. This has become a thorny issue because many renewables projects require more transmission and there's been a nationwide backlog of renewables in the queue. Huntoon points out that halfway through this tome of a notice, new technologies are discussed. 

"The NOPR says transmission planning will be improved with the use of dynamic line ratings and other 'grid enhancing technologies' (GETs)," Huntoon writes.

The problem, he points out, is that dynamic line ratings "can’t relieve reliability violations—arising from future system conditions or from interconnecting new generation," because transmission planning is done by worst-case scenarios and DLRs are useful only in less-than-worst-case scenarios. 

As for the GETs, Huntoon points out that the tech FERC recommends, like “advanced power flow control devices," are not helpful for transmission, only for dispatch. There are technologies that could help, Huntoon explains, "like sag studies to identify possible retensioning and tower raising, and more sophisticated technologies like reconductoring with advanced conductors and applying high-emissivity conductor coatings." But those do not appear in NOPR.

FERC has not misrepresented the state of affairs here: transmission planning and cost allocation are major problems. Some technologies could alleviate this. Nor has it misrepresented their views--it obviously takes these issues seriously and it's making their views clear. So FERC isn't lying per se. But it is bullshitting. Neither of the things they discuss can aid what their NOPR is supposed to fix. That leaves a question I ask myself a few times a week: what is FERC up to?

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Conversation Starters

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Word of the Day

Watthour (Wh) 

The electrical energy unit of measure equal to one watt of power supplied to, or taken from, an electric circuit steadily for one hour. (source)

Crom's Blessing