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IN THIS ISSUE:
- Pension Plans and Private Investments Are Not Woke Playthings
- Podcast of the Week: Industrial Wind: How to Fight It in Your Hometown and Win! (Guest: John Droz)
- Shifting Gears, EU Declares Natural Gas and Nuclear Green
- Evidence Shows Weather Is Not Getting More Extreme
- Climate Comedy
- Video of the Week: Authoritarianism in the Climate Change Debate
- BONUS Video of the Week: The Trajectory of Electrical Power Generation
- Recommended Sites
Pension Plans and Private Investments Are Not Woke Playthings
Many major banks, corporations, investment management firms, and pension funds are adopting leftist environment, social, and governance (ESG) programs and investment and business strategies. In addition, they are telling their peers in the business and pension community to do so, and just in case others don’t follow their lead, they are advocating state and federal governments force all companies to take up a variety of liberal, woke causes. Foremost among these is fighting climate change by ending fossil fuel use.
It is an open question whether they are doing this as a matter of virtue signaling, because their managers or owners really believe a climate apocalypse is on the way, or in anticipation of government regulations that could harm or benefit their businesses.
What is almost certainly not true is that they see this as a good investment opportunity absent government enforcement on everyone. If it were, investment houses such as BlackRock and banks like Bank of America wouldn’t be calling for federal regulation. Instead, they would use ESG investment as a moneymaking opportunity they could cash in on at the expense of their competition.
It is more likely the leaders of these companies are woefully woke or cynical crony capitalists who fear going down the green path unless government forces others to adopt ESG investment standards. If government does not impose their strategies, these companies will lose out to firms that don’t buy into the phony green investment schemes and instead continue making money the old-fashioned way—profiting from efficiency and innovation in response to market signals while using cheap energy—and get higher profits for their shareholders and pension plans.
The Heartland Institute has been fighting crony capitalism for decades. In recent years, Heartland has become actively engaged in pushing back against efforts by federal and state governments to make liberal politics instead of profits the mandatory metric for business success. We submitted testimony opposing plans by the Securities and Exchange Commission (SEC) to force all publicly traded companies to detail and report on any possible future climate-related risks they may face.
We supported efforts by the Trump administration to prevent the Office of the Comptroller of Currency (OCC) from denying services such as lending and payment processing to companies doing business in industries progressives don’t like, such as fossil fuels and firearms, as opposed to normal fiscal and business considerations. Heartland stoked opposition to Saule Omarova, the Cornell University law professor whom President Joe Biden nominated to run the OCC, because of her statements supporting a government takeover of all private banking and her stated hostility to the oil and gas industry. Facing almost certain defeat in a Senate confirmation vote, Omarova withdrew her nomination.
The Biden administration nonetheless seems intent on forcing publicly traded businesses to adopt its government-approved ESG policies and making sure banks do business only with companies in industries the government approves of. Firearms manufacturers, fossil fuel companies, and other disfavored enterprises need not apply.
Some states have leaped ahead of the federal government. Maine was the first state to adopt a fossil fuel divestment policy, with Gov. Mills signing such a law last June. It requires the state pension fund to eliminate all fossil fuel investments by 2026. Virginia’s legislature is considering two bills (SB 213 and HB 640) that would authorize but not dictate that state and local retirement boards divest from “fossil fuel companies.” The bills state this includes companies involved in coal, oil, and natural gas exploration, production, and distribution. Lawmakers in New York, Oregon, and Vermont are considering or developing similar divestment legislation.
Politico has taken notice of The Heartland Institute’s efforts to defeat mandatory woke, anti-fossil-fuel investment strategies. In a recent article it complained that The Heartland Institute, among other pro-liberty, limited-government organizations, is having success in some state capitals fighting efforts to impose a mandatory net-zero carbon dioxide economy on everybody.
Heartland and our allies believe private pension funds and those that manage them should be guided first and foremost by fiduciary responsibilities to retirees and investors. This means pursuing profits instead of the progressive political causes dear to the hearts of the many liberal CEOs of banks, investment funds, and stock traders. Putting profits first provides best for the well-being and retirement security of the people who have entrusted their money with those money managers and companies.
We believe businesses, investors, and private individuals should make up their own minds about whether to embrace the green economy, how much to fear or anticipate climate change, and indeed whether to fear, anticipate, or take it into account at all. Government bureaucrats should not be allowed to substitute their judgement about business and investment opportunities for those of the business owners and investors who have put their time and money into these enterprises.
As Politico notes, The Heartland Institute’s efforts are bearing fruit in some state capitals. States have barred cities from banning new fossil fuel use within their borders. Some states, such as Oklahoma, Texas, and West Virginia, have moved to prevent official state government business from being conducted with banks or investment management firms that divest from fossil fuels or use their market power to force other businesses to do so. Texas, for example, passed a law requiring state entities, including pension funds and the state’s substantial K-12 school endowment, to divest from companies that boycott or cut ties with fossil fuel producers. To carry out that law, the state is compiling a list of companies, which includes BlackRock, that will no longer be allowed to manage the state’s pensions, and banks that will not be allowed to underwrite state or municipal bond offerings.
More recently, the West Virginia Board of Treasury Investments, which is charged with managing about $8 billion in operating funds for the state, informed BlackRock it would no longer do business with the company because the company’s bias against fossil fuels comes at the expense of West Virginia’s economy and U.S. economic and national security.
Public pension plans across the country face a variety of challenges on an ongoing basis. The number of retirees is growing, and ever-more promises are being made to them. Employees and retirees are right to be concerned about the future of their pensions, but it is the taxpayers who will foot the bill for those poor public policy decisions. The fate of these pensions, and the burden on taxpayers, will only be made worse if politicians continue to push politically correct ESG policies that undermine profit, financial security, and fiscal soundness.
Research makes clear divesting from fossil fuels is a costly investment strategy. A report from the economics and regulatory consulting firm Compass Lexecon states the costs of divesting from fossil-fuel-related companies are substantial in terms of the return on a portfolio of investments. Specifically, the study shows less-diverse investment portfolios are exposed to higher risk and commonly suffer lower returns on investment. From 1965 through 2014, diversified portfolios that included fossil-fuel and utility stocks experienced an average annual return above 6.5 percent, the study found. The return for diversified portfolios without fossil-fuel or utility stocks was only 5.8 percent, a reduction of 0.7 percentage points per year, amounting to trillions of dollars in lower returns during that time.
Forcing public pension plans to divest from fossil fuel companies places significantly more risk on the long-term health of public pension plans than prior divesture efforts such as tobacco, nuclear weapons, and firearms. Those industries are niche sectors of our economy. The fossil fuel industry is large and will continue to play an important part in our economy for generations, despite the wishes of climate scolds. Often overlooked is this fact: any transition to renewable energy sources will require fossil fuels as a backup.
The vast majority of public pension plans are already substantially underfunded. Removing such a significant segment of our economy from public pension plans would only make a bad situation worse, making it that much harder to generate the investment return benchmarks our public pensions need to fulfill their promises to retirees.
It is important to understand how public pension plans work. Unlike the 401(k)s most of us are familiar with, a public pension plan is a promise to public employees that once they retire, they will receive a set monthly pension benefit for the rest of their lives. This promise must be met regardless of whether there are enough assets in the plan. If the assets in the pension plan are not enough to meet those promises, taxpayers are obligated to pick up the difference. Fossil fuel divestment increases the likelihood taxpayers will have to bail out public pension plans.
Anti-carbon-dioxide initiatives in the Northeast have already led to soaring electricity prices and home heating costs. Consumers are paying the price this winter, and fossil fuel divestment will only push taxes higher when the bill to make good on governments’ pension promises is delivered.
Fossil fuel divestment and other efforts to decarbonize our economy may warm the cockles of some peoples’ hearts, but they won’t warm anyone’s home. Instead, they will cost people dearly, through higher utility bills now and higher taxes in the future.
- H. Sterling Burnett and Bette Grande, guest contributor. Grande was a North Dakota state representative from 1996 to 2014 and currently serves as CEO of the Roughrider Institute and as a state government relations manager at The Heartland Institute.
SOURCES: Politico; Climate Change Weekly; The Heartland Institute
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Podcast of the Week
Texas has an abundance of coal, natural gas, and oil, leading you to believe it’d have a reliable power grid. This was once true, but politicians started overruling engineers and mucking with the power grid. As it stands, subsidized renewable power sources forced onto the system have left Texans vulnerable to power outages, a problem that could worsen in the future.
During the next legislative session, legislators should implement reforms that prioritize reliability of the electric power system. Wind and solar power subsidy recipients, not Texas’ ratepayers, should pay to ensure sufficient reliable baseload power exists when nature doesn’t keep turbines turning or solar panels generating.
Jason Isaac of the Texas Public Policy Foundation joins the show to discuss what went wrong with Texas’ power grid when it failed in 2021 during a brutal winter storm and how it remains unfixed today.
Shifting Gears, EU Declares Natural Gas and Nuclear Green
In an apparent bow to reality, the European Union (EU) has proposed natural gas and nuclear energy be counted as sustainable technologies. This would qualify them for use in meeting the trading bloc’s climate emission reduction goals.
This is a sharp about-face for the EU, as it and several of its member nations had previously demanded cutting natural gas use to reduce greenhouse gas emissions, and not counting nuclear power as clean energy.
Deutsche Welle (DW) reports the European Commission is putting in place a “taxonomy,” “a classification system, establishing a list of environmentally sustainable economic activities,” which “could be described as the EU’s green investment rulebook, intended to serve the goal of allowing the continent to become climate neutral by 2050.”
European Green Party representatives in the EU Parliament and in EU member countries have labeled the Commission’s move backsliding. The Greens claim the change would undermine the EU’s commitment to the Paris climate agreement.
However, the degree to which this proposal will reverse the energy woes induced by Europe’s climate policy is an open question. The devil is in the details.
DW describes those details as follows:
[T]he EU Commission stated that certain strings remained attached. For example, gas plants could only be considered green if the facility switched to low-carbon or renewable gases, such as biomass or hydrogen produced with renewable energy, by 2035.
Nuclear power plants would be deemed green if the sites can manage to safely dispose of radioactive waste. So far, worldwide, no permanent disposal site has gone into operation though.
Without a relatively rapid transition to biomass or hydrogen and an acceptable way to store spent nuclear fuel, neither natural gas nor nuclear will qualify as sustainable for more than a few years. The current status of those fuel sources not counting toward carbon dioxide reduction targets would resume thereafter.
The EU Commission proposes the new taxonomy as a “delegated power,” meaning unanimity of all member states is not required. Under the delegated power system, the proposal becomes law if 20 EU countries or a simple majority of European Parliament members approve it. It is now up for review by the 27 EU member states and the European Parliament.
Heartland’s Must-read Climate Sites
Evidence Shows Weather Is Not Getting More Extreme
New research published in European Physical Journal Plus finds there has been no measurable increase in the number or intensity of extreme weather events.
A team of researchers from universities and research centers in Italy reviewed the academic literature discussing extreme weather events and compared it to various time series data sets measuring different types of extreme weather across five different subsystems of the climate: the atmosphere, cryosphere, lithosphere, hydrosphere, and biosphere. They used the Intergovernmental Panel on Climate Change’s definition of extreme weather: “extreme weather events are events rare at a particular place and time of the year. Definitions of rare event vary, but an extreme weather event would normally be as rare as or rarer than the 10th or 90th percentile of a probability density function estimated from observations.”
The scientists’ summary of the evidence speaks for itself:
[G]lobal trends in heatwave intensity are not significant. Daily precipitation intensity and extreme precipitation frequency are stationary in the main part of the weather stations. Trend analysis of the time series of tropical cyclones show a substantial temporal invariance and the same is true for tornadoes in the USA. At the same time, the impact of warming on surface wind speed remains unclear. The analysis is then extended to … indicators of extreme meteorological events, namely natural disasters, floods, droughts, ecosystem productivity and yields of the four main crops (maize, rice, soybean and wheat). None of these response indicators show a clear positive trend of extreme events. In conclusion on the basis of observational data, the climate crisis that, according to many sources, we are experiencing today, is not evident yet.
To sum up on “disasters,” accumulated real-world data does not show cyclones, droughts, extreme precipitation events, floods, heat waves, hurricanes, or tornadoes have become more frequent or intense.
The best protection from extreme weather is wealth, the scientists note. They quote a 2019 study that found a “clear decreasing trend in both human and economic vulnerability, with global average mortality and economic loss rates that have dropped by 6.5 and nearly 5 times, respectively, from 1980–1989 to 2007–2016. We further show a clear negative correlation between vulnerability and wealth, which is strongest at the lowest income levels.” In addition, the researchers write, “global yields of maize, wheat, rice, soybean and barley have on average increased by 217–297% from 1960 to today” even as acreage devoted to growing these crops has been stable for approximately 50 years.
As important as findings of this report are, their conclusion is even more profound:
From the Second World War, our societies have progressed enormously, reaching levels of well-being (health, nutrition, healthiness of the places of life and work, etc.) that previous generations had not even remotely imagined. Today, we are called to continue on the path of progress … dictated by the fact that the planet is about to reach 10 billion inhabitants in 2050, increasingly urbanized.
Since its origins, the human species has been confronted with the negative effects of the climate; historical climatology has repeatedly used the concept of climate deterioration in order to explain negative effect of extreme events (mainly drought, diluvial phases and cold periods) on civilization. Today, we are facing a warm phase and, for the first time, we have monitoring capabilities that enable us to objectively evaluate its effects.
Fearing a climate emergency without this being supported by data, means altering the framework of priorities with negative effects that could prove deleterious to our ability to face the challenges of the future, squandering natural and human resources… . Whether or not we manage to drastically curtail our carbon dioxide emissions in the coming decades, we need to reduce our vulnerability to extreme weather and climate events.
I couldn’t agree more.
SOURCE: The European Physical Journal Plus
Video of the Week: Biden Energy Policies Cost U.S. Households More Than $1,000 in 2021
The Biden administration’s policies against inexpensive, reliable energy is proving to be a massive burden for Americans across the country. Costs are skyrocketing for electricity, gasoline, and consumer goods.
Heartland’s Andy Singer, Linnea Lueken, Anthony Watts, and H. Sterling Burnett reveal how much prices have increased in overall electricity, industrial electricity, home heating oil, industrial oil, natural gas, and gasoline.
BONUS Video of the Week: The Left’s New Way to Control You: Heartland’s Steve Milloy on the Ingraham Angle
Heartland Institute Senior Fellow and Director Steve Milloy, the founder of Junkscience.com, was on Fox News Channel’s Ingraham Angle on Tuesday, February 15, 2022 to talk about the folly of the electric vehicle (EV) push. It’s about controlling you, not saving the planet, Milloy said.
The internal combustion engine, which allows you to fill up your gas tank and drive 400 miles in any direction, is an instrument of freedom. The EV is an instrument of control — and if you don’t think the government isn’t figuring out a way to gain the ability to turn off your EV remotely, you are not paying attention.
Climate Comedy
via Cartoons by Josh