A strategically ambiguous vibe shift

Mar 10, 2023 View in browser   By Debra Kahn THE WEEK THAT WAS Sultan Ahmed Al Jaber is bringing oil and climate together. | AP/Courtesy of Ceraweek AWKWARRRDDD — The halting courtship of the fossil and renewable energy industries is feeling a bit more natural these days. Demand for oil and gas remains robust, but companies’ growing acceptance of the need to address climate change and the huge pot of money the U.S. government has made available are transforming their mission, Ben Lefebvre reports from CERAWeek, S&P Global's massive energy industry conference in Houston. To be sure: Fossil fuels aren't on the back foot. Overall spending on oil and gas exploration and production in North America is expected to rise nearly 18 percent this year over last, according to advisory and investment firm Evercore ISI. Rather, it's more a vibe shift that Ben is documenting: Occidental Petroleum and Exxon Mobil bragging about their carbon capture projects, and the head of the American Gas Association, Karen Harbert, talking about "blurred lines" between oil and gas companies' core and alternative technology investments. When it comes to defining the relationship, things get more stilted. Sultan Ahmed Al Jaber — the CEO of Abu Dhabi’s state-owned oil company, who's overseeing the next round of U.N. climate talks — said he "had some mixed feelings about coming here today,” because "some of you felt excluded from climate talks in the past, while others felt this was not their problem to fix." But isn't that exactly why he got the U.N. job? To try to bridge the divide between the emitters and the Greta Thunbergs of the world? In the words of Key and Peele, "It's not awkward, at least not until you said 'awkward.' Now it's awkward." WASHINGTON WATCH GENSLER'S GAME PLAN — SEC Chair Gary Gensler knows a wave of litigation is coming for the market regulator's new rules — and is trying to plan accordingly. “It doesn’t protect investors, promote capital formation, promote efficiency if we have a rule overturned in court,” Gensler told Declan Harty in an interview this week. Declan asked Gensler about the proposed climate risk disclosure rule that the agency is reportedly considering scaling back due to concerns about litigation. His response: "We at the SEC look at each of our proposals as an opportunity to hear from the public about the policy that we’ve put forward, but also the economics and the legal authorities. In the climate rule, we’ve gotten nearly 15,000 comments on the economics, on the policy, but also the legal authorities. Everything we do is based upon those legal authorities that Congress has laid out, regardless of whether it’s a climate risk disclosure rule, equity market structure or cyber rules. We really stay within the law and how the courts interpret the laws. So more specifically, to your question of do we take this into consideration in terms of climate risk disclosure, you betcha. For nearly 90 years, our authorities have been around companies raising money from the public and then providing full, fair, and truthful disclosure. So this project has really been about trying to bring some consistency to what’s already happening: Climate risk disclosure that hundreds of, if not well over a thousand, companies are already making."   DOWNLOAD THE POLITICO MOBILE APP: Stay up to speed with the newly updated POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. The sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don’t miss out on the app you can rely on for the news you need, reimagined. DOWNLOAD FOR iOS– DOWNLOAD FOR ANDROID.     AROUND THE WORLD NORTHERN EXPOSURE — Meanwhile, the Canadian government released new guidance this week on how banks, insurance companies and pension funds will soon have to incorporate climate-related risks into their business plans and report annually on those risks, Maura Forrest reports. According to the new guidelines from the Office of the Superintendent of Financial Institutions (which drew plenty of comments, too — some 4,300), banks and insurers should also contemplate linking compensation for senior management to climate risk considerations. Financial institutions will also have to report annually on climate-related risks, beginning in 2024. BUILDING BLOCKS NO FREE LUNCHES — Like the U.S., Europe is coming to grips with the dirty side of the clean energy transition. French officials are keenly aware that their second-largest lithium deposit lies underneath a protected nature reserve, Antonia Zimmermann reports. The European Commission is contemplating a special designation to give certain mining projects exemptions from other rules, like species protections. Draft rules that Antonia obtained would also allow regulators to grant two-year permitting deadlines for preferred projects. Europe also needs to decide whether to encourage deep-sea mining, as Louise Guillot reports. Groups are split on whether it's more or less damaging than terrestrial mining. In the long term, they're hoping recycling will lower demand for materials. In the short term, there are tough choices, said Kestutis Sadauskas, deputy director general of the Commission’s marine affairs department. “Do we source [cobalt] in Africa, in the worst human conditions possible? Do we go elsewhere looking for it? … That’s really the difficult question we have to pose.” HOLDING A CHARGE — California is ground zero for the electric vehicle revolution, but it's having trouble building the infrastructure, Wes Venteicher reports. State regulators said Thursday they don't expect to meet the goal of 250,000 charging stations by 2025, due to delays with local permitting and grid interconnection and supply chain issues. Lawmakers who approved the $2.9 billion funding plan to cover 1.2 million chargers by 2030 are frustrated. “What’s the point of putting the money on the street if we don’t have the charging stations for two, three, four years or never?” said Assemblymember Phil Ting (D-San Francisco). Meanwhile: New York regulators are contemplating increasing ratepayer funding for charging stations, Marie J. French reports. Most of the state's utilities are behind in their installation goals. A PLAN INSTEAD OF A CANAL — California also hasn't built enough storage to take full advantage of the massive water year it's having. That's forcing regulators to innovate, Camille von Kaenel reports. State regulators approved rules on Wednesday that allow them to send more water to farms in the Central Valley rather than leaving it to flow down the San Joaquin River and out to the ocean. Environmentalists are upset and plan to sue, arguing that endangered salmon and other fish need the water to stay in the river. But officials say the diversions are needed to restore depleted groundwater supplies. YOU TELL US GAME ON — Happy Friday! Welcome to the Long Game, where we tell you about the latest on efforts to shape our future. We deliver data-driven storytelling, compelling interviews with industry and political leaders, and news Tuesday through Friday to keep you in the loop on sustainability. Team Sustainability is editor Greg Mott, deputy editor Debra Kahn, and reporters Jordan Wolman and Allison Prang. Reach us at gmott@politico.com, dkahn@politico.com, jwolman@politico.com and aprang@politico.com. Want more? You can have it. Sign up for the Long Game. Four days a week and still free. That’s sustainability! WHAT WE'RE CLICKING — Ukraine is bringing wind turbines online just 60 miles from the front lines of the war with Russia, the WaPo reports. — New York City property owners are struggling to comply with an emissions performance standard for buildings, the NYT reports.   LISTEN TO POLITICO'S ENERGY PODCAST: Check out our daily five-minute brief on the latest energy and environmental politics and policy news. Don't miss out on the must-know stories, candid insights, and analysis from POLITICO's energy team. Listen today.       Follow us on Twitter Debra Kahn @debra_kahn Greg Mott @gwmott Jordan Wolman @jordanwolman Allison Prang @AllisonPrang   Follow us

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