Big Oil’s scorched-earth legal approach to climate change
By Keith Stewart, March 14, 2016
A highway loops around the southeast end of Mildred Lake at a Syncrude facility as seen from a helicopter tour of the oilsands near Fort McMurray, Alta., on July 10, 2012. Jeff McIntosh, The Canadian Press
I want to believe the oil company CEOs who say they’ve seen the light and now support action on climate change. I really do.
But it’s hard to take them at their word when their lawyers are simultaneously engaged in what one legal scholar has called “the first case in which a party has challenged the constitutional validity of any federal greenhouse gas regulations.”
A consortium of seven oil companies is challenging the right of the federal government to adopt a regulation designed to substitute renewable energy for fossil fuels — in part on the grounds that “that the production and consumption of petroleum fuels is not dangerous and does not pose a risk to human health or safety”, and so, “there is no evil to be suppressed”.
Those words are taken from a 2014 legal ruling against the companies. The judge in that case went on to refute their argument at length: “The evil of global climate change and the apprehension of harm resulting from the enabling of climate change through the combustion of fossil fuels has been widely discussed and debated by leaders on the international stage. Contrary to Syncrude’s submission, this is a real, measured evil, and the harm has been well documented.”
Case closed.
Or maybe not. Syncrude was back in court last November to appeal that ruling.
Few Canadians have heard of Syncrude because it’s a consortium of oil companies that jointly operate three massive tar sands mines. Suncor became Syncrude’s largest shareholder when it bought Canadian Oil Sands earlier this year, but the mines’ day-to-day operations are managed by Imperial Oil, the Canadian subsidiary of ExxonMobil.
It’s no surprise to see Exxon involved in this case; the company has a long history of opposing action on climate change. Exxon is now under investigation in New York and California for publicly claiming that the science of global warming was too murky to warrant policy action by governments — even as the company redesigned its drill rigs and pipelines destined for the Canadian Arctic based on company scientists’ predictions of a warming world. Exxon also was the only major oil player not on stage with Alberta Premier Rachel Notley as she announced the province’s ambitious new climate policy.
Yet it’s surprising to see companies like Suncor — which are trying to rebrand themselves as climate leaders — involved in such legal shenanigans. In his assessment of the original case, University of Calgary law professor Nigel Bankes wrote that this litigation “suggests that at least the sector of big oil represented by the Syncrude interests will fight federal greenhouse gas regulations in all of its forms and that it will fight them hard.
“There was no stone left unturned in this litigation. Counsel for Syncrude pursued every possible avenue, no matter how small the chance of success or creative the argument. Big carbon may be just like big tobacco in protecting its turf.” — University of Calgary law professor Nigel Bankes
That doesn’t sound like something climate leaders ought to do.
As the largest shareholder, Suncor should tell their colleagues to withdraw this appeal. They should then take the money they were spending on lawyers and use it to map out how their businesses can thrive in a world that has moved beyond fossil fuels.
Keith Stewart is the head of the climate and energy campaign at Greenpeace Canada, and teaches a course on energy policy at the University of Toronto
Would Saving A Livable Climate Destroy Buffett’s Fossil Fuel Empire?
By Joe Romm, March 11, 2016 8:00 AM
BNSF oil train derailment in 2013. CREDIT: BRUCE CRUMMY, AP
Billionaire Warren Buffett has bet the future of his company Berkshire Hathaway on dirty energy. In recent years he has been building a vertically-integrated fossil fuel empire — one that develops, delivers, processes, and burns the most climate-destroying fuels.
The final part of this series on Buffett looks at how BNSF Railways is the engine of his carbon-intensive conglomerate, creating a massive risk for shareholders in this increasingly carbon-constrained world — a risk the “Oracle of Omaha” needs to be far more upfront about.
Is Warren Buffett “The Profiteer” of “Climate Killers”?
When Rolling Stone named Warren Buffett one of its 17 “Climate Killers” in 2010, they called him “The Profiteer.” They zeroed in on his recent purchase of “Burlington Northern Santa Fe railroad for $26 billion — the largest acquisition of Buffett’s storied career.”
Why? BNSF is “the nation’s top hauler of coal, shipping some 300 million tons a year.” That is especially convenient for Buffett because, as noted in Part 2, Berkshire Hathaway Energy has four major utilities that still rely on coal for over half their electricity generation.
CREDIT: BNSF
But BNSF is so much more than just the top hauler of coal. As their website proudly attests “BNSF is the largest transporter of crude oil in North America” — and we all know how well the whole crude-by-rail thing has been going.
2015 “has already been the costliest by far for crude train explosions,” BloombergBusiness reported in December. A “BNSF train that derailed and exploded in Illinois” last March “carrying highly explosive crude from North Dakota” created some $5.5 million in damage.
From 2010 through mid-2014, oil shipped by rail in the United States increased from about one million barrels of oil every month to 25 million! At the same time, Canadian imports increased 50-fold, as we’ve reported. BNSF was a driving force behind that explosion.
CREDIT: EIA DATA
Also, last October we learned about “what is believed to be the largest frac sand unit train to date in North America.” You guessed it: “The 150-car unit train, operated by BNSF, carried 16,500 tons of frac sand used in hydraulic fracturing.”
Warren Buffett Bets Big On The Tar Sands
But wait, there’s more. You may recall from Part 1 that last year, the billionaire spent $240 million buying another chunk of Canadian tar sands giant Suncor, upping his overall bet on the climate-destroying liquid fuel to $1.1 billion — a fact Buffett does not share with shareholders in his list of Berkshire Hathaway’s climate risks.
On top of that, as BNSF’s website also proudly attests, the railroad “is positioned to act as a gateway to the Canadian oil sands.” Seriously.
Indeed several years ago, a BNSF employee magazine explained how invested the railway was in all aspects of tar sands (aka bitumen) development. The key point is that “Before bitumen can move through a pipeline to its destination, it must be blended with diluents (diluting agents),” lighter weight hydrocarbons like natural gasoline or butane:
BNSF has been moving single carloads of diluents from U.S. refineries to the Canadian border…. The inbounds are then interchanged with Canadian railroads, then moved to Edmonton, with the final move to the oil sands’ processing center via pipeline.
Last year, BNSF moved about 9,000 carloads of diluents for the project, with the majority of loads originating from the Gulf Coast, California, and Kansas. This year, about 12,000 carloads are anticipated to move.
There’s more: Beyond shipping diluents, “BNSF has also transported turbines, other large machinery and pipes for use at the drilling sites.”
There’s still more to this empire. In 2015, Buffett “nearly doubled Berkshire’s position in Phillips 66,” one of the country’s leading oil (and gas) refiners and processors. The company has 15 refineries which can refine a total of 2.2 million barrels of crude per day.
In January of this year alone, Buffett spent a staggering $832 million to buy yet more Phillips 66 stock. At more than $5 billion, it is his sixth-largest holding. He now owns 14 percent of the “Number 7” company on the Fortune 500 list.
Phillips 66 is a major co-owner of the Wood River Refinery in Illinois, which in recent years made investments “to expand the capacity to handle the bitumen from the Alberta oil sands by nearly 700%.” Also not coincidentally, for the last year, Phillips 66 has been trying to get California planning commissioners to let it build a 1.3-mile rail spur to its Santa Maria refinery. Why? As the Sierra Club explained last month, “The oil giant seeks to transport tar sands crude from Canada in mile-long trains — each laden with over 2 million gallons of dirty crude.”
Both A Livable Climate And Buffett’s Empire Cannot Thrive
Yes, the Oracle of Omaha has a thing for the Canadian tar sands. But more than that, over the last several years he has built a vertically-integrated fossil fuel empire — one that develops, delivers, processes, and even burns the most carbon-intensive fossil fuels. It would be a brilliant strategy except for two small details.
First, climate science makes clear we have to leave most fossil fuels — and virtually all of the most carbon-intensive — in the ground to avoid global catastrophic warming. Second, over the past 18 months, the leading nations of the world unanimously agreed on a plan whose goal is to do just that, and the overwhelming majority of them made detailed pledges to slow or reverse carbon-intensive growth and replace it with carbon-free growth.
The domestic and international coal market has already collapsed as a result of growing environmental concerns and low-cost alternatives including renewables. If the world follows through on its plans to keep total warming below 2°C — a big “if,” for sure — then coal is going to continue to be squeezed out of the market in the coming decades and oil will almost certainly follow the same fate, peaking in demand by 2030, as I discussed last month.
Now whether or not you believe the world is going to achieve the plan it unanimously embraced in Paris in December, surely Buffett ought to at least mention to his shareholders the risks to Berkshire Hathaway if the world does. Yet, his latest annual letter to shareholders dismisses the risk of climate change.
Here is all Buffett says about the coal risk: “To begin with an obvious threat, BNSF, along with other railroads, is certain to lose significant coal volume over the next decade.” But he quickly dismisses this as a problem that is not “crucial to Berkshire’s long-term well-being.”
Last summer, BNSF executive chairman Matthew K. Rose noted the decline in U.S. coal transport and consumption. He said of his company’s major investment to upgrade its rail service to and from the coal-rich Powder River Basin, “That leaves us with millions of dollars in investment in what will eventually be stranded assets.”
Certainly, from a short-term business perspective, investing in oil-by-rail and tar-sands-by-rail to replace coal-by-rail appears to make sense. But what are the risks those investments will eventually become stranded assets, too? Low oil prices aren’t good for crude-by-rail, as BloombergBusiness explained in December. And aggressive climate action, which could well give us peak demand within 15 years, is not bullish for oil prices.
CREDIT: BLOOMBERG
Rather than informing shareholders about any of these risks, Buffett asserts the reverse: “Both BHE [Berkshire Hathaway energy] and BNSF have been leaders in pursuing planet-friendly technology.” Seriously?
I discussed in Part 2 how, despite BHE’s own investments in renewables, BHE is working to crush solar energy in Nevada and around the western United States. And it remains a huge user of coal. And as we’ve seen BNSF is a major deliverer of coal….
But here is how Buffett defends the fairly ludicrous claim that BNSF is somehow one of the “leaders in pursuing planet-friendly technology”:
BNSF, like other Class I railroads, uses only a single gallon of diesel fuel to move a ton of freight almost 500 miles. That makes the railroads four times as fuel-efficient as trucks!
Yes, BNSF is a very fuel-efficient way of delivering vast amounts of climate-destroying fuels to market.
Finally, is it only a coincidence that after outperforming the market for decades, the stock of Berkshire Hathaway has actually underperformed the S&P 500 over the last five years?
Again, if serious global climate action ultimately keeps oil prices low and renders much of the tar sands uneconomic, then Buffett’s carefully constructed fossil fuel empire is going to keep suffering — and deservedly so. After all, leading climate activists have been urging major investors to disinvest in fossil fuels for years. Buffett is doing the exact reverse!
BOTTOM LINE: Between Berkshire Hathaway and a livable climate, only one can thrive. That’s not a tough choice, is it?
Fossil fuels ‘probably dead’ says CP Rail’s Hunter Harrison
Rail CEO sees slow shift to alternative energy, including for railways
The Canadian Press, Mar 09, 2016 2:52 PM ET, Updated Mar 09, 2016 2:52 PM ET
CP Rail CEO Hunter Harrison says fossil fuels are ‘probably dead’ and it’s time to adapt to it. (CBC)
The CEO of Canadian Pacific Railway says fossil fuels are “probably dead.”
Hunter Harrison told a transportation conference today that the transition to alternative fuels will be long, but new investments in traditional energy sources will dry up because of environmental hurdles.
The country’s second-largest railway has seen shipments of crude drop due to declining demand brought on by the dramatic fall in oil prices.
Thermal coal shipments have also waned.
Harrison said the rail industry will have to adjust ralternative energy sources, just as it did in the 1990s when the U.S. Clean Air Act wiped away 29 per cent of the business at Illinois Central Railway that he ran at the time.
He spoke at the J.P. Morgan transportation conference in New York.
By Timothy Cama – 12/19/15 08:35 AM EST
Getty Images
President Obama has vetoed a pair of measures by congressional Republicans that would have overturned the main pillars of his landmark climate change rules for power plants.
The decision was widely expected, and Obama and his staff had repeatedly threatened the action as a way to protect a top priority and major part of his legacy.
The White House announced early Saturday morning, as Obama was flying to Hawaii for Christmas vacation, that he is formally not taking action on the congressional measures, which counts as a “pocket veto” under the law. “Climate change poses a profound threat to our future and future generations,” the president said in a statement about Republicans’ attempt to kill the carbon dioxide limits for existing power plants.
“The Clean Power Plan is a tremendously important step in the fight against global climate change,” Obama wrote, adding that “because the resolution would overturn the Clean Power Plan, which is critical to protecting against climate change and ensuring the health and well-being of our nation, I cannot support it.”
That rule from the Environmental Protection Agency mandates a 32 percent cut in the power sector’s carbon output by 2030.
He had a similar argument in support of his regulation setting carbon limits for newly-built fossil fuel power plants, saying the legislation against it “would delay our transition to cleaner electricity generating technologies by enabling continued build-out of outdated, high-polluting infrastructure.”
Congress passed the resolutions in November and December under the Congressional Review Act, a little-used law that gives lawmakers a streamlined way to quickly challenge regulations from the executive branch.
Obama had made clear his intent to veto the measures early on, so the passage by both GOP-led chambers of Congress was only symbolic.
The votes came before and during the United Nations’ major climate change conference in Paris, as an attempt to undermine Obama’s negotiating position toward an international climate pact.
Sen. Jim Inhofe (R-Okla.), chairman of the Environment and Public Works Committee and a vocal climate change doubter, said it’s important to send a message about congressional disapproval, even with Obama’s veto.
“While I fully expect these CRA resolutions to be vetoed, without the backing of the American people and the Congress, there will be no possibility of legislative resurrection once the courts render the final judgments on the president’s carbon mandates,” he said on the Senate floor shortly before the Senate’s action on the resolutions.
Twenty-seven states and various energy and business interests are suing the Obama administration to stop the existing plant rule, saying it violates the Clean Air Act and states’ constitutional rights.
They are seeking an immediate halt to the rule while it is litigated, something the Court of Appeals for the District of Columbia Circuit could decide on later this month.
All Republican candidates for the 2016 presidential election want to overturn the rules.
In addition to the veto, Obama is formally sending the resolutions back to the Senate to make clear his intent to disapprove of them.
Obama has now vetoed seven pieces of legislation, including five this year, the first year of his presidency with the GOP controlling both chambers of Congress.
