Recovery Funds Going BackAssWards to the Future?

May 30, 2020

Sara Bloom Raskin in the New York Times:

The Fed is singularly poised to seed strategic investments in future economic stability. Oil, gas and coal companies are set or are seeking to receive billions in federal aid — including at least $3.9 billion from the Paycheck Protection Program and at least $1.9 billion in tax credits tucked into the CARES Act passed by Congress. Their allies in Congress and the administration have lobbied for changes to several of the Fed’s lending programs, including relaxing the Main Street Lending Program. Among those eligible for government assistance are many fossil fuel companies that were in deep financial trouble long before the pandemic began.

These concessions to the fossil fuel industry are a risky investment in the past. The Fed is ignoring clear warning signs about the economic repercussions of the impending climate crisis by taking action that will lead to increases in greenhouse gas emissions at a time when even in the short term, fossil fuels are a terribleinvestment.

Parts of the industry are awash in hundreds of billions in risky debt. Many fossil fuel companies spent the past decade recklessly expanding production even as they failed to turn a profit. Oil and gas companies now hold $744 billion in bonds and debt, much of it below investment grade or close to it. Almost 83 percent of the industry’s debt is now eligible for cheap refinancing by the Fed.

For taxpayers, shouldering these liabilities is a bad deal. Buying this bad debt is not likely to support the creation of jobs or even ensure that existing jobs survive. Moreover, the Fed-subsidized loans come with no strings attached regarding the retention of jobsC.E.O. bonuses or stock buybacks.

The decision to bring oil and gas into the Fed’s investment portfolio not only misdirects limited recovery resources but also sends a false price signal to investors about where capital needs to be allocated. It increases the likelihood that investors will be stuck with stranded oil and gas assets that society no longer needs. It also forestalls the inevitable decline of an industry that can no longer sustain itself. And finally, it undermines urgent efforts to counter surging carbon dioxide and methane emissions, which are bringing us closer to the catastrophe of an unlivably hot planet.

Last week, five economists released a survey of more than 200 finance ministers, central bankers and economists from Group of 20 countries. Their recommendations were unequivocal: The best long-term recovery plans will also be the plans that reduce greenhouse gas emissions.

In the United States, this dynamic has already become apparent. Renewable energy in the past few years has been shown to directly and indirectly generate roughly three times as many jobs as a comparable investment in fossil fuels. Jobs in clean energy, such as wind technicians and solar installers, are the fastest growing of any industry in the country, and over the past five years, employment in the clean energy industry has grown 70 percent faster than the economy overall.

Bloomberg:

Jeff Bishop’s LinkedIn post gets right to the point: “Houston Oil & Gas Folks — we’re hiring in Texas” for jobs in clean tech.

His company, battery developer Key Capture Energy, is making the pitch even as tens of thousands of renewable-energy jobs have dried up amid the coronavirus pandemic. That’s because Bishop and a handful of other clean-power executives see an opportunity to recruit talent from the oil and gas industries, which have been even harder hit.

While there are plenty of overlapping skills, it wasn’t always easy for clean-power companies to lure top talent from oil and gas. Wind and solar were young and niche industries that tended to attract environmentalists. Now they’re big energy, and they appeal to a wider class of workers. Since publishing the post two months ago, Bishop has received about 200 applications.

“We’ve always wanted oil and gas folks,” said Bishop, Key Capture’s chief executive officer.

Jeff Bishop’s LinkedIn post gets right to the point: “Houston Oil & Gas Folks — we’re hiring in Texas” for jobs in clean tech.

His company, battery developer Key Capture Energy, is making the pitch even as tens of thousands of renewable-energy jobs have dried up amid the coronavirus pandemic. That’s because Bishop and a handful of other clean-power executives see an opportunity to recruit talent from the oil and gas industries, which have been even harder hit.

While there are plenty of overlapping skills, it wasn’t always easy for clean-power companies to lure top talent from oil and gas. Wind and solar were young and niche industries that tended to attract environmentalists. Now they’re big energy, and they appeal to a wider class of workers. Since publishing the post two months ago, Bishop has received about 200 applications.

“We’ve always wanted oil and gas folks,” said Bishop, Key Capture’s chief executive officer.

But while some furloughed clean-power workers are already being called back to work, the pain in the oil patch continues as the industry suffers its worst downturn ever as the pandemic cripples demand.

On Wednesday, Chevron Corp. said it’s planning a 10% to 15% reduction in its global workforce this year, the biggest recent cut to headcount yet among global oil majors. It comes after oil-services giants Halliburton Co. and Schlumberger Ltd. have already made steep jobs cuts, including in Texas.

In the end, clean-power executives say they’re confident they’re better-positioned to bounce back and ultimately prevail in the struggle for the future of energy.

“We clearly see renewable energy coming out as a relative winner from this Covid crisis,” analysts from Sanford C. Bernstein & Co. including Deepa Venkateswaran wrote Friday in a note to investors. “The Covid crisis will result in an acceleration of decarbonisation initiatives.”

In some instances, pay is even better in clean power. The median hourly wage for a mid-career wind-industry worker is now $29.79, above the $26.67 for oil, according to the U.S. Energy & Employment Report from the Energy Futures Initiative and the National Association of State Energy Officials.

“Before 2020, I had never heard of any firm specifically hiring from oil and gas into advanced-energy companies,” said Nat Kreamer, CEO of the trade-group Advanced Energy Economy and a founder of the solar giant Sunrun Inc. “Now you look at a place like Texas with so much work to be done in renewables and so little work to be done in oil & gas — it’s obvious.”

7 Responses to “Recovery Funds Going BackAssWards to the Future?”

  1. pendantry Says:

    I spotted your deliberate duplication of those four paragraphs, Peter — do I get a prize? 😉

  2. Sir Charles Says:

    IMF: Direct damage from floods, heatwaves and droughts adds up to $1.3 trillion a year, on average.

    https://blogs.imf.org/2020/05/29/equity-investors-must-pay-more-attention-to-climate-change-physical-risk/

  3. Sir Charles Says:

    Timeline: Which countries have emitted the most CO2?


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