Summary3 min read

The Oil Patch – Episode Summary

Episode Title: 🛢️ BlackRock Dials Back Support for Climate Issues
Host: Oil Patch Media LLC
Date: August 25, 2023

Episode Overview

This quick-fire news episode highlights BlackRock's recent shift away from supporting climate and social shareholder proposals, explores broader industry trends in ESG (Environmental, Social, and Governance) sentiment, and discusses the continued dominance of natural gas in the US power grid. The host delivers industry news with a wry, direct tone that caters to oil and gas professionals looking for no-nonsense updates.

Key Discussion Points & Insights

1. BlackRock Retreats on Climate and Social Proposals

[00:10]

BlackRock, the world's largest asset manager, significantly reduced support for shareholder proposals targeting climate and social issues.
- Support fell from 22% to 7% in the 12 months to June.
The company described many proposals as "unduly prescriptive" and "attempts at micromanagement."
Quote:

“Because so many proposals were overreaching, lacking economic merit, or simply redundant, they were unlikely to help promote long term shareholder value and received less support.”
— Global Head of Investment Stewardship, BlackRock (00:30)
The host notes the irony, given BlackRock’s previous enthusiasm for net zero commitments.
Reference is made to political backlash from conservative states (notably Texas) against ESG investing.
- Texas accused BlackRock and others of “discriminating against oil and gas.”
- BlackRock quickly denied these allegations.

2. Industry-Wide Decline in ESG Proposal Support

[01:30]

The trend isn't limited to BlackRock; industry-wide support for ESG proposals dropped from 25% to 15% year over year.
Conservative pushback against ESG, coupled with the relative profitability of traditional energy vs. energy transition investments, is suggested as a major driver.
The host’s tone:

“Nobody could have seen this coming.”

3. Natural Gas Remains Critical in Power Generation

[02:00]

US gas-fired power generation rose by 10% in the first eight months of the year, while wind and solar output remained flat.
Gas accounts for about 40% of total US power generation between January and August.
Memorable moment:
- Reference to Reuters columnist Gavin Maguire, who called it a “gassy grid.”
The reliability of gas-fired power contrasted with intermittent renewables:

“The grid may be gassy, but it is also reliable. If gas wasn’t around to meet demand, we all know what would have happened.” (02:30)
Every US utility increased gas-fired output in the reporting period.

4. Texas as an Energy Snapshot

[03:15]

Texas leads in wind and solar capacity but still sourced 43.4% of its power from gas.
The state routinely faces periods when wind generation underdelivers.
The host notes:

“The future looks very much like the present when it comes to energy. Unless the federal government gets its way with the new proposed emission standards…” (03:50)
New federal emission standards could make gas and coal power much more costly, potentially leading to plant shutdowns.

Notable Quotes & Memorable Moments

On proposals:

“We all know how lousy it feels to be micromanaged, right?” – Host (00:20)
On investment priorities:

“Part of the reason is the conservative state's pushback against ESG investing. But there may be another part. The part where investment in oil and gas makes money. And investment in energy transition doesn't make money…” – Host (01:45)
On power grid reality:

“Imagine shutting all [gas generation] down to give way to wind and solar. Yeah, it's not happening.” – Host (02:50)

Timestamps for Key Segments

00:10 — BlackRock’s reduced climate proposal support
01:30 — Broader industry retreat from ESG proposals / states' reactions
02:00 — Gas “saves the day” in US grid reliability
03:15 — Texas’ energy mix and future outlook
03:50 — Implications of possible federal emissions standards

Conclusion

In a rapid-fire review, the episode underscores a financial and political pivot in major asset management and energy industries: climate proposals are seeing less support, ESG investing is facing headwinds, and natural gas is more entrenched than ever in the US grid. With its lively and sharp commentary, the episode positions natural gas as a reliable—even indispensable—energy source while casting doubt on a swift transition to renewables under the current economic and policy environment.

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Transcript1 lines

[00:01]
A
Good Morning Oil Patch. We made it to the weekend Friday, August 25th and here's what the oilman has for you today. BlackRock dials back support for climate issues BlackRock has significantly reduced its support for climate and social proposals from shareholders. Over the 12 months to June, support for these fell from 22% to just 7%. The Great BlackRock Awakening per the Asset Manager, many proposals on social and climate issues had become unpalatable. In a report, BlackRock called them unduly prescriptive and attempts at micromanagement. We all know how lousy it feels to be micromanaged, right? Here's how the global head of investment stewardship put it. Because so many proposals were overreaching, lacking economic merit, or simply redundant, they were unlikely to help promote long term shareholder value and received less support. Well, well, well. This is from the company that is pushing net zero like the holy Grail. I wonder if this might have something to do with some states backlash against ESG investing Remember when Texas Straight out accused blackrock and friends of discriminating against oil and gas? Remember how quick blackrock and friends were to say that no, they were not discriminating at all? No sir, they liked oil and gas just fine. They said it. It's not just blackrock. Blackrock was not the only place where support for ENS proposals declined substantially. In fact, industry wide support for These fell from 25% to 15% in the 12 months to June. Part of the reason is the conservative state's pushback against ESG investing. But there may be another part. The part where investment in oil and gas makes money. And investment in energy transition doesn't make money, let alone more than oil and gas. Not with the kind of cost inflation these industries are dealing with. Nobody could have seen this coming. And in our last story of today, gas saves the day again. Gas power generation in the US was 10% higher in the first eight months of the year than a year ago. Wind and solar output, on the other hand, was flat in 2022. A gassy grid. That's how Reuters columnist Gavin Maguire called it. The grid may be gassy, but it is also reliable. If gas wasn't around to meet demand, we all know what would have happened. This makes calls for the death of gas powered generation all the weirder. Especially if you know that gas accounts for some 40% of total generation between January and August. 40% is a lot. It's 10% shy of half. Imagine shutting all this down to give way to wind and solar. Yeah, it's not happening per the Reuters report, every utility in the United States increased its gas fired output over the last eight months. All of them. I wonder why. A Snapshot of the Future Texas is the state with the most wind and solar power capacity. Texas is also the state that got 43.4% of its power from gas fired plants. Texas also saw some prolonged period of low wind speed compromise electricity generation, which happens every year. So the future looks very much like the present when it comes to energy. Unless the federal government gets its way with the new proposed emission standards, these would make not just coal, but gas generation a lot more expensive and plant operators would have to shut down. That would be a much less nice future thanks for listening to today's Oil Patch podcast. If you enjoyed the show, please leave us a five star review in your favorite podcast. Appreciate and share it with a friend. Also, if you're not already a subscriber, be sure to go sign up for the Oil Patch daily newsletter at www.theoilpatch.co. there's a link in the show Notes. Enjoy the weekend and we'll see you Monday for another episode of the Oil Patch.