The Pendulum Train

I’m working on my next book, so occasionally I’m going to share my thinking here and on the Energy Thinks podcast to give you a preview and get your thoughts.

Ever since Russia invaded Ukraine, many energy observers have predicted that the renewed global focus on energy security means the global focus on climate change is over. My view is very different: I look at this moment as an opportunity for oil and gas leadership to respond to a range of social and financial pressures for cleaner energy — pressures that will only intensify. (We reviewed this dynamic in a recent Both True, The World’s Cleanest Oil & Gas on Stage.)

But while I disagree with those many energy observers on how to respond to this moment, we share at least this judgment: Politics moves like a pendulum. Below, I explore why I believe in and value the political pendulum swing — and also why I don’t think that this moment represents the end of the public focus on climate. Concern about climate isn’t a pendulum. It’s a train — and it’s not coming back.

A Pendulum or Directional Change?

Many reasonable people can (but don’t) agree that the energy-environmental pendulum has swung too far in the address-climate-at-all-costs direction. I certainly do. In a world with a lot of global challenges and priorities, the climate-apocalypse narrative certainly doesn’t work for all of us — not even a climate hawk like me.

Yet that doesn’t mean that the pendulum will swing back to some pre-2020 world.

Four significant but underrecognized structural changes over the past decade or so indicate that global interest in prioritizing climate is directional. So while we are experiencing a pendulum “correction,” we shouldn’t mistake pendulum corrections for directional change. The pendulum is on a train, and that train is going to climate town.

Below are those four structural changes, which are themselves directional. They are and will continue to drive directional change in public interest in climate:

  • Investor pressure. Now that everyone from BlackRock CEO Larry Fink to U.S. Treasury Secretary Janet Yellen to the Securities and Exchange Commission (SEC) has equated climate risk with financial risk, responsible investors must put climate considerations front and center. Recent SEC draft rules reinforce how central these analyses will be to company operations and disclosures.
  • Public sentiment. As discussed in my Both True What to Watch for 2022: Energy Prices, stakeholders tend to interpret current events through their own political lenses. I sat on a panel last week where one participant said the war in Ukraine was accelerating Germany’s permitting of wind facilities and another pointed out that Germany is turning coal-fired power back on. Very few people are rewriting their climate priorities in the face of world events.
  • Generational change. The oldest millennials are now turning 41 and continue to take leadership positions across finance, politics, community organizations, and business. They will dominate the population beyond 2050. Gen Z has now joined the millennials in the work force; together they will soon constitute a majority of working adults. Members of these generations, even when politically conservative, prioritize climate — and that is not going to change.
  • Company recruiting and retention. For the foreseeable future, oil and gas companies will be competing to both recruit and retain millennial and Gen Z talent. And increasingly, millennial and  Gen Z candidates and employees are under pressure to be a part of the climate solution (or at least part of the industries of the future!). Ask them and they will tell you: They want to see their companies leading in the decarbonizing energy future.

The drivers of directional changehave resulted in changing expectations for oil and gas companies — from within and without. These changing expectations include everything from lower-methane-intensity natural gas to detailed climate-scenario analyses on business risk. And these changing expectations are also directional— in other words, they are intensifying.

Even in this moment when our industry has an unprecedented opportunity to build public goodwill because of the public’s and politicians’ renewed focus on energy supply, security, affordability, and availability, we will not see a permanent return to the days before climate action went mainstream. This is simply a pendulum swing aboard a moving train.

Game-changing leaders will jump on the opportunity of this moment without losing the progress made on climate leadership. More on this in my upcoming book, which I’m drafting right now!

Adamantine can help you navigate the dual challenge of exhibiting energy security leadership and providing the cleanest molecules in the world. Reach out to learn more. If this Both True was forwarded to you, you can subscribe here.

To momentum — cheers!

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