News briefs: Oil giants' credit ratings under threat as renewable energy soars
Plus, India to impose green tax on old vehicles, Dow dinged over gas flares, Mastercard's carbon-neutral pledge and renewables firm fined for pollution
Oil giants' credit ratings under threat as renewable energy soars
Key credit ratings agency S&P Global says it is considering downgrading its score on 13 major oil and gas producers, including Exxon Mobil (XOM), Shell (RDS.A), Chevron (CVX) and Total, out of concerns about the transition to green energy, price volatility and future profitability. The move follows trends worldwide, including recent news that renewables in 2020 pushed aside fossil fuels, 38% to 37%, as the largest source powering the Europe Union’s energy grid. The companies are being placed on the firm’s Credit Watch status and their ratings could be lowered within a few weeks, S&P Global Ratings said in a statement. S&P reports that the West’s top nine oil majors alone are sitting on more than 28 billion barrels of undeveloped resources, according to company filings, and low prices in 2020 have already sidelined about a third of global oil and gas investments, raising concerns on the potential for future stranded assets.
Related story: Read, from Mark Hulbert, Where oil will be trading in January 2032: Why a lower price for oil means things could get worse for alternative energy companies before they get better
India to whack hefty ‘green tax’ on older vehicles
In a move that will be closely watched by automakers and other nations, the Indian government is set to introduce a “green tax” on personal vehicles that are over 15 years old and buses more than eight years old. The Times of India reports that owners of older autos will have to pay an addition 10% to 50% on their annual road taxes, with the higher rates being imposed in more-polluted cities. India has the worst air quality problem in the world, with major urban areas such as the capital, New Delhi, regularly smothered in killer smog. Taxes will also vary between gasoline and highly polluting diesel engines while vehicles used in farming as well as hybrids and electric-powered cars will be exempted.
Dow Chemical must spend megabucks to snuff sooty flares
The Dow Chemical Co. (DOW) will pay $294 million to reduce air pollution and flaring at four of the firm’s plants as part of a deal with the U.S. Department of Justice, reports the Herald Guide newspaper of St. Charles Parish, La. The company will also hand over a $3 million civil penalty as result of the settlement. The corporation, which produces chemicals, plastics and agricultural products as its core businesses, will be required to reduce emissions at its facilities in Hahnville and Plaquemine in Louisiana and Freeport and Orange in Texas. Under the agreement with the DOJ, Dow will operate systems that will recover and recycle gases instead of sending them to be to be burned in a flare.
Mastercard wants to gain credit for being clean and green
Plastic money giant Mastercard (MA) has pledged to be carbon-neutral by 2050, including by pressing its customers and supply chain to be more environmentally friendly. The target comes after the corporation says it now uses 100% renewable energy in its 180 business locations worldwide, including by installing solar panels on all its U.S. buildings. The plan includes persuading companies that issue credit cards under the Mastercard brand to use sustainable materials in their manufacture and advising businesses that use the corporation for transactions to set environmental standards. Kristina Kloberdanz, the firm’s chief sustainability officer, told altfi.com that “2021 is set to be a crucial year for climate action, and we believe the private sector has a vital role to play in the transition to a zero-carbon economy.”
Fed creates panel to assess climate risks to financial system
In what is being described as “an enormously big deal,” the Federal Reserve is creating a first-of-its-kind climate change panel in an attempt to deepen the central bank’s understanding of the risks of global warming to the world’s financial system. New York Feb Supervisor Kevin Stiroh has been chosen to head the committee, which will advise senior staff, including the Federal Reserve Board and the Fed’s 12 reserve banks across the country. The Supervision Climate Committee “will build on our climate change work already underway across the Federal Reserve System, and help us take a careful, thoughtful, and transparent approach to analyzing these potential risks,” Fed Vice Chair Randal Quarles said in a statement quoted by E&E News. Ilmi Granoff, who heads sustainable finance at the ClimateWorks Foundation, called the systemwide climate position an “enormously big deal,” adding that Stiroh's leadership could spur a “step change in sophistication on climate risk supervision.”
Renewable energy firm fined for – guess what? – polluting
In an ironic twist, a Pennsylvania recycling company is to pay a $218,393 penalty for pollution violations at its waste-to-energy incineration plant. The firm, Covanta Plymouth Renewable Energy LLC, was found to have produced excessive emissions between June 2019 and September 2020 at its facility in Conshohocken, which lies northwest of Philadelphia, according to the state’s Department of Environmental Protection. It has also agreed to fix problems at the plant, which processes 400,000 tons of waste annually that would have ended up in landfills, reports The Philadelphia Inquirer.