Investing

Buffett's gas bet, Facebook's climate woes, and the 500-year-old green building

By David Callaway, Callaway Climate Insights

LATEST NEWS AND INSIGHTS

  • Why is Warren Buffett buying fossil fuels when everyone else is selling?
  • Big week for pipeline protestors, not so much for pipelines
  • This 500-year-old Mexican palace received its green certification, and it’s not alone
  • Only four of the 50 largest electric utilities are aligned with the Paris Agreement: new study

SAN FRANCISCO (Callaway Climate Insights) — It’s hard to see Warren Buffett’s $10 billion play for Dominion Energy’s (D) natural gas assets over the weekend as anything other than one of his classic buy-at-the-bottom strategies.

The surprise announcement and the timing, coming after Dominion agreed to end a six-year project with Duke Energy (DUK) for the Atlantic pipeline under the Appalachian Trail, triggered speculation that Buffett is making a climate play with his first big asset purchase in years.

Energy companies have long argued that before renewable energies like wind and solar can take the lead in energy markets, there will need to be a transition period where they are powered through natural gas. This transition play is at the heart of what a lot of legacy energy companies see as their climate strategies.

But with natural gas prices at their lowest levels in 25 years, fossil fuel companies reeling from the collapse of oil prices this spring, and the rest of the market occupied with Covid-19, stay-at-home plays like Zoom Video Communications (ZM) and Netflix (NFLX), the old Oracle of Omaha probably just couldn’t resist a nice discount in one of his core sectors of investment — energy.

With a bankroll of $137 billion before the Dominion buy, Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) has an open highway in front of it if it chooses to cherry-pick distressed energy assets now. They are the only part of the market that isn’t overvalued as the S&P 500 is back within 6% of its all-time high.

While it’s tempting to think Buffett is playing the renewable transition game, it’s altogether more likely that this is a broader signal that the bear market in commodities might finally be over.

Latin America’s green building push is attracting investors

. . . . Built to last: Mexico and Brazil are leading a push in Latin America for green certified buildings, appealing to both investors and environmentalists. In some cases, they are finding that previous generations beat them to it, including Mexico City’s Old City Hall Palace, the Antiguo Palacio del Ayuntamiento, which is 500 years old. The push for LEED certification is on across the world, as investors target energy efficient buildings as a way to keep costs low and reduce electric use. . . .

Read the full story

. . . . Keystone cops: It’s shaping up to be a good week for environmental opponents of oil and gas pipelines.

First, Dominion and Duke canceled their six-year energy project to develop the Atlantic Pipeline underneath the Appalachian Trail, leading Dominion to sell its natural gas assets to Berkshire Hathaway.

Next, a district court judge ruled Monday that the Dakota Access Pipeline, which runs oil from North Dakota to Illinois, must be shut down and emptied within a month. The ruling hands a victory to the Standing Rock Sioux tribe, which argued that a spill underneath part of where the pipeline runs under the Missouri River could threaten its drinking water and fishing livelihoods.

Finally, the Supreme Court upheld a temporary injunction on construction of the controversial Keystone XL pipeline. The major project was caught up in a ruling that lifted an earlier ban on several pipeline projects that crossed bodies of water, but it kept the restrictions on Keystone. The ruling also ensures the project will — again — feature in the U.S. presidential election in November. . . .

. . . . Facebook (FB), under attack from, well, all sides, took another one-two punch this week on the climate front, as a prominent climate scientist said it was impeding her attempts to fact-check posts from climate deniers. Katharine Hayhoe(above) director of the Climate Science Center at Texas Tech University, told Scientific American/E&E News that her educational posts have been labeled “political,” requiring her to register them with personal information she fears could expose her to attack.

Last week, Emily Atken’s Heated newsletter and Judd Legum’s Popular Information newsletter broke the story about how Facebook is using an “opinion” loophole to allow climate deniers to spread misinformation. Today a group of activists, including possible Joe Biden VP candidate Stacey Abrams and billionaire and former presidential candidate Tom Steyer, sent a letter to Mark Zuckerberg demanding he reverse the policy.

Facebook shares, meanwhile, continued to bump up against record highs, as the more people Zuckerberg pisses off, the more his investors seem to like it. . . .

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