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We saw it coming. For the last few years, we were warning companies that it soon would be here and there would be a reckoning. Now it is here. This week S&P Global Rating warned ExxonMobil and Royal Dutch Shell and several other major oil companies that it may cut their credit score due to climate risk.

Climate risk is real and ignoring it is at your own peril. The repercussions of ignoring climate risk are beginning to materialize. The previous administration maintained business as usual (BAU) as much as it could. Ignoring reality and allowing short-term interests to prevail.

The Leaky Dam


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Winter Storm Uri has plainly shown that the state of Texas has developed an electric power system that does not prioritize infrastructure resilience. Rather, it is a race to the bottom by generators to provide the lowest-priced power, improve efficiency, and ensure cost reductions. This is why Texas usually has some of the lowest power prices in the United States. Additionally, the low price of energy and minimal regulations add another arrow to Texas’s quiver in its bid to be a business-friendly state. The unfortunate outcome of this race to the bottom is that there is minimal investment in our…


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Although 2020 was a bit different than previous years due to COVID-19, one thing that remained constant was the impact of a rapidly changing climate on our communities and economy. 2020 was another record-breaking year for climate-related disasters, whether extreme heat, hurricanes, or wildfires. These events are placing significant stress on our economy and industry resulting in reductions in profitability and earnings in companies. Beyond the physical risk, there is the transitional risk where fossil fuel-dependent companies are losing investments or possibly shuttering as the economy moves to decarbonize. …


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Much of my work entails a good bit of reading on the United States’ electric power system. I mainly focus on the resilience of our power system to major natural disaster events. There is a lot of good work published, primarily from the Department of Energy, that points to the susceptibility of our power system to natural disaster events, whether that is a chronic event such as extreme drought, or more acute events, like hurricanes. The National Academy of Science came out with a nice study, “Enhancing the Resilience of the Nation’s Electricity System,” looking at a variety of risks…


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During the most recent Presidential Debate, Trump thought he had Biden. He goaded Biden into saying that he was looking to phase out fossil fuels. Trump looked pretty smug. He thought he had an opportunity, a turning point of the campaign that would swing the outcome in his direction. The voting population, particularly in Texas and Pennsylvania would see that Biden is looking to shut down the oil and gas business and decimate the economy and their communities. However, a week later, the polls have not changed in Trump’s favor. Pennsylvania has not swung to Trump. Why would this be…


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“Green Jobs not Job Cuts” by John Englart (Takver) is licensed under CC BY-SA 2.0

Oil and gas production is slowly picking back up but indicators suggest that bringing it back will be difficult. Particularly as we see fossil fuel demand hitting a plateau somewhere around 2030–2035, oil and gas companies will be looking to transition to “clean energy” companies or will be downsizing, merging, or closing their doors. Regardless, this means a radically different employment skills landscape than where we are now.

The energy transition speeds up and there is less general resistance if there are jobs waiting for those coming from the oil and gas industry.

Our policymakers and decision-makers need to look…


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Hurricane Laura just hit Louisana and Texas with 150 mph wind. With warming waters and more moisture in the atmosphere, this may be more common. We are seeing indications in the climate models that hurricanes may not become more frequent but are likely to be more intense. As expected, with Laura, there are widespread power outages; approaching 1 million. Even areas that were not touched by the actual hurricane are now out of power. A good bit of the population west of the hurricane in the electric utility, Entergy’s territory is without power at this time(see image below as of…


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There is much discussion on a green stimulus. A federal monetary and programmatic infusion that would kickstart the economy while at the same time work toward decarbonization of our energy system. Trillions of dollars could be spent. An example may include H.R. 2, the Moving Forward Act, aka INVEST in America Act; — $1.5 trillion. This is a massive climate-friendly infrastructure bill, passed in June 2020. This bill looks at greenhouse gas mitigation and climate resilience. It includes:

  • Strategies to reduce the climate change impacts of the surface transportation system by conducting a vulnerability assessment to enhance its resilience;
  • A…


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A recent survey by FM Global of 150 CEOs finds that 58% of CEOs admit their company is not fully prepared for climate risk and 66% feel they have somewhat to no control over climate risk. Almost 90% feel they are somewhat to significantly exposed to climate-related risks. Their greatest concern is drought, hurricanes, and wildfires.


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Growing Demand By Investors and Regulators for Climate Stress Testing and Scenarios

Investors and shareholders are demanding a greater focus by companies to assess their climate risk. Phillips 66 was the most recent major announcement where shareholders voted to have the company consider is climate risk along the Texas Gulf Coast. A specific emphasis was given to public health impacts that may occur due to chemical releases brought on by storm surge, flooding, and hurricanes.

The wave is coming for greater climate risk transparency. As I have written before there is global activity among regulators, investors, and asset managers demanding greater transparency regarding climate risk. Further, ongoing discussions are happening at the…

Gavin Dillingham, PhD

Director of Clean Energy at the Houston Advanced Research Center. CEO of Pythias Analytics — Optimizing Climate Risk Decision Making — www.pythiasanalytics.com

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