The world is in a financial crisis and it is intentionally been implemented. Today I sit down with Paul Tice and we talk about his new book: “The Race to Zero: How ESG Investing will Crater the Global Financial System” – Paul H. Tice
While getting ready for this interview, I poured through the book. He has done an outstanding job lining up ESG investing and defining “Sustainable” energy. It is really hard to wade through the fear-mongering of the mainstream media. Looking at financials and ESG investing hypocrisy is critical. Talking about the investing hypocrisy for years has been frustrating, and Paul has done a great job pulling the data and the receipts to back up his opinions.
With the Biden Administration to raise taxes, investments with tax benefits are critical, and I appreciate everyone’s feedback and information. One can argue that just allowing tax cuts to sunset is in itself a tax increase and will impact the middle class.
Investors want their money, and the oil companies have done a better job with fiscal responsibility. The US oil companies are the best in the world at producing low-cost energy with the least impact on the environment. Energy will continue through the foreseeable future as being one of the key places the global investing market will turn to protect their portfolios.
Thank you, Paul, for your time on the podcast, and I highly recommend your book to anyone in the ESG, Investing, and energy markets. No, wait, let me expand on that; anyone who wants to protect their portfolio needs to read this. – Stu
Highlights of the Podcast
00:42 – Critique of ESG Investing
01:44 – ESG and the Energy Sector
03:09 – The Financial Industry’s Silence on ESG Critique
05:26 – Defining Sustainable Energy
06:33 – The Financial Impact of ESG Investments
07:38 – European Energy and ESG Policies
09:46 – The Future of ESG and Energy Policies
11:02 – Global Energy, ESG, and Economic Implications
13:06 – Nuclear Energy and the Transition Challenges
14:28 – Conclusion and Future Outlook
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Full Transcript:
Stuart Turley [00:00:07] Hello, everybody. Welcome to the Energy News Beat podcast. My name Stu Turley, president and CEO of the sandstone Group. What is ESG mean to you? Does it mean wealth transfer? Is it actually trying to do something good? Well, today I have an outstanding guest. We’re going to sit down. We’re going to talk to Paul Tice with Race to Zero how ESG investing will crater the global financial system in his new book. And I mean, it is fabulous. Thank you, Paul, for stopping by the podcast.
Paul Tice [00:00:42] It’s great to be with you.
Stuart Turley [00:00:44] I’ll tell you what, this is a fabulous book. And you and I were kind of talking about this, just before the show started. The oil and gas industry has never really done a very good job on, bragging about how, elimination of energy poverty is something they’ve done very well. Why did you write this book?
Paul Tice [00:01:09] You know, I think the main reason was because even though the last two years we’ve had some pushback on ESG, you’ve never hurt anyone who’s worked within Wall Street or the financial industry offer up a critical view of sustainable investing. And I thought it was important to articulate that view, because I think there is a silent majority that works on Wall Street that disagrees with this agenda, but they’re afraid to speak up, and that’s by design. You’re really not allowed to have a dissenting opinion. And I kind of experienced that over the last few years of my career.
Stuart Turley [00:01:44] You say dissenting opinion. Were you shut down as being a Wall Street? Exact?
Paul Tice [00:01:51] No. But my ability to write publicly, which I’ve done over my career, particularly over the second half while I was on the buy side. And I also have have taught down at NYU stern at the business school. Okay. So, you know, I’ve written publicly about the energy sector, which I’ve specialized in for the last 30 years, as well as climate policy and and ESG and sustainability, all of which is interrelated. And, you know, literally over a decade, you know, my ability to express my own personal views, which, again, didn’t reflect on any of my employers, right, was slowly getting constrained. I could feel that I was running out of runway. And it got to a point where, at one job, I was told by a senior manager that me having a different opinion from the CEO when it came to sustainability was a problem, which, you know, obviously is an amazing statement to make if you’re working in the financial markets, because you need to have a difference of opinion for the markets to work.
Stuart Turley [00:02:52] Right.
Paul Tice [00:02:53] So yeah, it is tough. And I’m sure everyone else is experiencing that. And they’re presented with the choice. Either I say something, and then I don’t get paid or I lose my job. So that is a real risk for anyone speaking out.
Stuart Turley [00:03:09] Wow. I’ll tell you, your book is so well laid out from a standpoint that as we sit back and take a look at climate change, how to invest. It started out with the ESG investing and then really constricting it down and saying, hey, this is where the money is going to go. And you nailed a comment that I want to kind of drill in, in here. And and that is sustainable. How did we come up with sustainable energy being wind and solar, when we have to print money in order to get them installed? They’re not sustainable. They’re not fiscally sustainable. Where did that come in?
Paul Tice [00:03:54] I think, sustainable. You know, if you trace it back, it was really used as a slur against the oil and gas industry initially, back when, you know, people were talking about peak oil, right. So oil’s not sustainable because we’re going to run out of it. Right. And that obviously is disproven for decades now with technology. So that that was the original concept of sustainability. And that kind of changed the 1980s. And the United Nations is all involved with this intertwined agenda of climate sustainability and ESG. And they kind of change the meaning of sustainable at that point. And basically it became that, you know, the progressive agenda, the long list of progressive goals over the last 100 years all became sustainable goals for business and for investing. And, you know, you can’t really argue that because they’re arguing about the future. So it becomes this theoretical discussion. But, you know, I personally believe that, you know, progressives don’t want to talk about history, certainly not the 20th century. Right. Even how when they were given the opportunity to to implement that progressive agenda, it went horribly wrong. So now they are just telling us that this will work in the future and to trust them. So it’s an amazing concept, but there’s a lot of inconsistency as you know it in terms of what really is sustainable, what’s green? But logic is never really worked on on leftists.
Stuart Turley [00:05:26] So it really hasn’t. And, and when we sit back and say sustainable fiscal responsibility from, let’s say offshore wind is zero from day one, I mean, you can they’re not fiscally sustainable from day one. And now there are other things that when they come in and at eight years, the maintenance kicks in so badly, is that from the numbers that I’ve been seeing that now, they’re really kicking in at the seven year and eight year in refinancing these to put in new turbines, go in, invest with the Inflation Reduction Act, get that extra money and then start the clock running again on their tax benefits and everything else. So the the scam runs again. So instead of running 30 years like everybody says, they last eight, they last seven, and then they go back into to double dip again. This cycle is the unbelievable on that. Anyway, I’m sorry I’m digressing on that. Well.
Paul Tice [00:06:33] Actually, I mean, electric vehicles probably fall in that same category where you don’t really know what the useful life is, the battery life. What happens when you get into an accident. So the replacement cost, which I don’t think it’s going to be subsidized, becomes onerous. And you almost have to junk that car over a very short period of time. So a lot of the economics work because the market’s not driving this transition that we all keep talking about. It’s politicians and you know they’re going to get it wrong. But I’ll give you another example of of sustainability being kind of an ironic term. Exxon and Chevron we’re told, are not sustainable companies because they generate carbon emissions. But they’ve been around each for 140 years. And then we have.
Stuart Turley [00:07:19] Good.
Paul Tice [00:07:20] Companies that focus on the ESG agenda, like Silicon Valley Bank last year. And they take their eye off the ball and they’re gone because they mismanage interest rate risk. So sustainability implies solvency. But the two are completely different terms.
Stuart Turley [00:07:38] You know, when you talk about ESG, let’s take a look at the difference between the big oil, BP and total energy, as I say from my Oklahoma Texas accent. You know, you sit back and kind of go. And then they have shell. They went really to the ESG and they were getting out of oil and gas. Chevron and Exxon kind of really stayed in this, mode of still, they’re going to still keep doing it. They’re going to try to lower their emissions. Oxy went totally into carbon capture. So they’re they’re kind of like a third one out here. Now you see BP beyond petroleum and total and shell are now all in again on oil and gas. And their CapEx is now going back in. And they’re having to play catch up to shell and to Chevron and Exxon. It’s kind of funny how all that turned around.
Paul Tice [00:08:36] Yeah. It’s if you look at ESG, Europe, it’s really the, the, ground zero for all of these programs, climate sustainability and ESG. So it’s not surprising that the integrate it’s over in Europe, which all of them used to be. They don’t have that in their DNA. I think that they would be embracing this because every government over in Europe, every bank, every financial institution and every industrial also is on board. And, you know, it’s not like they have a choice because they’re passing regulations across the entire economy that’s going to force this on them. But they did take the lead to try and make a good show of it, that they were trying to play along and wanted to get them. Shell continues to be sued because, you know, their emissions reduction targets are not enough business with with whoever wants to put up their hand now. So the fact that they’re they’re now basically backtracking for economic reasons. Right. And mirroring the U.S. integrated, I think it’s a good thing. It’s just going to guarantee that there’s going to be more lawsuits down the road.
Stuart Turley [00:09:46] They were just sued, I believe, this week, Paul, for, he was at a inclusion, some kind of inclusion event, the CEO. I can’t remember who it was, but he was just sued for something. Something really stupid. It’s amazing how many of them are going to be sued. But when we. We take a look. Palm. At Blackrock. Blackrock. I believe it was 2022. First half of 2023. They lost $1.7 trillion in the first half of 2023 because of their ESG investments. They’ve then they had, ESG investing hypocrisy going on because Blackrock actually had investments in pipelines in the Middle East, and they had to quietly bury those in some of their financial things. So Blackrock Larry Fink has now come out and said, well, wait a minute, natural gas. We need it. So it’s okay to invest now in. And Blackrock is publicly saying it’s okay to invest in oil and gas. Do you think that investors are waking up that ESG investing is harmful?
Paul Tice [00:11:03] Well, obviously Larry Fink and Blackrock have been a target of the opposition, right. They’ve been sued because he’s been the leading spokesman up until now. And so he’s made himself a target. Some of the numbers you quoted, I don’t think were all directly related to ESG. Okay. That’s. They lost money in 2022 when the markets went down. Right. And, you know, so 1.7 trillion is is way too high. So I think that was all just market moves and they’ve made that back. So if you look at Blackrock. There’s been some talk that there’s been a tactical retreat on the company’s part the last two years, right? They were out supporting the Exxon proxy battle. That engine number one mount. Right. So they and the other big, index fund, managers, all voted in line with engine number one. Right. And I think that was spun as a victory against Exxon. I don’t think it’s changed anything with the company. So that was much ado about nothing. But after that, there was a lot of fair criticism. Passive fund managers like Blackrock get to vote their shares when they’re passive. So that’s a real governance issue. I think that ESG is kind of exposed. Right. I think the remedy is that if you’re a passive fund manager, basically you see that vote back to management and they have to voted according to their recommendation. I think that solves the problem. But what Blackrock did was they’re now trying to farm that out to some of their investors and let them make the call. Right. But either way, they’ve made a taking a lower profile around that. So some people have construed that to mean that they are backing away. I think it’s a tactical retreat. I think basically they and everybody else in the industry are now waiting for financial regulations to make this a mandatory system. And then it doesn’t really matter if you’re a true believer like Blackrock or somebody else who’s just going along because you’re afraid everyone’s going to be forced to do that right now.
Stuart Turley [00:13:07] You mentioned the World Economic Forum, and in it’s all it’s like a wealth transfer if you would for ESG and, spending and the climate change and everything else. It seems like the carries of the world get richer, and you and I are actually having to pay for the power bills, you know, and, and, the EIA just put out just recently that in 2008, we had we’ve increased the wind and solar on our grids, about 15%. But let’s take California. They’ve had a 98% increase in their, kilowatt per hour since then. And it’s been because of the wind and solar are being added onto the grid. It’s almost 100% because of that. So when you sit back and take a look at the additional expenses coming in, the consumers get to pay for it. But then where does management come in? And the ESG side of this thing to say I have fiduciary responsibilities back to my investors. We’re seeing this really come back around. Is that what you’re saying on that big?
Paul Tice [00:14:28] The problem with the grid is that the regulatory commissions at the state level have been pushing intermittent wind and solar really since 20 years ago, you know, 2007. And, you know, I personally don’t think you should allow intermittent generation into any grid, right? Everything should be it has to be dispatchable. Right?
Stuart Turley [00:14:52] Right.
Paul Tice [00:14:53] So I think that’s your first problem because it can’t run all the time. It was never cheap. If you back out all the subsidies and now with interest rates in a more normalized pattern, it just exposes how expensive it is. Right. So, you know, I think that’s the problem. And then when you have utilities that are regulated, they clearly have not been able to speak up since the 1930s. Right. So you got a problem there, which is putting the entire economy at risk because, you know, our economy runs on power. And now, you know, we’re going to have unreliable grids and power outages will be the norm. We haven’t had to deal with that for 100 years. So I think that’s the problem, I think with with companies, the fiduciary responsibility. Well, first, the ESG side is trying to redefine fiduciary, right? They have been for the last several years. They’re trying to redefine a fiduciary rule for an investor as well as for a company. And in their argument, if you’re not managing s risk and using s g as a risk management tool, then that’s bad governance, which is their circular, self-serving argument. Yeah. But they have been lobbying that and they have implemented those tweaks to the fiduciary rule on the investment side that are already going into place over in, in Europe. And here the Department of Labor has done the same thing with the Biden rule with that came out, which were now challenging the court. It’s allowing for ESG, in a risk return analysis. And once you open that door, then it’s going to force everyone to that lower common denominator.
Stuart Turley [00:16:37] Wow. When we. One of the things I really liked about your book is that you also had, at the end of the 30, 30, exit plan. It seems like everybody’s got these, we have to these arbitrary dates. You know, it’s kind of like when we were younger. Oh, in 1977, the bears are all going to be dead or, you know, in 1980, you know, there’s going to be no polar caps. And now we have to be net zero by 2030. And all these numbers are out here, and the U.N. and the. I think we need to throw the UN. This is a personal opinion. Let’s get to all those in favor of getting the UN out of the US. I’m all in. Just throw these rascals right on out there. They’re a bunch of morons. And it seems like we’re paying, a lot of this for the salaries of these folks, and then they’re kind of doing damage to us. I mean, this is my purse. It’s not in the book. You do a great job not articulating. That’s just my opinion. But in the book in 2030, we’re not going to be able to get financially in fiscally the any kind of net zero. It’s not going to be possible. Why is suddenly, 2030, real plan date for these? I mean, how is that date there?
Paul Tice [00:18:01] Well, you know, as you point out, you know, the progressives behind this whole intertwined agenda, they love setting target dates, and they’ve missed a lot of them. And predictions have been way off. And all the climate models have been wrong in real time, but they’re not stopping. So I think we need to acknowledge the fact that, you know, they’re not going to back away from this. And as you say, there are so many grifters who have made a career and a lifetime around pushing this ideology that they really can’t back away from it at this point. So they’re all in. So I think 20, 30, we need to respect with regard to what they want to accomplish. And the goal is not to be net zero by 2030, but by 2050. But that implies that they need to make aggressive, progress by the end of this decade. And if you look with ESG, they want to have a sustainable global financial system by 2030. On the climate side, the U.S. and Europe both want to cut emissions by 50 to 55% versus 1990, which is going to apply a lot of economic shrinkage and lower living standards, and probably energy and food scarce in order to get there. Because what they won’t acknowledge out front is that fossil fuels drives economic growth, and capitalism take fossil fuels away. We have nothing to transition to. That implies deindustrialization and degrowth. Right. Which some on the left actually view that as a, as a, as a goal and a good thing, which is crazy. So by 2030, we’re going to see a lot of the pain already coming in place unless we can turn it around.
Stuart Turley [00:19:46] Well, you know, we’re already seeing the deindustrialization coming to the United States. Germany is being d industrialized very nicely right now. And there was an article that was just put out that said that they are really proud of how much they’re reducing in their carbon output, but yet their economy is failing miserably. You have the BASF, plant shut down. You know, they’ve shut down their fertilizer plants. Volkswagen is now moving their plants out. Where does your economic freedom come in when you start shutting d industrialization coming down. Because the high price of energy.
Paul Tice [00:20:29] Yeah. I mean, it’s it’s shocking how that has happened over the last two years with the, with the war in Ukraine kind of exposing that. Right. And that people just avert their eyes with regard to how many German industrials that have been around for 100 years went away when energy prices spiked.
Stuart Turley [00:20:47] Was that their steel. That was their steel mill that that shut down as their oldest steel mill. And it shut down because it couldn’t afford energy.
Paul Tice [00:20:56] Right, right. So that layer on top of that, what they’re also doing in Europe is attacking agriculture, which shows you how, you know, extreme this climate argument is being taken. They’re trying to shut down farms in the Netherlands, and the Netherlands feeds the rest of the continent. Right? So that’s something we need to acknowledge up front. They want to shut down 3000 farms in the Netherlands because they’re concerned about nitrous oxide, which is even more of a trace greenhouse gas than carbon dioxide and methane. And and if you look at the Netherlands, they’ve actually become more efficient as, as a farming, country. And they reduce their nitrous oxide and versus the total U.S., the total world number. Yeah. It’s it’s a rounding error, but still they’re they’re pushing forward with this. This, attempt to shut down farming because we’re hurting the planet, which just shows you that this whole agenda is anti-human.
Stuart Turley [00:21:57] It is, and so the the best thing that we can do as humans is to deliver the lowest kilowatt per hour to every single person on the planet, and that means use it all forms of energy doesn’t matter. But let’s have, you know, natural gas and let’s have, oil, clean coal. I mean, you can burn coal, and do it quite fine with the new equipment, but we can’t update our plants, because of the regulatory issues. We’ve got death regulations going on right now.
Paul Tice [00:22:34] It’s also it’s also when you look at they’re trying to push this on the developing world at a certain level and putting putting those economies on intermittent power means that they will never grow. Right. And they’re lecturing, you know, we are lecturing the U.N. it’s lecturing them on carbon emissions, when what you really need to focus on is economic development and and reducing poverty. I mean, if you look at poverty levels in the world, they really haven’t moved over the last 30 years that the U.N. has been focusing on this soft policy agenda, which is a crime, and all the development banks for the world, the world Bank, the regional development banks. Right. They don’t lend to oil and gas anymore. They haven’t for the last four years. Which I think is going to shut down a lot of, you know, projects obviously in the Third World, but they need.
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