What it takes to earn $70K as a water operator in California

The promise of job security and work-life balance drew Fernando Gonzalez to become a water operator. Now that he’s worked as one for a few years, he sees his job as much more than fining people for using too much water.

On a given day, he’s patrolling neighborhoods spanning from farmland to Malibu mansions, looking for evidence that residents are wasting water. He hands out notices of leaky sprinklers or when residents run sprinklers right after a rainstorm, sure, but the most rewarding part of his job is interacting with customers about how they can save water, and why it’s so important.

“We’re more of a teaching tool than we are a kind of enforcement,” Gonzalez, 43, tells CNBC Make It. “We’d rather spend more time with customers and actually give them pointers on how they can conserve, rather than just hand out blank fines and collect the money and run.”

The stakes have never been higher as Southern California and the rest of the southwestern U.S. continues its 20-plus years in a megadrought. It’s the driest period for the region in over 1,200 years, according to Nature Climate Change.

“Climate change has made a big difference to to how our hydrological cycle is being affected,” Gonzalez says. “You see the lakes running low. You see the the wildlife being affected. You can see that animals are coming down out of the mountains into urban areas to eat because their food sources are being affected up where they normally live.”

Fernando Gonzalez, 43, makes $70,000 a year as a water operator based in Calabasas, Calif.

Tristan Pelletier | CNBC Make It

Gonzalez sees the direct line between the work he does and affecting behavior change that can help conserve California’s precious water resources, even though talking to residents and news teams about climate change isn’t what he signed up for at all: “I never thought I’d be using my voice as a tool,” he says. But this is the reality of what we have to do in order to conserve water.”

Here’s how Gonzalez earns $70,000 a year, or nearly $100,000 with overtime, as a water operator in Calabasas, Calif.

Getting the job

Gonzalez was born and raised in California and helped run his dad’s pool cleaning business until age 25. During that time, he learned a lot about water chemistry and that he loved working outdoors. In his 20s, he changed careers to work as a plant manager in industrial sales and distribution, but realized he didn’t like working a desk job and wanted something different.

When Gonzalez noticed his clients who worked for a water agency were always in a good mood, could spend a lot of time with their families and even had energy for hobbies, he wanted in.

In 2017, Gonzalez enrolled in community college, took six courses and got certified by the California State Water Resource Control Board to work as a water operator.

Fernando Gonzalez is on the frontlines of combatting the historic “megadrought” in the southwestern U.S., and works with customers across parts of Los Angeles County to conserve water in the desert.

Tristan Pelletier | CNBC Make It

The biggest surprise during his studies was learning about the legal regulation of how water moves throughout the state of California to Los Angeles County. “It really brought to light the scarcity of the water here in Southern California,” he says. “I found out the water comes from Northern California, and we don’t actually store any water here in the south. So that made it real on the water conservation effort.”

Learning about the chemistry of water treatment — how acid, chlorine and different chemicals affect water — was a challenge, but Gonzalez learned to like it. “If you have a passion for something, you always find a way,” he says. “And I found that I had a passion for this, and it really did hit home for me.”

Water operators are required to hold either a water distribution license or a treatment license. Gonzalez currently holds both. He was hired at Las Virgenes Municipal Water District, which serves about 75,000 residents in western Los Angeles County, in January 2020.

A day on the job

Fernando Gonzalez says job security, work-life balance and the ability to work outdoors drew him to becoming a water operator. He also enjoys interacting with customers and teaching them how to conserve water.

Tristan Pelletier | CNBC Make It

The typical neighborhoods he works in can range from traditional single-family lots to farms with horses, as well as celebrity mansions owned by the likes of Kim and Kourtney Kardashian, Dwyane Wade and Kevin Hart — many of whom have been issued notices of excess water usage.

Fines range from $50 to $100, which are often “not enough of a deterrent for people who have the means and the money to just pay their way out of it,” he says.

And violations can bring up uncomfortable conversations with homeowners who worry that if they don’t water their lawns, their plants will die, and their property value could drop.

But Gonzalez reminds them that if the California drought gets worse, water use could be restricted to only human consumption. The consequences could be much worse than dull lawns. “It’s unfortunate, but there is going to be a casualty to the drought, and we prefer the casualty be the lawn over the people,” he says.

If a customer exceeds their water budget too many times, the district installs a flow restrictor — a washer with a 1/16-inch hole in the center that allows just under two gallons of water per minute to go to the house.

Properties that go over their water allotment too many times have a flow restrictor installed, which is a washer with a 1/16-inch hole in the center that allows just under two gallons of water to flow per minute.

Tristan Pelletier | CNBC Make It

The restrictors make customers re-prioritize their water use: “You’ll have to actually start making kind of decisions on what’s more important — watering your lawn or taking a shower — because you can’t do both at the same time with the restrictor in,” Gonzalez says.

Gonzalez approaches his work with empathy: People aren’t wasting water to be malicious. Usually, customers just pay their water bill and don’t think twice about it. It isn’t until someone like him visits their property, finds a leak and works with them to get it repaired that they realize they’re wasting water.

“It’s a win for everybody,” Gonzalez says. “Conservation-wise, it’s less wasted water, and the customer wins because their water bill will go down.”

Overall, “one of the biggest rewards for me is still the customer service aspect of it, of helping the community with what I do,” he says.

The future of water

Gonzalez also works on the Pure Water Project, an initiative that uses emerging technologies to treat recycled water for irrigation. The ultimate goal is to bring the treated water up to safe drinking standards one day.

In the mornings, Gonzalez will work in a lab to monitor the facility’s three-step filtration process, make adjustments to the system, and measure the impact of how pure the water comes out.

“Climate change has made a big difference to to how our hydrological cycle is being affected,” says Fernando Gonzalez. “You can see that animals are coming down out of the mountains into urban areas to eat because their food sources are being affected up where they normally live.”

Tristan Pelletier | CNBC Make It

Bringing in $144,000 a year as a female truck driver

After years as nuclear powerhouse, France makes play in offshore wind

This image, from Sept. 2022, shows French President Emmanuel Macron speaking with workers on board a boat during a visit to the Saint-Nazaire Offshore Wind Farm.

Stephane Mahe | AFP | Getty Images

A facility described as “France’s first commercial-scale offshore wind project” is fully operational, multinational utility EDF said this week.

The news represents a significant step forward for the country’s offshore wind sector, with more projects set to come online in the years ahead.

In a statement Wednesday, EDF said the 480-megawatt Saint-Nazaire Offshore Wind Farm would help to “support the French State’s energy transition goals, which include targets to generate 32% of its energy from renewable sources by 2030.” EDF’s majority shareholder is the French state.

Located in waters off the south west coast of France, the Saint-Nazaire project consists of 80 turbines. Its first electricity was generated in June 2022.

Looking ahead, EDF said the wind farm would “supply the equivalent of the consumption of 700,000 people with electricity every year.”

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While the Saint-Nazaire project represents a significant shot in the arm for France’s nascent offshore wind sector, the country has for decades been something of a powerhouse when it comes to nuclear.

According to the World Nuclear Association, France is home to 56 operable reactors. “France derives about 70% of its electricity from nuclear energy,” it adds.

In wind power, the country has an established onshore sector. Its offshore industry is by contrast miniscule, with a cumulative capacity of just 2 MW in 2021, according to figures from industry body WindEurope.

This is set to change in the coming years. “Offshore installations are finally set to take off as of 2022, and we expect 3.3 GW of offshore wind installations from now until 2026,” WindEurope’s Wind Energy in Europe report, which was published in Feb. 2022, said.

In a statement, EDF Renewables’ CEO Bruno Bensasson expressed pride in commissioning what he called “France’s first industrial offshore wind farm.”

“Over the past 10 years, this project has contributed to the construction of the offshore wind power industry in France and has mobilized a significant number of jobs during construction and now in the operating phase,” he later added.

Renault plans to harness geothermal energy and help heat plant

A Renault logo photographed in Bavaria, Germany. The French automotive giant says it’s targeting carbon neutrality in Europe by 2040 and globally by 2050.

Igor Golovniov/Sopa Images | Lightrocket | Getty Images

The Renault Group is working with French utility Engie on the development of a geothermal energy project at the automaker’s Douai facility, with the collaboration set to last 15 years.

In a statement, Renault said Thursday a subsidiary of Engie would start drilling work at Douai — which was established in 1970 and focuses on bodywork assembly — in late 2023.

The plan centers around taking hot water from a depth of 4,000 meters, or more than 13,100 feet.

According to Renault, this water will be used to help meet the Douai site’s “industrial and heating process needs from 2025.” The temperature of the water will be between 130 and 140 degrees Celsius.

“Once implemented, this geothermal technology would provide a power of nearly 40 MW continuously,” the company said.

“In summer, when the need for heat is lower, geothermal energy could be used to produce carbon-free electricity,” it added.

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The Renault Group’s CEO, Luca de Meo, described the program planned for Douai as “one of the most ambitious decarbonisation projects on a European industrial site.”

According to the International Energy Agency, geothermal energy refers to “energy available as heat contained in or discharged from the earth’s crust” which can be utilized to produce electricity and provide direct heat.

Elsewhere, the U.S. Department of Energy says geothermal energy “supplies renewable power around the clock and emits little or no greenhouse gases.”

News about Renault’s geothermal project with Engie was accompanied by details of other projects centered around decarbonizing operations at a number of the automotive giant’s industrial facilities.

Looking at the bigger picture, Renault says it’s targeting carbon neutrality in Europe by the year 2040 and globally by 2050.

Despite these aims, a top executive at the firm recently told CNBC that the firm saw the internal combustion engine as continuing to play a crucial role in its business over the coming years.

Earlier this month, it was announced the Renault Group and Chinese firm Geely had signed a non-binding framework agreement to establish a company focused on the development, production and supply of “hybrid powertrains and highly efficient ICE [internal combustion engine] powertrains.”

Speaking to CNBC’s Charlotte Reed, Renault Chief Financial Officer Thierry Pieton sought to explain some of the reasoning behind the planned partnership with Geely.

“In our view, and according to all the studies that we’ve got, there is no scenario where ICE and hybrid engines represent less than 40% of the market with a horizon of 2040,” he said. “So it’s actually … a market that’s going to continue to grow.”

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Renault’s continued focus on the internal combustion engine comes at a time when some big economies are looking to move away from vehicles that use fossil fuels.

The U.K., for example, wants to stop the sale of new diesel and gasoline cars and vans by 2030. It will require, from 2035, all new cars and vans to have zero tailpipe emissions.

The European Union, which the U.K. left on Jan. 31, 2020, is pursuing similar targets. Over in the United States, California is banning the sale of new gasoline-powered vehicles starting in 2035.

Young people just became official climate policy stakeholders at COP27

COP27 was another milestone for young climate activists as they became official climate policy stakeholders under the ACE Action Plan.

Photo by Dominika Zarzycka/SOPA Images/LightRocket via Getty Images

Young people have long been at the forefront of discussions and activism around climate change.

This year’s COP27 was another milestone for them — they became official stakeholders in climate policy under the ACE action plan, which was created at COP27 in Egypt over the last few weeks.

Young people’s voices and opinions will now be much more impactful when it comes to the design and implementation of climate policies, explains Hailey Campbell, one of the negotiators who made it happen.

“Official recognition as stakeholders in the ACE Action Plan gives young people the international backing we need to demand our formal inclusion in climate decision-making and implementation,” she told CNBC’s Make It.

Campbell is also the ACE co-contact point for YOUNGO, the youth constituency for the United Nations’ framework convention for climate change and the co-executive director of the U.S.-based organization Care About Climate.

What is the ACE action plan?

ACE stands for Action for Climate Empowerment and is outlined in article 12 of the 2015 Paris Agreement. Improving education and awareness around climate change by making research easily accessible is one of its aims. Another goal of the article, and the new plan developed at COP27 to support it, is making sure governments and organizations around the world work together on policies and take opinions from the public and stakeholder groups into account when making decisions.

Srishti Singh from the Indian Youth Climate Network, who worked alongside Campbell at COP27, told CNBC’s Make It that the new ACE plan is key when it comes to different groups being considered in climate policy.

“Strengthening ACE in climate policy means better participation of stakeholders at local, regional, and global levels, including youth,” she said.

Young participants meet on a discussion panel in Youth and Children Pavilion during the COP27 UN Climate Change Conference.

Photo by Dominika Zarzycka/SOPA Images/LightRocket via Getty Images

What does this mean for climate policy?

In short, being official stakeholders means young people get a bigger seat at the table. Campbell hopes that now, they will be able to shape policies that affect their future and work “with those who will not be here to see the impacts of decisions made today.”

The youth constituency should also see additional funding and support to take part in future COP conferences and other events about climate change, she adds.

Especially in recent years, young people have been some of the most vocal about strong climate targets and policies. Millions joined school strikes around the world, others took part in U.N. youth climate summits or made headway as activists, like 19-year old Greta Thunberg, or reached political leadership positions liked 28-year old Ricarda Lang, who is the co-leader of the German Green party.

This year’s COP27 also saw the first ever official youth representative, Omnia El Omrani, fight for the inclusion of young people’s voices, the launch of a climate youth negotiator program that aims to empower young climate activists from the global south, and the inaugural youth climate forum.

We know that including more youth creates more ambitious and just outcomes

Hailey Campbell

Co-Executive Director at Care About Climate and ACE Co-Contact Point of YOUNGO

Campbell says the goal was for young people to be at the center of policy-making.

“When we talk about representation, we don’t just want it at international negotiations and we don’t want to only be consulted. We want it at all levels of government and we want to be partners because action happens on the ground,” she said.

Her and her colleagues also hope to change the way older generations see climate change and its urgency.

“We know that including more youth creates more ambitious and just outcomes, so hopefully we will be able to advance quicker action on the climate crisis through our genuine involvement,” Campbell concluded.

How did they make it happen?

Most people on YOUNGO’s team had never formally learned negotiation skills. This included Bettina Duerr, a policy officer at Federation Internationales Des Mouvements Catholiques d’Action Paroissial.

“I did not have specific training or support in this role, but I used experiences from other contexts. Plus, our working group was really supportive throughout,” she told CNBC’s Make It.

“It helped that I was already in touch with the working group before COP27 and that we planned our strategy,” she added.

As well as learning from each other, previous networking had put the group in contact with experienced negotiators who gave them advice, Campbell added.

But their overall strategy boiled down to just three points, she explained. Those included writing out agreements they hoped to reach, partnering with other constituencies and making sure they had other groups in their corner, backing their ideas.

Duerr and Campbell both described the negotiations as intense, draining and stressful — but their commitment to the cause outweighed this.

“We’d stop anything we were doing to join last minute meetings with each other and with parties that wanted to champion our perspective,” Campbell said.

Is Patagonia the end game for profits in a world of climate change?

A Patagonia store signage is seen on Greene Street on September 14, 2022 in New York City.

Michael M. Santiago | Getty Images News | Getty Images

Many brands are aligning profits with purpose, but Patagonia’s decision in September to convert its for-profit business to one under which all the profits flow through to fighting climate change is the most complex move yet by a U.S.-based company in the realm of sustainable capitalism. Is it a model for other companies to pursue in the future?

For the family founded firm, it’s in some ways a natural evolution. Patagonia has long been on the vanguard of responsible business practices. As far back as 1985, Patagonia deployed portions of its profits to the environment, via an “Earth tax.”

It’s far from the only well-known U.S. brand to be structured in a way that allows profits to be donated to charitable causes. Newman’s Own, the food brand founded by Hollywood icon Paul Newman, is perhaps the most familiar. Since 1982, Newman’s Own has given 100% of profits to charity, now totaling half a billion dollars in contributions. But that business, with a pure non-profit structure, was more of a “first generation” model for sustainable business, says Tensie Whelan, founding director of the NYU Stern Center for Sustainable Business. “The Patagonia model is a little more sophisticated.” 

A business model already in Europe

Yet while Patagonia made headlines in the U.S. for being a novel marriage of capitalism and charity, similar corporate structures are already in use with several large family-controlled European companies, from Carlsberg to Ikea and Novo Nordisk. “Nothing new in this model,” said Morten Bennedsen, professor of family enterprise at INSEAD and the academic director of the Wendel International Centre for Family Enterprise.

Even in the U.S., one of the most iconic retail brands, has long had a No. 1 shareholder devoted to charitable causes and designed by the family founder: Hershey’s.

It is a model that is attractive for family firms that do not want to continue as classical family firms and want the long term stability and the increased professionalization that comes with enterprise foundations,” Bennedsen said. It often is very attractive from a corporate tax perspective, too, which has been noted of both the Ikea and Patagonia business models. “That is another driver of this,” he said.

One hundred percent of Patagonia profits are now committed to its new non-profit Holdfast Collective — which owns all of the company’s non-voting stock (98% of the total stock). A Patagonia spokeswoman said the move makes clear that it is possible to “do good for people and planet and still be a successful business.”

‘Unapologetically a for-profit’

Patagonia’s CEO went further in a September interview with CNBC’s “Squawk Box,” dismissing any idea that this change will lead it to focus less on beating the competition. “What people fail to understand about Patagonia, both the past and the future, is that we are unapologetically a for-profit business, and we are extremely competitive,” Ryan Gellert said. “We compete with every other company in our space aggressively. I don’t think we’ve lost that instinct,” he said. “This whole thing fails if we do not continue to run a competitive business.”

“How we build our products, how we sell them, and then the goal of releasing value to help the environment … the alignment of these goals gets lost if the story fails to recognize that Patagonia is a for-profit business with its profits being released to help the environment,” the spokeswoman said. “That’s an essential distinction.” 

Patagonia CEO Ryan Gellert breaks down the founder's decision to give away the company

There are less extreme options for values-driven founders than the paths chosen by Yvon Chouinard and Paul Newman. “Most founders like to maintain control and have for-profit (less altruistic) sensibilities,” Whelan said. 

B-Corp status, employee-ownership, and mutual organizations and cooperatives are all models that allow more focus on creating stakeholder value, in addition to shareholder value.

“We are seeing significant growth in these alternative models,” Whelan said.

Indeed, since 2011 the number of B-corps has steadily been on the rise, with the total number recently topping five thousand. 

For its part, Patagonia as a business will remain unchanged in terms of its day-to-day operations, but all of its profits (after reinvesting in the company, paying employees, etc.) will be handed over to the Holdfast Collective to fight climate change, an annual profit stream estimated at around $100 million per year.

“This was a process unlike any I’ve ever been a part of before,” said Greg Curtis, executive director of the Holdfast Collective. “It really started with what’s going to happen long term with the company, so that the purpose doesn’t change going forward. We want to recognize natural life spans … What does this actually mean for capitalism? What really motivates people – is it profit, is it purpose?” 

Patagonia founder Yvon Chouinard poses in his store in a November 21, 1993 photograph. He founded the company in 1973 and wrote in a letter announcing the plan to give the company away: “If we have any hope of a thriving planet—much less a business—it is going to take all of us doing what we can with the resources we have. This is what we can do.”

Jean-marc Giboux | Hulton Archive | Getty Images

Jennifer Pendergast, executive director of the John L. Ward Center for Family Enterprises at Northwestern University’s Kellogg School of Management, said the Patagonia decision may serve as a role model for other family businesses, just like the Giving Pledge, created by Warren Buffet, and Bill and Melinda Gates, caused many billionaires to rethink how they donate their wealth. “That said, it isn’t so much the specific form that is used that is unusual. It is more their level of generosity,” Pendergast said. “It isn’t that hard to set up a non-profit to accept shares. It is hard to get a family to agree to disavow future wealth for the benefit of a worthy cause.”

Long-term friction between purpose and capitalism

The new structure does leave open some long-term questions about the integration of profits and purpose. Rather than having a for-profit company deciding on a yearly basis how much and how a portion of its profits will be committed to charitable practices, the structure of the Patagonian Purpose Trust and the Holdfast Collective codifies the commitment. “In our model, the entity that is receiving the economic value doesn’t have a vote, and the entity that has the vote gets very little economic value. There’s no incentive for Patagonia to ever make a decision that isn’t aligned with ensuring the purpose of the company going forward,” Curtis said.

But when the founder and his family are no longer in control of Patagonia, there will be the issue of how the board of directors of the for-profit business is selected and run. “That will evolve, the board, and right now it is the family and its closest advisors,” Gellert said. But he added that no better option surfaced during a multi-year process to choose the best option for the future of the business. The company looked at a public offering, or selling stakes to investors, “but we would have lost control,” he said. “We had very little confidence in meetings with quite a few investors that the integrity would be protected.”

While this structure can be an option for both family and non-family controlled firms, Bennedsen said it works particularly well for family entrepreneurs who do not want to transition the firms within the family, and do not want to go public or sell the legacy firm.   

But expect the push and pull between profits and purpose to persist in any corporate undertaking.

“The tension between growth and environmental impact is one we know well,” Curtis said. “We would be ignoring our commitment to responsible growth if we just maxed out sales for the purpose of giving away more money.  Further, it is important to resist the assumption that our value comes from the money we give away. We don’t think about it like that,” he said. “Our value comes from being a for-profit business and a Benefit Corporation.”

“The challenge for his [Chouinard’s] family will be in later generations,” Pendergast said. “They will need to determine who will be the trustees of the shares held by the non-profit that will determine how that non-profit uses the proceeds they get from Patagonia. It is easy now because it appears he and his family are aligned in their goals. Further down the road, that could be more difficult.”

“At times there are some tensions,” Gellert said in his CNBC interview. “But the default for Patagonia is purpose. Patagonia needs capacity and profit, to take care of its people, to expand, to keep the supply chain moving, and that is all an important layer, but we want it to be better, and to continue to be innovative.”

Retail companies and their wares are replete with tales of the enthusiastic farmers who picked the beans for the expensive cappuccino and the sustainability of a particular bag, all of which helps the consumer to feel less like a mere consumer and more like a conscious buyer whose choices are making a difference. But there is reasonable cynicism and altruism fatigue in response to corporate sustainability branding. Nevertheless, “much of the Patagonia model is repeatable,” Whelan said.

The company is already a B Corp, has been a leader in sustainability practices across issues including its workforce and environmental footprint, and built a successful brand while upholding these values. “The fact that it was able to become and sustain a $3 billion business is a proof point of the business value of sustainability and the potential of stakeholder capitalism to be financially viable,” Whelan said. “The ‘giving away’ of the company may be an anomaly, but the sustainable and responsible business model is one that we are already seeing replicated.”

“The idea of committing to ESG goals and at the same time making profit is not a paradox anymore,” Bennedsen said.

New global climate deal struck at conference in Egypt

Climate reparations, or “loss and damage” funding, is a highly divisive and emotive issue that is seen as a fundamental question of climate justice.

Sean Gallup | Getty Images News | Getty Images

Government ministers and negotiators from nearly 200 countries finally secured an agreement Sunday aimed at keeping a critically important global heating target alive.

The new political deal reaffirms efforts to limit global temperature rise to the crucial temperature threshold of 1.5 degrees Celsius above pre-industrial levels and the creation of a new “loss and damage” fund that would compensate poor nations that are victims of extreme weather worsened by climate change.

The two-week-long COP27 climate summit took place in Egypt’s Red Sea resort town of Sharm el-Sheikh against a backdrop of increasing extreme weather events, geopolitical conflicts and a deepening energy crisis.

Delegates struggled to build consensus on an array of issues, even as a flurry of U.N. reports published ahead of the conference made clear just how close the planet is to irreversible climate breakdown.

The scale of division between climate envoys saw talks run beyond Friday’s deadline, with campaigners accusing the U.S. of playing a “deeply obstructive” role by blocking the demands of developing countries. The final agreement was reached in the early hours of Sunday morning following tense negotiations throughout the night, with many delegates exhausted by the time the deal was announced.

Some of the major sticking points included battles over whether all fossil fuels or just coal should be named in the decision text and whether to set up a “loss and damage” fund for countries hit by climate-fueled disasters.

The highly divisive and emotive issue of loss and damage dominated the U.N.-brokered talks and many felt the success of the conference hinged on getting wealthy countries to agree to establish a new fund.

The summit made history as the first to see the topic of loss and damage funding formally make it onto the COP27 agenda. The issue was first raised by climate-vulnerable countries 30 years ago.

Lifting hopes of a breakthrough on loss and damage thereafter, the European Union said late Thursday that it would be prepared to back the demand of the G-77 group of 134 developing nations to create a new reparations fund.

The proposal was welcomed by some countries in the Global South, although campaigners decried the offer as a “poison pill” given the bloc said it was only willing to provide aid to “the most vulnerable countries.”

Rich countries have long opposed the creation of a fund to address loss and damage and many policymakers fear that accepting liability could trigger a wave of lawsuits by countries on the frontlines of the climate emergency.

A big new Exxon Mobil climate deal that got assist from Joe Biden

Exxon Mobil inks first carbon capture deal

Could it be that Big Oil’s next big thing got a big assist from Joe Biden?

Maybe, if carbon capture and storage is indeed as big a deal as ExxonMobil’s first-of-its-kind deal to extract, transport and store carbon from other companies’ factories implies.

The deal, announced last month, calls for ExxonMobil to capture carbon emitted by CF Industries‘ ammonia factory in Donaldsonville, La., and transport it to underground storage using pipelines owned by Enlink Midstream. Set to start up in 2025, the deal is meant to herald a new stage in dealing with carbon produced by manufacturers, and is the latest step in ExxonMobil’s often-tense dialogue with investors who want oil companies to slash emissions.

The Inflation Reduction Act, passed in August, may determine whether deals like Exxon’s become a trend. The law expands tax credits for capturing carbon from industrial uses in a bid to offset the high up-front costs of plans to capture carbon from places like CF’s plant, as other tax credits in the law lower costs of renewable power and electric cars. 

The Inflation Reduction Act and Big Oil

The law may help oil companies like ExxonMobil build profitable businesses to replace some of the revenue and profit they’ll lose as EVs proliferate. Though the company isn’t sharing financial projections, it has committed to investing $15 billion in CCS by 2027 and ExxonMobil Low-Carbon Solutions president Dan Ammann says it may invest more.

“We see a big business opportunity here,” Ammann told CNBC’s David Faber. “We’re seeing interest from companies across a whole range of industries, a whole range of sectors, a whole range of geographies.”

The deal calls for ExxonMobil to capture and remove 2 million metric tons of carbon dioxide yearly from CF’s factory, equivalent to replacing 700,000 gasoline-powered vehicles with electric versions. 

Each company involved is pursuing its own version of the low-carbon industrial economy. CF wants to produce more carbon-free blue ammonia, a process that often involves extracting ammonia’s components from carbon-laden fossil fuels. Enlink hopes to become a kind of railroad for captured CO2 emissions, calling itself the would-be “CO2 transportation provider of choice” for an industrial corridor laden with refineries and chemical plants. 

An industrial facility on the Houston Ship Channel where Exxon Mobil is proposing a carbon capture and sequestration network. Between this industry-wide plan and its first deal for another company’s CCS needs, ExxonMobil is hoping that its low-carbon business quickly scales to a legitimate source of revenue and profit.

CNBC

Exxon itself wants to develop carbon capture as a new business, Amman said, pointing to a “very big backlog of similar projects,” part of the company’s pledge to remove as much carbon from the atmosphere as Exxon itself emits by 2050.  

“We want oil companies to be active participants in carbon reduction,” said Julio Friedmann, a deputy assistant energy secretary under President Obama and chief scientist at Carbon Direct in New York. “It’s my expectation that this can become a flagship project.”

The key to the sudden flurry of activity is the Inflation Reduction Act.

“It’s a really good example of the intersection of good policy coming together with business and the innovation that can happen on the business side to tackle the big problem of emissions and the big problem of climate change,” Ammann said. “The interest we are seeing, the backlog, are all confirming this is starting to move and starting to move quickly.”

The law increased an existing tax credit for carbon capture to $85 a ton from $45, Goldman said, which will save the Exxon/CF/Enlink project as much as $80 million a year. Credits for captured carbon used underground to enhance production of more fossil fuels are lower, at $60 per ton.

“Carbon capture is a big boys’ game,” said Peter McNally, global sector lead for industrial, materials and energy research at consulting firm Third Bridge. “These are billion-dollar projects. It’s big companies capturing large amounts of carbon. And big oil and gas companies are where the expertise is.” 

Goldman Sachs, and environmentalists, are skeptical

A Goldman Sachs team led by analyst Brian Singer called the law “transformative” for climate reduction technologies including battery storage and clean hydrogen. But its analysis is less bullish when it comes to the impact on carbon capture projects like Exxon’s, with Singer expecting more modest gains as the law accelerates development in longer-term projects. To speed up investment more, companies must build CCS systems at greater scale and invent more efficient carbon-extraction chemistry, the Goldman team said.

Industrial uses are the third-largest source of greenhouse gas emissions in the U.S., according to the EPA. That’s narrowly behind both electricity production and transportation. Emissions reduction in industrial uses is considered more expensive and difficult than in either power generation or car and truck transport. Industry is the focus for CCS because utilities and vehicle makers are looking first to other technologies to cut emissions.

Almost 20 percent of U.S. electricity last year came from renewable sources that replace coal and natural gas and another 19 percent came from carbon-free nuclear power, according to government data. Renewables’ share is rising rapidly in 2022, according to interim Energy Department reports, and the IRA also expands tax credits for wind and solar power. Most airlines plan to reduce their carbon footprint by switching to biofuels over the next decade.

More oil and chemical companies seem likely to get on the carbon capture bandwagon first. In May, British oil giant BP and petrochemical maker Linde announced a plan to capture 15 million tons of carbon annually at Linde’s plants in Greater Houston. Linde wants to expand its sales of low-carbon hydrogen, which is usually made by mixing natural gas with steam and a chemical catalyst. In March, Oxy announced a deal with a unit of timber producer Weyerhauser. Oxy won the rights to store carbon underneath 30,000 acres of Weyerhauser’s forest land, even as it continues to grow trees on the surface, with both companies prepared to expand to other sites over time.

Still, environmentalists remain skeptical of CCS.

Tax credits may cut the cost of CCS to companies, but taxpayers still foot the bill for what remains a “boondoggle,” said Carroll Muffett, CEO of the Center for International Environmental Law in Washington. The biggest part of industrial emissions comes from the electricity that factories use, and factory owners should reduce that part of their carbon footprint with renewable power as a top priority, he said.

“It makes no economic sense at the highest levels, and the IRA doesn’t change that,” Muffett said. “It just changes who takes the risk.” 

Friedman countered by saying economies of scale and technical innovations will trim costs, and that CCS can reduce carbon emissions by as much as 10 percent over time.

“It’s a rather robust number,” Friedmann said. “And it’s about things you can’t easily address any other way.” 

The ‘world’s largest floating wind farm’ produces its first power

Offices of Equinor photographed in Feb. 2019. Equinor is one of several companies looking at developing floating wind farms.

Odin Jaeger | Bloomberg | Getty Images

A facility described as the world’s largest floating wind farm produced its first power over the weekend, with more turbines set to come online before the year is out.

In a statement Monday, Norwegian energy firm Equinor — better known for its work in the oil and gas industry — said power production from Hywind Tampen’s first wind turbine took place on Sunday afternoon.

While wind is a renewable energy source, Hywind Tampen will be used to help power operations at oil and gas fields in the North Sea. Equinor said Hywind Tampen’s first power was sent to the Gullfaks oil and gas field.

“I am proud that we have now started production at Hywind Tampen, Norway’s first and the world’s largest floating wind farm,” Geir Tungesvik, Equinor’s executive vice president for projects, drilling and procurement, said.

“This is a unique project, the first wind farm in the world powering producing oil and gas installations.”

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Hywind Tampen is located around 140 kilometers (86.9 miles) off the coast of Norway, in depths ranging from 260 to 300 meters.

Seven of the wind farm’s turbines are slated to come on stream in 2022, with installation of the remaining four taking place in 2023. When complete, Equinor says it will have a system capacity of 88 megawatts.

Alongside Equinor, the other companies involved in the project are Vår Energi, INPEX Idemitsu, Petoro, Wintershall Dea and OMV.

Equinor said Hywind Tampen was expected to meet around 35% of the Gullfaks and Snorre fields’ electricity demand. “This will cut CO2 emissions from the fields by about 200,000 tonnes per year,” the company added.

The use of a floating wind farm to help power the production of fossil fuels is likely to spark some controversy, however.

Fossil fuels’ effect on the environment is considerable and the United Nations says that, since the 19th century, “human activities have been the main driver of climate change, primarily due to burning fossil fuels like coal, oil and gas.”

Speaking at the COP27 climate change summit in Sharm el-Sheikh, Egypt, last week, the U.N. Secretary General issued a stark warning to attendees.

“We are in the fight of our lives, and we are losing,” Antonio Guterres said. “Greenhouse gas emissions keep growing, global temperatures keep rising, and our planet is fast approaching tipping points that will make climate chaos irreversible.”

An emerging industry

Equinor said the turbines at Hywind Tampen were installed on a floating concrete structure, with a joint mooring system. One advantage of floating turbines is that they can be installed in deeper waters than fixed-bottom ones.

Back in 2017, Equinor started operations at Hywind Scotland, a five-turbine, 30 MW facility it calls the world’s first floating wind farm.

Since then, a number of major companies have made moves in the sector.

In Aug. 2021, RWE Renewables and Kansai Electric Power signed an agreement to assess the feasibility of a “large-scale floating offshore wind project” in waters off Japan’s coast.

In Sept. of that year, Norwegian company Statkraft announced a long-term purchasing agreement relating to a 50 MW floating wind farm — which it has also dubbed the “world’s largest” — off the coast of Aberdeen, Scotland.

And a few months later, in Dec. 2021, plans for three major offshore wind developments in Australia — two of which are looking to incorporate floating wind tech — were announced.

Earlier this year, meanwhile, the White House said it was targeting 15 gigawatts of floating offshore wind capacity by the year 2035.

“The Biden-Harris Administration is launching coordinated actions to develop new floating offshore wind platforms, an emerging clean energy technology that will help the United States lead on offshore wind,” a statement, which was also published by U.S. Department of the Interior, said at the time.

As well as the 15 GW ambition, a “Floating Offshore Wind Shot” aims to reduce the costs of floating technologies by over 70% by the year 2035.

“Bringing floating offshore wind technology to scale will unlock new opportunities for offshore wind power off the coasts of California and Oregon, in the Gulf of Maine, and beyond,” the statement added.

How wind power is leading America's energy transition

Taxation is a blunt instrument, IATA chief Willie Walsh says

IATA: Environmental taxes are a 'blunt instrument' to provide a sustainable footprint in aviation

The aviation industry requires more carrot and less stick going forward to become more sustainable, according to the director general of the International Air Transport Association.

Speaking at CNBC’s Sustainable Future Forum on Friday, Willie Walsh was asked if subsidies and tax breaks to encourage investments into cleaner energy were more effective than firms or consumers being taxed for emitting higher levels of carbon.

“Quite honestly, all of the evidence that we have available shows that the carrot is far more effective than the stick,” Walsh replied.

Expanding on his point, Walsh went on to describe taxation as being “a very blunt instrument — in many cases, actually, it would make our industry less efficient.”

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“I don’t think it would stop the number of planes flying, it would definitely reduce the number of people flying on the planes,” he added. “And that would be a silly thing to do.”

“What we need to do is to ensure that our planes are more full rather than less full, and to provide incentives to produce sustainable aviation fuels which will make a genuine impact on the environmental footprint of aviation.”

The European Union is currently looking to revise its energy taxation directive. Among other things, this would see both maritime and aviation fuels taxed. 

Net-zero goals

In Oct. 2021, IATA member airlines passed a resolution “committing them to achieving net-zero carbon emissions from their operations by 2050.”

Given the fact it’s a crucial cog in the global economy, conversations about aviation and its effect on the environment will undoubtedly take place at the COP27 climate change conference being held in Sharm el-Sheikh, Egypt.

This is because despite its importance, aviation has been described by the World Wildlife Fund as “one of the fastest-growing sources of the greenhouse gas emissions driving global climate change.”

The WWF also says air travel is “currently the most carbon intensive activity an individual can make.”

During his appearance at the Sustainable Future Forum, IATA’s Walsh was asked how difficult it was for the airline industry to decarbonize compared to others.

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“It’s very difficult … we account for about 2.4% of manmade CO2 today,” he said.

“We recognise however, as other industries decarbonize — and for many of them there are relatively simple pathways to decarbonization — our contribution will increase, because we will continue to be dependent on kerosene to power our aircraft,” he added.

“Now, technology will provide some solutions but … we’re not prepared to depend on something being developed in the future, we recognize we have to do something now.”

“So for us, the key to our goal is the use of sustainable aviation fuels — the science there is proven.”

“What we’ve got to do is turn what is very low levels of production of sustainable fuels into widespread availability.”

This, Walsh argued, represented a real opportunity not only for the industry but “countries around the world to start producing a sustainable jet fuel.”

Such a move would “address the environmental issues but … also create jobs.”

Gatherings like COP27 'are hugely important,' aviation CEO says

The overarching idea behind sustainable aviation fuels is that they can be used to reduce an aircraft’s emissions.

In terms of content, aircraft maker Airbus has described SAF as being “made from renewable raw material.” It’s stated that the most common feedstocks “are crops based or used cooking oil and animal fat.”

There are major concerns in some quarters that an increased uptake of SAF could, among other things, result in significant deforestation and create a squeeze on crops crucial to the production of food, an issue Walsh touched upon earlier this year.

Back at the Sustainable Future Forum, Walsh struck an optimistic tone about his sector’s prospects going forward, whilst acknowledging that work lay ahead.

“I think the fact that we are committed to net zero by 2050 is important, but demonstrating that we have a credible pathway to … net zero is equally important,” he said.

“And people are beginning to recognize that through sustainable aviation fuels and other initiatives … we can achieve that clear goal.”

Investing in innovation the important part

Microsoft co-founder Bill Gates on Tuesday addressed the issue of businesses that exaggerate environmental, social and governance credentials, arguing that though corporate sustainability credentials are often controversial, they are still critical for assessing whether to invest in a company.

“The part that I believe in is where you accelerate the innovation. To me, it’s not so much who you don’t invest in but who you do invest in,” Gates said during an interview with CNBC’s Diana Olick.

The comments come after the Securities and Exchange Commission earlier this year proposed new rules that would prevent misleading or deceptive claims by U.S. funds on their ESG qualifications and increase disclosure requirements for those funds.

Gates, who is also the founder of Breakthrough Energy Ventures, a leading climate technology investment company, said there is a modest number of companies that will drive down the cost of choosing clean technology over alternatives that emit more planet-warming greenhouse gases.

“I give people strong points where they’re making those investments and becoming customers of those green technologies,” Gates said. “The ‘E’ part — lot of controversy, but there is a way to measure it, and it should be one of the factors people look at when they invest in companies.”

Global ESG funds received a record $649 billion in investments in 2021 through Nov. 30, up from $542 billion in 2020 and $285 billion in 2019, according to financial services firm Refinitiv Lipper. Definitions of ESG often vary and difficult to measure, creating issues for businesses looking to boast their sustainability credentials to investors.

  • “The whole measurement thing is a little immature,” Gates said of ESG criteria. “The field is going to get mature on that. But having that environmental incentive — a lot of investors really do want to get that information.”