WHEREAS: Many policymakers, investors and companies have converged on goals including the need to limit global temperature increase to 1.5° C and to reach net zero global greenhouse gas (GHG) emissions by 2050.
The International Energy Agency’s (IEA) Net Zero 2050 Roadmap (NZE) describes an energy sector path for net zero GHG emissions. The IEA claims no investment in new fossil supply projects is needed in a net zero scenario (NZE): “As a share of total energy supply, [fossil fuels] fall from 80% in 2020 to just over 20% in 2050.”
In line with such assumptions, Berkshire Hathaway Energy (BHE), which is 92% owned by Berkshire Hathaway, has invested $37 billion in renewable energy generation and expects to complete its transition to net zero emissions by 2050.43 According to reports, “BHE is moving rapidly to shift its power mix to wind and solar….Berkshire will soon get 45% of its power from wind, solar, geothermal energy and hydropower….”44 In fact, “More than 40% of BHE’s owned generation capacity in 2022 came from wind and solar alone.”45 It has closed 16 coal-fired plants in recent years and has announced closing plans for 16 additional plants.46
These investment decisions presume the IEA NZE assumptions are true, but it is unclear what, if any, analysis Berkshire Hathaway has done to protect company assets should NZE prove false.
A 2023 study by the Energy Policy Research Foundation (EPRF) found that net zero advocates have misconstrued the IEA’s position on new oil and gas investment, and that the IEA has made questionable assumptions and milestones for NZE about government policies, energy and carbon prices, behavioral changes, economic growth, and technology maturity.47
The EPRF study found, “Oil and gas play irreplaceable roles in modern civilization that are not reproducible with low-carbon alternatives. The attempt to substitute them with inferior, less efficient, energy sources will have enormous micro- and macroeconomic consequences and profound geopolitical implications.”48
NZE advocates speak in terms of fossil fuels as stranded assets, but no consideration has been given as to whether the true stranded assets might be the assets spent on expensive renewable energy options based on faulty assumptions. Should the EPRF’s study ring true, our Company stands to lose tens of billions of dollars in renewable energy investments, plus the costs of reverting back to reliable energy sources. Additionally, it appears that most countries are not really going to outlaw reliable and affordable energy, further making current net-zero stranded-asset theory non-sensical.