Buffett Handing Complicated Climate Legacy to Berkshire Energy Head

akuo8}o6d42(3as2qvl7}(ab_media_dl_1.png BloombergNEF

Article content

(Bloomberg) — Warren Buffett will exit the CEO chair at Berkshire Hathaway Inc. later this year with a complicated climate legacy.

Article content

Article content

The Omaha-based investor runs a conglomerate that is a clean energy heavyweight, with wind and solar assets across the US, and he has written that climate change is “highly likely” a “problem for the planet.” Yet Berkshire is also a major investor in oil, gas and coal — a position poised to endure well after the 94-year-old retires.

Article content

Article content

Buffett has been opportunistic, said Ethan Zindler, who leads country and policy research at BloombergNEF. “He’s obviously one of the world’s most legendary investors because he sees opportunities. Some have been climate-coincidental, and some have not.”

Article content

Article content

Berkshire, of course, has invested in solar and wind. Its MidAmerican Energy Co. built a big portfolio of wind farms to help power Iowa and parts of nearby states. Those turbines were responsible for more than 60% of the utility’s generation capacity last year.

Article content

Over the weekend at Berkshire’s annual shareholder meeting, Greg Abel — Buffett’s anointed successor and the company’s energy boss — highlighted $16 billion in renewables investments in Iowa to retire five coal units. But he added that five other such units were still needed “to keep the system stable. We cannot have a Spain-Portugal situation.” The crowd applauded.

Article content

While Buffett has written about the risks of climate change, Berkshire has over the past decade made investments in Occidental Petroleum Corp. and Chevron Corp. despite fossil fuels being a major driver of greenhouse gas emissions. The company also made a deal for Dominion Energy Inc.’s gas assets in mid-2020. It was a contrarian bet at a time when the presidential candidacy of climate-minded Joe Biden was ascendant.

Article content

Article content

Edward Jones analyst Jim Shanahan surmised then that Berkshire wanted “to be bigger in renewables, but it’s going to take time.” The Dominion deal was “a bet that the future doesn’t come as fast as some people think.”

Article content

Berkshire isn’t alone in that regard: ESG investing has fallen out of favor while fossil fuels have regained some traction. The war in Ukraine underscored the importance of energy security — and the AI boom is driving a surge of new electric demand, which has led some power companies to extend the lives of old and dirty coal-fired plants.

Article content

“It doesn’t seem like ESG investing is too high a priority on their list,” Matthew Palazola, an analyst at Bloomberg Intelligence, said on Monday of Berkshire. “They would view energy as a necessity for society.”

Article content

During the annual meeting Saturday, Abel said the company works with states on the paths they want to chart — and plans that honor federal standards. Berkshire didn’t respond to a request for comment.

Article content

In 2022, Abel touted Berkshire’s businesses as “exceptionally well positioned to deliver on ever-changing customer expectations regarding sustainability.” It was months before Biden signed the Inflation Reduction Act, the landmark US climate law.