Recapping Buffett’s Q&A: Climate change, Wind Energy, and Solar Energy–Excerpts

Source: By Russell Hubbard, Barbara Soderlin and Cole Epley, Omaha World-Herald staff writers • Posted: Monday, May 2, 2016

Sunday, May 1, 2016, Omaha Nebraska

Climate Change

4:19 p.m. update: A shareholder motion on climate change was defeated Saturday at the annual Berkshire Hathaway meeting in Omaha.

The Nebraska Peace Foundation, which owns one class A share of Berkshire, succeed in putting to a vote a motion requiring the company to compile a report on the risks to its insurance subsidiaries posed by climate change.

“Humans are changing the atmosphere,” climate scientist James Hansen told the board during a short pitch supporters were allowed to make.

Hansen also recommended that Berkshire endorse a tax on fossil fuels to make them more expensive and lead to their disuse in favor of renewable sources such as wind power, a field in which Berkshire Hathaway Energy is already a leader via massive turbine farms in Iowa.

Berkshire management recommended shareholders vote against the proposal, which they did, 531,724 to 69,114.

Buffett said during the meeting the company has already provided an extensive analysis in company reports. He also said he agrees that climate change is an important topic that merits serious action by companies and governments.

Amid $3.6 billion push into Iowa wind energy, Berkshire says it’ll do more

10:47 a.m. update: Even though Warren Buffett and Charlie Munger differ on their motivations for supporting renewables, you can bet that Berkshire’s energy group will continue pursuing continued development of renewable energy within their generating portfolios.

That push is reliant on federal government subsidies designed to offset carbon emissions and effectively mitigate contributions to climate change, Buffett said.

Wind power will become an even larger driver of the Berkshire Hathaway Energy’s growth. Earlier this month, the Iowa-based utility announced plans to build out an additional 2,000 megawatts of wind power in that state at a cost of $3.6 billion.

Munger said the preservation of hydrocarbon fuel that would otherwise go to the energy industry will be an important future feedstock for chemical production.

Despite spending his life in a public power state – Nebraska’s power generation has come from public utilities since the 1930s – Buffett said there’s a certain irony in that particular business model being not only a source of pride for the state, but also a source of cost.

“The wind doesn’t start blowing at the Missouri River. That wind could be captured in Nebraska and so far it really hasn’t been,” Buffett said.

The costs to Nebraska ratepayers – and others in states served by utilities with lesser renewable portfolios than BHE? Money from their bank accounts for higher rates in addition to potential jobs and economic development.

Companies like Google and Facebook have planted server farms in Iowa because of that state’s share of renewable energy, Buffett said.

On Nevada solar-panel controversy, 99 percent shouldn’t subsidize 1 percent, Buffett says

11:18 a.m. update: When the Nevada Public Utilities Commission in February decided to levy fees on solar panel users to account for infrastructure costs, the move caused a stir among environmental groups, local ratepayers and even heavy hitters like Elon Musk and Hillary Clinton.

Berkshire’s NV Energy is the biggest utility in Nevada and has been accused of giving would-be solar rooftop users a disincentive to curb greenhouse gas emissions by charging higher fees.

But it’s not fair for the majority of that state’s electricity consumers to subsidize the rooftop installations of the few, Buffett said. Excess energy generated by rooftop solar panels in Nevada was being sold back into the market at rates far above the production costs for companies like NV Energy; the PUC decision erased that advantage.

Said Buffett: “It’s a question of whether you wish for the 99 percent (of electricity customers) to subsidize the 1 percent (of customers with rooftop solar). The Nevada Public Utilities Commission … decided they did not believe the 99 percent should be subsidizing the 1 percent.”

The decision was fraught with controversy, considering that companies including SolarCity, of which Tesla Motors’ Musk is a major shareholder, responded by laying off hundreds of employees and shuttering Nevada operations.