Dan Romito, Contributor

As anticipated, the political landscape in the U.S. is anything but calm. The next four months will undoubtedly produce a mixture of tension, anxiety and frustration. At the very least, recent polls indicate that Donald Trump’s probability of retaking the White House has slightly improved. Nothing is guaranteed, but Trump’s campaign is experiencing a distinct degree of positive momentum, mainly because Kamala Harris never even cleared the Iowa caucuses the last time she campaigned for president.

We urge the broader oil and gas space to take this momentum with a grain of salt. We increasingly notice a premature sense of relief beginning to permeate the energy sector, which is troubling.

The Supreme Court’s overturning of the Chevron deference doctrine is also a positive trend for the industry, and when combined with the Trump momentum, it is reasonable for people to feel more optimistic about the White House returning to a Republican administration—and sensible policy. Unfortunately, some of these convictions have introduced a notion that most environmentally focused mandates passed over the last three years will be wiped away. We cannot stress hard enough that this belief is incredibly dangerous and short-sighted.

Irrespective of the political landscape, it’s essential to recognize the pivotal role that environmental non-government organizations (NGOs) play in emissions oversight. The Supreme Court’s ruling has only fueled the motivation and strengthened the convictions of anti-fossil fuel groups.

The sector must understand that these well-funded and sophisticated organizations have effectively been “deputized” as the newly minted emissions police and technically, they do not have to answer to anybody. Their influence is significant, their financial resources are substantial and their activities should be constantly monitored. Ignoring their actions will lead to severe consequences. 

The financial and technological resources at the disposal of environmental NGOs are staggering.  The Sierra Club, Environmental Defense Fund and Greenpeace collectively hold over $1 billion in assets and generate annual revenues exceeding $100 million.

These groups are dedicated to implementing advanced technologies to continuously track the energy sector, particularly among smaller private operators. MethaneSAT, CarbonTracker, and the ClimateWorks database are prime examples of how regulation, oversight and monitoring have been permanently outsourced and now function as an unchecked extension of the executive branch.

The energy sector must not over-conflate the political scene with the regulatory landscape. Of course, there is overlap, but it is diverging. According to ClimateWorks, roughly 124 climate-focused organizations and over 60,000 trained climate activists are “assigned” to monitoring fossil fuel companies. This arrangement showcases how there are now essentially two levels of oversight—government and the deputized NGO space. A change in administration will not deter, let alone slow, the latter. 

As we consider the potential outcomes of the U.S. presidential election, it’s essential to understand the implications for the energy sector. If Harris wins the presidency, we can expect an increase in the existing regulatory burden for energy. On the other hand, if Trump wins, we may see a rise in deputized NGOs. This is no time for the energy industry to be complacent. 

More understanding and analysis can help us prepare for the potential changes and challenges that lie ahead. In practice, these NGOs will operate in a concerted fashion. Environmental NGO technology, i.e., MethaneSAT, will continuously monitor the space. Once a potential detection occurs, it will be recorded in an aggregated database that will eventually evolve into a publicly available dataset. This dataset will emerge as a “scoring” apparatus, i.e., MSCI, and will be utilized to influence policy, capital markets and public narrative.    

No, I am not wearing a tinfoil hat while writing this article. My team and I are observing this dynamic in real time. As always, the increased need for the energy space to improve the quantitative tracking of material non-financial metrics is critical.

Implementing an effective defense against this growing threat inherently means going on the data offensive and ensuring that all individual material non-financial metrics are tight. Unfortunately, the reality is that the energy space will be continuously monitored by obsessive groups that would love nothing more than to permanently put oil and gas out of business. Let’s not fuel their fire.

Dan Romito is consulting partner for Pickering Energy Partners.

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