Committee of Chief Risk Officers 8000 Research Forest Dr. info@ccro.org STE 115 #278 http://ccro.org The Woodlands, TX 77380 11 Advancing Our Energy Industry’s Risk &Compliance Best Practices from the Permian to LNG and move it to China and India. But that's not at all what these policies are doing. With these types of policies, you've mandated-out a technology rather than letting markets decide the best way. CCRO Member: This has been one of my complaints, and it's one of those questions I think for the CCRO’s ESG working group as well. I worked on a biofuels project that converts woody biomass to synthetic aviation fuel. The economics were entirely driven by this rube goldberg structure of LCFS, you know. What's that market doing? It's volatile. It's up to 300, it's down to 50. And then RINs ,and like 70% of the revenue was LCFS and RINs. Now, if you ran a $50 a ton carbon tax through it, it would've been a successful project. But instead, what they did is put in place tax credits for sustainable aviation fuel that lasts for four years and then expire. Okay, it's going to take five years to build the project! Nobody's going to finance that. I just think we have all these Rub Goldberg approaches to carbon, while you have guys like Art Laffer saying, let's have a carbon tax. Andy Roehr: Well, the other folks who were talking about a carbon tax come into play if you want to move anything into Europe. Their border tax on carbon is one of those things that is getting people's attention. So, if I don't pay for it here, so why do we need a market here? Well, if I don't pay it here or somehow get credit for it, I'm going to get whacked when I take my product into Europe, To our earlier point about working at cross purposes, now we're laying one more layer on top of something. It's just going to be really hard to unwind. I do hear that for some folks, one scenario does worry them as possibly playing out. Call it a global carbon regime without an offsetting unambiguous US carbon tax or something like one. CCRO Member: Well, as, as a sleepy utility that began a transformational project long before the IRA started and even made some public announcements on some very large ones. The thing that I lose most sleep at as the risk manager is not so much the market price volatility but is starting a couple of billion-dollar projects and having the rug pulled out from under us. Or worse, going through that five-year credit and then not having a secondary market to lay off the rest of the risked investment. The thing that I lose most sleep over as the risk manager is …having the rug pulled out from under us.