"They can see clearly that something needs to be done about climate change," said Andrew Grant, head of oil and gas for Carbon Tracker, a think tank that focuses on the financial and market implications of climate change. "An increasing numbers of countries around the world have set zero targets .... we're going to need other alternatives and less fossil fuels, and companies understand that, and they want to build in some future-proofing ... to build out some of those energy sources. They're stuck between that and the fact they have a very long history of producing oil and gas fields," Grant said.
A report from Rystad Energy forecasts the global number of drilled oil wells to be at 55,350, the lowest number of wells since the early 2000s and a 23% decline in the number of wells drilled in 2019. Even further, North American drilling is expected to remain 50% lower than last year's levels.
"A lot of pressure is coming through from all stakeholders, consumers, and civil society, but also investors, especially in the past few years. Investors realize there is a risk and they want to be reassured. It has become clear that oil and gas companies have underperformed in the market. Investors realize that the world is going to decarbonize," Grant said.
For Dominion, the business model is changing more quickly.
"They made a decision to exit this midstream pipeline business because they basically felt that it [renewable energy] would be a better business, it would basically accelerate the transition of the company to clean energy, For them, it's a pretty big strategic bet they made," Fleishman said. "They're making a bet the new model of the company will have better growth and better financial strength and more focus on clean energy will get a higher valuation."
Even as he increases his pipelines footprint, Buffett's utility has been making a considerable shift. It is already one of the biggest wind energy producers in the U.S. through its MidAmerican Energy utility affiliate based in Iowa, while its NV Energy in Nevada plans to increase its renewable generation to a percentage in the high 40s by 2023, mostly using geothermal and solar power.
Some make the case that the Buffett pipeline buy is about electric vehicles playing a bigger role in the future. But in a broader sense, Buffett has parted ways with a strict decarbonization investing philosophy in a core belief that he outlined to Berkshire shareholders who were concerned about climate change back in 2014. Buffett said that whether the investment decision was about Berkshire Hathaway or "virtually all the companies I can think of," he didn't believe that "climate change should be a factor in the decision-making process."
—Additional reporting by Eric Rosenbaum