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BlackRock CEO touts natural gas, 'energy pragmatism'

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Illustration: Sarah Grillo/Axios

BlackRock CEO Larry Fink said countries need to pursue "energy pragmatism" that incorporates natural gas alongside clean technologies like renewables and batteries.

Why it matters: The chief's annual letter Tuesday morning indicates that the world's largest asset manager is pushing forward on its energy-transition investments, even as it remains committed to fossil fuels.

Catch up quick: The top of Fink's letter this morning addresses America's retirement crisis. The rest dives into infrastructure investment and the energy transition.

Big picture: Fink argues for investing in climate tech companies such as Antora, which is developing a thermal battery, while also backing natural gas assets to make sure the grid has a reliable source of 24/7 electricity.

  • "Texas runs on 28% renewable energy — 6% more than the U.S. as a whole. But without an additional 10 gigawatts of dispatchable power, which might need to come partially from natural gas, the state could continue to suffer devastating brownouts," he writes.
  • The need to upgrade global infrastructure to both advance the energy transition while ensuring energy security was behind the company's $12.4 billion acquisition of Global Infrastructure Partners, Fink writes.

Between the lines: Fink is at least partly responding to GOP allegations that BlackRock is shortchanging shareholders by focusing too much on clean energy and other ESG principles.

  • The Texas Permanent School Fund, for example, last week withdrew $8.5 billion from BlackRock, making it the latest fund in the Republican-led state to pull away from the asset manager over practices concerning environmental, social, and governance-driven investing.

"Governments have been pursuing energy security since the oil crisis of the 1970s ... so this is not a new trend," Fink writes. "When I wrote my original 2020 letter about sustainability, I also wrote to our clients that countries would still need to produce oil and gas to meet their energy needs."

Alan's thought bubble: Fink's letter doesn't mention data centers, but they've unleashed a new era of soaring energy demand — meaning natural gas is here to stay for the foreseeable future.

  • Gas is better than coal. But gas assets are multi-decade investments — meaning each that gets a green light now will lock in emissions for decades to come.
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