Norges Bank PX14A6GLetter to shareholders

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

NOTICE OF EXEMPT SOLICITATION

Submitted Pursuant to Rule 14a-6(g)

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Written materials are submitted pursuant to Rule 14a-6(g)(1) promulgated under the Securities Exchange Act of 1934. This is not a solicitation of authority to vote your proxy. Norges Bank is not asking for your proxy card and will not accept proxy cards if sent. DO NOT send us your proxy card. To vote your proxy, please follow the instructions on your proxy card.

The views expressed are those of Norges Bank. The information provided in this communication may not be relied upon as investment advice, nor be considered as a recommendation to buy or sell shares of Kinder Morgan, Inc. This communication is for informational purposes only and should not be construed as a research report. The cost of this filing is being borne entirely by Norges Bank.

(Written material follows on next page)

To: Kinder Morgan, Inc Shareholders

Subject: VOTE FOR Item 5: Establish GHG Emission Reduction Target

Annual Meeting: May 8, 2024

Contact: Tim Smith, Lead Investment Stewardship Manager, Norges Bank Investment Management, a division of Norges Bank – tim.smith@nbim.no

Dear fellow shareholders in Kinder Morgan, Inc,

In November 2023, Norges Bank filed a shareholder proposal at the company, Inc, requesting the adoption of an emission reduction target. We are grateful for the constructive and positive dialogue we have had with the Company, but decided to proceed with our proposal as we think the topic is sufficiently important that fellow shareholders should opine on it.

We take this opportunity to clarify our position on some of the topics the company’s board have raised in their opposing statement.

The Company underlines that it does not wish to set GHG emission reduction targets that are not reasonably achievable. The proposal text does not ask for this. On the contrary, the proposal does not define any ambition level or timelines, which it leaves entirely to management’s discretion. At minimum, a target can merely quantify current decarbonisation efforts and planned investments, e.g. due to the natural replacement rate of compressor stations.

The company have ruled out the possibility of pursuing electrification of their compressor fleet based on costs ‘which could exceed $20bn’ and lack of ‘currently available technology.’ While the Company’s estimate of an >$20bn cost is high in absolute terms, we would like to be clear that the proposal is not proposing that the company should abate 100% of their compressor emissions in a single program. Companies can and do execute emissions reductions over time, in a way that optimises for current equipment lives and their own customer’s plans.

Our own expectations on climate changeⁱ ask companies to disclose their abatement cost curves to allow investors to better understand how targets can be adopted and executed over time.

The company claims that their business is ‘critical to reducing overall global GHG emissions’ and that there is a need for a replacement of ‘existing coal generation with natural gas worldwide.’ We understand the role of LNG in the energy transition but believe this will be accompanied by a focus on minimising value chain emissions. Such focus on value chain emissions from LNG underpins the need for operational (scope 1 and 2) decarbonisation at the company.

The GHG benefit that comes from replacing coal with natural gas can make LNG a meaningful contributor to emissions reduction globally, but only if the lifecycle emissions from natural gas production and transport are managed.^ii iii

Where LNG exports do not necessarily displace existing coal generation and instead compete with other sources of gas, there is similar necessity to manage lifecycle emissions. In Europe for example, since Russia’s invasion of Ukraine, imports of LNG from the US have risen from 18.9bcm in 2021 to 56.2bcm in 2023. While this has had positive effects on energy security in Europe, it is not correct to characterise the change as displacing coal in electricity generation.^iv For there to be a benefit in GHG terms, lifecycle emissions from the imported LNG from the US need to be lower than those in the gas that it replaces or competes with.

One illustration of this can be seen in the UK. The UK government assesses US LNG’s carbon intensity at 78kgCO₂e/boe, meaning that although the US LNG only made up 14% of gas supply by volume (2022), this represented 35% of emissions.^v

There are already emerging signs of the global LNG industry moving towards an increased focus on lifecycle emissions. Chevron have a methodology that covers ‘emissions from wellhead-to-discharge terminal’^vi while energy consultant Wood Mackenzie have recently reported that US LNG is the most emissions intensive of the major global sources^vii, highlighting the potential for US exports to be disadvantaged if climate legislation is further tightened in major LNG markets.

More broadly, the energy industry globally understands the value of reducing operating emissions and so the carbon intensity of their delivered product. The Oil and Gas Decarbonisation Chater, established at COP28 in the UAE^viii establishes this by committing companies representing 40% of global oil and gas production to net zero operations by 2050. This included ExxonMobil, which has allocated >$10bn to scope 1 and 2 decarbonisation in their own business plan.^ix

In our analysis of the energy companies in Norges Bank’s portfolio, we were only able to find three energy companies without emission reduction targets from the companies that make up 70% of our financed emissions. We believe accordingly that the company has fallen behind both their specific peers and the industry’s direction of travel overall.

The Company states that compressor electrification ‘would simply exchange Scope 1 emissions for Scope 2 emissions.’

The carbon intensity of the US electric power sector has declined by ~35% since 2005^x and is expected to continue to decline based on the impact of the Inflation Reduction Act. The REPEAT project models a 77-79% reduction in GHG emissions from US electricity generation in the period from 2022-2035.^xi This means that at any point since 2005, a one for one swap of scope 1 for scope 2 emissions has, all else equal, enabled meaningful decarbonisation in the years beyond the switch. The same is likely to be true in the period to 2035. So any investments in electrification should be seen as enablers of long-term decarbonisation, not simply a straight switch.

Electrification also introduces the possibility of further active decarbonisation through either installation of on-site renewable generation of use of renewable power purchase agreements. While the availability of renewable PPAs varies by market, Texas is an active market for renewable power purchase agreements. Recent corporate examples include involved Meta, TotalEnergies, Ørsted^xii, Enel and EDP.

We note KMI’s concern that the SEC’s climate rules may pose increased ‘litigation and regulatory risk.’ Even though their implementation have been paused, we believe the inclusion of a safe harbour clause in the final rule mitigates this particular risk as it covers ‘transition plans, scenario analysis, the use of an internal carbon price, and targets and goals.’^xiii

Conclusion

In conclusion, we urge shareholders to vote FOR Item 5.

For further information, please contact Tim Smith at tim.smith@nbim.no.

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