Thomas Perrett
14 January 2022
US President Joe Biden at the COP26 climate summit.
Photo: Alan Harvey/UK Government
Thomas Perrett reports on the efforts of corporate lobbyists to stymie US President Joe Biden’s climate ambitions
Since he assumed office, US President Joe Biden has encountered significant obstacles blocking his proposed plan to decarbonise the US economy by the middle of the century.
West Virginia Senator Joe Manchin has consistently opposed the Build Back Better Act, which would have invested $555 billion in clean electricity and accelerated the reduction of methane emissions, and Arizona Senator Krysten Sinema has likewise resisted Biden’s climate spending plans.
Recently, fresh challenges have also emerged from coordinated, Republican-aligned interest groups. Corporate lobbyists are attempting to craft legislation which hands a lifeline to the fossil fuel industry, encouraging state officials to blacklist and divest from financial companies which pull funding from fossil fuels.
Last month, the American Legislative Exchange Council (ALEC), an organisation which creates templates for state legislation by connecting law-makers with corporations, published a draft of a piece of legislation entitled the ‘Energy Discrimination Elimination Act’ (EDEA).
Claiming that “restricting the supply of fossil fuels, without an immediate substitute for those fuels, only serves to raise prices on energy consumers, profoundly impacting the poorest among us”, the EDEA attempts to punish financial institutions seeking to divest from polluting energy sources.
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The EDEA aims to take action against firms which “boycott energy companies”, referring to the termination of business activities associated with corporations engaged in producing fossil fuel energy. It advocates that state legislatures be given the authority to “sell, redeem, divest, or withdraw all publicly traded securities” of banks which decide to redirect their investments towards renewable energy sources.
Stating that financial companies should be mandated to provide state comptrollers (regulatory bodies) with evidence of their continued commercial support for oil and gas firms to avoid facing debilitating economic sanctions, the EDEA advocates that officials be permitted to “request written verification from a financial company that it does not boycott energy companies and rely, as appropriate in the comptroller’s judgement and without conducting further investigation, research, or inquiry, on a financial company’s written response to the request”.
This suggests that the jurisdiction concerning whether financial firms have, in fact, “boycotted energy companies” rests entirely with the state comptrollers, which may decide that nothing less than explicit support for oil and gas firms is sufficient for the firms to avoid divestment, public blacklisting, and the revocation of subsidies.
The EDEA advocates for states to make public lists of financial institutions complicit in divestment from fossil fuel energy, advocating for comptrollers to “prepare and maintain, and provide to each state governmental entity, a list of all financial companies that boycott energy companies”. It also suggests that such lists ought to be regularly reviewed and updated.
Thomas Perrett reports on the efforts of corporate lobbyists to stymie US President Joe Biden’s climate ambitions
Since he assumed office, US President Joe Biden has encountered significant obstacles blocking his proposed plan to decarbonise the US economy by the middle of the century.
West Virginia Senator Joe Manchin has consistently opposed the Build Back Better Act, which would have invested $555 billion in clean electricity and accelerated the reduction of methane emissions, and Arizona Senator Krysten Sinema has likewise resisted Biden’s climate spending plans.
Recently, fresh challenges have also emerged from coordinated, Republican-aligned interest groups. Corporate lobbyists are attempting to craft legislation which hands a lifeline to the fossil fuel industry, encouraging state officials to blacklist and divest from financial companies which pull funding from fossil fuels.
Last month, the American Legislative Exchange Council (ALEC), an organisation which creates templates for state legislation by connecting law-makers with corporations, published a draft of a piece of legislation entitled the ‘Energy Discrimination Elimination Act’ (EDEA).
Claiming that “restricting the supply of fossil fuels, without an immediate substitute for those fuels, only serves to raise prices on energy consumers, profoundly impacting the poorest among us”, the EDEA attempts to punish financial institutions seeking to divest from polluting energy sources.
How the Financial Sector Bankrolls CLIMATE CHAOS
Thomas Perrett
The EDEA aims to take action against firms which “boycott energy companies”, referring to the termination of business activities associated with corporations engaged in producing fossil fuel energy. It advocates that state legislatures be given the authority to “sell, redeem, divest, or withdraw all publicly traded securities” of banks which decide to redirect their investments towards renewable energy sources.
Stating that financial companies should be mandated to provide state comptrollers (regulatory bodies) with evidence of their continued commercial support for oil and gas firms to avoid facing debilitating economic sanctions, the EDEA advocates that officials be permitted to “request written verification from a financial company that it does not boycott energy companies and rely, as appropriate in the comptroller’s judgement and without conducting further investigation, research, or inquiry, on a financial company’s written response to the request”.
This suggests that the jurisdiction concerning whether financial firms have, in fact, “boycotted energy companies” rests entirely with the state comptrollers, which may decide that nothing less than explicit support for oil and gas firms is sufficient for the firms to avoid divestment, public blacklisting, and the revocation of subsidies.
The EDEA advocates for states to make public lists of financial institutions complicit in divestment from fossil fuel energy, advocating for comptrollers to “prepare and maintain, and provide to each state governmental entity, a list of all financial companies that boycott energy companies”. It also suggests that such lists ought to be regularly reviewed and updated.
A Feature of the System, Not a Bug
The EDEA was based on State Bill 13, which has taken hold in Texas, promulgating that state officials must “sell, redeem, divest, or withdraw all publicly traded securities”, from financial organisations and insurance houses which “boycott energy companies”.
Drafted by the libertarian think tank the Texas Public Policy Foundation (TPPF), State Bill 13 bears significant similarities to the EDEA. According to emails obtained by the Centre for Media and Democracy, TPPF director Jason Isaac described the EDEA as “an opportunity to push back against woke financial institutions that are colluding against American energy producers”.
Isaac’s email also described the EDEA as “a strategy in which states use their collective economic purchasing power to counter the rise of politically motivated and discriminatory investing practices”, outlining the corporate plan to bypass democracy and compel financial companies to facilitate the continued existence of environmentally damaging energy sources.
The EDEA has formed the basis of several attacks on fossil fuel divestment, having proven popular in West Virginia, a state famously reliant on coal-fired power stations and represented in the Senate by Joe Manchin.
Indeed, a bill introduced to the West Virginia legislature last year stated: “The legislature finds it is contrary to the interests of the state of West Virginia and the citizens of West Virginia for taxpayer dollars or retirement funds of public pensions to be invested in or at the direction of entities engaging in, providing incentives for, or directing strategies to divest from companies invested or assisting in the production of or the manufacturing of any of the following: natural gas, coal, oil, or petrochemicals.”
Much like the EDEA, this bill includes provisions for state officials to notify financial institutions of their complicity in boycotting energy companies, stating that: “If 90 days after the system’s first engagement with a business under this code, the business continues to engage in divestment activity, the system shall sell, redeem, divest, or withdraw all publicly traded securities of the business that are held by a fund.”
This follows a sustained campaign by corporate interests to artificially keep the coal industry afloat despite renewable energy becoming an increasingly attractive prospect for investors and declining significantly in cost. In August 2020, the West Virginian electricity regulator voted to keep coal-fired power stations running until 2040, even despite the state experiencing a 150% rise in electricity prices over the past 15 years.
Ted Boettner, senior researcher at the Ohio River Valley Institute, a think tank which focuses on the expansion of clean energy and the democratisation of the economy, told Kate Aronoff of The New Republic that corporate interests are frequently involved in drafting legislation similar to the EDEA, stating: “The coal industry and other powerful industries in the state typically write legislation.”
“Having a lobbyist write a bill is a feature of the system, not a bug,” he added.
Both ALEC and the TPPF have extensive records of promoting disinformation about the veracity of climate science, and lobbying to roll back environmental protections. ALEC, which received $3.2 million from organisations related to the radical right-wing Koch family between 1997 and 2017 according to Greenpeace, was intimately involved with a GOP-backed plan to oppose President Biden’s climate agenda.
ALEC’s advocacy against measures designed to avert the climate crisis has become so radical that even the multinational oil and gas firm ExxonMobil cut ties with the group in 2018 following disagreements over climate policy. Despite the disingenuous nature ofExxonMobil’s recent advocacy for a carbon tax, which is in fact indicative of corporate greenwashing, it is telling that ALEC’s hardline stance against decarbonisation proved too noxious even for Exxon.
The EDEA, and the legislation in West Virginia and Texas seeking to punish financial institutions for divesting from fossil fuels, represents an alarmingly coordinated opposition to the expansion of clean energy.
With state officials incentivised to blacklist companies which ‘boycott’ oil and gas firms, decarbonising the economy is likely to prove even more difficult. The Koch network, and the ‘revolving door’ between corporations and state legislatures, must be challenged if President Joe Biden’s green policies are to succeed.
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