Seize property to build wind and solar farms, says JP Morgan chief
Simon Foy
Tue, 4 April 2023
Jamie Dimon - Marco Bello/Bloomberg
The chief executive of JP Morgan has suggested that governments should seize private land to build wind and solar farms in order to meet net zero targets.
Jamie Dimon, the longstanding boss of the Wall Street titan who donates to the Democratic Party, said green energy projects must be fast-tracked as the window for averting the most costly impacts of global climate change is closing.
In his annual shareholder letter, Mr Dimon said: “Permitting reforms are desperately needed to allow investment to be done in any kind of timely way.
“We may even need to evoke eminent domain – we simply are not getting the adequate investments fast enough for grid, solar, wind and pipeline initiatives.”
Eminent domain is when a government or state agency carries out a compulsory purchase of private property for public use and compensates the asset holder.
The proposal is unusual, especially coming from the longest-serving chief executive of a Wall Street bank, and could stir controversy as states in the US seek to crackdown on seizure orders.
In Iowa, state legislators on Monday passed a bill that aims to protect private property owners from eminent domain use by carbon pipeline companies.
Mr Dimon said the war in Ukraine was redefining the way countries and companies plan for energy security.
He added: “The need to provide energy affordably and reliably for today, as well as make the necessary investments to decarbonise for tomorrow, underscores the inextricable links between economic growth, energy security and climate change. We need to do more, and we need to do so immediately.
“To expedite progress, governments, businesses and non-governmental organisations need to align across a series of practical policy changes that comprehensively address fundamental issues that are holding us back.
“Massive global investment in clean energy technologies must be done and must continue to grow year-over-year.”
In the UK, reforms to Solvency 2 rules are expected to unleash a wave of investment in renewable energy projects after insurers and pension funds complained that EU-era regulations obstructed their ability to invest in infrastructure.
Mr Dimon’s comments also come as tensions between investors grow about how to tackle climate change.
In December, Vanguard, the world’s second largest asset manager, pulled out of Mark Carney’s global climate change alliance, saying the group’s full-blooded commitment to tackling climate change resulted “in confusion about the views of individual investment firms”.
Mr Dimon said: “Polarisation, paralysis and basic lack of analysis cannot keep us from addressing one of the most complex challenges of our time. Diverse stakeholders need to come together, seeking the best answers through engagement around our common interest.
“Bolstering growth must go hand in hand with both securing an energy future and meeting science-based climate targets for future generations.”
The banking chief also hit out against regulators in the wake of the banking crisis last month triggered by the collapse of Silicon Valley Bank (SVB).
He said the collapse of SVB and the government-engineered takeover of Credit Suisse by its biggest rival risked undermining confidence in the sector.
He added: “Ironically, banks were incented to own very safe government securities because they were considered highly liquid by regulators and carried very low capital requirements.”
Mr Dimon also warned regulators against tightening rules for lenders following the recent market turmoil.
He said: “It is extremely important that we avoid knee-jerk, whack-a-mole or politically motivated responses that often result in achieving the opposite of what people intended.
“Now is the time to deeply think through and coordinate complex regulations to accomplish the goals we want, eliminating costly inefficiencies and contradictory policies.
“Very often, rules are put in place in one part of the framework without appreciating their consequences in combination with other regulations.”
The Case For Nationalizing American Solar Energy Supply Chains
- The need for clean energy transition is urgent and requires a massive increase in green energy production capacity and infrastructure.
- The current energy crisis in Europe as a result of Russia's invasion of Ukraine highlights the vulnerabilities of global supply chains and necessitates a focus on short supply chains.
- Nationalizing solar energy supply chains could reduce emissions and lower energy consumption and pave the way for increased use of renewable power.
Meeting global climate goals will require a massive increase and acceleration of green energy production capacity and infrastructure. The scale of this challenge is unprecedented, and we have a lot to lose by getting it wrong. Changing the basis of the global economy – carbon-based fossil fuels – is scary and will inevitably have hiccups. Finding the right balance between decarbonization and energy security will therefore be essential to a successful clean energy transition.
Right now, the climate for energy security is particularly tricky. Years of volatility from the Covid-19 pandemic have been compounded by Russia’s illegal invasion of Ukraine. Europe’s dependence on Russia to keep the lights on has plunged the European Union into an energy crisis as the war in Ukraine rages on and the flow of energy from the Kremlin (or lack thereof) becomes a strategic bargaining chip.
And in our globalized and interconnected world, a crisis in Europe is actually a global crisis. Both Covid-19 and the current energy crisis have thrown the vulnerabilities of global supply chains into a harsh spotlight, and global geopolitics are shifting accordingly. We are increasingly seeing a move away from globalization and free trade toward nationalism, protectionism, and “friend-shoring,” in which countries limit their economic and trade partnerships to countries with similar values and strong alliances.
There is now a renewed focus on the relative resilience of short supply chains, both in policy and research circles. And some of the arguments for keeping supply lines short and simple are compelling. In one example, a new study from Cornell University finds that nationalizing United States solar energy supply chains would greatly reduce their carbon footprint and energy use.
In a study published in Nature Communications, a team of researchers from Cornell Engineering found that if the U.S. were able to transition to manufacturing all of its own solar panels by 2035, this would cut emissions by 30% and reduce energy consumption by 13%, compared to 2020 when imports were at an all-time high. Producing solar panels on its own hom turd would reduce cost and emissions of shipping the panels from overseas, and will reduce lag times as well. Working within a smaller geographic area with fewer middle men will allow solar panels to get connected to the grid faster. And the timing has never been better for beefing up domestic green energy manufacturing, as Biden’s Inflation Reduction Act has put forward billions of dollars of subsidies and incentives for doing just that.
Fengqi You, a co-author of the study, explained in a press release that “the US will see a larger share of renewable power accounting for primary energy consumption and an overall lower primary energy consumption over the years for solar panel manufacturing.” And lower greenhouse gas emissions in the United States is good news for everyone, everywhere. The United States is the second-largest greenhouse gas emitter in the world, behind China. Together, China, India, and the U.S. contribute 42.6% of total emissions, while the bottom 100 countries (that’s more than half of all countries in the world) account for just 2.9% all together.
The authors also contend that re-shoring solar panel supply chains would help to rectify some of the significant setbacks that the solar industry is currently facing. These hurdles include massive delays thanks to supply chain bottlenecks, trade tensions, bureaucratic red tape, securing sufficient land tracts, and delays in connecting to the grid. Furthermore, the U.S. currently relies on China for at least 80% of its solar panels, which is frightfully reminiscent of the European Union’s reliance on that other volatile authoritarian regime. And we’ve all seen what can happen when diplomatic relations fail and a tyrant holds all the supply chain leverage.
By Haley Zaremba for Oilprice.com
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