We might never find out how much money the United States has handed to the fossil fuel industry under the guise of pandemic stimulus. As reported in Politico, Treasury Secretary Steven Mnuchin plans on keeping the details of which companies are getting pieces of the $500 billion in federal bailout funds a secret, citing it as “proprietary” and “confidential” information. The Small Business Administration is also now withholding its Paycheck Protection Program loan data from the Government Accountability Office, shielding it from oversight.
Here’s some of what we do know: 62 percent of the nation’s “mining” firms—including oil and gas companies—have received federal bailouts so far, according to a recent analysis by watchdog group Accountable.US. Sixteen oil- and gas-related companies have together reaped $72 million in PPP loans. The Federal Reserve has expanded the eligibility for its Main Street Lending program along lines mightily similar to those requested by the industry. The White House has increased regulatory rollback and subsidies for polluting industries as tens of thousands people die of pandemic respiratory illness; there could be more of these deregulations and subsidies coming soon.
Such lavish spending to prop up an economically troubled, environmentally unsustainable industry represents a decent return on investment for dogged lobbying. Fossil fuel money is ubiquitous in Washington. While most of the industry’s lobbying dollars flow to Republicans, Democrats also receive money and hold their own loyalties to fossil fuels. Environmentalists’ and anti-lobbying activists’ attempts to curb that influence mostly haven’t worked—green groups would be hard-pressed to outspend oil companies, and campaign finance reform has mostly stalled since the Supreme Court struck down limitations on corporate spending.
A forthcoming report from researchers Carla Skandier, Mark Paul, and Rory Renzy for the People’s Policy Institute outlines what might sound like a novel solution to these problems: nationalizing the fossil fuel industry. “The simplest case for nationalization is that it’s a one-time buy out for the political capital of fossil fuel interests,” Paul told me. “If we can neutralize lobbyists and shareholders, we can put our planet’s needs above short-term profits. There’s been nothing that’s done more damage to climate progress than the political power of the fossil fuel industry.”
Nationalization could also be pretty cheap as compared to the tens of billions of dollars polluters receive each year and the trillions already spent in 2020 on coronavirus relief. As Skandier, Paul, and Renzy note in the report, “While a few years ago taking over just the top 25 oil, gas, and coal companies would have required over $1.15 trillion, today a takeover could cost just $550–$700 billion (or half of that if the Fed were to acquire only majority control—51 percent—of companies).”
Calls for climate action—whether in the form of more regulation on polluters or to build out renewable energy—have tended to sidestep the oil-drenched elephant in the room: that as it lobbies for bailouts and ever-more-generous subsidies, the fossil fuel industry will try and quash anything called climate policy with its virtually unlimited stores of cash. The traditional response to this from Democratic lawmakers has been to temper emissions reductions proposals so that they can pass muster with the GOP politicians on whom oil, coal, and gas companies rely to look out for their interests. Even if it were possible to radically decarbonize the economy while preserving the business model of the world’s biggest polluters, there’s no good reason to suspect they’d go along with it.
The relatively modest and deeply flawed cap-and-trade measure Democrats attempted to pass through Congress in 2009 was predicated on support from some segments of the fossil fuel industry. When it was convenient, and already scant Republican support started to wane, polluters’ emissaries dipped out of the grand green-corporate coalition which had been pushing the bill, the U.S. Climate Action Partnership. Moreover, companies like BP and ConocoPhilips, which had been involved in USCAP, had all the while been paying into powerful trade associations like the American Petroleum Institute and National Association of Manufacturers, who were trying to crush it. For industry, it was a win-win: If a bill did pass, it’d be sufficiently watered down, exempting them from a wide range of regulations. Better yet, it might not pass at all, and talk of climate action would go away for a few years as Democrats lost interest. The latter is exactly what happened, and fossil fuel companies have doubled down on spending since. In the last three election cycles, Skandier, Paul, and Renzy note—2014, 2016, and 2018—the oil and gas industry has made $254 million worth of campaign contributions. Just in 2019, it spent $125 million lobbying members of Congress.
Those who propose nationalizing the industry point out that the fossil fuel industry’s leaders are not some fair-weather negotiating partners to be swayed by facts and reason, and shouldn’t be treated as such. Their years spent funding climate denial, despite knowing the profound risks posed by rising temperatures; delaying timely action on the issue; and continued commitment to a business model premised on exploiting coal, oil, and gas for decades to come, all make them the main obstacle to averting catastrophic levels of warming. Of course, nationalization won’t flip a switch and make Republicans start voting for bold climate policy and environmental justice measures; plenty of other polluting interests—including Koch Industries—will pay them not to. But it can stop the flow of dollars from the likes of Exxon and Chevron to Capitol Hill, making more and better climate policy more likely.
But even this proposal runs into the same chicken-and-egg problem that has plagued all attempts to curb lobbying influence: Executives who have poured millions into killing even modest climate proposals at the local, state, and federal level obviously won’t be keen on a proposal that liquidates their control. To address that, Skandier, Paul, and Renzy propose an alternative vehicle for nationalization: the Federal Reserve.
Since the financial crisis in 2008, the Fed has revealed its toolbox to be much bigger than conventionally thought. Its dual mandate—maintaining price stability and full employment—tasks it with addressing systemic risks to the economy. As a threat that could upend human civilization and cost trillions, climate change should qualify as one of those risks. “If we had the right people appointed, the Fed could do this under existing law,” Paul said. He notes that the Fed can only purchase publicly listed companies, which would preclude privately held companies from being brought under public ownership. Fed Chair Jerome Powell may or may not be the right man for the job, having just enacted several policies publicly backed by the fossil fuel industry. Though central bankers in the U.S., including Powell, have been reluctant to see the planet as a part of their mandate, a growing number of Federal Reserve analogs abroad and even former U.S. Federal Reserve staff are beginning to acknowledge the role their work plays in fueling emissions. Last month, former Deputy Treasury Secretary and Fed governor Sarah Bloom Raskin criticized Powell’s decision to subsidize fossil fuels. Such moves, she wrote in a New York Times op-ed, increase “the likelihood that investors will be stuck with stranded oil and gas assets that society no longer needs. It also forestalls the inevitable decline of an industry that can no longer sustain itself.” Instead, she added, Fed policy should “build toward a stronger economy with more jobs in innovative industries—not prop up and enrich dying ones.”
“We have a choice,” several current and former European central bankers argued similarly in The Guardian on June 5, “rebuild the old economy, locking in temperature increases of 4C with extreme climate disruption; or build back better, preserving our planet for generations to come.” They didn’t call for nationalization. But in the American context, those concerned about the planet are running out of ideas for countering the fossil fuel industry’s stranglehold over politics. As it blocks other attempts at reform, nationalization may yet be the easiest and cheapest solution to the problem.