On Tuesday, executives from more than 300 companies—including renewables firms and several gas and electric utilities—released a letter urging the Biden administration to pledge to cut emissions by 50 percent by 2030. “The private sector has purchased renewable energy at record rates and along with countless cities across the country, many have committed themselves to a net zero-emissions future,” the letter stated. “If you raise the bar on our national ambition, we will raise our own ambition to move the U.S. forward on this journey.” Noticeably absent from the list of signatories are fossil fuel producers, who are now coalescing around their own vague net-zero-by-2050 goals.
The letter’s organizers, speaking to The New York Times, portrayed it as indicating a “major shift” in how the corporate world approaches climate change. But there are several reasons not to celebrate corporate America’s pivot to climate rescue just yet.
Many of the companies on the list still make generous donations to politicians who are hell-bent on stopping anything called climate policy. Walmart—which, like many companies, gives evenly to Republicans and Democrats—had its political action committee contribute $10,000 this past cycle to the reelection campaign of Steve Scalise, who regularly regurgitates climate denier talking points. Eager to maintain Republican control of the Senate—a situation that makes passing meaningful climate policy virtually impossible—signatory General Electric’s PAC gave $9,000 to Mitch McConnell, $8,500 to David Purdue, and $8,000 to James Inhofe. The list goes on. Microsoft, too, has donated to McConnell despite its widely publicized corporate climate goals.
Calling for this 2030 target costs these companies little: It allows companies to collect some good P.R. and come out in support of something that sounds nice that can be announced through executive action, all while continuing to fund politicians who’ll ensure any such target lacks teeth.
Without enforcement mechanisms, 2030 targets aren’t worth much. A recent synthesis report on 2030 targets from the U.N. Framework Convention on Climate Change itself found that existing 2030 pledges put forward as part of the Paris Agreement are woefully inadequate. Forty-eight of the updated Nationally Determined Contributions—the state-level pledges that make up the Paris Agreement, representing 75 of the 191 signatories to it—are now on track to decrease those countries’ emissions by just 0.5 percent below 2010 levels. As UNFCCC Executive Secretary Patricia Espinosa put it: “We are collectively walking into a minefield blindfolded. The next step could be disaster.”
Whether a target is in place, then, is basically irrelevant if it’s delivering such meager results. Many of the companies that signed the letter to Biden would have little to lose even if a 2030 target were rigorously enforced by the administration. In fact, the space between top-line goals and substance could be big business for many of the companies signed on to the pledge. Especially with so few specifics about what changes to, say, the power sector should look like, a 2030 target could help greenlight generous amounts of new gas infrastructure that could stay online for decades to come. That would be great news for signatories like gas utility National Grid, or Microsoft, which has a lucrative business providing cloud-computing software for drillers. To give just one example of how targets and subsidies theoretically supporting them could stimulate business without limiting global warming in the slightest: The way they’re currently structured, incentives like the 45Q tax credit—for capturing carbon dioxide—are effectively subsidies for continued drilling via enhanced oil recovery.
That’s not to say such pledges are entirely meaningless. Setting an ambitious target can send a market signal for financial sector interest in green energy, which—especially combined with recent pledges from the European Union—will be a boon to both wind and solar companies as well as asset managers and investment banks, which stand to collect both user fees and returns from a new round of lucrative public-private partnerships for green infrastructure. But if investments in green energy aren’t paired with hard constraints on fossil fuel production, emissions will just keep ballooning alongside a green bubble.
In the grand scheme of things, it’s a good thing that companies now see a profitable upside in going green: There will need to be private sector investment to build up clean energy. The danger is in holding climate action hostage to whether executives can turn a profit off it and having the public sector play second fiddle to companies whose entire goal is to turn a profit—whatever it costs the planet.
U.S. climate envoy John Kerry has made some unfortunate gestures in that direction. He’s leaned heavily on the private sector to drive an energy transition, calling on Wall Street to form its own “net-zero banking alliance.” As he argued to the Institute of International Finance last month, “No government is going to solve this problem. The solution is going to come from the private sector, and what government needs to do is create the framework within which the private sector can do what it does best, which is allocate capital and innovate.”
The last time Democrats tried to bring in business support to pass climate policy was in 2009, and it failed spectacularly. When push came to shove, corporations weren’t remotely interested in supporting a bill that would actually limit their activities. Kerry, who was right in the middle of things as that cap-and-trade bill collapsed, should know better by now. And the rest of the public should keep that in mind while reading about corporations’ supposed commitment to climate action.