Preventing a Fossil Fuel Comeback in Congress
There is little question that the world remains dependent on fossil fuels, but there is also no question that a long-term pivot away from fossil fuels is already underway. Nevertheless, oil and gas lobbyists have long punched above their weight and have far more influence in politics than in the economy. The entire U.S. energy economy in 2020 was about $1 trillion or 4.8% of the GDP. That includes renewables as well as fossil fuels. Over 80% of the U.S. GDP is in the service economy. Technology companies like Google and Microsoft comprise close to 10% of the U.S. GDP. These companies and their products require energy but have no reason to favor fossil fuels over renewable energy. In fact, due to the growing need for American companies to report and reduce their carbon footprint, they should be promoting renewable energy and opposing the use of fossil fuels. However, the natural gas lobby has a different idea. As Eric Lipton reported in the New York Times last week:
“Oil and gas industry lobbyists, anticipating that Republicans could take control of the House in the midterm elections, are already working behind the scenes on Capitol Hill to push back against what they consider the Biden administration’s anti-fossil-fuel agenda… Their hope is to undercut a $4.5 billion program that will give rebates worth as much as $14,000 per household to low- and moderate-income families to install electric-powered heat pumps, water heaters, induction stoves and other devices that would in many cases replace appliances that use natural gas… Nationally, environmentalists and the gas industry are already engaged in an intense confrontation over whether cities and states should take steps to push homeowners to move away from natural gas. The shift is already underway: Natural gas was a primary source of heating in 46 percent of the nation’s households in the most recent Energy Department survey in 2020, down from 49 percent in 2015.”
The goal of decarbonizing America’s energy system is opposed by conservatives in Congress in part because it is seen as a form of interference in the free market. This ignores the fact that there has never been a “free market” in energy since fossil fuels have long been subsidized by the U.S. government. According to Savannah Bertrand of the Environmental and Energy Study Institute:
“U.S. direct subsidies to the fossil fuel industry are estimated at roughly $20.5 billion per year, including $14.7 billion from federal subsidies and $5.8 billion from state subsidies. When externalities such as health, environmental, and climate factors are included, it is estimated the United States subsidizes fossil fuels to the tune of $649 billion per year. Eliminating fossil fuel subsidies would save taxpayer dollars while simultaneously reducing greenhouse gas emissions.”
Clearly the move by fossil fuel lobbyists and the response by some Republicans have more to do with political competition than free market economic competition. With fuel prices rising, Republicans seek to blame rising prices on Democratic resistance to fracking and drilling for fossil fuels in fragile environments. The complexity of the global energy market and the impact of Russia’s invasion of Ukraine on fuel prices are conveniently ignored as the cry of “drill baby drill” returns to Capitol Hill.
My question is when will the companies that use energy and report their carbon emissions going to flex their muscles and put an end to the outsized influence of this relatively small part of America’s economy? Clearly the issue intensity and importance of decarbonization are far greater for fossil fuel producers than for energy consumers. But energy users should be pushing for decarbonization. Last year, a huge proportion, over 90%, of top American companies filed annual environmental, social, and governance reports. To improve their performance on these increasingly important metrics, they need to transition to renewable energy. It may well take the influence of these companies to combat the ideological idiocy and the immature competitiveness of some Congressional conservatives. These legislators simply want to beat the “Libs.” They sometimes vote against bills they favor to try to deny their opponents a victory. If Biden favors renewable energy and electrification, then they must oppose it. If Biden suddenly supported fracking, they’d probably find a way to oppose that, too.
It’s not that tech companies are silent in Washington, it’s that their focus is on anti-trust regulation and other moves to regulate their business. According to Bloomberg’s Anna Edgerton and Bill Allison:
“Google’s lobbying expenditures increased 28% in 2021 to $9.6 million, according to disclosure reports that were due Thursday. In addition to the specific antitrust bills, some of which could threaten Google’s business model, the company’s Washington team lobbied on a range of issues including cloud computing, the semiconductor supply chain, cybersecurity, global tax issues, pandemic contact tracing and the remote learning technologies that have become a central part of education… Amazon spent $19.3 million on lobbying in 2021, up 8.2% from a year before. Apple spent $6.5 million last year, mostly maintaining its level of spending from 2020. Microsoft Corp’s lobbying expenditures also ticked up last year, to $10.2 million, an 8.4% increase from 2020.”
Environmental groups and climate activists might find it worth their while to convince these tech companies to use some of their lobbying clout to weigh in on the side of renewable energy. In fact, when companies present their greenhouse gas reduction record, they might also be asked what they are doing to promote decarbonization public policies. The customers of tech companies tend to favor renewable energy, and companies might obtain a PR benefit. In addition, promoting renewable energy might advance technology and reduce energy costs, thereby enhancing their ability to reduce their own climate impact and energy bills.
The Biden administration is deploying all the tools at its disposal to decarbonize the economy. They are using federal purchasing power, they included renewable energy and mass transit in the trillion-dollar bi-partisan infrastructure bill, and they featured decarbonization in the poorly titled “Inflation Reduction Act.” A Republican Congress will make further progress difficult, although it will take years to implement the important initiatives already enacted. To ensure continued momentum behind environmental sustainability, it will be necessary for energy-consuming companies to have their voice heard. That could change the power equation and enable additional progress to be made.
While mid-term gains are typical for the party that does not hold the White House, and polling seems to indicate growing Republican strength, a word of caution is warranted. First, we could still see an October surprise of some type—the Supreme Court seems particularly politically oblivious these days, and who knows what they might do in the next two weeks? Second, mid-term turnout is always unpredictable, and in a polarized nation, motivation really matters. We do not yet know the electoral impact of overturning Roe v. Wade. Finally, Republican election deniers may try to change the narrative of whatever the vote determines and could distract from and muddy results—even if they win.
If Republicans gain control of one or both houses of Congress, we may also see an interesting and active lame-duck session as Democrats seek to solidify some of the gains made over the past two years and advance their agenda for a final time before the 2024 presidential race. For climate and environmental sustainability policy, the degree of uncertainty need not result in a return to the backsliding of the Trump years. The power of the presidency is far from trivial, and the Biden team may not be perfect, but it includes many skilled and experienced leaders and strategists.
While our reliance on fossil fuels is real, the past two years have reinforced the volatility and insecurity of this source of energy. It makes good economic, political, national security, and environmental sense to promote renewable energy and allow energy price competition to drive fossil fuels out of the marketplace. That transition has begun, and no matter who runs the American government, it will continue.