Welcome to “Feet to the Fire: Big Oil and the Climate Crisis,” a biweekly newsletter in which we’ll share our latest reporting on how the fossil fuel industry is driving climate change and influencing climate policy in five of the nation’s most important oil-and-gas-producing states. In addition, we’ll shine a spotlight on the financing of the fossil fuel industry, holding banks and other financial institutions accountable for their role and providing you with updates on their activities. We will also bring you the latest from our climate and media columnist, acclaimed environmental writer Mark Schapiro.
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The continued clout of the oil and gas industry, even amid a worsening climate crisis and powerful politicians’ ambitious plans to speed up the transition to clean energy, can never be underestimated. In recent months, industry lobbyists and their allies in state legislatures have used a variety of tactics — such as diverting funds, blocking climate bills and using decoy bills to obscure their true intentions — to hinder tougher action in curbing the use of fossil fuels.
In California, which is at the forefront of the nation’s push to accelerate the transition to a green economy, the oil and gas industry is spending millions to kill two bills that would require corporations to disclose more information about their emissions and their efforts to address the climate crisis. One bill would force big companies that do business in California to report all of their emissions; the other would require firms that buy or sell carbon offsets — which are credits that represent a reduction in greenhouse gas emissions — to be more transparent in an effort to crack down on bogus climate claims. Both pieces of legislation have momentum but could be blocked by moderate Democrats historically aligned with corporate interests, reports The Slick’s Aaron Cantú.
In a stunning sign of the industry’s determination to have its way, an oil and gas lobbyist bluntly told Cantú that fellow lobbyists were “misadvertising” a bill ostensibly intended to regulate the industry’s handling of carbon dioxide in a way that misleads lawmakers. Their plan was to revise the bill to instead speed up approvals for CO2 pipelines. “We don’t want the environmentalists to see what we’re up to,” said Theo Pahos. In the wake of the revelation, a leading Democrat in the Legislature pulled the bill from further consideration until next year.
In Pennsylvania, the election of a climate-friendly governor and the retaking of the House by Democrats raised environmentalists’ hopes that the state would begin to curb emissions and cut back on fossil-fuel production. But even as political power has shifted, oil and gas lobbying groups and their union allies have managed to block several key climate bills. One would have prohibited the most energy-intensive form of cryptocurrency mining for two years while another would have required natural gas wells to be placed at least 2,500 feet from buildings or groundwater wells. “The oil and gas industry, labor, they seem to win at every turn,” a frustrated lawmaker told The Slick’s Audrey Carleton about how he was pressured by the House speaker to abruptly cancel votes on the bills.
One bill that remains viable and enjoys bipartisan support is legislation that would create a Solar for Schools grant program to help the commonwealth’s school districts build large-scale solar arrays to power public K-12, community college and career technical school facilities. Currently, less than 2% of Pennsylvania’s nearly 7,000 schools are powered by solar energy while the vast majority source electricity from the regional grid, which is powered primarily by a mix of coal, gas and nuclear.
In New Mexico, where a program to distribute grants to accelerate the state’s energy transition was long delayed, the goals of the program are being thwarted by lobbyists who are proposing to get taxpayer money for projects that rely on natural gas production. San Juan College’s pitch for $6 million includes natural gas-based partner projects with Big Navajo Energy and Libertad Power, both of which aim to make hydrogen from natural gas. “It’s just the same old dirty fossil fuels scenario that they always attach themselves to,” Mike Eisenfeld, energy program director with the San Juan Citizens Alliance, tells The Slick’s Jerry Redfern.
The Danger of ‘Backsliding’ When It Comes to Fossil-Fuel Financing
- It sounds good. For the first time, more money is being raised from green bond sales and loan arrangements than from bond sales for fossil fuels. In the first half of 2023, companies and governments raised almost $350 billion from green bonds, compared to less than $235 billion of oil, gas and coal-related financing, according to data compiled by Bloomberg. But that’s because the fossil-fuel industry is so flush with cash, it didn’t need to go out to raise more money by accessing fixed-income markets to support operations or meet debt maturities. And some of the green money is going to major polluters — such as RWE AG, a German utility that raised $1.1 billion selling green bonds with the proceeds earmarked for solar and wind projects. The utility is a major coal developer and Europe’s biggest emitter of greenhouse gases. “The energy transition unequivocally needs more financing, but I’m not convinced that financing for renewables should be going to companies that are opening new coal mines at the very same time,” says the Rainforest Action Network’s April Merleaux.
- Twenty of the world’s biggest banks — including Barclays, JPMorgan and BNP Paribas — are being told to live up to their pledges as members of the Net Zero Banking Alliance by cutting ties with an energy giant’s latest project. Equinor is about to drill Rosebank, the largest untapped oil and gas field in the North Sea — it has an estimated reserve of 300 million-500 million barrels of oil. All twenty banks are financing Equinor, despite the fact that developing the oil field would violate the banks’ pledges to restrict global warming to 1.5 degrees C, per a letter sent to them by Action Aid, Friends of the Earth and Greenpeace. “Any bank that is genuinely committed to a safe climate must engage with Equinor and cut ties with the company if it continues to develop the field.”
- Though it’s long been considered “dirty” and its use has plummeted in the U.S., coal remains one of the main sources of energy in Asia, where it accounts for nearly 60% of electricity generation. “Coal presents a Catch-22 for us,” conceded Indranee Rajah, a finance minister in Singapore, at a June 28 conference organized by the International Capital Markets Association (ICMA). “While financing coal activities is less and less defensible in a decarbonising world, the indiscriminate withdrawal of financing can result in undesirable outcomes, such as the loss of energy security or of livelihoods for communities that depend on coal.” Participants discussed ways to leverage finance to accelerate the early phase-out of coal-fired power plants, including the issuance of green bonds by the Singapore government.
- The governments of other coal-dependent regions are less sanguine about the future. Though Colombia is considering plans to diversify its financing with carbon credits and green bonds, its finance minister, Ricardo Bonilla, admitted this week that it’s still a long way off from transitioning to clean energy. Colombia’s two main sources of export revenue are oil and coal — and they will continue to export those fossil fuels for “much longer,” another 15 to 20 years, until other exports become readily available, he told Reuters.
- Financing of fossil fuel extraction is so pervasive and enmeshed in the global economy that even environmental groups find it hard to avoid conflicts of interest. Some of the world’s leading climate campaign groups — the European Climate Foundation, the Carbon Tracker Initiative and the World Wide Fund for Nature (WWF) — are under fire for taking millions in donations from hedge fund billionaires whose firm invests heavily in oil and gas companies, reports The Guardian. Quadrature Climate Foundation was established by Quadrature Capital, which is run by investors Greg Skinner and Suneil Setiya and owns stakes worth more than $170 million in fossil fuel companies, primarily in North America. Among them is a $24 million stake in ConocoPhillips, the multinational behind the controversial Willow project that will drill in the Arctic. The oil giant faces a potential $914,000 fine by Alaskan authorities for a gas leak at its drill site.
- These developments come amid a series of global setbacks for climate activists in the last two years, highlighted in a recent paper by Thomas Ferguson, professor emeritus at the University of Massachusetts, Boston. He notes that the business sector, including banks, has echoed the industry’s push for retaining a U.S. role in LNG exports in the wake of the Ukraine war: “Even before the Russian invasion, doubts that major financial houses would follow through on their pledges to limit lending to fossil fuels were already widespread.” And, indeed, more and more asset managers, banks and private equity funds have pulled back from such efforts, while shareholders of major oil giants have opposed motions for sustainable finance. To top it off, he notes that regulators seem to be ignoring the increasing potential misuse of green bonds — “greenwashing.”
Ferguson concludes: “The backsliding is dangerous because a world of many producers can easily degenerate into a ‘devil take the hindmost’ situation in which legacy fossil fuel asset holders compete with one another to monetize their holdings before further global warming becomes so unbearable countries again find the will to act.”
- Capital & Main’s Mark Schapiro digs into an underreported side of the climate crisis — how crop insurance reports reveal the vulnerabilities of California’s agriculture industry. And they expose how a New Deal-era program meant to protect farmers from unanticipated losses is being used to incentivize “growing cash crops in ways that are not optimal for current climate realities.”
