That the Biden administration and the Democratic-majority Congress have set their sights on the oil and gas industry as the ultimate culprit behind a changing climate was clear even before last year’s elections. Now, it seems, Washington is doubling down on its promise to crack down on oil and gas in any way possible.
But the move may backfire badly.
Last week, the House Oversight Committee wrote to the executives of the biggest oil companies operating in the United States along with the American Petroleum Institute and the U.S. Chamber of Commerce to inform them that it is now investigating these companies for disinformation on climate change. The letter also called on the executives to appear in Congress next month to testify on the issue.
“We are deeply concerned that the fossil fuel industry has reaped massive profits for decades while contributing to climate change that is devastating American communities, costing taxpayers billions of dollars, and ravaging the natural world,” the committee wrote.
“We are also concerned that to protect those profits, the industry has reportedly led a coordinated effort to spread disinformation to mislead the public and prevent crucial action to address climate change.”
The letter cites a number of news reports from outlets such as The Guardian, Mother Jones, the New York Times, and Inside Climate News, largely summarizing the information in these reports and stating quite plainly that it is going after Big Oil for spreading disinformation and hiding facts about climate change.
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Now, a House Committee hearing is certainly not the end of the world for any of the companies summoned, although the authors of the letter note that their main target is Exxon. However, the news about the summons comes soon after it became clear that the new Democrat plan to decarbonize the grid has excluded natural gas as a clean energy source. In fact, the plan will penalize electricity suppliers that use natural gas to generate power while rewarding those who generate it from renewable sources.
That is not all, however.
Last week, a group of progressive Democrats introduced a bill that seeks to ban U.S. banks from funding fossil fuel projects from 2030 onwards. Called the Fossil Free Finance Act, the legislation would mandate the Federal Reserve to require all banks with more than $50 billion in assets and all non-bank systemically important financial institutions to reduce their financing of polluting industries by 50 percent by 2030 and by 100 percent by 2050. Fossil fuel financing, under the bill, should end by 2030.
“For too long, our federal government has looked the other way while our nation’s largest banks bankroll the dirtiest fossil fuel projects, exacerbating the climate crisis and setting us up for a massive, climate-induced economic collapse. That must change,” said Rep. Ayanna Pressley, one of the sponsors of the bill.
Now, these are all bills and plans that may never see the light of day as actual laws. Given the Democrats’ own internal divisions along energy lines, it is highly unlikely that the last bill will ever become law. However, the direction that Congress is headed with regard to energy may, based on the latest events in Europe, be a bit unwise.
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What we are currently seeing in much of Europe, notably the UK, is a large-scale case of putting the cart before the horse. The UK is currently in the throes of a major energy crisis as gas prices have tripled since the start of the year and the country’s wind capacity has been underperforming recently, causing an electricity crunch that has sent electricity bills much higher than anyone is comfortable with. Earlier this month, the UK was even forced to reopen a coal power plant to supplant its gas-fired generation and whatever wind and biomass could generate.
In other words, the U.S. has the chance to see how not to do the energy transition and learn from it. Instead, its legislative majority is doubling down on its plans for rapid decarbonization that could affect the local oil and gas industry severely, leaving the world’s top consumer more dependent on energy imports. Given the size of U.S. oil and gas reserves, this would be ironic at best and ridiculous at worst.
Right now, both the Biden administration and Democrats in Congress are prioritizing the fast electrification of the U.S. economy while at the same time decarbonizing the electric grid. This will likely include the shutting down of coal and gas-fired power generation capacity, just like it did in the UK. It will also mean a massive increase in wind and solar generating capacity. All it would take to compromise all this capacity would be a few days of low winds or a heatwave.
The current situation in Europe is a great lesson in how not to do it when it comes to decarbonization. Yet, for a lesson to be useful, someone needs to pay attention to it.
By Irina Slav for Oilprice.com
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