It’s past time to retire the “climate president” moniker. Plus: what SVB’s collapse signals about climate risks.
The year is 2023, the concentration of carbon dioxide in the atmosphere is 50 percent higher than it was before the Industrial Revolution, and the so-called “climate president” has decided to go ahead with industrializing the Arctic wilderness, a region already warming four times faster than the rest of the world.
On the campaign trail in 2020, asked about drilling in the Arctic, Biden responded, “I’m totally opposed to it… No more drilling on federal lands, period. Period, period, period. In the Arctic Circle, it’s a disaster to do that.”
On Monday, the Biden administration approved one of the largest ever oil drilling projects on federal lands. ConocoPhillips’ Willow Project is located in the largest expanse of undeveloped wilderness left in the United States—Alaska’s North Slope. The Interior Department itself estimated that the approved version of the Willow Project will release 239 million metric tons of carbon dioxide over its anticipated 30 year lifespan. This is the equivalent of 64 new coal plants operating for a year, or 1.7 million more gas-guzzling cars on the road for the next 30 years. (Read our official statement on the Willow Project’s approval here.)
It is genuinely challenging to try to encapsulate the many violences perpetrated by this project. Corporate profits, government revenue, construction jobs, barrels of oil—these things can all be quantified in numbers and dollars. And yet the project’s reverberating consequences will far outstrip the magnitude of the economic benefits its proponents cite so smugly.
There are the ecological consequences of drilling 199 new oil wells, building a new gravel mine and airstrip and hundreds of miles of pipelines and roads through melting tundra, home to people and denning polar bears and migrating caribou and endangered sea birds and whales and fish and so much more. There are the cultural and health consequences for the local indigenous community in Nuiqsut—many of whom oppose the project—of increased disruption to the wildlife they depend on for subsistence and exposure to toxic and carcinogenic pollution, a problem they’ve already faced from oil and gas production for years. In fact, as I write this, a ConocoPhillips well near Nuiqsut has been leaking methane for over a week.
And then there are the consequences for our shared climate, that almost-intangible, often-invisible precondition for life that most people only notice when it’s violently disrupted. The consequences of the Willow Project will be massive—its emissions may be double the emissions avoided by all renewable energy projects on public lands through 2030 combined. But it’s hard to picture exactly what that means. One absurd detail helps us visualize this project’s climate disruption: ConocoPhillips will have to bring in coolers to re-freeze the melting permafrost in order to drill for oil that, when combusted, will further melt the permafrost.
ConocoPhillips’ project will bring death. That much is guaranteed. But whose deaths, when and where—that is where models falter, where economic analysis fails. Politicians and corporate elites seize upon that gap in knowledge and imagination to paper over it with their profiteering propaganda. As our Dorothy Slater and Toni Aguilar Rosenthal wrote last week, the corporate media’s feigned ignorance about the Willow Project’s consequences serves very specific industry interests.
On Monday, Interior Secretary Deb Haaland gave a veritable masterclass in greenwashing. She announced the massive new Arctic oil drilling project in a video where she says “the climate crisis is the most urgent issue of our lifetime” and that they’re “ensuring that equity is our North Star” to deliver a future that their “grandchildren deserve.” If it’s any consolation, the comments section doesn’t seem to be buying it. But the fossil fuel industry has a lot of people doing their PR for free right now. So it’s worth doing some mythbusting.
NPR reported Monday that “Alaska’s congressional delegation is celebrating; so are the state’s largest and most powerful Alaska Native organizations. They say this project means jobs and revenues that will sustain the region and their Indigenous culture for years to come.” NPR quotes Alaska’s Democratic Congresswoman Mary Peltola saying that “the state needs Willow to make the transition to a renewable fuel economy and just to fund government services.”
These takes are both tragic and disprovable, given that, as Dorothy and Toni put it, “this country does in fact have a government (with quite a large budget).” It would not be a hardship for the federal government to create a few hundred jobs in Alaska, or invest a couple billion dollars in public services. But the Biden administration would apparently rather auction off Alaska’s exquisite and fragile wilderness to the worst industry on the planet than consider uplifting Alaskan communities without a catch.
Another kicker: the Interior Department notes in its approval of the Willow Project that “most construction jobs would be filled by non-locals.” But somehow the Willow Project, which is only expected to create 300 non-construction jobs, is going to “sustain the region…for years to come”? The Interior Department reports that the Willow Project could lead to increased revenues of up to $10 billion for Alaska and the North Slope Borough, and increased federal revenues potentially up to $7 billion. These are hardly massive sums of money in the context of a government budget, though certainly more significant for Alaska than for the federal government. The federal government could easily provide that financial support for Alaska through other means.
As for federal revenue, here’s a thought: increasing the environmental enforcement budget at the EPA, DOJ and other agencies could easily bring in more than $7 billion in fines and fees from corporate polluters. The justice of securing federal revenue from fining corporations who flagrantly violate bedrock environmental law instead of giving the very same corporations license to do more damage would be profound.
Bottom line, on any rational person’s balance sheet, there is no way that one company’s profit from selling 576 million barrels of oil is worth the harm that extracting and burning that oil will cause. The habitability of our planet, and our collective future, is being bartered for short term corporate profits. There is simply no greater possible disjunction in relative values.
The profound delusions of the economic elite leave us with this double-whammy: the Willow Project, like many other new fossil fuel infrastructure projects that the government is currently approving, can both do significant damage and end up a stranded asset with significant losses. A thirty-year oil drilling project on rapidly melting Arctic ice? I wouldn’t invest in that. (But I actually listen to climate scientists.)
In fact, the Willow Project development plan assumes that the existing ice-road season will stay the same over the next decades; a pretty ludicrous assumption that, as Atlantic writer Emma Marris points out, might well leave their assets literally stranded. However poetic that would be, it’s worth noting that should the Willow Project—along with other new fossil fuel developments—become a stranded asset in the traditional financial sense, whether from climate disruptions or any other reason, that could have systemic repercussions too. And the status quo has it that private individuals bear the brunt of the cost of corporations’ risky business.
You might have heard about the clamor in Santa Clara last weekend as Silicon Valley Bank collapsed. The (heretofore libertarian) venture capitalists and tech billionaires who had deposited vast sums of money in the bank—sums well exceeding the $250,000 that the Federal Deposit Insurance Corporation guarantees—spent the weekend deliberately stoking fears online of cascading systemic risk to the banking system if they were not made immediately whole by the government. The government complied, agreeing to fully cover their deposits. I won’t get into the details here, though rest assured that you’ll see more on this very soon from my colleagues.
Big picture, this bank made a stupid mistake: putting too much of their customers’ money in Treasuries whose value rapidly depreciated as the Federal Reserve raised interest rates, leaving the bank with insufficient liquid funds to fulfill their customers’ cash withdrawals. This was a risk that any responsible bank would have seen coming for years. If inflation is high, and the Fed is consistently telegraphing that rate hikes are on the horizon, the bank should have hedged against these risks.
Who Pays for Bankers Being Unable to Understand Risk?
What does this have to do with long-term Arctic drilling projects? Well, if banks can’t be trusted to hedge against the most elementary of risks, they certainly can’t be trusted to adequately prepare on their own for the complex risks that climate change poses to the financial system. The Federal Reserve keeps treating climate change as a political issue and failing to regulate accordingly, when climate change is a scientific fact and an inevitable cause of future financial volatility.
The SVB collapse should be a dire warning to the public and financial regulators that banks cannot be trusted to hedge against the unavoidable complex risks that climate shocks and the energy transition pose to our financial system. Indeed, a much-cited 2022 study in Nature estimated that future lost profits from stranded assets globally exceeds $1 trillion in current dollars, with private individuals exposed to much of that risk.
Will the federal government and taxpayers be on the hook for shelling out billions of dollars to keep afloat the banks still investing in long-term oil and gas projects like Willow? Bank of America, JPMorgan Chase, TD Bank, Wells Fargo, Citi, and a dozen other banks have financed ConocoPhillips to the tune of over $20 billion dollars since 2016. Who will be responsible for propping up these banks for their morally bankrupt and massively risky financial decisions when those risks come back to bite them?
Will retirees see their savings disappear because TIAA and other pension funds are heavily invested in companies like ConocoPhillips, who are actively worsening the climate crisis set to roil their company’s profitability? We know how this works; the public pays the price.
This has been a bad week for the future that we at RDP are fighting for. Bailing out the Silicon Valley elite while selling off the Arctic for pittances is the federal government at its worst. But the fight isn’t over. And we won’t be letting the administration off the hook.
Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week: