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Newsletter | Revolving Door Project Newsletter | November 8, 2023

We Can’t Afford Supply Side Liberals’ Climate Strategy

ClimateExecutive BranchMedia Accountability
We Can’t Afford Supply Side Liberals’ Climate Strategy

Climate policy that fails to call for keeping oil and gas in the ground is not real climate policy.

This newsletter was originally published on our Substack. Read and subscribe to get our newsletters delivered weekly to your inbox here.

Last week, my colleague Dylan and I wrote in “Supply-Side Liberals Keep Peddling The Fossil Fuel Fix for The Nation about one of the weirder political fixations of the past year and change: “permitting reform,” or expediting federal approvals for new energy infrastructure. 

What can we make of the fact that something as dry as reforming the approval process for new construction projects has captured the imagination of both Republicans and Democrats in Congress? (It’s also resonating on the state level, with states like Massachusetts and Michigan aiming to centralize permitting for renewable energy, while local newspapers around the country have seen a rash of columns, op-eds, and editorials calling for federal permitting reform.) Why is Biden’s senior advisor John Podesta “obsessed” with permitting, according to New York Times columnist Ezra Klein (who is also obsessed with permitting)? And what is up with this new strain of center-left pundits arguing that environmental reviews are the big barrier to the energy transition? 

Our piece took a hard look (to borrow NEPA’s language) at what those pundits argue, and where we think they miss the plot. We can’t get into all of it here, so check out the piece in full on The Nation’s website

All Incentives, No Phase-Out

Many of the pundits calling for permitting reform are so-called supply side liberals, adherents of an economic approach which emphasizes the government’s role in boosting market capacity and productivity. They’ve found some real allies in the Biden administration; Treasury Secretary Janet Yellen herself described Bidenomics as “modern supply-side economics.” To be clear, we’re not opposed to the government intervening in the market to make it financially easier to build things that the public needs built. In the energy space, it’s vital that the government use all its tools to support the rapid, smart deployment of renewables. But it’s also vital that the government use its tools to rapidly phase out polluting energy.

All that this administration has done to make renewables easier and cheaper to build in this country is threatened by the administration’s simultaneous willingness to let U.S. fossil fuel companies continue to extract the massive reserves of oil and gas still in the ground, and, increasingly, to export it abroad. We share one global atmosphere. There is no decarbonizing America—no avoiding climate change reshaping the possibilities for life on this planet—without keeping our massive oil and gas reserves in the ground. 

One argument we make is that reforming permitting now, if it involves lifting barriers for building new fossil fuel infrastructure as well green infrastructure, is particularly harmful because of the financial structure of these projects:

“Fossil energy production’s total lifetime costs skew heavily toward upfront capital expenditures, rather than toward ongoing operating expenses. Once fossil fuel companies invest in building new operations, they have a strong financial incentive to continue operating them for their full lifespans. On the flip side, delaying the construction of such capital-intensive infrastructure ensures that a serious transition into clean energy becomes that much more cost-competitive. This makes the obstructionist tactics of environmental protesters seeking to delay fossil fuel projects not only moral but financially strategic as well.”

One of the glaring pitfalls of the supply-side liberalism we’re seeing put into practice today is how it overlooks the need for curbing oil and gas production in favor of an incentives-based approach to pushing private industry to realize public policy ends. That’s why its center-left proponents end up more aligned at times with the longstanding aims of the deregulatory right-wing than with environmentalists who’ve been fighting the climate fight for decades. Hence the right-wing, Koch-founded, libertarian Cato Institute giving “one and a half cheers for supply-side progressivism.” They’re pleased that voices on the Democratic side of the aisle are suddenly championing deregulation and economic growth like old-school Republicans, but hate that more “egalitarian value judgments” (their words) might worm their way into policy decisions too. It should give left-of-center permitting bros pause that their rallying cry is being taken up by people like Jonathan Brightbill, the erstwhile right hand man to insurrectionist Jeff Clark when Clark led the Justice Department’s (anti) environmental litigation practice under Trump.

Giving Cover To Corporate Greed

The fact that permitting reform seems to answer to both right-wing concerns (making it easier for corporations to build; weakening the administrative state) and left-wing concerns (making it faster to build renewable energy) helps account for its quick ascent to prominence in political discourse. But not nearly as much as how it serves corporate interests. Given how much the congressional agenda is shaped by industry lobbying, it’s hardly surprising that “permitting reform” has become a rallying cry on the Hill. Importantly, though, as a report from the Climate and Community Project and Roosevelt Institute explores, “Too much of the debate around rapid deployment has hinged on permitting, when the transition is mired elsewhere in the development process.” In other words, permitting reform would not be the boon those on the center-left think it could be for accelerating the energy transition.

In our piece, we talk about how supply-side liberalism’s credulity towards (and reliance upon) corporate actors gives cover to the low-road companies seeking to make easy money from the Inflation Reduction Act’s hundreds of billions in energy-related tax incentives. We highlight hydrogen and carbon capture incentives as arenas where fossil fuel companies are seeking to maximize profit and minimize standards: 

“The Biden administration is offering tens of billions in uncapped tax credits for “clean” hydrogen production, while industry players are lobbying hard to keep what qualifies as “clean” hydrogen as weak and manipulable as possible. And though carbon capture projects have failed to deliver, companies are happy to take more money to continue adopting them—after successfully lobbying to loosen federal standards for how much carbon they actually have to capture.”

At the same time, the administration is letting projects with mind-boggling emissions footprints move forward. In addition to the eight existing liquified natural gas export terminals in the US, eighteen more have been approved, and seven more have been proposed. The gas processed and exported by just one proposed facility, Calcasieu Pass 2, has projected emissions twenty times greater than the notorious Willow Project. Meanwhile, the original Calcasieu Pass facility exceeded its permitted pollution threshold over 2,000 times in 2022. And though this is gas fracked on U.S. land and sold by U.S. companies, poisoning U.S. communities all the while, technically the emissions from this gas are attributed to the countries where it’s combusted, meaning that with LNG exports the U.S. can outsource its official carbon footprint

Of course, that’s not how climate change works; the planet doesn’t care who burned the gas. As Kate Aronoff recently pointed out in The New Republic

“Maybe the problem is a lack of object permanence: If gas is shipped abroad, we don’t need to worry about its emissions. Another explanation, if one considers national security adviser Jake Sullivan’s recent essay for Foreign Policy, is a bit darker. Sullivan paints a bleak picture of a country beset by competition with its geopolitical rivals. Adjusting to the ‘new realities of power,’ he writes, means recognizing that ‘international power depends on a strong domestic economy.’” 

Aronoff is clear-sighted about what the Biden administration’s incoherent fossil fuel export stance implies about the goals of its climate policy: 

“The upshot of this kind of climate policy—a climate policy motivated chiefly by geopolitical anxieties—is that it isn’t really climate policy, whose chief goal should be reducing emissions. Looking to bolster domestic supply chains for clean energy is a perfectly fine goal. But if the ultimate prize is preserving the U.S. as a de facto super power, there’s no reason why expanding clean energy would need to be mutually exclusive with ever-expanding fossil fuel exports.”

The growing prominence of this type of lopsided supply-side energy policy not only provides cover to the polluting corporations trying to exploit climate policy, but also gives a new face to an old geopolitics aiming to preserve U.S. hegemony at the cost of global flourishing.

There are paths towards expediting the energy transition that don’t demand sacrifices from those who’ve already sacrificed the most. Insofar as supply side liberals actually do seek rapid decarbonization, then we ought to work together to build power for what fighting climate change realistically demands: a rapid build-out of clean energy infrastructure, and no new fossil fuel infrastructure. Whether or not this feels like a politically expedient or realistic option is beside the point; the science is unequivocal that it is necessary.

Image Credit: “No Pipelines! Keep It In The Ground” by Lorie Shaull is licensed under the Creative Commons Attribution 2.0 Generic license.

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As Climate Change Drives Insurance Crisis, Groups Call on FSOC and Regulators to Protect Economy

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Lobbyists are cashing in on the AI ​​wave

Kurt Campbell: The Lobbyist As Diplomat

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