Politics of Climate Change: A Well-Oiled Machine

By Julie Gorte and David Loehwing

The politics of climate change are a lot like the politics of gun control, at least in the sense that President Obama meant when he asked in April 2013 how Congress could fail to deliver gun control legislation when 90 percent of the American public wants it. Polling in 2013 shows that 87 percent of Americans would like their national government to make clean energy a priority; only 12 percent think that this should be a low priority. The same poll showed that 70 percent of Americans believe that climate policy should be a priority, and 59 percent think the US should reduce its own greenhouse gas emissions even if other nations do not. Yet year after year, our national policy mechanisms have stalled efforts to do both. What’s holding us back? Special interests are, and more specifically, fossil fuel interests are.

In the year leading up to President Obama’s first election, expectations that Congress would pass some sort of bill limiting greenhouse gas emissions were high. The percentage of Americans who said in public opinion polls that they believed that climate change was happening and that something should be done about it was rising in the wake of two dreadful hurricane seasons. At least one global warming bill had gotten out of committee in 2007 in the Senate, and in 2009 the House of Representatives passed the Waxman-Markey American Clean Energy and Security bill. Financial analysts were beginning to talk more about the costs of carbon emissions, often with the expectation that regulatory action was imminent.

All that came crashing to a halt in 2010, when, in July, Senator Harry Reid finally pulled the legislation when no solution to various objections to it could be reached. There is plenty of culpability to go around in this failure, but much of it can be laid at the door of fossil fuel companies and electric utilities opposed to any kind of emissions regulation. Lobbying spending by electric utilities peaked in 2010, after ratcheting up significantly in 2008 and 2009 after Mr. Obama was elected; the picture is similar for oil and gas companies and coal mining companies (see figures below).

It is noteworthy that H.R. 2454, the American Clean Energy and Security Act of 2009, which would have instituted a cap and trade system for greenhouse gas emissions, had the fifth highest number of clients for whom lobbying was carried out in the 111^th Congress.  And this isn’t fifth out of ten, it was fifth highest for all issues on which lobbying was conducted.

Public databases give indications of the magnitude of lobbying on climate and energy legislation, but the figures alone don’t connect all the dots in terms of the effect of this spending on the policymaking process. For that, we need case studies. Robert A. G. Monks documents the contributions of ExxonMobil to many organizations that attacked the Arctic Climate Impact Assessment, a scientific consensus document published in 2004 that called for mitigation of climate change through reductions in greenhouse gas emissions. Monks states,

“Soon, the conservative George C. Marshall Institute ($630,000 in donations from ExxonMobil between 1998 and 2005) had joined the fray with a press release attacking the Arctic report for ‘unvalidated’ climate models and ‘scenarios’ that bear little resemblance to reality and how the future is likely to evolve. And thus the story continues to this day. In 2010, the U.S. Chamber of Commerce, generously funded by ExxonMobil and many other energy companies, tried mightily to get the EPA to reverse its findings that greenhouse gas emissions endangered human health. When that failed, the Chamber sued the agency.”

Joe Romm wrote in 2010 that companies spent over half a billion dollars to kill climate legislation and support offshore drilling. Romm lays out the top ten companies in terms of expenses for lobbying and PAC contributions to federal candidates, and also notes that the Chamber of Commerce and the Edison Electric Institute, which represents investor-owned utilities, were significant players in exerting political pressure against legislation limiting greenhouse gas emissions.

Companies often profess that their lobbying and other political spending improves their performance, by helping to create a public policy regime that is friendly to their interests. That may be so, though academic work casts some doubt on that assertion. Even if it is true, however, the government is accountable to all citizens, not just business interests, and it is supposed to take a long-term view of social welfare and economic development. Climate change has already cost the government, not to mention insurers, other  businesses and citizens, billions of dollars, and those costs are predicted to rise as the climate warms. For example, Munich Re reported in 2012 that the damages from weather-related disasters are up almost fourfold since 1980, totaling over $1 trillion. The World Bank estimated that the costs of adapting to global warming on the order of 2⁰C would be $70-100 billion a year; the costs of adaptation to a world with 4⁰C warming—a catastrophic world—are incalculably greater.

Society as a whole might be far better off without any corporate spending on politics and policymaking. We are unlikely ever to know, especially after the Supreme Court’s Citizens United decision removed most limitations from corporate campaign contributions. However, in issuing that decision, the Supreme Court also noted that corporations should report on their political spending (though the decision did not require that).  In the words of the Justice Kennedy,

“With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions…  This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

Justice Scalia wrote, in another Supreme Court decision a year earlier, “Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed.”

But despite the more than half a million letters to the SEC mostly supporting a petition that the agency require transparency on political spending, there is no law, and no regulation, requiring corporations to report. We may very well be facing doom, not from a lack of civic courage, but from a more tempestuous planet. And the companies whose emissions are responsible for much of that tempest continue to urge policymakers to reject regulation, without much obligation to tell anyone about it.

A concerted shareholder campaign, of which Pax is a member, has convinced many large corporations to do some reporting and establish some oversight processes on political spending, but it is vanishingly rare to find a corporation that actually reports all the money it spends on politics, including spending (often called dues) on nonprofit organizations, like the Chamber of Commerce, whose own spending on politics (over $16 million in 2013) dwarfs that of most corporations. In 2012, almost one-third of all shareholder proposals filed were on political contributions. It is time for us to take back the political process while there is still time to avoid catastrophic climate change. We are approaching that level of atmospheric carbon dioxide concentration—450 parts per million—very fast, and recently crossed the 400 ppm threshold. One of the many things needed to stop this runaway train before it rolls off the cliff is to make corporations more accountable for their actions—in this case, their political actions aimed at stopping a sensible climate policy.

After the bankruptcy of Solyndra, a renewable energy company that received a government loan, we heard a nearly nonstop chorus of “government shouldn’t be picking winners.” Never mind that the Department of Energy’s loan guarantee program for clean and renewable energy projects has generally been a success, helping to keep about 60,000 people employed during the economic downturn. And never mind that government loan guarantee programs have generally been good at managing risk, costing taxpayers only 94 cents for every $100 invested.  So despite a long history of fairly successful policies supporting private sector innovation (which, by the way, is often beneficial for the economy as a whole), the government, which has the long-term interest of all citizens at heart, shouldn’t be picking winners, but energy companies, which have the short-term interests of their own management at heart, should? To paraphrase Winston Churchill, this is nonsense, up with which we should not put. Pax has filed or cofiled several shareholder proposals asking companies to be more transparent about their political expenses over several years, including two for the proxy season of 2013.

It is time for companies to be accountable for their attempts to manipulate the public policy enterprise.  It is entirely appropriate that corporate interests should be taken into account while making policy—recall that government should have the interests of all its citizens at heart—but sunshine and accountability are also the bedrock of our political system, and it is time to have those as well.  The SEC should issue a rule requiring corporations to make public all their political spending, not just campaign contributions, but also lobbying expenses, which dwarf campaign contributions.  Moreover, that rule should include disclosure of contributions to nonprofits, some of which spend more on lobbying than most companies.

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Julie Gorte is SVP, Sustainable Investing and David Loehwing, Director of Sustainability Research Department, at Pax World Investments

[image credit: Andrew Scott: Flickr cc]