Paying the price: Let market forces end the fossil fuel era

There’s an old saying about liars: Fool us once, shame on them; fool us twice; shame on us. We all should be ashamed of letting the fossil energy industry deceive us about global climate change. The price of that con has become unacceptably high.

I’ve described the industry and its backers in Congress as a carbon cartel. But national energy policy also makes the American people unwitting partners in a Faustian bargain between the federal government and Big Oil.

Even President Joe Biden, who has done more for clean energy than any of his predecessors, has been drawn into the cartel. He has embraced an “all of the above” energy strategy that allows coal, oil and natural gas to remain indefinitely in America’s energy mix. If the United States is to do its part in keeping global warming at or below 1.5 degrees Celsius, we should retire carbon-based fuels from the economy as soon as possible.

Research in 2021 estimated that most of the world’s proven fossil energy reserves must remain in the ground for just a 50 percent chance of holding climate change to manageable levels by mid-century. In the U.S., two-thirds of America’s oil reserves, half our gas and 97 percent of coal reserves are unextractable. But considerably more should be left in the ground because a 50-50 chance is far too big a gamble on an existential threat like global warming.

The United States should off-ramp all three fossil fuels from the economy well before 2050. National energy policy should clearly define when and how those retirements will proceed. Instead, President Biden waffles.

He said during his campaign that the oil industry’s transition would happen “over time.” In 2021, he said, “the idea that we’re going to be able to move to renewable energy overnight … it’s just not rational.” In his most recent State of the Union address, the president said, “We’re going to need oil for at least another decade … and beyond that.” But the industry, its shareholders, investors, workers and customers need greater certainty to prepare for decarbonization.

Rather than making the future of Big Oil a political problem, Congress should let market forces determine the industry’s fate. The industry neither needs nor deserves taxpayer subsidies. Besides, we have known for some time that we can’t trust the oil majors. They have consistently deceived the government and the American people about their responsibility for global warming.

Investigations by Inside Climate News and the Los Angeles Times blew the industry’s cover in 2015 by revealing that oil executives knew as early as the 1960s that their products were causing global warming. They covered it up. Starting in 1968, Exxon (now ExxonMobil) reportedly gave more than $31 million to groups spreading climate change misinformation.

The five biggest oil companies earned a record $200 billion in profits last year, double the year before. But instead of significant investments in clean energy, they used the profits to pay bigger dividends to shareholders and buy back stock to increase its value. BP, Exxon and Shell pulled back on cutting their emissions and investing in renewable energy.

President Biden should follow the example set by Christiana Figueres, who led international climate negotiations until 2016. In a recent newspaper editorial, she admitted falling for Big Oil’s lies when it promised to join the fight against global climate change.

In 2015, she urged critics to stop “pointing the blaming finger at fossil fuel companies” because “bringing them with us has more strength than demonizing them.” Now she admits she was wrong. She acknowledges that oil and gas companies are making “no effort to get on the right side of history, and they “do not have the right to determine the future of everybody on this planet.“

Time magazine reports that fossil fuels have pushed the world into “uncharted territory.” The Earth is hotter than it’s been for 125,000 years, and the climate is becoming deadly faster than humans and many other species can adapt. Time warns, we are “remaking our planet into one in which large swaths may become inhospitable to human life.”

Meanwhile, the Biden administration is again leasing public lands for oil and gas development. The president supported faster permitting of oil and gas infrastructure even though the International Energy Agency (IEA) warned in 2011 that the world should invest no more money in fossil fuels. Biden also approved permits for the controversial ConocoPhillip’s Willow oil project in Alaska.

An oil industry executive responded happily, “Everyone is moving to the middle” on energy policy. But unceasing fossil fuel pollution has left the world with no time for a transactional change in the energy economy. We need a wartime footing for an energy transformation.

So, what should the president and Congress do?

Biden can start by recognizing climate change for what it’s become: a threat to economic and national security. He can declare a climate emergency, giving him additional authority to deal with the crisis. Second, he can reinstate the moratorium on oil and gas production on public lands.

Next, he and Congress can embrace the conservative principle that markets, not government, should pick the winners in the energy economy. The government can stop all public subsidies for fossil fuels. Given the oil industry’s maturity and enormous profits, it does not need and cannot justify taxpayer support. The International Monetary Fund (IMF) estimates this would generate $35 billion in new federal revenue in the U.S. The money could help fossil-energy workers and communities through the clean energy transition.

Fourth, Congress can fully unleash market forces with a clean carbon-pricing bill so fossil fuel prices more accurately reflect their actual costs to society. The IMF estimated those costs in the United States to be well over $600 billion in 2020. According to the IMF, carbon dioxide pollution would drop 36 percent by 2025 if fossil-energy prices worldwide equaled their actual social and environmental costs.

Congress can learn from the Regional Greenhouse Gas Initiative founded by Northeast and Mid-Atlantic states in 2009. It reportedly has cut carbon pollution by more than half, saved consumers more than $1 billion in energy costs, created thousands of jobs, and added $4 billion to the region’s economy.

To put it plainly, current national energy policy is not only unsustainable; it’s also morally wrong. It makes the American people unwitting members of the carbon cartel and enablers of Big Oil’s greed.

To paraphrase Figueres, the fossil fuel industry powered human development in the 20th century and is destroying it in the 21st. Neither we nor our government should be part of that deal.

William S. Becker is executive director of the Presidential Climate Action Project, a nonpartisan initiative that works with national thought leaders to develop recommendations on national energy and climate policy. The project is not affiliated with the White House. He is a former U.S. Department of Energy central regional director and special assistant to the assistant secretary of energy efficiency and renewable energy.