In the midst of the coronavirus pandemic, a dozen members of the New York City Council have seized the opportunity to introduce a resolution calling on Wall Street to cut ties with traditional fuel sources, urging banks, money managers, and insurers to divest from companies in the coal, oil, and gas sectors—all in the name of climate change.
With the American economy facing unprecedented challenges as millions of Americans remain out of work and thousands of businesses temporarily shuttered, it is not the time to launch a political attack against the nation’s most viable energy sources.
Given New York City is the epicenter of Covid-19 here in the United States, one would assume elected officials would be devoting all of their efforts to ensuring the safety and health of city residents rather than gambling with the nation’s energy future.
Unfortunately, it seems these lawmakers have prioritized an anti-fossil fuel ideology over the best interests of their constituents (energy consumers) and the economy.
With Wall Street as the hub of the American financial industry, this ill-timed resolution attempts to regulate the nation’s energy policy by pressuring banks to pull the plug on fossil fuel business dealings. But the resolution overlooks several inconvenient facts. Not only are financial institutions not responsible for dictating energy policy, but traditional fuel sources continue to provide the lion’s share of American energy—and New York is no exception.
With its large population, the state is one of the nation's five largest consumers of petroleum. Additionally, natural gas is responsible for nearly two-fifths of the state’s electricity generation, and heats three-fifths of households. And according to the federal Energy Information Administration data from 2018, renewable energy sources of wind and solar provided only about 3% and 1% of the state’s electricity, respectively.
But the critical role of natural gas and oil is not unique to New York. As the EIA reports, fossil fuels are responsible for meeting nearly 2/3 of our nation’s electricity needs. In addition, petroleum products accounted for about 92% of total U.S. transportation sector energy use. Nationwide, wind and solar produce less than 10% of our electricity.
The resolution also neglects the significant environmental benefits of natural gas. As reported by the International Energy Agency earlier this year, global carbon dioxide emissions flatlined in 2019, despite widespread expectations of another increase. The agency credits this to declining emissions from electricity generation in advanced economies, as the United States led the way with the largest emissions decline of any country. The U.S.'s success is largely due to the increase in natural gas-fired electricity generation. Natural gas is part of the solution—not the problem.
In response to previous calls for banks to divest from fossil fuels and infrastructure development, legal experts have reminded activists that financial institutions do not establish public policy, nor have they been tasked with selecting the nation’s energy portfolio. Perhaps the most succinct explanation came in a 2019 report in which experts wrote:
“Private lending institutions are engines of commerce, not administrative agencies or legislative bodies. Bank officers are neither elected government officials nor arbiters of economic, social, or environmental issues. They fund legitimate business enterprises, and large-scale infrastructure developments are lawful, profitable endeavors for them.”
Despite what the dozen City Council members might argue, investments in energy development are legitimate, profitable business ventures. Not only have traditional energy sources been a sound investment monetarily, but they have also served as a lifeline for the American economy for decades.
Rather than casting out the cornerstones of American energy, policymakers have a duty to ensure the economy has the building blocks for success as we emerge from Covid-19. Access to reliable, affordable, and efficient energy will be a key component as the nation works through the pandemic and begins the long road back to normalcy.
Craig Stevens is a Western New York native and former senior adviser to U.S. Energy Secretary Sam Bodman. He is now the spokesman for Grow America's Infrastructure Now (GAIN).
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May 07, 2020 at 06:00PM
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City Council's call for fossil fuel divestment is unrealistic and harmful - Crain's New York Business
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