In an amusing twist on a classic, George Washington University professor, Henry Farrell, once paraphrased the famous John Maynard Keynes quote, noting that it is often the politicians who remain “unwitting slaves of the ideas of defunct economists.” Now, while Professor Farrell and Sir Keynes have clear points to make with regards to monetary policy, if we consider energy policy in the United States in the same light, we can see that the Farrell/Keynes snark hits frighteningly close to home.
In late February, Citigroup CEO Michael Corbat announced his company’s latest foray into sustainability investing. To be clear, this was a major announcement: “Citi will lend, invest and facilitate $100 billion over 10 years for projects ranging from energy, to clean tech, to water, to green infrastructure. Simply put, it is a $100 billion investment in sustainable growth.” And as the announcement spread across the financial press, it drew reactions that ranged from praise to matter-of-fact head-nodding from the broader business and investing community. After all, this is Citigroup we’re talking about – not some two-bit day trader, pawning the latest 3X-leveraged ETF promising insane returns on Twitter.
But lest a good deed go unpunished, enter the Wall Street Journal editorial board. With damning arguments such as: “Again, we don’t doubt Citi has run the numbers on its $100 billion sustainability fund, and we wish them luck with it,” the notoriously fossil fuel-aligned WSJ ed board charted a bizarre course in attempting to dismantle the Citi announcement in a thoroughly nonsensical piece.
Perhaps this shouldn’t come as a surprise. After all, in many mainstream conservative circles, green = bad and fossil (primarily oil) = good. End of discussion. While these arguments appear constantly in Beltway publications, although rarely do they seem to be done with actual constituents’ best interests or even popular opinions in mind. And yet, tilting at windmills – in this case, literally – provides plenty of punching bag material in D.C.
This brings us back to the Farrell/Keynes quote. If the politicians are right, and green energy is one big government-inspired bust, that must mean that Citi, Apple, Google and many, many others are wrong. Forget the data that directly refutes the WSJ’s argument that “green projects not subsidized by taxpayers have been at a price disadvantage for years” – when in fact the lowest *unsubsidized* levelized cost of energy available today is from wind power. Forget the polling that shows “Americans largely favor renewable energy sources of electricity like solar and wind power over technologies like nuclear and coal power.” And despite the WSJ’s cynical swipe at a so-called “green-venture lobby,” the renewable energy industry certainly hasn’t evolved to the point of playing big money politics with the likes of Exxon Mobil and the American Petroleum Institute. Perhaps this is the reason behind that certain persistent attitude in Washington D.C. – ranging from blasé to openly hostile – toward a growing and profitable renewables sector.
But whether you blame big money politics or not, one thing is clear: the energy markets are experiencing change like never before. As the decades-old oil price/GDP correlation breaks down, energy demand flattens (even reverses!) and the coal industry continues down its slow, painful road to obsolescence – is it that crazy to think that innovative, affordable and most importantly, renewable, resources are actually becoming attractive? To deny the reality that the market is already sniffing out is precisely the kind of backwards thinking our policymakers ought to resist.
But for now, the rest of us are stuck waiting to see how long certain politicians in Washington (you know who you are) will remain enslaved to the ideas of defunct economists, energy analysts – or dare I say, the WSJ editorial board?
Kevin Haley is the Director of Communications for the American Council On Renewable Energy (ACORE)