Recessions are a Second Chance to Divest

Did you know that fossil fuels in the US are subsidized? The reason for this is that the domestic American fossil fuel market was once young and unstable, though since then it has ballooned into a mature, lucrative business. The federal government’s financial support of coal, oil, and natural gas guaranteed cheap and plentiful energy in those early years. But now that we have realized the harms caused by fossil fuels and harnessed affordable and limitless energy from the wind and sun, we can (and should) wean ourselves off of the Earth’s finite resources of fossil fuel. Economic recessions are a great time for governments to divest in fossil fuels and reinvest that money into renewable energy, and in this article I’ll tell you how.

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Much like we have seen during the coronavirus pandemic, when people stop spending, industries stop pushing out products and the fossil-fuel industry loses customers. Although a halt in emissions results in a temporary display of clear skies and beautiful city-scapes that were covered in smog just weeks before, fossil fuel industries are quickly bailed out and continue to release chemicals into the atmosphere (sometimes at an even higher rate than before) immediately following an economic recession.

Despite significant financial support from the government, the profitability of US oil companies is not what it once was due to over-production. From 2005 to 2014, the net debt of North American exploration & production companies increased by a whopping 250 percent, while cash flow increased by a mere 68 percent. Low-wage workers laid off by the oil and gas industries need government support during times of economic hardship such as these, but as this article stresses, the country’s emergency funds should not be wasted on an already-failing industry or their bosses.

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The decline of fossil fuel industries should serve as a natural transition into other more reliable energy sources that won’t risk biodiversity or public health. Why are we desperately throwing public funds at a dying market, when we could be building a sustainable future while we have the chance?

The Past

Imagine if the Obama Administration had been willing to construct a new economy on the back of the Great Recession of 2008. Naomi Klein writes in her book This Changes Everything, “The stimulus package could have been used to build the best public transit systems and smart grids in the world. The auto industry could have been dramatically reengineered so that its factories built the machinery to power that transition – not just a few token electric cars (though those too) but also vast streetcar and high-speed rail systems across an underserved nation.”

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Bailed-out banks could have been required to give loans to credible factories switching from dirty to clean energy production, or face nationalization. Other auto-industry factory owners could have turned their plants into cooperatives producing a wide range of domestic products.

The Dream

Ontario’s Green Energy and Green Economy Act of 2009 was a climate action plan described as “the most comprehensive renewable energy policy entered anywhere around the world” by Michael T. Eckhart, then president of the American Council On Renewable Energy. Energy experts from around the globe hailed the act of legislation which aimed to completely withdraw Canada’s most populous province from the claws of coal. Here’s what the plan was:

  • Enable renewable energy businesses to sell leftover power back to the electric grid, providing them with long-term contracts at a guaranteed premium price
  • Promote a range of business types, including not just large companies but also local municipalities, co-ops, and Indigenous communities
  • Verify that businesses are supporting the local economy by hiring and purchasing a fixed percentage of equipment from within the region
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The act helped to create over 31,000 jobs in renewable energy. Renewable energy factories were able to use existing abandoned infrastructure from the auto-parts industry to build panels. Much of the workforce came from the auto industry as well. It seemed like a dream, until everyone woke up to the harsh reality of global trade deals. As soon as solar and wind manufacturers moved in, they were moving out. Canada’s attempt to strengthen its local economy and become independent from coal was inhibited primarily by the World Trade Organization (WTO) of which it has been a member since 1995. The WTO found Ontario’s policy which favored local products to be discriminatory against products made in other nations. The act was repealed, and Canada was allowed to continue participating in free trade, which is a driver of the climate crisis we are in today.

“For centuries world trade has increased not only environmental degradation but also global inequality. The expanding ecological footprints of affluent people are unjust as well as unsustainable. The concepts developed in wealthier nations to celebrate ‘growth’ and ‘progress’ obscure the net transfers of labour time and natural resources between richer and poorer parts of the world” – Alf Hornborg, Professor of Human Ecology, Lund University

Now is our chance to gain independence from the fossil fuel industry, and to look forward to better managed, sustainable alternatives. If I haven’t convinced you yet, maybe I will another day, because I’m emotionally drained by the lack of action from our leaders that the US (and the world) critically needs. Click on any of the underlined links to learn more. Have a great weekend! Sincerely, The Green Goddess 🙂

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