“We want them to go bankrupt if we want to fight climate change.”
“…tThe way we basically get rid of these carbon financiers is to deprive them of their source of capital.”
“Financial regulators need to rethink their own role in order to be able to play their part in the broader reinvention of the economy.”
“…the adoption of [financial regulatory] practices and policies that will allocate capital and align portfolios with sustainable investments that are not dependent on carbon and fossil fuels.
“It will change the allocation of capital. Suddenly people are going to make assessments taking into account the long-term risk for investing based on the climate crisis.
These are all quotes from President Biden’s current and former high profile candidates and appointees. Their declarations are not made in a vacuum and the signals they send are as much responsible for the energy inflation that we are experiencing today as they are representative of the administration’s hostility towards fossil fuels. This anti-energy rhetoric has had a chilling effect on long-term markets and investment, decapitalizing the booming US oil and gas industry. In an effort to appease their liberal base, the Biden administration has enacted policies and broadcast messages that pick and choose favored industries over disadvantaged industries.
Unfortunately, banks and financial institutions have followed suit, appeasing activist investors by blocking energy producers, guns and other legal industries by restricting their access to credit and capital. As a result, the Bakken growers in my home state of North Dakota ran out of money and are now producing 400,000 barrels per day less than at its peak. Similarly, carbon capture projects have struggled to find funding because administrative and financial officials have focused on fuel types rather than the emission reduction target.
This politically motivated discrimination is the reason why I introduced the Fair Access to Banking Services Act. This legislation, which is co-sponsored by one-third of the Senateprotects access to financial services and ensures that banks base their decisions on unbiased and individualized risk-based analysis, developed from empirical data and assessed against quantifiable standards.
The Biden administration plans to double down on its overregulation agenda. On March 21, the Securities and Exchange Commission (SEC) will announce its rule governing how publicly traded companies are required to disclose their climate change risks. Not only does the SEC lack the power to require disclosures that are not financially material, but the new climate reporting requirements are arbitrary, confusing, and would impose significant costs on publicly traded companies. .
The Biden administration’s regulatory onslaught and acerbic rhetoric are unfolding against a backdrop of soaring energy prices. While President Biden made the right decision to ban energy imports from Russia after bipartisan pressure from Congress, that action by itself is not enough. The administration would look to despots in Iran and Venezuela to help deal with oil shortages. Instead, it should send market signals to American energy producers who want to step in, fill the void and help America’s European allies become less dependent on dictators’ energy supplies. Jen Psaki likes to talk about price gouging and supposed deferred action by oil and gas producers. In reality, many producers and refiners are ready and willing to step in, but no sane CEO would spend millions or billions on costly capital expenditures when their government is actively touting an energy transition to regulate or decapitalize.
The Biden administration must radically change course by reversing bureaucratic efforts to deny funding to what it wrongly views as “socially suboptimal” industries. It begins by removing radical and climate alarmist political candidates and appointments. These signals could provide banks, financial institutions and energy producers with the security and stability needed to trigger long-term US energy growth.
Cramer is the junior senator from North Dakota.