Paris Agreement was good for subsidized big business, but not Americans

Not everyone was thrilled with President Trump’ s decision to withdraw from the Paris climate agreement, and they’ve made no secret of their disappointment. CEOs Elon Musk and Bob Iger, for example, have resigned from President Trump’s business advisory council in protest of his decision.

These and other titans of industry have argued that abiding by the pact’s requirements would be good for the U.S. economy. Yet one can’t help but note that many of the businesses boosting the Paris accord get a big boost in profits from global warming policies.

Take Elon Musk, for example. Two of his companies, Tesla and SolarCity, have accepted billions in global-warming-predicated government loans and federal tax credits. Put another way, Musk has a multibillion-dollar personal stake in global warming.

{mosads}Nor is mogul Musk alone. GE, Microsoft, Google, JP Morgan, Bank of America, Goldman Sachs, Morgan Stanley – all benefit from “warmist” tax equity arrangements that allow them to take a 30 percent federal investment tax credit when financing solar projects. 

That preferential tax treatment can be worth hundreds of millions of dollars per deal. In 2013, for example, Goldman Sachs offered a $500 million financing arrangement for SolarCity rooftop solar leases. 

Goldman Sachs has also been associated with other solar projects beholden to the federal taxpayer for financial backing. They include the Desert Sunlight utility solar project (with over $350 million in stimulus funds and a nearly $1.5 billion loan guarantee from the Department of Energy) and the Alamosa Solar Generating Project (with cash grant from Treasury exceeding $35 million and a more than $90 million loan guarantee from the Department of Energy).

GE’s Shepherds Flat wind farm received over $1.2 billion in federal and state subsidies, despite the Obama administration’s estimation that it would “likely move without the [Department of Energy] loan guarantee.” The Obama administration also determined the climate benefits fell short of the total subsidies by a factor of six.

Google, General Electric, Chevron, BP, and Statoil are among a host of companies that own Ivanpah, the solar farm boondoggle that has cost Californians and federal taxpayers hundreds of millions. And while oil companies certainly see a threat in global warming policies that target use of conventional fuels as policy “losers,” companies like ExxonMobil andChevron also have considerable resources in natural gas, a “winner” in global warming-inspired policies like the Clean Power Plan or a carbon tax that primarily targets coal.

Corporations love it when governments jump on the global warming bandwagon. They get “free money” through subsidies like renewable tax credits, government backed loans and loan guarantees, and grants, and artificially high demand through state-level mandates to use renewable energy. It allows them to double and triple dip in the pot of taxpayer dollars.

But experts inside and out of the financial world warn that these policies are not just wasteful; they could be creating a market bubble ready to burst.  Furthermore, they mask the price point at which these technologies are economically competitive.

“Free money” aside, large international companies like large international regulatory schemes (such as the Paris protocol) because they like certainty and hate competition. By being at the Paris-set table, large international companies have a shot at minimizing regulatory uncertainty and their own risk.

Oil companies, for example, see it as an opportunity to cut their losses. Shell CEO Ben van Beurden said that “One of the biggest concerns that I have around climate change is the unpredictability in which governments will go about it. If we have a very clear understanding that governments, successive governments, will continue to act consistently with a certain policy set that we believe in, I have no issue with it.”

Big companies can afford big lobbying firms to “work” the regulators, limiting damage to their own bottom lines and freezing out smaller competitors through regulatory requirements. And when regulations impose a heavy compliance burden, large companies can often absorb those costs or pass them on to consumers. 

In that sense, big business and big government have walked hand in hand for decades. Small wonder the New York Times found that small businesses regarded President Trump’s Paris decision so positively.

Leaving the Paris Protocol is not about bailing out the shrinking coal industry. And nothing about withdrawing from Paris precludes companies from investing in renewable technologies with their own money. But for American workers and consumers, the costs of Paris far outweighed the benefits. What’s good for subsidized big business isn’t necessarily good for the economy or the people.

Katie Tubb is a policy analyst specializing in energy and environmental issues at The Heritage Foundation’s Roe Institute for Economic Policy Studies.

The views expressed by contributors are their own and are not the views of The Hill.