Fossil Fuel Companies Have Used At Least $3 Billion In Federal Covid-19 Aid
“We should not be wasting taxpayer dollars on an industry that’s in a tailspin of its own making, especially when it seems intent on bringing the whole planet down with it.”
Over 5,600 fossil fuel companies, many of which were already struggling and heavily debt-burdened before the pandemic, have taken at least $3 billion in Covid-19 bailout aid from the federal government according to an analysis by Documented and the Guardian of data released on Tuesday from the Small Business Administration (SBA).
The Guardian’s Emily Holden notes that the $3 billion figure is almost certainly far less than the companies actually received, as the SBA did not disclose full details of the federal aid. The real sum could be closer to $6.7 billion, with at least 475 fossil fuel companies receiving at least $2 million, according to the report.
“A separate review by the watchdog Accountable.US and the Guardian found that millions of dollars in coronavirus aid has also gone to companies with histories of significant environmental violations,” reported Holden.
Environmentalist have widely condemned the indiscriminate use of bailout funds to prop up an industry that experts say must be phased out to prevent ecological catastrophe. Notably, wind and solar are now cheaper than coal and steadily improving in efficiency, leading environmentalists like the New Republic’s Kate Aronoff to advocate a clean energy transition as an integral element of any Covid-19 economic recovery plan.
Other critics pointed to the hypocrisy of the fossil fuel industry, generally dominated by right-wing “free market” advocates, relying on federal funds for survival.
“Federal aid should be going to help small businesses and frontline workers struggling as the result of the pandemic, not the corporate polluters whose struggles are a result of longstanding failing business practices,” Melinda Pierce, Sierra Club legislative director, told the Guardian.
The Federal Reserve’s pandemic reaction, which American Prospect editor David Dayen has called an “unprecedented rescue of corporate America” facilitated by a “$4.5 trillion slush fund”, follows a decade of low interest rates that have enabled U.S. companies to expand through cheap credit. This policy has significantly impacted the US fossil fuel industry, which as of April 2020 has more than $700 billion in outstanding debt, according to the Institute for Energy Economics and Financial Analysis.
Beyond the fossil fuel sector’s massive annual public subsidies, the fracking industry has been particularly dependent on cheap credit to maintain operations after years of unprofitability, increasing concerns that the Fed’s direct corporate debt purchasing program will rescue the industry from mountains of poorly rated debt accumulated through irresponsible business practices.
The Trump administration has continued it’s rollback of environmental protections throughout the pandemic and promised to protect US fossil fuel producers from market downturn.
We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!
— Donald J. Trump (@realDonaldTrump) April 21, 2020
Even establishment journal Foreign Affairs slammed the use of bailout funds for the fading fossil fuel sector, emphasizing the unprecedented financial crisis that will accompany prolonged use of carbon-based energy. Foreign Affairs warns that not only will the insurance industry confront unmanageable turmoil from intensified storms and weather patterns, but that the inevitable transition away from fossil fuels will cause a severe reduction in the value of the industry’s assets, costing investors billions in capital.
Larry Fink, CEO of BlackRock, the largest asset management firm in the world and the author and facilitator of the bailout plan, has also stressed the financial consequences of climate inaction. Economists at JP Morgan Chase, another one of the world’s largest asset managers, warned in a leaked document in February that energy sources must change “if the human race is going to survive.” Notably, both of the mammoth financial institutions have pumped billions of capital into fossil fuel expansion in recent years, with BlackRock doubling as a driving force in Amazon deforestation.
While recent record-breaking heat and unprecedented arctic fires illustrate the direness of the situation, a string of victories this week against the Atlantic Coast Pipeline, the Dakota Access Pipeline, and Keystone XL represent serious advancements for the social movements fighting to keep fossil fuels in the ground.
“We should not be wasting taxpayer dollars on an industry that’s in a tailspin of its own making, especially when it seems intent on bringing the whole planet down with it,” said Jesse Coleman, a researcher for Documented.