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An ExxonMobil oil refinery in Baton Rouge, Louisiana is the second-largest in the United States. (Photo: Barry Lewis/InPictures via Getty Images)

Climate Groups Blast ALEC's Model Legislation Targeting Fossil Fuel Divestment

"It's ridiculous that supposedly pro-free market forces are trying to mandate how banks conduct their business. But this farce becomes tragedy when ALEC's work locks in stranded assets and ultimately locks in humanity to more warming, more chaos, and more disasters."

Jessica Corbett

Over three dozen advocacy groups on Monday responded to recent reporting about a U.S. right-wing group's efforts to advance model legislation opposing fossil fuel divestment by calling on state officials to "disavow" the proposed bills and ditch climate-wrecking industries.

"It was only a matter of time before ALEC and Big Oil would attempt to hold even Wall Street banks hostage to their climate-, economy-, and community-destroying agenda."

The letter from 38 organizations to the executive directors of the National Association of State Treasurers and the National Association of State Auditors, Comptrollers, and Treasurers follows the latest conference of the Koch-funded American Legislative Exchange Council (ALEC).

During the summit, ALEC's Energy, Environment, and Agriculture Task Force endorsed two pieces of model legislation: the Energy Discrimination Elimination Act and the Resolution Opposing Securities and Exchange Commission and White House Mandates on Climate-Related Financial Matters.

Along with calling on auditors, comptrollers, and treasurers to oppose the bills, the letter says that "we encourage you to heed the call of scientists, financial experts, and the International Energy Agency (IEA) by moving state funds under your control to a 1.5°C-aligned pathway and decreasing the exposure of those funds to the fossil fuel and other carbon-intensive industries."

The groups argue that "what ALEC claims to be discriminatory action is instead prudent action to ensure the stability of our financial system and economy," noting that most major oil and gas companies are planning to increase production this decade despite the necessity of keeping fossil fuels in the ground to meet the Paris agreement's goals.

As the letter explains:

Because oil and gas producers have refused to adapt their business models, at some point a huge number of fossil fuel projects will be retired prematurely or become "stranded assets." This means that the market is now carrying a huge amount of "unburnable carbon" and that companies are raising money for projects that will not provide the return on investment envisaged under a business-as-usual scenario. This could result in financial shocks arising from unforeseen write-downs and bankruptcies that reverberate throughout the market. Financial actors including state governments that do not insulate themselves from these sorts of climate-related financial risks could be negatively affected.

"Despite what ALEC and other politically-motivated organizations may claim, the global energy transition is underway. This is a market reality, not a political opinion," the letter continues. "Fossil fuel companies and allied political officials who refuse to acknowledge this reality are putting fossil fuel workers and residents of fossil-fuel dependent local communities in unnecessary harm by delaying the inevitable."

The letter adds that "proactive and deliberate economic planning that prioritizes the needs of workers and affected communities is the only way to ensure that workers are not disenfranchised and abandoned by companies who waited until it was too late."

The groups take aim at ALEC's track record, declaring that "it's no surprise that this climate change-denying organization, long on the opposite side of workers and the environment, is mobilizing once again to attempt to quell the people-centered movement for real action on climate change and financial regulation."

They also warn the letter's recipients to learn from the recent past, pointing out that "we know from the Great Recession that the financial sector won't take responsibility. It's up to regulators to protect people from the impact on climate and financial risk of fossil fuel investment."

"Ensuring a managed decline of the fossil fuel industry and smooth transition to a clean and just economy at the rapid rate that science requires demands strong government regulation and your leadership," the letter concludes. "We hope we can count on your enthusiastic and levelheaded support."

Members of the organizations behind the letter blasted ALEC's actions to prevent fossil fuel divestment—and thus further endanger frontline communities often home to poor as well as Black, Indigenous, and people of color (BIPOC) households—in a joint statement from the Stop the Money Pipeline coalition.

"We need policymakers and financial regulators to stand up to corrupt groups like ALEC and listen to scientists and frontline communities to shepherd a just transition off of extractive fossil fuels."

"​​It's so predictable that an organization like ALEC, that's fueled crises in BIPOC communities with policies and platforms that sustain corporate power and white supremacy, is trying to thwart the people-centered movement for real action on climate change and financial regulation," said Erika Thi Patterson, campaign director of climate and environmental justice for the Action Center on Race and the Economy.

"The 2008 crash showed us that the financial sector will always put profit before people and we're seeing that again with Wall Street continuing to pump trillions into the fossil fuel industry," she added. "This is why we need policymakers and financial regulators to stand up to corrupt groups like ALEC and listen to scientists and frontline communities to shepherd a just transition off of extractive fossil fuels."

Doug Norlen, Economic Policy Program director at Friends of the Earth U.S., said that "it was only a matter of time before ALEC and Big Oil would attempt to hold even Wall Street banks hostage to their climate-, economy-, and community-destroying agenda."

"They are willing to let the climate burn, leave the economy in ruins, and derail any just transition just to squeeze out... a few more quarterly profits," he asserted.

RL Miller of Climate Hawks Vote called out the group's apparent hypocrisy.

"It's ridiculous that supposedly pro-free market forces are trying to mandate how banks conduct their business," she said. "But this farce becomes tragedy when ALEC's work locks in stranded assets and ultimately locks in humanity to more warming, more chaos, and more disasters."


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