June 15, 2021 Read More →

White House mulls using financial regulation to raise fossil capital costs

Houston Chronicle: 

The Biden administration, facing a Congress unlikely to take significant action on climate change, is considering reaching beyond environmental law to establish tough, new financial regulations that raise the capital costs of the nation’s fossil fuel industries.

To accomplish the president’s agenda of dramatically lowering greenhouse gas emissions, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Department are in various stages of rulemaking to encourage the nation’s banks, institutional investors and other financial players to invest more heavily in clean energy, mirroring efforts underway in the European Union.

The strategy threatens to accelerate the shift of investment away from the oil and gas companies that dominate the Houston and Texas economies, depriving them of the capital they need to launch drilling projects, expand and hire workers, analysts and policy experts said. It would only add pressure on an industry that has fallen out favor with investors after years of high costs and low returns and uncertainty over its future in a low-carbon world.

“The SEC is where the money that goes into the ground gets regulated, so it’s a big deal for them to get into the climate game, not to mention all these other financial regulators moving at the same time” said Kevin Book, managing director at the research firm ClearView Energy Partners. “Nobody who assesses the health of these (publicly traded) entities will be able to say (emissions) don’t matter anymore.”

[James Osborne]

More: Biden looks at financial rules to deprive oil of capital, shift country on climate

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