Crypto, carbon markets, and red wave skeptics prevailed this week.
This edition of the Revolving Door Project newsletter was originally published on our Substack. View and subscribe here.
The political world is looking altogether different today than it did last week. With the midterm vote counts and global climate conference wrapping up, while one billionaire throws lighter fluid on the long-smoldering fire that is Twitter1 and another billionaire-no-longer’s crypto exchange goes up in smoke, attention is spread thinner than Lauren Boebert’s apparent margin of victory. (The race is headed to a recount.)
Now that we know Democrats will hold the Senate majority, it’s no longer a matter of utmost urgency to push through as many of Biden’s unconfirmed appointees as possible during the lame-duck session, at least in terms of Senate makeup. That’s a relief, because as of last week, there were 186 nominees still awaiting Senate confirmation. These nominees include dozens of judges, as well as agency leadership whose work, if confirmed, would affect fair housing, equal opportunity, labor standards, transportation safety, environmental and internet user protection, and more. Biden has also yet to announce nominees for 152 vacancies.
While the confirmation crisis now has a chance of being resolved, agency budgets will suffer if the current Congress isn’t able to pass an omnibus spending bill to fund the government before the continuing resolution expires on December 16. Looking ahead to the next two years of a divided Congress, and a challenging Senate map for Democrats to win in 2024, the agency budgets established for 2023 will form the baseline number for more difficult years of negotiation to come. For many agencies, the spending increases proposed by this Congress for 2023 are themselves inadequate, when accounting for inflation and a decade of forced austerity for non-defense agencies. We’ve been documenting this at length in our omnibus awareness and government capacity work.
Whether your priority is the government holding rich lawbreakers from Trump to Musk to Bankman-Fried to account, or passing regulations to protect people from wage theft and toxic air pollution, the fight over the government budget today is the fight over whether the government can adequately serve people beyond just being an “insurance company with an army.”
Democrats need to hold the line and fund non-defense agencies as fully as possible in 2023. Republicans will undoubtedly seek to undercut agency capacity in subsequent government spending bills while the right-wing judiciary will take a sledgehammer to decades of legal precedent in an effort to constrain the regulatory state. We have little reason to expect that Congress will increase non-defense agency budgets beyond the numbers proposed in the Senate and House appropriations committees’ draft bills during this reconciliation process. But where the House and Senate proposed budgets differ, the more ambitious budgets closer in line with agency requests must win out.
Among the many massive shake-ups in the past week was the fast-motion implosion of Sam Bankman-Fried’s cryptocurrency exchange FTX. My colleague Timi Iwayemi has a fantastic article out in The Nation this week, underscoring the scam at the heart of the crypto business model. He pieces together the “gorgeous mosaic of market flimflam” that constituted the crypto industry’s self-advertising, and shows why its shattering this week was inevitable.
As crypto firms continue collapsing like dominoes, expect to hear more from us on why Biden needs to protect his legacy by only nominating financial regulators with a track record of “sniff[ing] out trendy but dangerous financial speculation” before it all comes crashing down. As in our “Hack Watch” newsletter on Larry Summers’ legitimization of crypto this week, we’ll also continue to cover how the media uncritically lifts up crypto bros of all kinds, including former Treasury Secretaries.
Shams in Sharm El-Sheikh
While we’re on the subject of dangerous and fraudulent market schemes, though the “dream” of crypto may have evaporated this week into a fine mist settling over the Bahamas, ten thousand kilometers to the east in Sharm El-Sheikh, Egypt, the voluntary carbon market just got an undeserved boost from US Presidential Climate Envoy John Kerry.
Kerry announced at COP27 that the US government will be partnering with the Bezos Earth Fund and the Rockefeller Foundation to “catalyze private capital to accelerate the clean energy transition in developing countries.” Short on details, the announcement says that the goal is to establish “a high-integrity framework enabling developing countries to attract finance to support their clean energy transitions” through issuing “marketable carbon credits” that represent “verified greenhouse gas emission reductions.”
Fortunately, it seems much of the media has learned the lesson over the past quarter-century that carbon offsets are mostly just greenwashing cover for major corporations, as a critical mass of stories covering Kerry’s announcement aired some skepticism about the proposal. Even better, thirty-five news organizations from over twenty countries published a joint editorial on Tuesday calling for a windfall tax on the biggest fossil fuel companies, with the funds raised to be redistributed to the countries most vulnerable to and least responsible for climate change.
Those who argue that private sector change is necessary for the global energy transition are precisely those who should oppose carbon trading in its various configurations. Carbon markets reinscribe the status quo, allowing companies to outsource their responsibility for reducing their emissions. Worse, carbon offsets don’t even reliably facilitate emissions reductions, making them most effective at burnishing companies’ reputations. None of this is new news. No wonder that climate scientist Bill Hare, who was on the United Nations expert panel at COP27, told AP that “the proposal shocked people at the climate summit and upset many governments.”
“The reason why is because we’re at that stage of history now where everyone has to reduce emissions,” he elaborated. “And the implications of John Kerry’s proposal is that companies would not actually have to reduce emissions if they buy offsets.”
Back in the spring, we published a Carbon Offset Industry Agenda report, outlining the parts of the federal executive branch that the carbon offset industry is most interested in influencing, and the danger of any new federal support for the industry. At that point, the administration was rightly more focused on emissions reductions than emissions offsetting; this move from Kerry constitutes the highest profile legitimization of carbon markets from the Biden administration yet.
As the joint editorial published by 35 news organizations this week suggests, the alternative to offering corporations another way to greenwash their business practices would be to actually extract funds for loss and damage from the world’s biggest polluters. That means both corporations and governments. For the Global North, ending government subsidies of fossil fuel development remains a planetary imperative—but one which rich countries including the United States continue to refuse.
A new report from Friends of the Earth and other partners on public finance for fossil fuels from the G20 countries and major development banks is packed with important numbers, but here are a few key points: Fossil fuels received at least $55 billion annually between 2019 and 2021, nearly double the money for clean energy. Most fossil fuel finance flowed from wealthy countries to other wealthy countries, and most renewable energy finance was overwhelmingly concentrated in wealthy countries.
The report found that clean energy finance to African countries has actually decreased over the past decade. International public finance in Africa is largely going to new gas projects destined for exports instead of domestic use. This is an absolute nightmare scenario, enriching multinational companies and supplying rich countries with fossil fuels extracted from countries least responsible for, and most vulnerable to, the local health impacts of fossil fuel extraction and the global climate damage it exacerbates.
Another report out this week from Oil Change International investigating new oil and gas investments in 2022 found that this year’s final investment decisions alone would lock in enough new oil and gas production to create an additional 11 gigatonnes of carbon dioxide pollution. That’s equivalent to the lifetime emissions of 75 new coal power plants. (A gigatonne is 1,000,000,000 tonnes, helpfully described by the University of Calgary as 200 million elephants, or roughly the mass of all land mammals other than humans. So, new fossil fuel development pledged in this year alone would emit a mass of pollution equivalent to 2,200,000,000 elephants. We can imagine the actual number of elephants on earth—fewer than 50,000—decreasing as a result.)
Looking at new oil and gas projects expected to receive final investment decisions between 2023 and 2025, the report found that these new projects would lock in a further 59 gigatonnes of carbon pollution, equivalent to building almost 400 new coal plants. Altogether, anticipated new oil and gas projects over the next three years alone could lock in enough emissions to deplete 17 percent of the world’s remaining carbon budget. And that’s without considering the emissions locked in from existing oil and gas projects.
The United States under Biden remains a global leader in the delusional support for new oil and gas development. Fracking for shale gas, especially in the Permian Basin, accounts for most of the gravity of this death spiral. (A reminder that natural gas is not the clean fuel that oil and gas companies are determined to portray it as being. Natural gas production leaks so much methane that it warms the planet as much as coal in its first two decades in the atmosphere, and that’s without considering the harms of natural gas production and combustion for human health. Yes, the gas stove in your home is leaking toxic and carcinogenic compounds, even when it’s turned off.) The Oil Change researchers note a “deep discrepancy between the U.S.’s stated goal of reclaiming climate leadership through the passage of the Inflation Reduction Act and the reality of the country’s continued investments in unsustainable levels of additional fossil fuel production.”
On Wednesday morning in Sharm El-Sheikh, in a symbolic first, the US signaled support for language calling for a phasedown in the use of “unabated” fossil fuels. That’s not nothing—the flaring boom in the Permian Basin is distinctly unabated, for example—but as Jean Su at the Center for Biological Diversity rightly pointed out, “limiting that phaseout to ‘unabated’ fossil fuels could open a polluters’ Pandora’s box of false solutions.” Without any enforcement mechanism, and with Inflation Reduction Act money pouring into carbon capture schemes without holding them to a specific standard of how much carbon they actually have to capture (or what they have to do with it), there’s no proof of this pivot amounting to more than “blah blah blah”…and no proof of life for the goal of limiting warming to 1.5°C.
Earlier in the week, John Kerry emphasized that his carbon credit plan would “supplement, not replace, any public commitments or public dollars or public efforts that have been made. But it’s clear, my friends,” he went on, “that if we’re going to achieve keeping the earth’s temperature at 1.5 degrees, the scientists tell us, the only way to do it is to be able to reduce emissions by about 45 percent in the next seven and a half years.” Knowing what they must know about the amount of US public dollars pouring into fossil fuel development, it’s hard to believe that Biden and Kerry genuinely think the 1.5°C goal isn’t dead in the water. The World Meteorological Organization, which called for a “complete energy transformation” this week at COP27, predicts we have a 50-50 chance of hitting 1.5°C of warming by 2026.
Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last two weeks:
The Public Does Not Need Another Fintech-Friendly Regulator
The Biden Administration Does Not Need Another Wall Street Adviser
Money From Nothing: Sam Bankman-Fried’s Crypto Shakedown
Inflation, Supply Chain Woes, and Elaine Chao’s Culpability
Corporate Scammers Aren’t Independent Voices
Departing lawmakers are lining up cushy lobbying gigs
‘Bedazzled by money’: Democratic ties to Sam Bankman-Fried under scrutiny after FTX collapse
Biden Team to Push ‘Ambitious’ Antitrust Crackdown on Big Tech in Congress
What Could a Republican Congress Do to the Climate?