President-elect Donald Trump’s sweeping victory has given him a mandate to exploit America’s “liquid gold.” Therefore, when Republicans take control of the federal government in January, they should act immediately by streamlining environmental permitting, reversing greenhouse gas emissions reporting, and strengthening the fiduciary responsibilities of asset managers and proxy advisory firms. These reforms will boost energy production and require fiduciaries to seek the best financial return for their clients rather than engage in political activism.
The new Republican trifecta should also keep an eye on potential mischief coming out of the annual United Nations Climate Change Conference (also known as COP29) — the international gathering of climate alarmists happening this month. This conference features the very worst would-be environmental “saviors” who feel a solemn responsibility, from the perch of their self-righteousness, for the fate of the world.
Unfortunately, climate activists at COP29 will only come up with extensive, costly, and intrusive changes that we should make — for our own good, of course. Rather than voluntarily cutting back on their own carbon footprints (after all, they can’t be expected to walk to COP29!), they intend to force change on everyone else through law, taxes, and regulation.
Our environmental overlords are meeting in Azerbaijan, an authoritarian petro-state that should not be confused with the United Arab Emirates, the authoritarian petro-state that hosted last year’s climate conference. Both the president of COP28, Sultan al Jaber, and this year’s president, Ilham Aliyev, were longtime executives of large state-owned oil companies.
If you find it odd that authoritarian petro-states are hosting these climate conferences and that executives of major fossil fuel companies are chairing these meetings, you’re not alone. The Sierra Club and other environmental groups have worried that holding the annual U.N. climate conference in heavy oil-producing countries was like putting a fox in charge of the henhouse. Perhaps al Jaber and Aliyev recognize that fossil fuel usage is unlikely to decline, but Western governments might be persuaded to curtail their production of fossil fuels regardless.
If the environmentalists’ crusade against oil production in Western countries succeeds, the prices of fossil fuels will rise. And when they do, there’s nothing to stop the Abu Dhabi National Oil Company or the State Oil Company of Azerbaijan from cashing in on the high prices by increasing their oil and gas production. In fact, there is already evidence that representatives from oil-producing countries intend to use COP29 to cut deals to produce more fossil fuels.
And besides being prone to corruption, embezzlement, and fraud, state-owned oil companies also tend to have worse environmental records than Western oil companies.
For mere “commitments” to creating more renewable energy and to reducing future emissions, petro-states have been granted a seat at the head of the climate change table. Since COP29 will create rules, targets, and restrictions for the rest of the world, these self-dealers are being given significant power and influence over the global economy.
Even though Republicans are unlikely to link arms with climate alarmists to shut down Western production of fossil fuels, the rhetoric and goals that come out of COP29 can nevertheless impact U.S. citizens. U.S. banks and asset managers may feel greater pressure to continue reducing how much they fund energy development. After all, Western oil companies have been divesting fossil fuel assets “voluntarily” for years, often for pennies on the dollar, at the behest of climate activists. While some of these divested assets made their way into private hands, many went to organizations such as the State Oil Company of Azerbaijan.
By passing sensible environmental laws and executive orders, the incoming Republican administration and Congress can kill several birds with one stone in 2025: cheaper energy, reducing income to authoritarian states, and reversing destructive climate policy.
Trump could start by once again withdrawing from the Paris climate accords, which set extreme, costly greenhouse gas reduction targets in 2030 and 2050.
He should also rein in regulatory agencies that have blocked or delayed energy development projects.
And officials in Washington can reduce the financial pressure companies face to reduce emissions by strengthening fiduciary duties. Major backers of the environmental agenda such as Blackrock, State Street, Glass-Lewis, and Institutional Shareholder Services will engage in less nonfinancial lobbying if they face greater accountability for seeking the best financial returns for their clients.
If the incoming administration and Congress don’t act, new stricter greenhouse gas emission targets and alarmism will give eager regulators more ammunition to impose costly reporting requirements on publicly traded U.S. companies. This will undermine Trump’s “drill, baby, drill” energy agenda and spread a wet blanket over American economic dynamism, making all of us poorer in the process.
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Paul Mueller is a senior research fellow at the American Institute for Economic Research.
This article was originally published at www.washingtonexaminer.com
