One of the facts being laid bare by Russia’s invasion of Ukraine is that Europe has become highly dependent on Russian oil and natural gas for its economy, largely owing to green energy policies that have shut down coal and nuclear electricity generation in countries like Germany, thereby necessitating the importation of Russian natural gas through pipelines like Nordstream 1 that runs from Russia to Germany via the Baltic Sea.
In 2020, the European Union imported 9.1 trillion cubic feet of natural gas, according to Eurostat. And about 41 percent Europe’s imports come from Russia, or about 3.73 trillion cubic feet a year, 24 percent from Norway at 2.2 trillion cubic feet and 11 percent from Algeria at 1 trillion.
The Nord Stream 2 was suspended by Germany because of the war and was built from 2018 and finished construction in Sept. 2021 at a cost of $11 billion, and would have doubled the current pipeline’s distribution of 1.9 trillion cubic feet a year to 3.9 trillion cubic feet a year. In Nov. 2021, Germany delayed final regulatory approval of the pipeline project before the war. Germany already purchases about 55 percent of its natural gas from Russia before the new pipeline has even gone online.
Western dependence on Russian oil and gas as a main source has absolutely become a threat to national security to everyone paying attention. Now, after the invasion, Germany realizes the threat and is building two new liquified natural gas terminals to take in more imports, and is increasing military spending. They are pivoting.
But independence will not happen overnight. Germany is still so dependent on Russian oil and gas that German Economy Minister Robert Habeck told reporters on March 1 that Berlin opposes an embargo on Russian energy imports: “I wouldn’t support an embargo on imports of fossil fuels from Russia… I would even speak out against it, because we would threaten the social peace in the republic with that.”
President Joe Biden announced new sanctions on Russia, and is releasing 30 million barrels of oil from the Strategic Petroleum Reserve, but like Germany is also holding back on an embargo or even on more drilling. Is the U.S. lagging behind?
In a recent Morning Consult poll conducted on behalf of the American Petroleum institute on March 1, 84 percent of Americans agreed, with 63 percent strongly agreeing, with the statement “Producing natural gas and oil here in the U.S. helps make our country and allies more secure against actions by other countries such as Russia.” That included 88 percent of Republicans, 83 percent of Democrats and 78 percent of independents.
What is less obvious to voters is that federal energy policy goes way beyond easy-to-understand permits allowing drilling on federal lands or agreements with Canada authorizing the Keystone XL Pipeline to be built. And these other policies play a far more influential role in hampering energy policy not just for the U.S., but advanced economies throughout the West.
The federal government the past seven years has opened the door for left-wing Environmental, Social and Governance (ESG) investing via private retirement funds regulated under the Employment Retirement Income Security Act (ERISA) via a regulation by the Obama Labor Department in 2015.
The Obama rule allowed pension plan managers to give additional weight to companies touting ESG goals that focus on green energy, cleaning up the environment, are anti-oil, anti-coal, anti-carbon, but also anti-tobacco, anti-guns, embracing critical race theory, implementing diversity and inclusion racial and gender hiring quotas and practices and other left-wing issues.
Suffice to say, having a high ESG rating gives a company weighted investments in ESG funds—and for companies focused on green energy at the expense of oil and coal, it has paid off handsomely, even while U.S. energy independence and security has suffered.
Financial incentives like this are why in part stocks like Tesla have recently rallied to more than $1,100 per share before the market’s recent correction despite not generating much profits for years, because they are weighted so heavily by ESG funds. With ESG investing, profits are divorced from valuation and saving the world takes precedence.
Big ESG funds like BlackRock, a hedge fund with more than $9 trillion of assets under management, have placed green activists onto the board of Exxon to make it a “not-oil” company. And so forth.
Now, under President Joe Biden the $762 billion federal Thrift Savings Plan (TSP) for federal employee retirees will be investing in ESG funds as well going into effect in 2022, following state government employee retirement funds in California, New York, Colorado, Connecticut, Maine, Maryland and Oregon that have made similar investments for years. Those are tax dollars, paid into government employee retirement plans going directly to funding green energy, at the expense of particularly oil and coal.
Thanks to the combination of incentives and direct funds, ESG funds, which total $38 trillion out more than $100 trillion global assets under management, will grow to $53 trillion by 2025, according to Bloomberg News. And it will crush carbon-based energy, hampering the West economically and militarily by limiting options in the event of war.
The whole point of ESG is to restrict capital investment from flowing into proven carbon-based energies that the West now urgently needs, which is exactly what happened to Europe and the UK — and now Russia has them over a barrel. Congress should consider prohibiting the use of federal funds, including pensions, for implementing the ESG regulation incentivizing green investment at the expense of carbon-based energy including oil and coal.
ESG is neutering the West, endangering national security and emboldening our adversaries by making the U.S. and Europe increasingly dependent on Russia.
In a world at war, energy independence equals sovereign freedom and independence. The question is: Does the West still want to be free? If so, then it’s time to drill — and to defund ESG.
Robert Romano is the Vice President of Americans for Limited Government Foundation.
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