Polluting Industries Cash In On COVID-19, Add To Climate Crisis
Airlines, farmers and plastic bag makers look for relief amid the pandemic.
But the coal industry, and wind and solar energy concerns, lose out in the relief bill.
With the attention of lawmakers and government agencies focused on the global coronavirus pandemic, polluting industries have seized on the opportunity to advance their own interests.
In the days leading up to President Donald Trump’s signing of a $2.2 trillion relief bill, lobbyists descended on Washington in an attempt to squeeze as much as possible out of the U.S. Treasury. Some industries, including agriculture and aviation, got major boosts; others, notably coal and clean energy, were left disappointed.
As the number of infections and deaths from the coronavirus pandemic continues to rise and the economic fallout starts to hit more Americans, industries are scrambling to stay afloat and save jobs. But some, critics say, are exploiting the situation to their advantage, potentially at a cost to the climate.
This week, after a request from the oil industry, the Environmental Protection Agency issued a suspension of its enforcement of environmental laws, a move that critics say will let the industry pollute indefinitely.
Environmental and advocacy groups say they are concerned that other agencies will follow suit, allowing industries to capitalize on the crisis. And some are already trying to get what they can.
The plastics industry, for example, is using the COVID-19 pandemic to try to save what has become in many peoples’ minds a global villain—the single-use plastic bag.
Their actions come after a growing number of states and cities have banned plastic bags or slapped fees on their use in retail and grocery stores. Plastic bags and all kinds of other plastics are choking the oceans, with microscopic bits of plastic getting into human bodies, giving the industry a bad reputation. And plastics manufacturing and incineration are contributing to global warming.
But seeing an opportunity in the global crisis, the Plastics Industry Association has asked the U.S. Department of Health and Human Services to declare the bans on plastic bags a health risk, and “to speak out against bans on these products as a public safety risk and help stop the rush to ban these products by environmentalists and elected officials that puts consumers and workers at risk.”
The industry cites studies or reports, including at least one paid for by the plastics industry, that claim dirty reusable bags spread germs. Those are findings that are disputed by others, including Greenpeace, which describes the industry efforts as “a profit-driven distraction.”
But the industry is succeeding in getting some traction, at least temporarily:
- Maine delayed its ban on single-use plastic bags from April 22 to Jan. 15, 2021.
- New Hampshire Gov. Chris Sununu temporarily banned reusable bags in grocery stores, as did Massachusetts Gov. Charlie Baker, who also lifted all local plastic bag bans in his state.
- Charleson, South Carolina, had banned plastic bags effective on Jan. 1, but last week suspended that ban for 60 days, as part of its response to COVID-19.
New York, the epicenter of the coronavirus outbreak in the United States, has delayed enforcing its new statewide plastic bag ban until April 1, but officials said that’s only because of a legal challenge unrelated to the pandemic.
Some retail stores are prohibiting their customers from using reusable bags while others still allow them, or do so only if customers fill them.
To Judith Enck, a former regional administrator for the U.S. Environmental Protection Agency who runs the Beyond Plastics campaign, the industry’s efforts are unfortunate.
“I am quite disturbed that the plastics industry is exploiting this pandemic with unfounded information,” Enck said, adding, “What I am most worried about is the permanent repeal of plastic bag bans.”
The relief package passed by Congress directs $14 billion to the country’s farms through the Commodity Credit Corporation, a Depression-era program designed to stabilize farm income and ensure stable supplies of major crops. It also directs another $9.5 billion to fruit and vegetable growers, livestock producers and those farmers who sell directly to markets.
The infusions were welcomed across the board by progressive and conservative farming groups. But some advocates for climate-friendly farming are concerned that the dollars will end up with mega-farms and multinational agriculture corporations that have pushed against sustainable, climate-forward farming.
Over the last two years, the Trump administration has given American farmers nearly $28 billion in bailouts to compensate for losses linked to the administration’s trade war with China. Critics said most of that went to larger farms and worry the new funds could be spent the same way.
“The defining element of this aid package is a total lack of specificity,” said Eric Deeble, policy director for the National Sustainable Agriculture Coalition. “It’s not that people didn’t try to do hard work; it’s just that when they tried to get specific, it started to fall apart.”
That means Agriculture Secretary Sonny Perdue will decide who gets the aid and how much. His past record suggests it will flow to the biggest farms.
“Perdue’s handling of the trade aid payments shows his preference for large-scale commodity farmers,” said Ben Lillilston, director of rural strategies and climate change at the Institute for Agriculture and Trade Policy. “Within the $9.5 billion, will the bulk of the money go to big feedlots and mega-dairies? That’s a big concern, given Perdue’s preference for those types of operations.”
Democrats had originally proposed a $50 billion stimulus measure for the airline industry that would require airlines to go carbon neutral for domestic flights by 2025 and would also provide funding to develop lower-carbon fuels. Both those measures were cut from the package passed in Congress this week, which included nearly $60 billion for airlines with no green strings attached.
The emissions-reducing measures wouldn’t have been out of line with what the airline industry is already trying to do. A decade ago, the International Air Transport Association (IATA) set a number of ambitious targets to combat the industry’s contributions to climate change, including binding the trade group’s hundreds of member airlines to participate in carbon offset schemes starting in 2027.
Without assistance, however, those plans could take a back seat. Offset schemes could already cost airlines at least $6.2 billion a year over the next five years, according to an analysis by Citigroup.
Commercial aviation is responsible for 2.4 percent of the world’s greenhouse gas emissions and could account for up to a quarter of the world’s carbon budget by 2050, according to a 2019 study by the International Council on Clean Transportation.
But as the coronavirus outbreak has led to steep declines in air travel, many airlines have been focused on mere survival. IATA’s most recent estimate projects global aviation passenger revenues this year plummeting $252 billion, or 44 percent below 2019 revenues. And the group’s CEO Alexandre de Juniac this week called for $200 billion in international relief to prevent a total collapse of the industry.
Whatever gets the aviation industry that supports is what’s most important, said Chris Goater, IATA’s manager of corporate communications. “We are primarily focused on the survival of industry at this point,” he said. “If leaving provisions out of the bill enables it to be passed, then that is worth it.”
The coal industry, which was in free-fall long before the coronavirus hit, tried to benefit from the stimulus bill but was left out of the package.
The industry’s requests—relief on taxes supporting abandoned mine clean-up and workers stricken with black lung disease and a reduction in royalty payments to the federal treasury for coal mined from federal lands—were not new and an industry spokesman said the industry will keep asking for them.
Congress in December had just fully restored the excise tax on coal that funds benefits to coal miners with black lung disease.
“It’s essential that policymakers thoughtfully consider ways to ensure the coal sector can provide uninterrupted operations,” said Conor Bernstein, spokesman for the National Mining Association. Friday, Bernstein said the bill has some tax provisions that will help all industries, including mining. “We will keep making the case for more specific action as the government continues to look for ways to support critical industries and lift the economy.
A spokesman for Senate Majority Leader Mitch McConnell, the Kentucky Republican who sees himself as a friend of the coal industry, provided only a vague, one-sentence response to questions about what happened to the mining industry’s request. McConnell has been “working hard” to help coal families and employers, the spokesman said.
Advocates for coal miners were incensed by the industry’s requests.
Rebecca Shelton, with the Appalachian Citizen Law Center in eastern Kentucky, called the National Mining Association’s request “particularly egregious” because “those with black lung disease are likely to be very vulnerable to COVID-19 and yet the industry wants to reduce funding for the trust fund that many miners with black lung disease rely upon.”
The coal industry has experienced waves of bankruptcies and consolidations as it has struggled to compete with cheaper natural gas and increasingly less expensive wind and solar energy, said Chiza Vitta, an analyst with S&P Global Ratings.
As such, it is not a typical candidate for a bailout, he said.
“Normally, you give bailouts to companies that can thrive going forward,” Vitta said.
Renewable energy trade groups also hoped their industries would get something in the stimulus legislation, including extensions and expansions to tax credits that had narrowly missed being included in a budget bill in December.
After the tax credit proposals were not included this week, the major solar and wind trade associations issued conciliatory statements.
“As Congress continues to address the ongoing COVID-19 crisis, we appreciate that they are prioritizing relief for families and small businesses,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association.
Hopper said some of the aid in the legislation will help people in the solar industry, but lamented that her group did not get anywhere near what it wanted. A few days earlier, she had warned that up to 125,000 jobs—about half of the solar industry—could be lost because of the economic disruption caused by the coronavirus, and asked
Tom Kiernan, CEO of the American Wind Energy Association, praised Congress for taking action to help workers, before adding that the wind industry is “disappointed clean energy sector relief did not make it into the phase three stimulus package.”
Hopper and Kiernan both said they are looking to future measures to potentially provide the aid to their industries that did not make it into this bill.
And lawmakers have hinted that this week’s stimulus is probably not the last.
Trump’s Move to Suspend Enforcement of Environmental Laws is a Lifeline to the Oil Industry
The American Petroleum Institute sought the EPA’s help for companies hurt by COVID-19. One former EPA official called the suspension “an open license to pollute.”
The Trump administration’s unprecedented decision to suspend enforcement of U.S. environmental laws amid the COVID-19 crisis throws a lifeline to the oil industry as it copes with the greatest threat to its business in a generation.
The decision, announced late Thursday by the Environmental Protection Agency, comes after a detailed call for help from the industry’s largest trade group, the American Petroleum Institute, five days earlier.
The EPA went further than meeting the oil industry’s request—announcing a blanket policy suspending enforcement and civil penalties for any regulated entity that can show COVID-19 was the cause of a failure to comply with the law. But it is clear that a primary beneficiary will be the oil industry, which sought suspension of its obligations under consent decrees over past air and water pollution violations at its refineries, deferral of requirements on handling of fracking wastewater and a pause in reporting its greenhouse gas emissions and other pollution.
On Friday afternoon, the EPA announced a separate action to relieve refineries of their legal obligation this year to produce “summer” blends of gasoline, designed to reduce smog-forming emissions.
Although the EPA sought to portray its suspension of enforcement activities as an action that would not pose a threat to human health or safety, experts are alarmed at the risks that the retreat poses, especially to the mostly poor and minority communities that have struggled with pollution from oil and gas operations in their midst.
“Air pollution leads to respiratory distress in downwind communities and respiratory distress, in turn, makes you more susceptible to the coronavirus,” said Betsy Southerland, a former EPA official who worked at the agency from 1984 to 2017.
The agency’s enforcement suspension demonstrates that as the oil industry faces a historic challenge—plummeting global demand that is driving it to a major shut-down of production—the Trump administration is positioning itself to sustain the business and assist in a rapid return to the fossil fuel status quo.
“This is an open license to pollute,” said Gina McCarthy, president, and CEO of the Natural Resources Defense Council, who served as administrator of the EPA during the Obama administration. “The administration should be giving its all toward making our country healthier right now. Instead, it is taking advantage of an unprecedented public health crisis to do favors for polluters that threaten public health.”
Judith Enck, who served as an EPA regional administrator from 2008 to 2017, calls the rules waiver “irresponsible” and fears that it will give the oil and gas industry carte blanche to pollute with little EPA accountability.
“This is a get out of jail free card, and don’t think that the industry won’t play it to their fullest advantage,” she said.
An API spokesman said that the group “welcomed” EPA’s action, stressing that the industry is “committed to prioritizing safe and reliable operations and is complying with requirements.”
“Unfortunately, in some locations, there may be limited personnel capacity to manage the full scope of the current regulatory requirements due to social distancing, contractor availability, and other COVID-19 impacts,” the spokesman said. “Temporary relief from these requirements will allow operators and suppliers to prioritize their resources on those critical activities to enable the continued production of fuels and products.”
The Worst Industry Crisis Since the 1973 Arab Oil Embargo
The oil industry’s call for relief came amid what many analysts see as its worst crisis since the upheaval of the Arab oil embargo in 1973. Although in its request for help, API invoked the COVID-19 pandemic, the industry’s woes escalated sharply with Saudi Arabia’s March 7 announcement that it would begin increasing production, drawing on its prodigious spare capacity. The move caused oil prices to crash to less than half of what they were at the start of the year.
The point was to squeeze rival producer Russia, and by extension, frackers in the United States who had been stealing Saudi Arabia’s market share. The rating agency Moody’s expects a sharp increase in bankruptcies among U.S. frackers when the “staggering” amount of debt they used to finance their operations comes due.
On top of that pressure, stay-at-home orders across much of the country to slow the spread of the coronavirus have caused demand for oil to plummet. The oil consulting firm IHS Markit said that production will need to be shut down because the market is on track to produce far more oil than there is storage available to hold. The demand for gasoline in the United States could fall by more than 50 percent, an impact much greater than that of the 2008 recession.
Some oil and gas companies and their allies have sought massive federal government intervention. Some members of Congress and oil executives had reportedly called for direct financial support for the industry, perhaps through loans or trade actions against Saudi Arabia or Russia for boosting output.
Last week, a group of lawmakers called on the Trump administration to temporarily lower royalty rates for oil and gas extracted on public lands. Texas considered capping the state’s oil output to try to boost prices and Sen. Kevin Cramer (R-N.D.) asked the administration to place an embargo on oil from Russia, Saudi Arabia, and other oil-producing nations. But API, representing the largest industry companies, has opposed trade sanctions or production quotas.
The EPA announced its plan to suspend enforcement of environmental laws after Congress passed a stimulus package that did not include funding to fill the Strategic Petroleum Reserve or other direct aid to the industry.
EPA Administrator Andrew Wheeler, a former coal lobbyist, said the policy would not apply to criminal violations of the law. He said the agency “expects regulated facilities to comply with regulatory requirements, where reasonably practicable.”
“This temporary policy is designed to provide enforcement discretion under the current, extraordinary conditions while ensuring facility operations continue to protect human health and the environment,” Wheeler said. He offered no projected timeline for lifting the policy.
It’s unclear whether the administration’s easing of environmental laws will provide significant financial relief for the oil industry. Most experts view a fall in U.S. oil production as now inevitable. Rystad Energy projected that U.S. output will decline this year as companies slash spending by up to $100 billion. It said oil producers may drill only about two-thirds as many wells as planned for the year.
The Public’s Exposure to Pollution Could Increase
Numerous former EPA officials from the Obama administration said the agency’s unprecedented enforcement suspension was not necessary, because the EPA always has the discretion to waive penalties in cases of hardship.
“It can be appropriate to do so, provided [it’s] some narrowly constrained relief but imposing enforceable conditions that assure the public remains protected,” said Cynthia Giles, who served as head of EPA’s enforcement office during the Obama administration. “That’s not what they’ve done here. This is a nationwide moratorium on enforcing the environmental laws, and it does not contain the kinds of protections that are needed to ensure that there’s not unlawful air and water pollution and there’s not a collapse in monitoring.”
She added that the EPA’s action was “wildly overbroad.”
“I am not aware of any instance when EPA ever relinquished this fundamental authority as it does in this memo,” Giles said.
Enck, who served as EPA regional administrator for New Jersey and New York, said officials dealt with crisis conditions during Hurricane Sandy in 2012 without suspending rules protecting the public.
In that case, requests for waivers were assessed individually, said Enck, now a visiting professor and senior fellow at Bennington College in Vermont.
“I wanted to hear from the lawyers and the scientists,” before we made any decisions,” Enck said. “Our first responsibility was to the public, not the industry to make the right decisions.”
Allowing a company to postpone the repair of equipment that leaks toxic gases into the atmosphere, as API has suggested, leaves the public exposed to those pollutants for longer periods of time, increases the risk of fire and explosion and is not just a paperwork concern, Giles and other former EPA officials and environmental organizations said in a letter of protest to the EPA.
Clean Air Act rules limiting hazardous air pollution, for example, require refineries to monitor benzene levels at their fence lines and to take corrective action whenever annual concentrations of this harmful pollutant exceed 9 micrograms per cubic meter.
Monitoring reports show that at least 10 refineries in Illinois, Louisiana, Mississippi, Pennsylvania, New Mexico and Texas exceeded this annual threshold in the fourth quarter of 2019, the environmental advocates said in their letter.
Pasadena Refining Systems in Texas reported that benzene levels along part of its boundary averaged 565 micrograms per cubic meter between Oct. 16 and Oct. 30 of 2019, or nearly six times the 10-hour exposure limit recommended by the National Institute of Occupational Safety and Health.
Rob Verchick, an environmental law professor at Loyola University and a deputy associate administrator for policy at the EPA during the Obama administration, said he would be particularly concerned about emergency releases from refineries and other petrochemical facilities during the regulatory suspension.
“These would affect poorer communities usually who are situated around facilities like this and those emergency releases are the kinds of things that send people to the hospital when they happen,” he said.
Verchick said emergency releases occur when pressure within a petrochemical plant builds to a dangerous level and the pressurized gases, which often include harmful pollutants, are released into the atmosphere. To avoid such releases, the plants could also shut down temporarily and wait for the pressure to subside. Such shutdowns, however, take time and carry a financial burden because of decreased productivity.
Verchick said the regulatory suspension could increase the frequency of emergency releases and decrease reporting of such releases to the agency and to surrounding residents.
For people who live in nearby communities, Verchick said, the EPA’s enforcement suspension would be “just open season on our population.”
Mustafa Ali, vice president of environmental justice, climate and community revitalization for the National Wildlife Federation and former head of the environmental justice program at the EPA, said tying the suspension to COVID-19 is “nonsensical.”
“We know that these are the communities where we have elevated levels of cancers and liver kidney, heart and lung diseases,” he said. “You’re going to put more pollution into these communities, then you’re also going to create more chronic health conditions which make you more susceptible to COVID-19.”
Ali added that in many instances, these are also medically underserved communities that will have a much more difficult time if their residents become infected.
David Uhlmann, director of the environmental law and policy program at the University of Michigan Law School, said it is important to remember that environmental laws rest on an honor system where companies are required to self-identify their pollution activities, self-monitor their compliance and self-report their violations. It might have been preferable to offer leniency on a case-by-case basis instead of a blanket waiver, he said, but the end result may not have been different.
“The Trump administration has such a deplorable record on environmental protection that the no-enforcement rule announced this week is immediately suspect,” he said. “But this policy may be less nefarious than the alarming environmental rollbacks that the Trump EPA continues to pursue, even as the nation is fighting the COVID pandemic.”
The Impact on Climate Change Could be Staggering
Whatever implications the enforcement suspension may have for the residents who live near refineries and other oil industry facilities, its impact on climate change could be staggering.
If an administration were in place that viewed action on the climate crisis as a priority, the slowdown in drilling could provide an opportunity to ease the economy into a clean energy transition that provides more stability for workers, analysts said.
“The fossil fuel industry is particularly capital-intensive,” said Gernot Wagner, an economist at New York University who is co-author of the book Climate Shock. “Installing solar panels on people’s roofs is famously labor-intensive. In a week when 3 million Americans have filed for unemployment, why not focus on actually helping those most affected by the crisis?”
Wagner was one of a group of academics who have called for Congress to address the COVID-19 crisis with a “green stimulus” package that addresses climate concerns at the same time it addresses the health and economic security of workers. The package Congress passed this week did not include any clean energy component, and the latest move by the Trump administration makes clear that is not part of its agenda.
“Loosening environmental restrictions is a particularly shortsighted way of attempting to stimulate economic activity,” said Wagner. “Doing so during a public health crisis magnifies the concerns.”
Sabrina Shankman contributed to this report.