Governments trying to find ways to regulate parts of the economy that they don’t like isn’t anything new. Or more common is to find ways to introduce policies they know that aren’t going to be popular in a way most people won’t notice. Regulating by stealth has become something of an artform for many who draft legislation.
Environmental Policy stands out as one of the notable areas where governments have gotten creative about bringing in regulations they know would be unpopular. Generally speaking if any so-called green policy typically drives prices up one shouldn’t be surprised that it is almost impossible to maintain popular support for it.
As a result many of the true believer Progressives that view net-zero, or a green new deal as being central components to their goal of remaking the economy have become increasingly creative in how they have gone about reaching their objectives.
A number of state governments that have tried to be much more proactive in getting rid of fossil fuel usage have struggled because they don’t have much in the way of jurisdictional ability to do anything. However, one suggestion has been to attack the finance industry as a way to try and coerce behavior towards the desired effect.
New York State has come up with one of the newest methods to try and get around the problem using a much more blunt approach. Rather than directly regulating energy they have looked to the supporting parts of the economy to get the job done.
A new proposed bill in the New York state legislature would make it illegal for an insurance company to do business with any company that makes more than 10% of its income from fossil fuels.
The bill states,
“Within 5 years of the effective date of this article the superintendent shall require any insurer doing business in the state to certify that they have divested from any company that derives 10% or more of revenue from exploration, extraction, processing, exporting, transporting, and any other significant action with respect to oil, Natural gas, cold, or any byproduct thereof.”
It puts a further burden on any financial institution to ensure that any of their customers don’t intend to expand into an area that might see an increased use of oil, gas, or coal either. This isn’t simply preventing insurance from doing its job but also having the insurance companies have to do most of the enforcement of the law themselves.
While the specific way of measuring what 10% of your revenue is (direct or indirect forms of income for something like a transportation or logistics firm would not be identical) it probably is not an accident that it is vague. The purpose is fairly obvious. If you can undermine the ability to insure or find financial ability to operate a business, you’ve pretty far down the road of putting them out of a job.
You could also question why 10%. That seems entirely arbitrary. Why not 15%, or 12%, or 8%. No real reason is given for that figure. And there is not really a good environmental case for using that number.
One of the bill’s activist supporters Pete Sikora commented, “There’s no real magic bullet to stopping the oil and gas beast, but to the extent there is it could be insurance. No insurance, no projects.”
There is a recognition that energy is the key cornerstone of the economy.
It makes for an easy way for the government to control the economy. And this is the bigger part of this exercise. Environmental regulations have increasingly been used to bring large segments of the free market economy under indirect (sometimes direct) government control. Making sure the financial sector has to abide by arbitrary government standards is a good way to make sure that it only works in the way that the political class wants it to.
Insurance has been one of the ways in which a number of activists have increasingly been pushing to manipulate market demand. From this standpoint it’s not that the demand for fossil fuels is going away, but it’s easy to make it impossible for that market to function.
There are those that hope that there’s an optimistic side point. There is the chance that by trying to regulate Insurance in this fashion they’re more likely to drive companies out of New York and into other markets. on this front New York State could find itself with a dearth of financial institutions and have to reverse course. It’s similar to the argument that happened during the implementation of Obamacare where a number of insurance companies left certain markets if there wasn’t sufficient open competition.
The energy sector is one of the prime areas progressives have targeted as a way to control economic decisions and the operations of the market. Arbitrary measures like this are not about any public good, but simply about control.
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