- “Greenlash” sees conservative governments challenge ESG investment legitimacy and alter energy targets, signaling a shift in political and public sentiment.
- Rising living costs combined with financial commitments for green transitions have sparked concerns among the public, leading to greater scrutiny of transition policies.
- Experts suggest reframing the green agenda as an industrial policy to address the growing dissent and ensure continued support for climate initiatives.
In the UK, Prime Minister Rishi Sunak outraged environmentalists by saying his cabinet will issue hundreds of new oil and gas licenses for the North Sea if reelected.
A wave is rising across Europe and the United States, and it’s a wave that should concern transition advocates, including those in government. Because that wave threatens to carry away their seats.
In the U.S., the trend that media have called a “greenlash” has mostly taken the form of conservative state governments challenging the legitimacy of ESG investment requirements.
In some cases, these governments have plainly stated that there is no legitimacy to these requirements, and they are, in fact, a form of discrimination against certain industries, chiefly oil and gas. As such, ESG investing had an issue with anti-monopoly legislation, those governments said, and made for good ground for lawsuits.
As a result of this push against ESG, many companies that were happy to wave around their ESG credentials suddenly discovered they were not really that strongly against oil and gas, as stated by BlackRock, JP Morgan, and others that Texas threatened with divestiture if they continued with their ESG push.
In Florida, state and local officials have no right to promote ESG investing, and municipalities are banned from issuing ESG bonds per a new law that Governor Ron DeSantis signed in May.
In Europe, the greenlash wave is taking the form of a rise to power of conservative parties, to replace liberal governments that focused on the transition. Sweden was the latest example. Before it, conservatives took power in Italy. In the Netherlands, the farmer’s party that emerged in response to the former government’s plan to essentially decimate the country’s farming industry won strong support in local elections.
In Germany, meanwhile, the Green Party, which is part of the ruling coalition and, naturally, the strongest advocate for the transition, is falling out of favor with voters fast, while the conservative Alternative for Germany is gaining popularity.
According to a report by CNBC, the greenlash wave is a result of the fact that people are only now beginning to feel the costs of the transition with their wallets. The report makes sure to reference recent claims that July was the hottest on record in Europe this year and the UN’s Antonio Guterres’ grave statement that “The era of global warming has ended; the era of global boiling has arrived.”
The comments below tweets citing Guterres’ statement provide yet more evidence of that greenlash wave. Commentators are not buying the “global boiling” warning, it seems. Rather, they are mocking it and referencing the private jets climate change and transition leaders tend to use to get around.
As a result, according to Reuters, those climate change and transition leaders are starting to worry that their net-zero efforts could be in jeopardy. With several national elections plus a European parliament election next year, politicians are beginning to pay attention to the cost of climate change policies, the news outlet reports. It then adds that popular support for climate change policies remains strong.
This strong popular support, however, appears to be more general than pro-transition politicians would like. It seems that people don’t mind net-zero policies as long as they don’t affect them personally. But because net-zero policies would affect people personally, some governments, chiefly in Eastern Europe, are staging an opposition to the EU’s net-zero push.
Poland is even suing the EU because of the ban on internal combustion engine vehicles that the European Parliament voted for earlier this year. Other Eastern European members are also unhappy about the ban. As Polish energy minister Anna Moskwa summed it up, “Does the EU want to make authoritarian decisions about what kind of vehicles Poles will drive?”
Eastern members are also dragging their feet on other transition policies, Brussels has complained. The reason they are dragging their feet on things like coal power plant closure, wind and solar capacity targets, and the like, is that they are aware their populations will not be happy about those policies. The opposition is spreading, according to Reuters.
It’s hardly surprising that it’s spreading. The cost of living has soared across Europe, and this has happened as financial commitments for the transition soar, too. It appears that people are starting to ask questions, and these are uncomfortable questions. The solution: reframing the narrative, per one executive from an Italian think tank.
“At the moment, it looks like green parties are not doing going fantastically well. I think the challenge is going to be for those, like myself, who really believe in this agenda to reframe the issue,” Nathalie Tocci, director of Istituto Affari Internazionali, told CNBC recently.
“In the case of Europe, if you have this ‘greenlash’ that persists … the trick is going to be that of reframing this in terms of industrial policy,” she added.
Only time will tell if reframing the narrative will be enough to quench people’s concerns about their higher energy bills and lower purchasing power as their governments pursue the net-zero political agenda.
By Irina Slav for Oilprice.com