The Treasurer
One state official has forged a national coalition against the managed decline agenda
“We had coal operators, gas operators here in West Virginia coming to see me. Banks laid it out in very clear terms. We’re losing access to capital to finance our operations. That’s when I became aware of it,” Riley Moore, the State Treasurer of West Virginia, told me over the phone.
He was referring to a set of policies adopted by big banks to curtail the flow of capital into the very energy projects that power the U.S. economy.
West Virginia produces 10 times as much energy per capita as the average state, and 88 percent of this energy - the same energy that powers homes, factories, and for that matter, electric cars - comes from coal. But coal isn’t popular anymore.
While visiting the state in 2016, Hillary Clinton boasted that her planned administration would “put a lot of coal miners and coal companies out of business.”
Secretary Clinton may have expressed herself in an uncommonly tone-deaf way, but her point of view wasn’t at all uncommon among (even supposedly centrist) Democrats. Large corporations, particularly financial institutions, took similar anti-energy stances.
An effort by the U.N., the Net-Zero Banking Alliance, sought to deny capital to non-renewable energy projects. As of this writing, the initiative’s official website reports that “banks worldwide representing over 40 percent of global banking assets” have signed on.
This strange alliance between left-wing politicians and powerful financial interests had fully solidified by the time Joe Biden was elected president. Moore was one of the first American politicians to notice.
“There are some banks that this is their religion,” Moore said. “They think this is the best path for the country. And this has been going on for a while, this woke capitalism. I think they felt liberated, unfortunately, by Biden coming into the White House. Secondarily, you have John Kerry and a lot of that crew pressuring these things. They’re coercing them, using what I believe is extralegal pressure to divest. It’s kind of coming from both angles. ”
He’s referring to John Kerry’s actions, as President Biden's Special Envoy on Climate, to push the private sector to abandon traditional energy projects in favor of wind and solar. Moore has a different take on the feasibility of this plan: “It’s going to be catastrophic.”
Managed Decline
Civilization runs on energy. Economists have long attempted to measure the relationship between energy usage and economic growth, and while different analyses have yielded different estimates as to the strength of this relationship, there’s no real dispute as to the existence of this relationship. More energy usage means that we can do more things.
In addition to being a net exporter of energy, West Virginia has vital internal uses for the energy it produces. Within the state, 45 percent of energy usage supports the manufacturing sector. Manufacturing is notoriously and unavoidably energy-intensive.
A report by McKinsey and Company, titled The Decoupling of GDP and Economic Growth, notes that in recent years, the relationship between energy usage and economic growth has grown somewhat weaker, but one factor implicated in this shift is worth considering carefully: “...a steep decline in energy intensity of GDP, primarily the consequence of a continuing shift from industrial to service economies…”
In other words, reducing energy usage relative to GDP is only possible if the manufacturing sector shrinks relative to the less energy-intensive service sector. Moore is acutely sensitive to this reality. At several points during our conversation, he posed different versions of the same question: if the United States voluntarily loses its capabilities in such areas as resource extraction and manufacturing, what will the coal miners and factory workers do?
“Walmart jobs,” he answered his own question.
And it’s far from a given that the rest of the world will follow our lead, Moore notes. A former staffer for the House Foreign Affairs Committee and a graduate of the National Defense University, he’s quick to consider the foreign policy and trade implications of our domestic decisions: “Guess who’s building 55 coal-powered plants?” he asked. The answer, of course, was China.
Rather than leveraging our abundant natural resources to make the United States a more attractive location for high-value-added businesses to operate, Moore explained, we’re placing ourselves at a significant competitive disadvantage relative to our greatest adversaries. In his thinking, our ability to produce energy is “one of our advantages, one of the ways we can incentivize companies to stay in America.”
In an era when globalization has only increased demand for energy, the United States and certain U.S. allies, such as Germany, have moved to suppress domestic energy production. The result has been a greater reliance on foreign oil from Russia, Venezuela, and Saudi Arabia.
Moore is skeptical that the U.S. will be able to substitute renewables for traditional energy sources, saying “renewable energy is not baseload energy. Baseload energy is gas, coal, and nuclear, in that order. Down at the bottom is wind and solar, and it’s been at the bottom for years.”
In a 2016 Forbes article, Michael Shellenberger writes, “...no amount of marketing could change the poor physics of resource-intensive and land-intensive renewables. Solar farms take 450 times more land than nuclear plants, and wind farms take 700 times more land than natural gas wells, to produce the same amount of energy.”
As the McKinsey report hints, there’s no way to run an industrial civilization on windmills alone. At a certain point, we have to recognize this policy of managed decline for what it is: a choice.
The Energy Coalition
Riley Moore is unusual for a politician. First, he didn’t begin his career in finance, law, or consulting. He got his start as a welder. When he speaks, you can tell that he still feels a deep sense of kinship with the blue-collar workers of his state. When he considers policy decisions, he seems to instinctively look at the issues from the vantage of the people he grew with, the people who made him state treasurer when he ran against an incumbent who had held that office for over two decades.
Second, he’s the sort of rare, creative problem solver that we would hope to see in a position of major public responsibility. For example, as state treasurer, he developed a new version of the popular 529 college savings plans for blue-collar workers who want to save money to buy equipment or to cover licensing fees.
But what can a state treasurer do to counter the actions of large, private banks, which are themselves acting in response to pressure from the federal government?
Moore had an idea. States typically keep their public funds in private banks. There are guidelines that determine which banks are eligible to hold public money, and elected state treasurers have a role in shaping these guidelines.
“We have a coalition where we’ve all agreed going forward that we're changing our contracting process as it relates to banking. We’re going to ask them to certify that they’re not boycotting the energy industry.”
“We” here refers to 17 states that are moving to condition access to public money on banks not implementing explicitly anti-energy lending policies. Together, they control hundreds of billions of dollars in capital. This is a powerful lever.
In March, the West Virginia State legislature officially ratified Moore’s plans to update the state’s contracting guidelines. Other states seem poised to follow suit. In an era shaped overwhelmingly by decisions made in faraway places like New York, Washington, and Davos, Moore has lined up a third of the Union against a trend that stands to irreparably harm the economy of his home state.
The people in those faraway places have only grown bolder in the Biden era, and we can no longer count on a sclerotic Washington or a misaligned Wall Street to steward the fate of our country and its people. If there's cause for hope, it's to be found in leaders like State Treasurer Moore, people who can see our problems clearly and devise unorthodox solutions.