Sep 30, 2021 - Energy & Environment

Reconciliation waiting game attracts climate influence spending

Illustration of hands grasping money, all surrounding the US Capitol building.
Illustration: Shoshana Gordon/Axios

The extended timeline for a reconciliation package on Capitol Hill is widening the spigot for business and advocacy group dollars to flow into the fight.

Why it matters: The longer the skirmishes on Capitol Hill last, the more time they provide for the energy industry, associated trade groups and environmental groups to pour money into TV, radio and online advertising campaigns to influence Americans' views of the wide-ranging proposals.

  • This, along with other factors such as the president's sagging poll numbers and the approaching 2022 midterm campaign calendar, increases the odds that certain climate change-related provisions in the sweeping $3.5 trillion House-passed bill may be altered or struck out.
  • Delays on a final climate deal likely mean the U.S. would go to UN Climate Summit in Glasgow without a bill signed into law that would back up its latest emissions reduction commitments under the Paris Agreement.

Driving the news: Business interests and the oil and gas industry that are spending on ads to oppose the $3.5 trillion House bill are focusing their fire around a key way Democratic lawmakers propose to fund the legislation, which is to raise the corporate tax rate on profits from 21% to 26.5%.

  • Democrats aim to take that step in order to pay for the expansive measure that would alter Americans' everyday lives, from the cars they drive to the child care choices available to parents.
  • The fossil fuel industry in particular has other provisions it opposes in the reconciliation package, but the ads focus on tax rates.
  • Overall, the bill would hasten the transition to clean energy sources, particularly in the electricity and transportation sectors. The oil-and-gas industry opposes proposals like new fees on methane emissions and clean power investments that don't credit natural gas-fired generation.

Details: The Business Roundtable, whose members include companies that support climate action, has spent $166,416 in Facebook ads during the past week, many of which warn of potential economic harm from the corporate tax rate hike.

  • The Roundtable is also financing a multi-million dollar advertising campaign against the tax provision of the Democrats' plan, which includes print, talk radio and within-the-Beltway TV ads. It also includes "Direct CEO engagement to Capitol Hill and the Administration," the group's website states.

The intrigue: The Roundtable's ads are putting some of its member companies, like Apple, in an awkward position. Apple supports the climate provisions and has publicly stated that support but is now under pressure to distance itself from the group.

What they're saying:

  • “All of our members support action on climate change, but Business Roundtable’s position on a reconciliation package will be based on the totality of what’s in the bill," said Business Roundtable CEO Josh Bolten, in a statement to Axios.
  • "Congress has unnecessarily tied climate action with $1 trillion in tax increases on job creators, which we strongly oppose, and trillions in non-climate related spending," Bolten said.
  • The BRT has not received pushback from its members or any threats to quit the group as a result of the reconciliation ads, the group told Axios.

Between the lines: The White House knows it's taking incoming fire from trade groups as well as the energy industry and is calling on businesses that are acting on climate to speak out in favor of both the bipartisan infrastructure bill and reconciliation.

  • "Make your voice heard, please. Social media, letters, whatever it is. We very much want to have the business community to be linked with us,” Energy Secretary Jennifer Granholm said Tuesday at an event sponsored by Fortune.
  • The White House has been working to amplify business voices that are in favor of the legislation, including through emails to the White House press list containing statements from the likes of Apple, GM, Walmart, Netflix and Salesforce.

Meanwhile... Energy companies are also increasing their digital ad spending, both individually and via their trade groups.

  • According to InfluenceMap, a London-based think tank that tracks corporate influence on climate policy, the American Petroleum Institute, which includes ExxonMobil, has spent $423,000 on Facebook ads since Aug. 11, when the Senate passed a budget resolution.
  • The organization says these ads have garnered 21 million Facebook impressions (number of times they were shown on a screen).
  • The group API's "Energy Citizens" page has published 286 ads targeting individual members of Congress with messaging around tax hikes on U.S. energy companies.

Details: Exxon itself has spent $296,954 in Facebook ads during the past seven days alone, targeting the corporate tax increase.

  • The ads warn that corporate tax hikes would endanger the economic recovery and "cost 1 million jobs."
  • One of these ads was viewed more than 1 million times, with others earning hundreds of thousands of impressions.

On the other hand: Environmental groups like the League of Conservation Voters (LCV) and Climate Power are working to mobilize supporters of climate action.

  • Many activists view this as the last, best chance to secure the needed greenhouse gas emissions cuts to rein in climate change and reassert U.S. leadership on this issue.
  • The LCV and Climate Power are spending millions to bolster support among moderate House Democrats for climate portions of reconciliation, and have been since the summer.

The bottom line: Legislation this complicated was never going to be completed in one week, and it could drag on into late fall. The two Senate moderates who hold sway, Democrats Krysten Sinema of Arizona and Joe Manchin of West Virginia, don't seem to be in any hurry to get to yes.

  • However, the Glasgow Climate Summit is one month away, with America's international credibility resting in part on the reconciliation bill's movement.
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