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SALT LAKE CITY — Utah's treasurer says his office will conduct an "enhanced due diligence assessment" of any energy contract issued by a financial institution that has pledged to "boycott" funding for boycott traditional energy industries, such as coal, oil and gas.
Utah Treasurer Marlo Oaks' announcement Wednesday comes a little more than a week after he and Utah Auditor John Dougall were among leaders in 15 states who signed an open letter to the U.S. banking industry, ripping "the ongoing and growing economic boycott" of traditional energy production industries.
"Traditional energy plays an important role in Utah's economy, particularly in rural Utah. Cutting off financing for businesses engaged in economically essential activities to advance a radical social agenda destroys livelihoods, increases costs and does little to advance the desire we all have to breathe cleaner air and improve the environment," Oaks said in a statement Wednesday. "Punishing these entities is antithetical to our nation's capitalist system that has developed some of the greatest innovations in human history."
The letter, dated Nov. 22, came from West Virginia treasurer Riley Moore but was signed by over a dozen other elected leaders, including Oaks and Dougall. In it, the elected officials wrote that any policies against the industry would attack "well-paying jobs, health insurance, basic infrastructure and quality of life" and would harm states' revenues.
The letter goes on to say that states would take measures to support banks and lenders that don't participate in traditional energy boycotts. For some states, that will include a certification process that an energy boycott wasn't considered in a project proposal or, as in Utah's case, it may come in the form of an assessment.
"We will each take concrete steps within our respective authority to select financial institutions that support a free market and are not engaged in harmful fossil fuel industry boycotts for our states' financial services contracts," the group wrote. "Although these measures will vary in nature and scope from state to state, they will all be narrowly tailored to meet the compelling interests of our respective citizens."
The letter concludes that they aren't asking for "special treatment" for traditional energy sources; rather, they are seeking that financial institutions assess fossil fuel businesses "without prejudice or preference" like any other business. Treasurers, auditors and comptrollers from Alabama, Arizona, Arkansas, Idaho, Kentucky, Louisiana, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Texas and Wyoming also signed.
The letter was in response to the U.S. Department of Treasury's "Fossil Fuel Energy Guidance" issued to Multilateral Development Banks back in August. The federal department explained that it would begin "advocating for MDB investments that prioritize clean energy, innovation and energy efficiency, to achieve a clean and sustainable future that is consistent with their development goals and the goals of the Paris Agreement."
The department said it was enacted in response to an executive order signed by President Joe Biden one week after he took office. The message to switch to alternative fuels was also further hammered during the United Nations Climate Change Conference that wrapped up last month.
The debate between fuel sources pins current and future business with current and future climate concerns.
Scientists say reducing global greenhouse gases associated with fossil fuels and climate change, such as carbon dioxide and methane, is one of the top measures to slowing down Earth's warming rate. A United Nations report released in August found the earth was warming faster than originally believed, resulting in more heat waves and droughts, among other harmful effects.
Biden agreed during the summit to work with other countries in an effort to reduce global methane emissions by 30% over the next decade, the Associated Press reported. Stopping leaks from oil wells and gas pipelines is considered one of the simpler solutions to reduce methane emissions. But other tougher solutions call for easing off fossil fuels and switching to renewable sources, such as solar, wind, hydro and geothermal energy.
Utah energy has already started to shift well before any new policies were put in place, according to U.S. Energy Information Administration analysis of Utah's energy consumption updated in March. For instance, the report states that Utah's reliance on coal for energy dropped 14 percentage points between 2015 and 2020, while solar energy accounted for 97% of Utah's "electric generating capacity" added since 2015.
Still, fossil fuels account for most of the state's energy. Coal accounted for about 61% of Utah's total electricity net generation in 2020, while natural gas accounted for another 25%. Only about 14% came from renewable energy sources, according to the report.
The administration report also pointed out that Utah is a net supplier of power for neighboring states because it produces more energy than it consumes. It didn't include any employment figures.
The Intergovernmental Panel on Climate Change, in 2018, released a report that noted a rapid switch away from coal, oil and gas would be costly but would help slow down the warming of the planet and reduce harmful impacts associated with that.
But Dougall views the debate differently, in that he doesn't want to pick sides. In a statement Wednesday, Dougall called Utah "an all-of-the-above energy state" in that residents "expect reliable, low-cost energy with a continual push for cleaner air."
That's why he said he signed the letter to the country's financial industry.
"Government should not be picking market winners and losers. Banks and investors should focus on the potential of companies to provide increased shareholder value, rather than favoring certain partisan agendas, particularly at the expense of shareholders," his statement continues. "Energy companies of all types should have unfettered access to capital and lending markets."