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Well-Heeled and Wrongheaded in California

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Well-Heeled and Wrongheaded in California

Tom Steyer spends millions to stop energy exploration. Summer 2014
Infrastructure and energy
California

California billionaire Tom Steyer may be the biggest player in this year’s congressional elections—and, some charge, the biggest hypocrite. Steyer has vowed to use his NextGen Climate PAC to spend as much as $100 million to boost Democrats around the country who oppose the Keystone XL pipeline and support alternative-energy measures to combat climate change. But Steyer, the former CEO of the Farallon investment firm, made much of his fortune from the coal, oil, and gas industries that he now targets.

Steyer may be mulling a run for governor after Jerry Brown finishes his almost-certain next term—and California, with its aggressive Air Resources Board and alternative-energy mandates, would seem to be friendly territory for Steyer’s political aspirations. But the reality is more complicated. Steyer is a frequent critic of the conservative Koch brothers, who, he alleges, use their political muscle to improve their bottom line. But Steyer’s critics say that he’s becoming a left-wing version of the Kochs. His political activism, they suggest, will likely help Farallon, which operates a competitor to the Keystone XL. Steyer retired as CEO in 2012 but hasn’t divested from all his energy holdings, though he has promised to do so from his tar sands and coal holdings.

Surprisingly, Steyer has had only mixed political success so far. The Los Angeles Times cites his victories: “He bankrolled a successful effort in 2012 to persuade Californians to raise taxes on out-of-state businesses by $1 billion per year, half of which will be spent on energy-efficient programs. He also co-chaired the successful effort in 2010 to defeat Proposition 23, which would have rolled back the state’s landmark global warming law.” But Steyer has been consistently outmaneuvered on the two issues that seem dearest to him: halting hydraulic fracturing and slapping petroleum companies with an oil-severance tax. California is the rare oil-producing state that doesn’t impose such a tax, and Steyer says that if the legislature doesn’t pass one this year, he will lead an initiative campaign to get it on the 2016 ballot. On the fracking front, California recently passed industry-backed regulations that put some limits on the practice but essentially allow the technology to move forward. The law was a big win for the oil industry and for Steyer’s nemesis on the issue—Governor Brown.

No one can question Brown’s credibility on climate change. He was a leading force behind California’s first-in-the-nation cap-and-trade law, and his environmental advocacy goes back to the 1970s. But since returning to the governor’s office, Brown has promoted oil exploration in California, seeing its potential to unleash an economic boom. The Monterey Shale formation in the state’s agriculturally rich Central Valley is the largest of its kind in the country. Brown won industry praise by removing Arnold Schwarzenegger–era regulators who were holding up oil-lease approvals. He signed the fracking law and remains a forceful advocate for developing California’s oil resources—even as the state pushes to cut down on the demand side by promoting alternative energy. “There is a lot of concern about fracking, and that’s why we are spending millions of dollars and taking the time to understand as much as we can about the consequences,” he told CNN recently. But fracking, he added, “has been going on in California for more than 50 years. So we are not going to shut down a third of our oil production and force more oil coming from North Dakota, where they are fracking a lot more, to come by train or more boats and ships coming in from all over the world.”

Brown had no comment on recent reports from the federal Energy Information Administration suggesting that, using existing technology, recoverable oil from the Monterey Shale is 96 percent below estimates released last year in a USC study. The formation’s complex geology makes the oil tough to get to, at least for now. Steyer greeted the news by renewing his call for a moratorium on fracking: “Our leaders in Sacramento can no longer afford to pin our hopes on the false promises of a fossil fuel windfall—especially when our state is poised to lead the nation and the world toward a cleaner, more sustainable energy economy. California must have the courage and vision to address the root causes of the climate crisis.”

The Brown administration seems content to let private firms develop the technology necessary to exploit California’s oil resources. Tom Steyer may be taking his clean-energy campaign nationwide; but so far, he has little to show for it, even in green-friendly California. Maybe he should worry less about the Koch brothers and more about Jerry Brown.

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