Tennessee Legislation Rejects Divestment Trend Of Fossil Fuel Industry

Photo: Oil pump near Rugby in Morgan County, Tennessee, USA. Oil wells such as this are scattered sporadically across Tennessee’s northern Cumberland Plateau region. Photo Credit: Brian Stansberry / CC

The Tennessee Conservative [By Paula Gomes] –

Legislation that passed both the House and Senate of the Tennessee General Assembly with votes along party lines prohibits the state treasurer from entering into contracts with banks or other financial institutions in Tennessee that have a policy of prohibiting financing to companies in the fossil fuel industry unless the state was unable to obtain the services elsewhere.

A company in the fossil fuel industry includes all entities with “at least 50% of their annual revenue obtained from business operations involving natural gas, oil, kerosene, petroleum, coal, hydrocarbon product, or any form of solid, liquid, or gaseous fuel derived from such material to produce heat for the generation of electricity.”

According to the American Petroleum Institute, the oil and gas industry employed approximately 4% of Tennessee’s workforce in 2019.

Texas passed a law last year requiring its comptroller to make a list of all the financial institutions that boycott energy companies in order for the state to boycott those institutions. At least seven other states have had similar bills proposed this year.

*** Click Here to Support Conservative Journalism in Tennessee. We can’t cover stories like this without your support!***

As countries tighten laws to regulate greenhouse gas emissions, fossil fuel investments are falling out of favor with some investors. However, financial support for the industry remains strong with nearly $2.5 billion in funding provided over the last 6 years by just 12 banks labeled “the dirty dozen” by the Banking on Climate Chaos report.

The report, authored by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International, Reclaim Finance, Sierra Club, and Urgewald shows that fossil fuel financing is still considered to be good business by four U.S. banks, with JPMorgan Chase, Citi, Wells Fargo, and Bank of America together accounting for one quarter of the total financing from 2016 – 2021. Globally, 60 banks have provided more than $4 trillion over the last 6 years.

Brian Wesbury, First Trust’s Chief Economist, speaking about the U.S. economy in a market volatility update last week, said that owning hard assets is very important in the stagflation that the U.S. now finds itself.

Wesbury, a member of the Academic Advisory Council of the Federal Reserve Bank of Chicago from 1999-2007 and a regular attendee of the Economist Roundtable Luncheon at the Chicago Fed since 2007, was named a Fellow of the George W. Bush Presidential Center in Dallas, TX, in 2012 where he worked closely with its 4%-Growth Project. 

In his remarks to investors, Wesbury recommended investing in companies with lots of fixed assets such as materials companies and oil companies in light of the inflation that he predicts is going to be “higher sustained and last longer” than expected.

Nevertheless, divestment appears to be a growing trend with faith-based organizations representing the largest source of divestment, followed by educational institutions, philanthropic foundations and pension funds according to this database of fossil fuel divestment commitments.

The Tennessee General Assembly passed two more bills that support the oil and gas industry this year. One removes local control of new fossil fuel projects. The other, the Tennessee Natural Gas Innovation Act, which was signed by Governor Bill Lee in March, “authorizes a public utility to request, and the Tennessee public utilities commission to authorize, a mechanism to recover the costs related to the use or development of infrastructure to facilitate use of innovative natural gas resources for natural gas utility customers, if the commission finds that the costs are in the public interest.”

About the Author: Paula Gomes is a Tennessee resident and reporter for The Tennessee Conservative. You can reach Paula at paula@tennesseeconservativenews.com.