Timothy Carney
“Subsidymagination:” GE’s regulatory robbery
By: Timothy P. Carney
Examiner Columnist
May 29, 2009
Imagine a salesman comes to your door peddling composting barrels. You tell him that while composting would offer some benefits—good for the environment, free topsoil—you don’t think it’s worth the cost.
He replies, “Oh, sir, but I’m afraid you don’t really have a choice. You see, the county government just passed a law requiring everyone to use a composting barrel. I should know—I’m also a lobbyist, and I helped write the law.”
You’d call that a racket. On a far larger scale—peddling “greenhouse gas credits” and windmills instead of composting barrels—General Electric calls it “Ecomagination.” Author Steve Milloy has come up with another apt name for much of GE’s business “Subsidymagination.”
Ecomagination turned four years old this month, and GE’s annual eco-report described it as “a business initiative to help meet customers’ demand for more energy-efficient products….” This charming description omits the relevant fact that this “demand” is
often created by government mandates and regulations—for which GE lobbies heavily.
Certainly, many Ecomagination products legitimately fulfill GE’s mantra that “green is green.” Many of the products cut costs and increase profits in ways that also help the planet. For instance, GE offers customers ways to cut back on water use or energy use, reducing bills while conserving God’s gifts to us.
But closely read the Ecomagination annual report, or carefully listen to the words of Ecomagination boss Steven Fludder, and you realize that it’s mostly through government regulations, mandates, and spending that GE turns green into green. In other words, ingenuity mixed with lobbying gives GE direct access to the wallets of taxpayers, businesses, and consumers.
Lobbying is at the heart of Ecomagination. Scattered throughout GE discussions of Ecomagination is talk of “working with government.” GE was the seventh most prolific lobbyist of all U.S. businesses in this year’s first quarter.
Fludder and GE CEO Jeffrey Immelt wrote this week, “ecomagination also has provided us with the opportunity to work with global thought leaders and legislators to craft longer-term policies designed to accelerate innovation and spur action.” Translation: It’s easier to get a seat at the power table when you’re dressed in green.
Ecomagination benefits from Obama’s election and strong Democratic majorities. Fludder, speaking last week at Goldman Sachs Fourth Annual Alternative Energy Conference, explained his optimism for Ecomagination’s future:
“I like to describe it as a funny thing happened on the way to the end of last year,” he said, referring to the elections, “and that is all of a sudden, green is relevant. And there are some pretty bold decisions that have to be made—and some courageous decisions, in some cases.”
One “bold decision” benefitting Ecomagination was Obama’s passing the largest spending bill in the history of the world. From the annual Ecomagination report: “By some estimates, the total green component of all global stimulus programs now exceeds $400 billion.”
GE’s high-tech battery business—aimed at creating battery-powered cars—relies on federal policy. The annual report cites “increases in the cost of fuel and other drivers to reduce emissions.” Those “drivers” are federal and state emissions restrictions—covering both pollution and greenhouse gases—for which GE has lobbied.
GE is a major investor in windmills, which business Fludder described as “handsomely profitable.” Wind power, of course, is heavily subsidized at the state and federal level, as well as internationally. Fludder said, however, he doesn’t like to talk that way. “I’d prefer not to think of words like ‘subsidies’ and that type of a construct. I think it is more supporting the creation of scale.”
And of course, GE Finance, through a joint venture called Greenhouse Gas Services, is positioning itself to become a broker-dealer in greenhouse gas credits—products that are basically worthless unless Congress creates restrictions on greenhouse emissions.
And once again, GE is not simply taking advantage of subsidies that exist—the company lobbies, with its $18 million-a-year lobbying outfit, to create or protect these subsidies. On greenhouse emissions restrictions, GE is leading the pro-regulation charge.
But these “green” profits for GE don’t come out of nowhere. Regulations force businesses to buy GE’s products. Subsidies incentivize them to buy GE’s products. In either case, regular people foot the bill—either through higher prices for electricity, shipping, and manufactured goods, or through higher taxes.
Taxpayers or consumers may call it a racket. I like to call it regulatory robbery. GE calls it Ecomagination.
Timothy P. Carney is The Washington Examiner's Lobbying Editor. His K Street column appears on Wednesdays.
