Smoking Gun – Sierra Club admits donations targeting a natural gas competitor

On February 2, 2012, the Sierra Club allowed a Time magazine blog to break a poorly kept “secret” whose existence had threatened to get out of hand. In a post titled Exclusive: How the Sierra Club Took Millions From the Natural Gas Industry—and Why They Stopped Bryan Walsh described how one of the oldest, largest, and best endowed members of the established environmental community accepted approximately $26 million dollars during the period from 2007-2010 from executives associated with Chesapeake Energy.

The donations were specifically targeted to assist the Club in its already established Beyond Coal campaign. Though it is not earth shattering news for fossil fuel interests to donate money to a group like the Sierra Club (or Greenpeace, NRDC, Audubon, or any of dozens of similar “green” groups), those donations are generally made to the organization as a whole. Depending on the speaker’s point of view and the audience to which the donations are described, they are positioned as being an attempt to show community involvement or corporate concern for the environment or they are portrayed as virtual protection money aimed at ensuring the groups do not attack the donor too hard.

What is rare and interesting in this particular example, however, is the clear connection between the payments from Chesapeake and the actions taken by the environmental group. Apparently, Chesapeake Energy’s leadership gave Sierra tens of millions of dollars in return for both promotion of its own product – natural gas – and for attacks against coal, a rival product against which it competes for market share.

The story is made even more intriguing – for an observer like me – and disturbing – for many of the sincere, but misguided campaigners in the Club – because Chesapeake is one of the US’s leading practitioners of hydraulic fracturing (fracking) technology to extract gas from formations that others thought were not worth developing.

Many local chapters of the Sierra Club have been fighting against the devastation that the fracking industry often causes in the rural areas where its use has been rapidly increasing since 2005, when the technology received a boost from a backdoor exemption from the Clean Water Act and other federal regulations in favor of lighter, often non-existent, state and local regulations.

Sierra Club local chapters have been legitimately concerned about water use, waste water treatment, heavy truck traffic, diesel generators on the drilling sites, solid waste disposal, and the unknown concoctions of chemicals injected thousands of feet below the earth’s surface. However, their efforts to obtain assistance from the Club’s national leadership often fell on deaf ears. Instead of the requested support, they were treated to the spectacle of their leaders appearing on stage at natural gas industry conferences, joining gas industry marketing initiatives and walking as lobbyists in the halls of Congress alongside the industrial leaders whose rigs, trucks and generators were having such negative effects on their communities.

There have been some Club member defections and expressions of a strong sense of betrayal at the acknowledgement that their club of nature lovers was receiving donations that were a significant portion of the annual budget, even for a group as well-funded as Sierra, from the very industry that the local chapters were trying to hold accountable.

It is hard to resist the temptation to say “I told you so”, so I won’t. Unlike the idealistic Sierra members who feel betrayed by the recent admissions, Atomic Insights readers have heard for years that Chesapeake has openly supported Sierra’s Beyond Coal campaign and paid for television commercial with the same message. They have listened to Thomas Price, a Chesapeake VP describe how his hundred member SWAT team goes from state to state to partner with groups that are already fighting coal.

This is an exceptional opportunity for us to talk about the benefits of partnerships. We have actually been involved in a number of these efforts to try to stop the expansion of coal plants around the country. We began actually about four years ago in Texas where we developed a campaign called “Coal is Filthy”. It was a real subtle and very much appreciated in Appalachia and I am sure in Wyoming.

We’ve got about 125 rigs active across the country. It’s been said before, but the demand side of the equation is extremely important right now. I mean, this really is a zero sum game. I think that certainly there are a number of very progressive utilities out there that recognize the challenges they are facing, not only from climate change but from the Transport Rule and Clean Air Act and various others. The challenge for many of us has been to recognize the obligation that we have as producers to really engage and be more empathetic with the environmental community…

Okay – that is the end of my “told you so” gloating. It really is not becoming.

After the Time article appeared, there were also expressions of outrage from coal industry representatives and from labor leaders in coal mining areas. Those hard-nosed leaders recognize that they compete with natural gas for market share in the electric power fuel business, but they think it is unfair that their competitors have funneled money to groups that seem to be opposed to all industrial development.

In an interesting twist to the story, the speech from a coal industry leader indicated that the Sierra Club has not been the only beneficiary – the American Lung Association has also received money from natural gas industry sources, which seems to have influenced its official position on energy sources.

The American Lung Association supports the phase out of conventional coal-fired power plants as the nation transitions to a clean energy future.

The American Lung Association does not support the construction of new advanced coalbased generating facilities, including carbon capture and sequestration and integrated gasification combined cycle plants.

The American Lung Association supports the increased use of natural gas as a transitional fuel for the production of electricity, as a cleaner alternative to biomass, coal and other fossil fuels.

Before nuclear generating capacity is expanded, the American Lung Association believes that two key thresholds must be met. First, the expansion of capacity must be economically viable without direct government subsidies. Second, the nuclear industry must demonstrate that it can reduce the continuing risks to safety and the environment.

(Emphasis added.)

Pulling just a little harder on the hint from that last bullet statement about energy sources from the American Lung Association, please consider the following statement that was released from a Chesapeake Energy spokesman”

Over the years, Chesapeake has been proud to support a number of organizations that share our interest in clean air and agree that America’s abundant supplies of clean natural gas represent the most affordable, available and scalable fuel to power a more prosperous and environmentally responsible future for our country.

(Emphasis added.)

The way I parse that statement is that Chesapeake has proudly and openly donated money to a number of organizations that have promoted natural gas as a better fuel than its competitors – which includes promoting it as a better fuel for the future than uranium or thorium. Even in the case of a group whose main focus is right in nuclear energy’s “wheelhouse” of extremely low impact on air pollution, the natural gas industry money has apparently helped to sway the position statement into something that is quite negative about immediately using more nuclear energy instead of burning more natural gas.

One more amusing twist to the story is the way that conservative, free-market advocates have reacted. They are not too disturbed by the notion that a business might resort to underhanded means to gain a competitive advantage, but they have essentially told Chesapeake Energy that they have gotten what they deserve from getting in bed with the arch enemy of conservatives – the liberal, environmentally concerned Sierra Club.

Many people overlook the fact that there are rivalries among the carbon-based fuels. Oil and gas men hang together in their battle with coal. And five years ago, Chesapeake Energy — a gas company — helped underwrite the Sierra Club’s war on coal called the Beyond Coal campaign. Now, five years and $26 million later, the Sierra Club — a tax-exempt corporation that lobbies against industrial activity of any sort — is thanking Chesapeake Energy by opposing natural gas.

My theory is that there is plenty of additional information that should be discovered and discussed about the relationships between groups that fight energy developments and the industries that benefit when the supply of reliable energy fuels is not quite large enough to supply the market demand. The efforts are not progressive – they actually seek to harm most of us in order to benefit the very wealthy people at the top of the established suppliers who want to keep out the competition.

Full disclosure: I actually admire the way that Chesapeake Energy has stubbornly seen opportunities to produce natural gas in the United States at a time when most other oil and gas producers were investing tens of billions of dollars into developing natural gas sources and liquified natural gas transportation systems outside of the US. Over the years, I have made some healthy profits by investing in Chesapeake Energy stock. Though I do not currently hold any, I am considering making some future purchases because the price seems poised to increase.

Additional reading

ANS Nuclear Cafe (February 7, 2012) Not So Strange Bedfellows – Sierra Club accepts natural gas money

Politico (February 7, 2012) Sierra Club faces gas-cash fallout

Last week’s revelations about the 120-year-old organization’s hushed financial marriage to the natural gas industry — and its just-as-secretive divorce — have left some long-time supporters feeling angry, betrayed or misled. The news cut especially deep for activists who have spent years fighting the spread of shale gas drilling in states like New York and Pennsylvania.

The Sierra Club quietly accepted $26 million in donations from gas industry interests from 2007 to 2010 — years when the group’s national leaders were talking up gas as a cleaner, greener “bridge fuel” alternative to coal.

“I think it betrays all the grass-roots volunteers,” said Kate Bartholomew, a gas activist who is also an elected member of the executive committee that oversees the Sierra Club’s statewide chapter in New York.

Update (Posted February 12, 2012) I came across a blog post from December 2009, right in the middle of the period when Chesapeake was a major funding source for the Sierra Club. Sierra Club’s love/hate relationship with natural gas. It talks about the national leadership’s promotion of gas while the local chapters are expressing concerns about fracking. Money often makes unusual allies.

About Rod Adams

12 Responses to “Smoking Gun – Sierra Club admits donations targeting a natural gas competitor”

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  1. Rod Adams says:

    Note: I have been working with my web hosting company to overcome the significant delays in posting comments. There is something happening with the caching settings that is causing what looks like a several hour moderator delay. I apologize for any interruption in the discussion that has caused and will continue to seek a solution.

  2. No offense Rod, but you’re not looking very hard if your one example of market advocate response is, “You reap what you sow” (although frankly, it is also a perfectly good response on its own). Plenty of market advocates have decried the blatant rent-seeking involved in this practice.

    Nobody likes rent-seeking, Rod (except for perhaps its primary beneficiaries). No need to create an artificial division where none exists.

  3. donb says:

    Chesapeake VP Thomas Price said:
    “I mean, this really is a zero sum game.”

    What this says to me is that Mr. Price believes that natural gas should replace coal but at no decrease in cost (perhaps increased cost!?).

    The goal for most of us who support nuclear is that power and heat from nuclear sources should be less expensive than fossil fuels, so that we have a positive sum game!

    Even if Mr. Price means that energy from natural gas should be substituted for coal one-for-one, this straight-across substitution only happens by maintaining at least the current price for energy. Decreasing the cost of energy leads to its productive use in more areas, thus more energy consumption from which we benefit.

  4. Ioannes says:

    The Sierra Club is liberal Democrat and don’t you forget it. Don’t blame conservatives for this mess. That’s all on you liberal progressives. President Bush – may God bless him – did more for nuke power than Obama ever did. You can blame Jaczko as Commission on Obama. You libs are and have always been the problem.

    • Joel Riddle says:

      A partisan-ship post from Ioannes? What a surprise.

    • Rod Adams says:

      Actually, the Sierra Club is a conservation group, started by people with conservative, admirable principles of protecting some of god’s greatest gifts to mankind. The question that should be stimulated by the post, however, is how moral is it for a business to give money with the express purpose of kneecapping a competitor? Is the Tonya Harding school of competitive behavior really acceptable?

      Is that a classical “liberal” position or a classical “conservative” action? My answer is neither. It is an unprincipled maneuver justified by pure greed.

      • Jeff S says:

        I don’t really blame Chesapeake or other LNG companies. It’s a basic, fundamental right to support whoever you want. If they saw advantage in supporting people who were attacking their competitors anyhow, I have no problem with that.

        I *do* however have a problem with the Sierra Club accepting their money, and secretly. If they’re going to accept an industry’s money, they should be up-front about it and let everyone know.

        • Friakel Wippans says:

          I DO have a serious issue with Chesapeake.

          How did they account for taxes those $26 million dollars in donation? Did they deduct what looks very much like a public relation service as charitable donations?

          What about the Sierra Club? How was it accounted? Did they file and pay the proper taxes due on a commercial service?

          I’m not just a supporter of nuclear power. I’m also a tax payer and what others fail to pay goes on the public debt tab, my and everybody else’s tab.

  5. John Englert says:

    I’m surprised you didn’t mention all the anti-nuclear columns written by Carl Pope.

    • Jeff S says:

      It’s kind of hard to draw a straight line from one to another. That is, Sierra Club has been antinuclear for a long time. The Gas Industry can easily claim that, “The enemy of my enemy is my friend”, so they supported the Sierra Club but that they did not influence SC to do or say anything they wouldn’t have said *anyhow* – just that the money allowed them to more effectively spread their message.

      Sierra Club, for their part, can say much the same thing – the money didn’t change our policy – just enabled us to do and say things in ways and on media we couldn’t otherwise afford. To run campaigns we couldn’t have run without the money, but which we wanted to do anyhow.

      Of course, I’m also not so naive as to see that the money can “cement” a group into a particular position – e.g. during these periods, some of their own members were calling on them to adopt a *new* policy wrt nat gas and fracking, a policy which would have been in direct conflict with their sources of funding. Also, there are a number of environmentalists who are trying to call upon environmental organizations to change their minds and policies wrt Nuclear Power, and it’s easy to see how gas money can, again, “cement” their position so that they cannot afford to change, even if they do start to doubt that nat gas is a better alternative than nuclear power for the environment.

      • Rod Adams says:

        @Jeff S

        I did not go into the long history of corporate support for the Sierra Club in this post. However, it is interesting to note that the Sierra Club in CA once ran a campaign called “Atoms, not dams” in the early days of nuclear energy – pre 1970.

        Then, the Club decided that it would accept corporate donations. At the time, two of the largest corporations in California were Chevron and Gulf Oil. They both had some trouble with keeping their operations clean and became reliable donors to the Club. Some thought of those donations as protection money or as ways to prove that the companies really did care about the environment.

        They did not notice that there was also a sudden shift in the Club’s position about nuclear energy to be almost completely negative. Coincidence?

        It is difficult to provide links to back these assertions because I accumulated notes from dead tree sources over a long period of library research. However, here is a link to an oral history that provides some glimpses.

        Here is another fascinating viewpoint about the nuclear energy controversy within the Sierra Club between 1966 (when it passed a resolution favoring Diablo Canyon as an appropriate alternative site for a nuclear plant) and 1974 when it passed a resolution that put it squarely in the antinuclear camp.

        Pages 140-143 of In the thick of it: My life in the Sierra Club by John Michael McCloskey are also informative with regard to the Sierra Club’s energy positions