Jamie Dimon’s Climate Corporatism
The J.P. Morgan CEO wants the government to seize land for wind and solar projects because rural landowners stand between his mega-bank and tens of billions of dollars in business.
Deep Throat never said, “follow the money.”
That phrase, which has become one of the most famous axioms in politics and journalism, was featured in the 1976 movie “All the President’s Men,” which starred Dustin Hoffman and Robert Redford. But that phrase was not in the 1974 book of the same title by Carl Bernstein and Bob Woodward that recounted their investigation into the Watergate debacle1 Instead, it appears the phrase was first used by an attorney named Henry Petersen who testified at a Senate Judiciary Committee hearing in 1974. It then made it into the movie screenplay which was written by Woodward and William Goldman.
Today, the phrase is part of our political vernacular. It has been used as the title in a movie, as the title of a book, and it’s used in dozens of websites, including followthemoney.org, that track political contributions.
Follow the money and you’ll understand why Jamie Dimon, the CEO of J.P. Morgan, the world’s largest bank by market capitalization, wants the government to seize private property so that his bank can finance the construction of more solar and wind energy projects in the name of doing something about climate change. Last week, in his letter to shareholders, Dimon wrote “Permitting reforms are desperately needed to allow investment to be done in any kind of timely way,” Dimon wrote. “We may even need to evoke eminent domain––we simply are not getting the adequate investments fast enough for grid, solar, wind, and pipeline initiatives.” (Emphasis added.)
Follow the money. Dimon wants the government to seize private property because his bank is one of the two biggest players in the business of tax equity finance, a $20 billion-per-year business that is crucial to wind and solar development. If those projects don’t get built. J.P. Morgan will lose out on billions in profits. To justify the taking of private property, Dimon invoked the specter of climate change, writing that the “window for action to avert the costliest impacts of global climate change is closing” and that we “need to do more, and we need to do so immediately” to meet “science-based climate targets.”
Dimon uses the word “science” to justify the seizure of private property, but what he’s advocating for is what I call climate corporatism, which is the use of government power to increase the profits of big corporations at the expense of consumers—and in particular, at the expense of small (and mostly rural) landowners—in the name of climate change.
Follow the money. J.P. Morgan’s profits last year totaled some $37.7 billion, a drop of about 20% from 2021. Dimon needs more tax equity finance deals to bolster his bank’s bottom line.
Dimon did not mention in his shareholder letter—and legacy media outlets largely refuse to cover—the raging land-use conflicts over renewable projects that are happening from Maine to Hawaii. As I have documented in the Renewable Rejection Database, since 2015, local communities and jurisdictions have rejected or restricted wind or solar projects nearly 500 times. Rural Americans are fighting these projects because they are concerned about their property values, and rightly so.
A 2020 study in Rhode Island found that prices of homes located close to solar projects went down by as much as 7%. A study released last month by Lawrence Berkeley National Laboratory concluded that solar projects can reduce the value of nearby properties by as much as 5%. Wind projects can also reduce property values. A 2014 study by the London School of Economics found wind projects can reduce the value of nearby homes by as much as 12% and a 2019 study of German homes by research outfit RWI found that evaluating some three million offers from an online real estate website, wind projects can reduce the value of nearby homes by about 7%.
The undeniable fact is that solar and wind projects are politically popular but nobody wants to live near them. That’s particularly true for wind projects. Rural residents don’t want to see red-blinking light atop 50-or 60-story high wind turbines all night, every night, for the rest of their lives. They are also rightly concerned about the annoyance and deleterious health effects that can be caused by prolonged exposure to the low-frequency noise, infrasound, and noise pollution that is generated by giant wind turbines, a problem that was documented way back in 2009 by the Minnesota Department of Health.
Over the past 13 years, I have talked with dozens of rural landowners who have been fighting the encroachment of wind and solar projects. On April 1, in Ida, Michigan, I interviewed 10 more.
The meeting was set up by Ricki Roelant, a nurse practitioner who helped lead the fight to prevent a solar project from being built in Ida, near her family’s farm. (They grow corn and soybeans.) Before the meeting, she told me that one or two other people might come with her to the meeting. Instead, she brought nine.
All of the people who came to the Old 23 Grill, which sits a block or two south of the grain elevators at the Ida Farmers Co-op, are fighting against the encroachment of solar projects near their homes and businesses. The stories they told me were familiar: a big out-of-state company had quietly come into their communities and obtained leases with a handful of landowners. When news of the projects broke, and they realized what it would mean for their neighborhoods, they got motivated, got organized, and rallied to oppose the projects.
Most of the people I met in Ida are fighting the 150-megawatt Azalia solar project which is proposed for Milan township, a small, table-flat, agricultural community located about 17 miles south of Ann Arbor. The proposed project, which is being pushed by Apex Clean Energy, would cover hundreds of acres of farmland with solar panels. The company is targeting the land in Milan because it sits close to existing high-voltage transmission lines, a fact that Apex says makes it “highly suitable” for a solar project.
“We would be surrounded by solar panels. We don’t want solar around us. We moved into the country 33 years ago. We want to live here in this rural area. We are going to stand up and fight. We don’t want this.” — Cheryl Majors, Milan, Michigan
The Azalia proposal is meeting stiff local opposition. Milan township will have a recall election on May 2 that could result in the removal of several township officials. Stephanie Kozar, a resident of the township, who is running for clerk in the recall election, told me the current township government is “stacked to support the project.” She continued, “We are pro-responsible renewable energy.” Milan residents, she said, are fighting to protect “agricultural land and for respect of our farmers and landowners.” Cheryl and Joe Majors are also fighting the Azalia project. They raise sheep on 25 acres in Milan. Cheryl told me that if Apex gets their project approved “We would be surrounded by solar panels. We don’t want solar around us. We moved into the country 33 years ago. We want to live here in this rural area. We are going to stand up and fight. We don’t want this.”
People like the Majors stand between J.P. Morgan, Apex, Invenergy, NextEra Energy, and other big renewable energy promoters, and staggering amounts of federal money. As I reported last year, the available tax credits for wind and solar amount to about $240 billion between now and 2030. But a recent estimate by Goldman Sachs determined that the number may be too low. The Wall Street firm estimated that the tax credits provided by the Inflation Reduction Act, which aren’t capped, could add another $82 billion to that sum!
None of the people I met with at the Old 23 Grill knew that Apex, one of the most aggressive renewable energy outfits in the country, has seen its projects rejected in numerous other locations including New York and Ohio. It’s also facing huge resistance in Piatt County, Illinois where 70% of voters recently said “no” to a question about permitting wind projects in the county. Nor did they know that in 2021, Apex was acquired by Ares Management Corporation, a publicly traded investment firm with a market capitalization of about $24 billion.
Following the money requires understanding how the NGO-corporate-industrial-climate complex finances big renewable projects and J.P. Morgan’s pivotal role in the lucrative business of tax equity finance. According to the giant law firm Norton Rose Fulbright, about 44% of the capital cost of a wind or solar project is covered by federal tax incentives such as the production tax credit (wind) or investment tax credit (solar). The remainder of the costs are covered with a combination of debt and equity. About half of all the tax equity finance deals in the country (worth about $10 billion per year) are being done by just two big banks, J.P. Morgan and Bank of America. The two outfits have the resources to handle the tax credits that are generated by renewable projects and pair those “tax subsidies” (the term used by Norton Rose Fulbright) with the capital financing needed to get the projects built. As the Congressional Research Service explains, “These transactions involve one party agreeing to assign the rights to claim the tax credits to another party in exchange for an equity investment (i.e., cash financing). The exchange is sometimes referred to as ‘monetizing,’ ‘selling,’ or ‘trading’ the tax credits.”
Follow the money. Norton Rose Fulbright says that “Most tax equity investors are banks and insurance companies for whom a 6% to 8% yield is attractive compared to alternative uses of money, like making loans.”
Follow the money. Dimon did not mention in his shareholder letter that in 2020, his bank along with two other firms, bought $2.5 billion of equity units in NextEra, the world’s largest renewable energy producer. As I explained last year, in a recent 10-K filing, NextEra reported nearly $4.3 billion in federal tax credit carryforwards. That volume of tax credits assures that NextEra will not be paying federal corporate income taxes for many years to come.
Follow the money. In 2021, J.P. Morgan said it would “finance and facilitate” more than $2.5 trillion in alt-energy projects over the next decade with $1 trillion to be spent on renewables and “clean” technologies.
Those are big numbers. And Dimon is correct when he says that building energy infrastructure is hard. Last month, the Energy Information Administration reported that “In 2022, the least interstate natural gas pipeline capacity was added since we began data collection in 1995.” High-voltage transmission is also extremely difficult to build. As I pointed out back in February in these pages, at current rates of growth of about 1,700 miles per year, doubling the size of America’s high-voltage transmission network would take 140 years. Last year, the high-voltage transmission system in the U.S. only added about 800 miles of new lines.
What does all this mean for the future of energy infrastructure in America? As I have written before, the energy networks and grids we have today are largely the energy networks and grids we will have in the future. That means we will have to make the best use of our existing infrastructure including siting new nuclear plants on the sites of retiring hydrocarbon power plants so they can use the transformers and power lines that are already there.
There appears to be some support in Congress for passing legislation that could streamline federal rules and allow more energy projects to be built. But a friend who works on Capitol Hill told me last week that, “Republicans like eminent domain for gas pipelines. They don’t like it for electric transmission lines. Democrats like it for high-voltage transmission. They don’t like it for pipelines. There’s cynicism on both sides.” As for wind and solar projects, some states, including Illinois, New York, and California, are enacting legislation that will give state bureaucrats the authority to override local zoning regulations and force communities to accept renewable projects they don’t want.
In closing, I will point out that battles over eminent domain (and the abuse of eminent domain) have been ongoing for decades. In the late 1990s, I wrote about how George W. Bush and his cronies used eminent domain to seize land so that his baseball team, the Texas Rangers, could get a new stadium in Arlington. Bush ended up making a killing on that deal when he and his partners sold the team for $250 million shortly before he ran for president. In 2005, the U.S. Supreme Court ruled in the landmark Kelo decision that New London, Connecticut was justified in using eminent domain to condemn private, non-blighted property for economic development because it satisfied the constitutional “public use” requirement.
It’s unlikely that Congress will grant broad powers of eminent domain to renewable companies so they can build more wind and solar projects. Heck, it’ll be difficult for them to agree on using it for transmission projects. Nevertheless, Dimon’s endorsement of the use of eminent domain is important because it coming from the head of the biggest bank in the country.
Lisa Linowes, the founder and executive director of the WindAction Group, who has been doggedly documenting the backlash against renewable projects since 2006, told me in an email that Dimon’s endorsement of eminent domain “demonstrates the merger of big government and big business.”
That merger has been underway for a long time. Last week, Jamie Dimon made it clear that he wants to speed up the process.