Nationalization for Decarbonization: Opportunities and Obstacles to a Bold Response to the Climate Emergency

Long associated with socialist strategy, nationalization is a dirty word for neoliberals: indeed, the globalization of neoliberalism is in significant measure a history of corporations organizing to prevent it. However, neoliberals and private industry have recently begun to express a willingness to support and even advocate for nationalization of fossil-fuel infrastructures (relating to coal in Australia and the United States, and oil in Canada) as investment horizons become increasingly uncertain and hydrocarbon assets risk becoming stranded. We argue that although this new trend of "neoliberal nationalization" is intended to protect the fossil fuel industry with state support and public subsidy in the face of rapidly changing market conditions, it potentially opens up opportunities for more comprehensive policy responses to the climate emergency than the earlier consensus on market-based solutions (e.g. emissions trading and carbon pricing) had allowed. Weakened ideological opposition to nationalization creates space for climate activists to push for an alternative "ecological nationalization" scenario in which public ownership of energy infrastructure assets can be used to enable comprehensive public investment in Green New Deals, ensure hydrocarbons remain in the ground, and neuter industry opposition to climate action. While this may seem far-fetched in the current political environment in the US, at least one Democratic candidate for President (Jay Inslee) has included "buying out and decommissioning of fossil fuel assets" in his policy platform. In this paper, we explore the political and legal obstacles to such a scenario and potential options to overcome them. In particular, we focus on the inevitable battle that would be waged over the appropriate compensation to be paid to ex-owners of fossil fuel and energy assets. Legal claims (under the US Constitution or international investment treaties) would be for the "fair market value" of the assets. We argue that there is a strong case to be made for a lower standard of compensation that accounts for various factors (e.g. substantial public subsidies, and potentially criminal liability for the role played by industry in fostering climate denial) and weighs the public interest in climate mitigation against the private interest of shareholders.