When the Future Gets Cheaper, the Past Gets Political
The backlash against climate and sustainability is not evidence the transition is failing. It is what happens when the incumbent economy can no longer win on economics alone.
A communications expert asked me recently why climate technology, ESG and just about everything associated with sustainability suddenly seem to be under attack.
My immediate answer was provocative...well, maybe glib is a better word:
Because we are witnessing the final throes of a system in decline.
I wrote that line in my book, The Gigacorn Hunter: Severn Principles for a Climate Investor.
I was talking about an incumbent energy economy that has had more than a century to accumulate wealth, infrastructure, and political and social influence while leaving a meaningful segment of the environmental and health costs associated with producing and consuming its products off its own balance sheet. This is commonly referred to as externalized costs, or externalities.
But the more I thought about my answer, the more I realized that "final throes" was too simple. As I said earlier, too glib.
Oil and gas aren't disappearing tomorrow. Fossil fuels remain enormously important to the global economy. We still need them to heat, cool, feed, and support billions of people. Hundreds of billions of dollars continue to be invested in them every year. Energy security and reliability are legitimate concerns, and any serious discussion of the economic transition has to acknowledge that.
What is changing is more interesting.
The incumbent energy economy is losing its monopoly on the economic argument.
For decades, climate action was largely presented as something society should do.
Pay more for cleaner electricity. Accept a green premium. Subsidize an emerging technology. Make a sacrifice today in exchange for a better climate tomorrow.
It was an argument that practically came gift-wrapped for political opposition. Nobody likes being told to pay more, consume less and feel guilty while doing it.
But that argument is changing.
Increasingly, the technologies that reduce emissions also reduce costs, improve productivity, strengthen energy security, create domestic industries, build resilience and generate jobs.
And that changes the politics.
Because when the future gets cheaper, the past gets political.
Follow the capital
Forget the slogans for a moment and look at where the money is going.
The International Energy Agency expects approximately USD3.4 trillion to be invested in energy globally in 2026. About USD2.2 trillion of that is expected to flow into renewables, grids, storage, nuclear, efficiency, electrification and other low-emissions technologies.
About USD1.2 trillion will go into oil, natural gas and coal.
In other words, almost two dollars are now being invested in the emerging energy system for every dollar going into fossil fuels.
That is not a climate activism.
That's capital allocation.
The economics of renewable electricity are even more striking.
According to the International Renewable Energy Agency (IRENA), more than 90% of the utility-scale renewable projects commissioned globally in 2025 produced electricity more cheaply than the cheapest new fossil-fuel plant available in their market.
Global average generation costs were approximately USD33/MWh for new onshore wind and USD44/MWh for solar PV.
IRENA estimates that renewables operating in 2025 avoided approximately USD480 billion in fossil-fuel costs and 8.4 gigatonnes of GHG emissions.
Battery costs have fallen dramatically as well. Fully installed battery-storage project costs fell approximately 93% between 2010 and 2024.
Renewable energy employed approximately 16.6 million people globally in 2024.
None of this means the transition is easy.
We need vastly more transmission. Permitting remains painfully slow. Electricity demand is growing. Renewable intermittency has to be managed. Supply chains matter. Minerals matter. Nuclear, natural gas and other sources of dispatchable capacity will play different roles in different markets.
Some climate technologies will fail commercially. Of course they will. The dot-com crash did not prove the internet was a fad. Pets.com failed. The internet somehow muddled through.
The same thing will happen here.
There will be bad climate companies, bad investors, bad technologies and wonderfully bad pitch decks promising to reinvent thermodynamics before Series A.
That is what technological transitions look like.
But the underlying trajectory is increasingly difficult to explain as some kind of environmental charity project.
The world isn't investing trillions of dollars in the transition because everybody suddenly became an environmentalist.
It's investing because there is money to be made.
ESG made itself an easy target
It is also important to distinguish between ESG and climate technology.
They are not the same thing.
ESG became an extraordinarily broad label. It came to encompass climate change, diversity, governance, employee relations, disclosure, investment screening, stakeholder capitalism, corporate purpose and, depending on who was speaking, apparently every human activity performed between breakfast and bedtime.
Some ESG products were poorly constructed. Some companies greenwashed. Some asset managers made claims they could not adequately substantiate. Some advocates stretched the definition so far that almost every corporate activity could somehow be described as ESG.
That made ESG vulnerable.
Once a term means almost anything, its opponents are free to make it mean whatever frightens their audience most.
The backlash is now real. More than 40 anti-ESG bills had been enacted across 21 U.S. states by 2025, restricting or regulating the consideration of ESG factors in public investment, contracting and other areas.
Climate technology is different.
A solar panel isn't progressive.
A battery isn't conservative.
A heat pump does not have a pronoun.
A more efficient industrial process doesn't care who won the last election.
If it produces the same output using less energy, that's margin.
If a battery reduces peak electricity costs, that's economics.
If a heat pump lowers a building's energy bill, that's economics.
If capturing waste heat improves industrial productivity, that's economics.
If domestically produced renewable power reduces exposure to imported gas, that's energy security.
If technology allows a manufacturer to use less material, fuel, water or electricity to make the same product, that's productivity.
And if all of those things also reduce GHG emissions, then climate value isn't something being purchased separately from business value.
It is embedded in it.
I wrote about this in The Gigacorn Hunter because I believe this distinction is fundamental to understanding climate investing.
The strongest climate companies will not win because society perpetually agrees to pay them a premium for being green. They will win because their carbon value proposition is embedded in a superior economic value proposition.
Which is precisely why the backlash is becoming so interesting.
The old economy was never as cheap as it looked
There is another problem with the economic comparison between the old and new energy systems.
We have never accounted for their costs in the same way.
For more than a century, much of the fossil-fuel economy has enjoyed a business model unavailable to almost any other industry:
Sell the product. Keep the revenue. Send part of the bill to someone else.
Air pollution? Health system.
Climate damages? Taxpayer.
Environmental remediation? We'll circle back.
Carbon in the atmosphere? Apparently an accounts-payable problem for the next century.
That sounds ideological. It isn't. It's accounting.
The International Monetary Fund estimates that global fossil-fuel subsidies totalled approximately USD7.4 trillion in 2024, equivalent to roughly 6.4% of global GDP.
That number is often attacked, so let's be precise about what it means.
Governments did not write USD7.4 trillion in cheques to oil companies.
About USD730 billion represented what the IMF calls explicit subsidies. This is when consumers pay less than the actual supply cost of energy, along with certain forms of producer support.
The much larger number, approximately US$6.7 trillion, represents implicit subsidies. Those exist when market prices do not reflect costs imposed elsewhere in the economy.
Air pollution.
Climate damages.
Environmental degradation.
According to the IMF, 39% of the total fossil-fuel subsidy comes from underpriced local air pollution and another 32% from underpriced climate damages.
Call these subsidies. Call them externalities. Call them unpaid invoices. I don't particularly care which term makes everybody more comfortable at the dinner table, boardroom table, or chalet.
Someone is paying them.
If pollution contributes to respiratory disease, that cost may appear in a healthcare budget rather than an energy company's income statement.
If extreme weather damages infrastructure, it may appear on an insurer's claims ledger, a government's disaster-relief budget or a homeowner's mortgage.
If emissions accumulate in the atmosphere for generations, the liability does not disappear because nobody found a sufficiently large envelope to mail the invoice.
The World Health Organization now describes air pollution as the world's leading environmental health risk factor, causing approximately 6.6 million deaths annually. Fossil-fuel-based energy production and transportation are among the major contributing sources of ambient air pollution.
Again, I am not arguing that fossil fuels cause every one of those deaths. They do not. I am arguing that a product is not necessarily cheap simply because some of its costs appear on somebody else's balance sheet.
For a century, we have confused cheap energy with energy whose full costs we chose not to price. Those are not the same thing.
Now look at what we ask of the future
Last year, a senior executive at Ørsted, one of the world's largest renewable-energy developers, said something to me that stuck. When they arrive in a community proposing a major renewable-energy project, he told me, the conversation quickly becomes about much more than electricity.
What jobs are you going to create?
What are you going to do for local workers?
What will you contribute to the community?
What will you do for our schools?
What infrastructure will you improve?
How will Indigenous or local communities participate economically?
What else are you going to solve while you're here?
In other words:
Thank you for the zero-carbon electricity. Now, about the hockey arena.
He wasn't exaggerating.
The U.S. Department of Energy has an entire guide devoted to community benefits associated with wind developments. Importantly, it explicitly distinguishes these benefits from the normal economic contributions and obligations of a project.
They are in addition to things like property taxes, land leases, compensation to directly affected stakeholders and environmental mitigation required through permitting.
Community benefits can include workforce programs, schools, broadband, parks, recreation, environmental projects, training and direct community investment.
The South Fork Wind project agreement in East Hampton, New York, included approximately USD29 million in community payments in addition to property taxes, including annual payments and a USD5.5 million community fund.
Let me be clear.
I think this is a good thing.
Communities hosting major infrastructure should participate in the prosperity it creates.
Indigenous communities should have opportunities to participate economically in projects developed on or affecting their traditional territories.
Developers should mitigate their impacts. Workers should benefit. Communities should be better off because investment arrived.
This is progress.
But consider the asymmetry.
The incumbent energy economy has created enormous economic value for communities too. It created jobs, paid taxes, built infrastructure, forged Indigenous partnerships, supported local procurement and invested in communities. That should not be minimized.
But those benefits do not extinguish its liabilities.
And that is where the comparison becomes interesting.
Today, we increasingly expect new energy projects not only to manage and pay for their impacts, but also to deliver additional community benefits on top of them. Meanwhile, some substantial liabilities created by the incumbent system remain underfunded, underpriced or ultimately backstopped by the public.
The issue is not whether the old economy created benefits. It did. The issue is whether it paid all of its bills.
A wind developer may be asked to help pay for the playground. The incumbent economy still isn't fully charged for the air pollution. A nd somehow the wind farm is the subsidy problem.
The answer isn't to stop asking more of the wind developer.
The answer is to finally ask the same of everybody else.
If you want to see an externalized cost, go to northern Alberta
There may be no better Canadian illustration than the oil sands.
Alberta's oil-sands have created enormous tailings ponds containing water, sand, clay, residual bitumen and other by-products of the extraction process.
Today those ponds contain more than 1.4 billion cubic metres of liquid.
Operators are legally responsible for managing and ultimately reclaiming these sites. But legal responsibility and financial provisioning are not the same thing.
As of September 2025, Alberta's Auditor General reported that the provincial government held approximately CAD1.8 billion in financial security against CAD51.9 billion in estimated oil-sands mine reclamation liabilities. About three and a half cents of security for every dollar of estimated liability.
Imagine walking into a bank and saying, "I have a $52 billion obligation. Don't worry. I've put aside $1.8 billion."
And yet here we are.
Of the CAD1.8 billion held, approximately CAD913 million was deposited when the current program began in 2011, while another CAD869 million represented an operating-life deposit required of one operator.
The Auditor General reported that no other deposits had been made by oil-sands operators under the program since its inception.
And CAD51.9 billion may not represent the outer boundary of the eventual cost. An internal Alberta Energy Regulator analysis disclosed several years ago estimated oil-sands mining liabilities at roughly CAD130 billion. The regulator subsequently characterized that exercise as an unvalidated hypothetical worst-case estimate. So I would not present CAD130 billion as established fact. But neither should we pretend that estimating the eventual cost of reclaiming an industrial landscape and tailings system of unprecedented scale is an exercise in precision.
The ultimate bill is uncertain. The liability is not.
Now here is where the economics become harder to explain away.
In 2025:
Suncor repurchased approximately CAD3.0 billion of its own shares.
Imperial Oil repurchased approximately CAD3.18 billion.
Canadian Natural Resources repurchased approximately CAD1.4 billion.
Three companies with major oil-sands operations therefore spent approximately CAD7.6 billion buying back their own shares in a single year. That is more than four times the amount of financial security Alberta currently holds against the estimated reclamation liabilities of the entire oil-sands mining industry. And that doesn't include dividends.
I have no objection to share buybacks. I am a capitalist. Profitable companies are supposed to return capital to shareholders when they cannot deploy it productively elsewhere. But there is a fairly important step before "return excess capital."
It's the word excess.
If billions of dollars are available for buybacks while tens of billions of dollars in eventual environmental obligations remain overwhelmingly unsecured, it is reasonable to ask whether that capital is actually excess.
I am not suggesting these three companies are individually responsible for the entire C$51.9 billion liability. They aren't. Nor am I suggesting every dollar distributed to shareholders should instead go into a reclamation trust.
But the fundamental question is unavoidable:
Why should shareholders receive the cash today while the public carries a meaningful portion of the risk tomorrow?
That isn't an environmental question. That's a corporate-finance question.
Capitalism works when businesses earn returns after accounting for the costs required to generate those returns.
If an enterprise can distribute billions of dollars today while society carries the risk associated with tomorrow's cleanup bill, we have created an extraordinary arrangement:
Privatize the return. Socialize the liability.
We can call that many things. But we can't call it a free market.
It is a freeloader market. A market where private actors capture the upside while leaving part of the bill for everyone else.
And this is where the politics begins.
Incumbent industries rarely surrender economic power gracefully. Nor should anyone expect them to.
Industries lobby. They advertise. They fund trade associations. They hire lawyers. They make political contributions. They advocate for policies that protect their assets, their shareholders and their business models.
Renewable energy companies do it. Technology companies do it. Banks do it. Pharmaceutical companies do it.
If there is a large enough pool of money involved, someone in Washington or Ottawa is eventually going to be taken to a very nice lunch.
This isn't a conspiracy. It's political economy.
But scale matters.
OpenSecrets calculated that the U.S. oil and gas industry spent approximately USD2.8 billion on federal lobbying between 1998 and 2023. Environmental organizations spent roughly USD430 million over the same period. About one-sixth as much.
A century-old, multi-trillion-dollar incumbent industry does not arrive at technological disruption empty-handed. It arrives with capital. Trade associations. Lobbyists. Political relationships. Legal expertise. Existing infrastructure. Supply chains. Workers and communities whose livelihoods genuinely depend upon it. And a tremendously powerful narrative about the risks of change.
That narrative is becoming increasingly important because the old economic argument is weakening.
When renewables were expensive, the argument was price. As prices fell, it became reliability. As storage improved, it became critical minerals. As supply chains diversified, it became land use and permitting.
And if those objections are answered, apparently there is always a whale or birds.
The objections, the concerns, are not frivolous. Many are real and need to be solved. But when a disruptive technology emerges and solves these concerns one by one by one...the goalposts move. The objections change. And that is the clue. Eventually you have to ask whether the problem is really the technology or
the threat it poses to the incumbent.
Fear is a powerful incumbent advantage
People aren't irrational to worry about energy prices. They aren't irrational to worry about whether the lights stay on. A worker in a resource-dependent community isn't irrational to wonder what happens to their job. A family struggling with inflation isn't irrational to be skeptical when somebody tells them an enormous economic transformation will be painless.
Those concerns are legitimate.
And because they are legitimate, they are extraordinarily useful to anyone seeking to preserve the status quo. Fear becomes especially powerful when the benefits of the future will take time to realize while the perceived costs of change are immediate.
Lose 1,000 jobs in one town and everybody knows the name of the town. Create 50,000 jobs spread across a continent and it becomes a statistic.
Shut down one factory and there is a television camera at the gate. Avoid USD480 billion in fuel costs and nobody sends the solar panel a thank-you card.
That is a political asymmetry every transition has to overcome. Which is why I think it is a mistake for advocates of the climate economy to respond with moral superiority.
People do not need another lecture. They need better economics. And increasingly, they are getting them.
Climate technology doesn't need you to believe in climate change
This is the part that leaves me profoundly optimistic.
For much of the modern climate correction, we thought the prerequisite for action was agreement.
First convince people the science is real. Then convince them the problem is urgent. Then persuade them to care. Then persuade them to pay.
That is a fairly exhausting sales funnel.
I don't think that's how this transition ultimately gets won.
A manufacturer doesn't need to care about polar bears to want lower energy costs. A fleet operator doesn't need a net-zero target to want lower fuel and maintenance expenses. A utility doesn't need an ESG report to want storage that can improve utilization of its network. A country doesn't need to join an environmental movement to want domestically produced energy instead of imported fuel. A farmer doesn't need to describe himself as a climate activist to want technology that improves yield while using fewer inputs. An industrial company doesn't have to embrace stakeholder capitalism to want a process that uses less heat and produces the same output.
They just need the technology to work.
That is the shift that matters.
For years, climate technologies were asked to compete while carrying an additional burden.
Be cleaner. Be responsible. Create local jobs. Build local supply chains. Contribute to communities. Protect biodiversity. Engage Indigenous communities. Meet increasingly sophisticated environmental standards.
And, by the way:
be cheaper too.
Increasingly, they are.
That is the part the political debate has not caught up with.
Perhaps this isn't really about climate anymore
Something else is happening that I find fascinating.
Many of the technologies once described almost exclusively as "climate tech" are being relabelled.
Deep tech. Advanced manufacturing. Energy security. Resilience. Critical infrastructure. Dual use. Defence. Industrial strategy.
The technology didn't change. The politics around the adjective did.
A battery that stores renewable electricity can also strengthen a military base. A technology that reduces industrial energy use also makes domestic manufacturing more competitive. Critical-mineral technologies matter to electric vehicles and national security. Distributed power improves climate resilience and reduces vulnerability to grid disruption. Advanced materials can reduce carbon emissions and strengthen defence supply chains.
Different pools of capital are looking at the same technologies through different lenses.
I don't particularly care what anybody calls them.
If changing the label from "climate technology" to "energy security" causes somebody to discover the exact same economics, welcome aboard. We have plenty of chairs.
The backlash isn't proof that the transition has failed
I understand why the current politics can feel discouraging.
ESG has become a dirty acronym in some circles. Climate policies are being reversed. Offshore wind projects are being attacked. Financial institutions are retreating from climate alliances.
The backlash is not evidence that the economic transition has failed.
In some respects, it may be evidence that the transition has become economically consequential enough to threaten incumbency.
That is precisely when incumbents fight hardest.
Not when the challenger is irrelevant.
When the challenger starts taking market share.
So what should we do?
Not become more ideological. Become less so.
Build better companies. Deploy better technology. Create better jobs. Make communities wealthier. Reduce costs. Improve resilience. Strengthen energy security. Measure the carbon. Make the business case.
And insist that every industry, the legacy and the new, carries an honest accounting of both the value it creates and the costs it imposes.
Hold renewable developers to high standards. Make them engage communities. Make them mitigate their impacts. Make them clean up after themselves. Make them share prosperity.
Absolutely.
Then walk down the road and apply the same standard to the incumbent.
That isn't radical.
It is remarkably conservative.
Pay your bills. Fund your liabilities. Don't dump costs onto your neighbour.
And don't call something a free market while asking the public to quietly hold the cleanup risk.
Because the economic transition will not ultimately succeed because one political tribe defeats another.
It will succeed when the better technology becomes the obvious economic choice.
Increasingly, that is precisely what is happening.
We may continue fighting over ESG.
We may rename climate technology as deep tech, advanced manufacturing, resilience, energy security or something else entirely.
We may continue arguing about what to call the transition.
Capital will keep moving anyway.
Because when the future gets cheaper, the past gets political.
And eventually, economics wins.
To read more from Nelson, you can purchase The Gigacorn Hunter: Seven Principles for a Climate Investor here.
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