Energy Policy

Industry Roles in Policy Planning


We've spent a lot of time this semester discussing the role of all scales of government in developing energy policy. But it should be clear by now that they aren't the only players. Industry plays a huge part in shaping policy of all kinds, and energy is certainly no exception. Let's take some time to explore the advantages and disadvantages associated with having industry involved with the development of energy policy. Collectively, we'll refer to anyone spending money to influence energy policy as the energy lobby.

Who are the players?

The primary players in the energy policymaking process are the energy companies themselves. Individually and working in coalitions together, energy companies spend a lot of money developing and presenting their thoughts and positions on energy legislation to Congress.

Below are links to some energy lobbying groups if you're interested in learning more about who participates and what they do.

How do they participate?

What does it really mean to be part of the energy lobby? It means working directly and indirectly with the nation's lawmakers in Washington to inform and influence the content and scope of legislation. This can take on many forms, from donating to campaign funds for candidates who support favorable policies to preparing brief documents to be distributed to committee members, to working with congressional staffers, to actually drafting language to be included in the text of legislative bills.

Why do they participate?

They have a lot at stake. In the case of energy policy, specifically, we are talking about billions of dollars, national security, and international relations. A commonly used metaphor for energy companies and their participation in energy policy (even policies that limit emissions or impose other restrictions) is that companies would rather be at the table than on the menu. If they are able to help inform the development of policy, they are more likely to ensure that the policies eventually adopted have less negative (or more positive) consequences for them, and it helps policy makers understand how policies will affect their businesses.

It's not rocket science - public policy, for better or worse, can have significant impacts on individual companies and entire industries. Lobbying can and does influence these policies, so lobbying is seen as an investment that can provide returns. 

Political advantages to participation

Recall that as previously noted, legislators cannot be expected to be experts on energy, education, health care, homeland security, the environment, and any other number of issues that are impacted by their policy decisions. Instead, politicians rely on experts in the field to provide them with accurate, complete information as they try to navigate policy alternatives and options. Experts such as private industry executives, scientists, environmentalists and many others participate in this process. They play an important role in educating legislators and allowing them to focus on passing policies (and getting re-elected).

Disadvantages to participation

Of course, no action taken by any individual or company is done in a vacuum. Everyone has motives and goals, and sometimes these do not align with policy development goals. For example, if Congress considers decreasing a subsidy to oil companies, citing recent profits as a demonstration that the subsidy is no longer needed, lobbyists from oil companies will likely lobby against it. There is also the risk of "regulatory capture," which is when corporate (or rarely, other than corporate) interests have such an outsized influence on a regulatory agency that the agency creates regulations that favor the outside interest instead of achieving the agency mission. This has more to do with the application of policy, but is a consideration for lawmakers when crafting a bill as well. It is such a widespread problem that Sheldon Whitehouse introduced a federal bill to prevent it in 2011. (It never made it out of committee, unsurprisingly.) There are also organizations such as the American Legislative Exchange Council (ALEC), a libertarian (and anti-renewable) non-profit that exists primarly to write legislation that they would like adopted word-for-word by legislators at all level of government, to varying degrees of success.

All of this speaks to why it is important for legislators to seek the advice and input of many diverse interests as they develop polices. Simply letting the companies and organizations with the loudest voices (which translates to the deepest pockets) have the final say in how policies are structured does not result in beneficial or effective policy — energy or otherwise.