Last fall I led a research team at Brown’s Climate and Development Lab, which investigated 10 of the country’s largest investor-owned utilities. The report we produced was featured in The Atlantic shortly after its publication. Curiously, however, the Atlantic story did not explicitly spotlight the major patterns outlined in our lengthy report, those patterns being decades of participation in climate denial trade groups, coordination with other carbon-intensive companies, a range of progress in the clean energy transition. Instead, The Atlantic chose to highlight an unexpected nugget buried in our research: trains.
In 2019, our team found that four rail freight companies control American coal transportation: Burlington Northern Santa Fe (BNSF), CSX Transportation, Union Pacific, and Norfolk Southern. In other words, these four companies have been lugging around the vast majority of American coal for centuries, and gotten rich from it. They have also been leaders in a network of organizations historically dedicated to thwarting climate progress. One important organization in that network is America’s Power (ACCCE), a coalition of companies that mine, transport, burn, and run on coal, which the four aforementioned rail companies had been heavily involved with since its founding in 2008.
That network changed in 2020. According to America’s Power’s membership page, BNSF and Union Pacific appear to have cut ties with the coalition, while CSX and Norfolk Southern remain members. Accordingly, my argument is simple, redundant, and desperately necessary: CSX and Norfolk Southern need to follow suit and leave America’s Power.
America’s Power has its roots in outright climate denial. In a 2014 report, the organization called climate change a “hypothesis” and a “debate,” and claimed the social benefits of carbon fuel were up to 500 times its costs. America’s Power has gone to great lengths to undermine climate policies, with a track record of pro-coal advertising campaigns, intensive lobbying, and backing climate denying scientists. A full profile of America’s Power is available in a Climate and Development Lab report I co-authored in 2018.
The impact of our lab’s utilities report, and the much-circulated Atlantic article, has indeed been tangible. Shareholder advocacy organizations have folded the companies into their engagements on climate change governance. House Committee on Transportation Chairman Rep. Peter DeFazio (D-OR) cited the article in a strongly-worded letter to the four companies, asking, “How can your organization continue to tout the environmental benefits of freight railroads while these same railroads are funding organizations who deny climate change?” And prominently, after over a decade, BNSF and Union Pacific have dropped their affiliations with America’s Power.
Once again, CSX and Norfolk Southern have not distanced themselves from America’s Power. Cutting ties with America’s Power would be a small step, albeit past due. But it would signal willingness to imagine a business model that is not dogmatically coal-dependent.
In my research, I have often found that when carbon-intensive companies undertake major climate governance reforms, it often comes as a result of practical considerations rather than moral awakenings. Examples include public image complications, changing political dynamics and market landscapes, shifting partnerships and alliances. My lab team witnessed all of these examples play out for utilities: companies dropped climate denial groups in the wake of scandals, they shifted their positions in response to specific administrations or climate bills, frantically developed renewables after prices plummeted past a certain threshold, or distanced themselves from longtime allies in the coal industry.
Many of the same practical considerations utilities have worked through today apply to rail companies. As such, I will offer four straightforward reasons why continued membership in America’s Power is not in CSX’s and Norfolk Southern’s interests: 1) Membership has been and will continue to be a public relations nightmare, 2) The political influence of America’s Power appears to be dwindling, 3) The companies’ bottom line does not have to be dependent on coal, and 4) Investors want out of coal.
First, affiliation with a group like America’s Power is dangerous for CSX and Norfolk Southern’s public image. These companies employ large teams to manage their public affairs, run expensive advertisements, and publish flashy reports in order to ensure that the right people hold their company in high regard. RP3, the PR agency behind an award-winning 2019 Norfolk Southern advertising campaign, said to Trains Magazine that the perceptions of “policy makers and opinion elites… are vital to Norfolk Southern’s success.”
America’s Power is a uniquely regressive anti-climate action group –– another PR disaster waiting to happen. In the past, America’s Power has shown consistent willingness to take risky, extreme positions. In 2009, for example, American’s Power was indicted for hiring a firm to send forged letters to lawmakers in opposition of the Waxman-Markey climate bill. Among these documents were falsely signed letters to the NAACP. Deep into the 2010s, America’s Power fervently questioned the scientific basis of climate change even as peer organizations changed tone. More recently, America’s Power CEO Michelle Bloodworth said that Texas’ recent winter blackouts are “another stark reminder” that America should promote an “all-of-the-above” energy strategy that includes sustained coal use. America’s Power is a ticking time bomb for public image, and with each round of bad press, the rail companies will suffer another blow.
Second, America’s Power is not as powerful as it once was. At its founding in 2008, the coalition represented some of the most powerful companies in the American mining, rail, and utility industries. As utilities began transitioning coal out of their portfolio planning throughout the 2010s, most dropped affiliation with America’s Power. Two prominent companies, Duke and Alstom Energy, backed out following the forged letters scandal. Giants like General Electric, FirstEnergy, and Detroit Edison eventually followed. Southern Company and American Electric Power are major utilities historically central to anti-climate action efforts. Both ended their membership with America’s Power in 2019, bringing their resources and influence with them
With BNSF and Union Pacific gone as well, CSX and Norfolk Southern stand alone among struggling coal cooperatives, mining companies straddling bankruptcy, and dogmatic fossil fuel guzzlers. America’s Power still gets the occasional news quote, but as paradigms on clean energy shift rapidly, the coalition’s messages of energy security and grid resilience fall flatter with every passing day.
Third, these companies do not fundamentally rely on coal. According to CSX and Norfolk Southern’s annual SEC filings, coal transport composed 17 percent and 15 percent of their respective 2020 revenues. Replacing that revenue would be a formidable challenge, but not insurmountable. Like utilities, who generate electricity through sources as diverse as coal, gas, hydroelectric, solar, and wind, freight companies can also transport any number of commodities. Instead of funneling hundreds of thousands of dollars into America’s Power, CSX and Norfolk Southern should fund updates for coal-centered infrastructure, market research into new commodities like wind turbine parts, or the creation of an executive office devoted to climate resiliency.
Finally, in recent years, institutional investors have clearly demonstrated hesitance towards financing new coal ventures and resistance towards coal-friendly companies. For example, the Interfaith Center for Corporate Responsibility, a coalition which manages half a trillion dollars in assets, is rallying fellow investors to push CSX and Norfolk Southern on climate governance, alongside other major utilities and finance companies. The organization’s 2021 Proxy Resolutions & Voting Guide argues that the companies’ pro-coal lobbying efforts “present systemic risks to our economies,” adding that the companies’ misalignment with Paris Climate Accords goals “increase the physical risks of climate change, threaten economic stability, and introduce uncertainty and volatility into our portfolios.”
It is becoming abundantly clear that the coal business is as economically unsound as it is environmentally unsustainable. For CSX and Norfolk Southern, clinging onto America’s Power may be as much of a threat to investors as it already is for activists.
In 2019, my research team ignited a spark that helped push two of America’s four coal freight with America’s Power, BNSF and Union Pacific rejected a coalition long dedicated to denying climate science and obstructing climate progress, and one that had proven volatile to their public, political, and economic stability. In 2021, it is time for CSX and Norfolk Southern to finally read the writing on the wall and follow suit.