Much has been made lately of the Heartland’s Institute’s implosion over it extreme position on climate change. In February there was the revelation of internal strategy documents that included a plan to promote climate change scepticism in schools. In early May they unveiled a billboard equating those who believe in global warming with the Unabomber.

In the resulting uproar, nearly 50% of the Heartland Institute’s projected corporate donors for 2012 have pulled out. The funding drop has been so dire that at Heartland’s latest climate change sceptics conference in Chicago last month, Heartland president Joe Bast was reduced to asking the audience to find a ‘rich uncle’ to fund future conferences. 

But the most telling outcome may prove to be the defection of Heartland’s entire Finance, Insurance, and Real Estate division. As team leader Eli Lehrer told the Guardian 

“As somebody who deals mostly with insurance I believe all risks have to be taken seriously and there certainly are some important climate and global warming related risks that must be taken account of in the insurance market. Trivialising them is not consistent with free-market thought. Suggesting they are only thought about by people who are crazy is not good for the free market.”

Now coming out and agreeing with every major national science academy in the world may not sound so revolutionary. But it is for a number of reasons.

Firstly “free market” think tanks like Heartland and many of their conference co-sponsors have been a driving force behind the entire push to confuse the public over climate change science for more than 20 years. Driven by a fiercely ideological opposition to the regulation of corporate activity, most in the free market movement would rather subscribe to quack science than accept the need for the kind of government intervention mitigating climate change will require. Such a public acknowledgement of the seriousness of the climate crisis from within is therefore extremely rare.

Secondly is the fact that the move was clearly driven by pressure from insurance industry donors (who were among those who pulled their funding from Heartland). Historically, denial of climate change has proven lucrative in attracting donors. Heartland and their conference co-sponsors have collectively received over $67 million from the fossil fuel industry over the years to spread their message of climate confusion. Suddenly another major donor group – the insurance industry has the second biggest lobbying spend in federal politics – is pulling their funding because of these activities. As happened with Heartland, other think tanks could find themselves having to choose between these two important donor groups.

Then there is the potential credibility loss this represents to Heartland and likeminded think tanks’ claims of representing free market interests. As Lehrer rightly points out, denying a scientific reality with potentially far reaching economic consequences “is not good for the free market”.

What Heartland is doing is the opposite of good free market policy. Information, not ignorance, is key to the market functioning properly. For years Heartland and company have distorted the market in favour of the fossil fuel industry and prevented potentially life saving and profitable alternative energy markets from emerging.

By downplaying the risks of climate change, they continue to distort vast sectors of the economy, from transportation to manufacturing and of course insurance risk assessment. If this message that climate change denial “is not good for the free market” can become widespread, it greatly undermines Heartland’s authority and policy recommendations regarding these various industries.

Finally there’s the fact that within a week of the Unabomber billboard going up Lehrer and his team had already left and formed a new think tank, implying that this unrest has been growing for some time.

While positive, these developments are not enough for climate activists to jump for joy. The Heartland case is somewhat unique. Among the confidential documents acquired in February was a list of Heartland’s corporate donors. Exposing this usually confidential list allowed environmental groups to name and shame specific companies to great effect. Without knowing donor identities, targeting other think tanks could prove difficult.

Another unusual aspect of the Heartland case is that it took an especially offensive billboard (and to a lesser extent their school curriculum plans) before donors found their association with Heartland to be too toxic.

This is similar to the case a few years ago where it took a staffer at the US Chamber Of Commerce calling for a Scopes monkey trial of climate scientists before the likes of Nike and Apple led a member exodus. Until the very notion of denying climate science becomes an outrage, the above cases show it may take a bit of scandal to scare off donors.

What is clear is that for climate change activists to have any chance of getting timely mitigation policies in place, they must curb the impact of free market think tanks. It is these groups who create the ‘echo chamber’ of seemingly independent experts who appear on TV, testify before Congress and pump out the overwhelming majority of climate change denial literature. For example, without the likes of Heartland, the Competitive Enterprise Institute, the Heritage Institute and dozens of others, the expertly spun and hugely damaging ‘Climategate’ scandal would never have happened.

What the Heartland situation demonstrates is that for those seeking to diminish the impact of free market think tanks in the climate debate, what works best is not science or reason but pressure from donors. In particular, while climate change activists may occasionally get lucky and acquire a list of donors to name and shame, the insurance industry situation is different. It exposes a potentially expensive and embarrassing conflict of interest for Heartland and other think tanks that feed at the troughs of both the insurance and fossil fuel industries.

Should similar pressure be brought to bear at these other think tanks, they may just find themselves in the unenviable position of having to either soften their climate change denial stance or be left pleading for the invention of a rich uncle, both of which would be huge victories for climate change activists.