Transition Finance Weekly - 2/13/2025
Superfund Grandstanding, IRA Delays Hit Red States, $1.5T Home Equity Risk
1. 22 Attorneys General Challenge New York’s Climate Superfund Law
Republican-led states sue New York to protect polluters from paying their fair share.
West Virginia’s Republican Attorney General JB McCuskey stood alongside coal and gas industry representatives and 21 other Republican AGs to announce their lawsuit challenging New York’s climate superfund law.
They say only the federal government can regulate emissions, but that is both untrue and this law doesn’t do that; the law seeks compensation for past emissions from the fossil fuel companies that emitted them, to help the people impacted. The $75 billion it could raise doesn’t begin to cover the actual economic devastation.
Laws like these are extremely popular. In a Data for Progress survey, two-thirds of voters, including half of Republicans, said they support a national “polluters pay” proposal introduced in the House.
2. With Critical IRA Funds Under Threat, State Economies Are On the Brink
States like Arizona and Georgia show how much economic development is at risk.
As the president (illegally) blocks Inflation Reduction Act disbursements and Congress debates whether to kill clean energy incentives, businesses across the country are sounding the alarm. A new survey found 53% of companies expect to lose revenue if the IRA is repealed, with 21% anticipating layoffs. The damage won’t be evenly distributed — states that voted for Trump got 80% of IRA investments and stand to lose the most.
Some damage is already done: In Arizona, Kore Power canceled a $1.2 billion battery factory after Trump’s Department of Energy froze clean energy loan disbursements. Georgia’s $1 billion grid modernization project is now on hold, and battery manufacturer Freyr scrapped a $2.6 billion, 700-job plant south of Atlanta.
In a letter this week, 133 mayors and local leaders representing 25 million Americans across bipartisan lines called for clean energy incentives, including elective pay, to be protected.
From the letter: “Repeal, rollback, or adjustment of any clean energy incentives will upend countless energy projects and jobs across our country, endangering millions of American jobs, increasing costs for everyday Americans, costing billions in taxpayer dollars, and potentially forcing American jobs overseas.”
3. Southern California Edison Could Be On the Hook for the Eaton Fire
The utility could face up to $10 billion in liability.
Power lines have caused at least eight of California’s 20 most destructive wildfires, yet little has changed in how utilities manage their aging infrastructure. With Southern California Edison potentially on the hook for $10 billion in damages to the 9,000 homes and businesses lost in Altadena’s Eaton Fire, this could be a turning point in how utilities manage their aging infrastructure. Similar fire liability sent Pacific Gas & Electric into bankruptcy five years ago.
Utility lines are huge risk points for safety and reliability, especially near the wildland-urban interface. Southern California communities could decommission natural gas infrastructure damaged by the fires as part of rebuilding, which could make it safe to move power lines underground and reduce future risk.
4. Climate Change Is Erasing the American Dream
A new report is a $1.5 trillion wakeup call for real estate.
A new First Street Foundation report paints a stark picture of the housing market’s future: climate-driven disasters could wipe out $1.5 trillion in real estate value by 2055. And the rising cost of insurance is one of the risk drivers.
Over 10 years, insurance costs as a share of mortgage payments more than doubled, jumping from 7-8% to over 20 percent. Over time this will make some high-risk communities too expensive to sustain, triggering climate migration to more affordable areas (which may themselves also be high-risk).
State policymakers control land use planning, building codes, and insurance regulations, all of which help determine whether communities can adapt to the new reality. All these factors are being considered: for instance, a bill backed by California members of Congress would offer grants and credits to homeowners who invest in climate resilience.
5. The New Robber Barons Look a Lot Like the Old Ones
Pennsylvanians suffer while fossil fuel companies extract their profits.
A new report from the Ohio River Valley Institute confirms what many Appalachian communities already know first hand: fossil fuel companies overpromise and underdeliver. Shell got $1.65 billion in tax breaks to build a petrochemical plant in Beaver County near Pittsburgh, with promises of a local economic boom. But the boom has been a bust.
The county’s GDP dropped by 12% despite double-digit statewide growth; population fell; employment plummeted by 13%; the number of businesses dropped. Public health is likely to take a hit. And even for Shell, the plant (in the words of IEEFA energy analysts) is turning out to be a “value-destroying project,” with expected returns of 7% or less, far below the 10-15% target.
Beaver County isn’t alone: similar stories have played out all over Appalachia, where coal companies and petrochemical companies came in, pillaged the landscape and local economies, and left.
Jackson Zeiler, public health analyst at the Environmental Health Project: “When combined with a legacy of industrial pollution in the region, the Shell complex adds to the threat of increased hospitalizations and premature deaths while reducing the quality of life for many frontline families.”
Sierra Club’s 2025 Pension Report Card
A new Sierra Club report determined that only one public pension fund out of 32 analyzed, MassPRIM, earned an “A” grade for responsible climate investment in proxy voting. Most funds still lag behind, with 14 earning “D” or “F” grades for failing to use their proxy voting power to hold corporate polluters accountable.
Surprisingly, some pensions in states without anti-ESG regulations scored almost as low as the pensions that faced such rules.
The Sierra Club’s Allie Lindstrom: “Despite the fossil fuel industry’s ongoing attacks on responsible investing, more pension fund leaders are recognizing that climate change threatens to destabilize our entire economy. But they must do more to mitigate this enormous risk…. [P]ensions must strengthen their proxy voting strategies to hold corporate polluters accountable and support climate progress.”