Transition Finance Weekly - 4/3/2025
States Take Over on Climate; Buffett’s Blitz; Pension Funds Push Responsibility
1. Not Surprised, Just Disappointed: SEC Abandons Climate Risk Disclosure Rule
Big business won this round, but climate risks aren’t going away.
The SEC announced this week that it will no longer defend its landmark climate disclosure rule requiring companies to disclose their Scope 1 and 2 emissions. The 2023 rule has faced fierce opposition from the oil and gas industry and other Trump allies, and 25 attorneys general have sued.
But ignoring climate risks doesn’t make them disappear. Without mandated reporting and transparency rules, sound financial planning and risk mitigation become much harder.
The bright spot: In the absence of federal leadership, states like California and New York are stepping up with rigorous disclosure laws that go even further. Climate accountability is not going away.
Tim McDonnell for Semafor: “Contrary to what the Republican AGs suing the SEC argue, ESG investing was never about fighting climate change, per se. It was about preparing for the financial risks posed by physical climate impacts and government policies to cut emissions. The physical risks are more obvious every day; and even though the current US administration has prioritized fossil fuels, most investors still recognize that companies with unrestrained carbon footprints are a risky long-term bet.”
2. Warren Buffett’s Master Plan to Shield Utilities from Wildfire Liability
A look into his state legislature blitz.
Warren Buffett’s Berkshire Hathaway, through its subsidiary PacifiCorp, launched a multistate push to shield utilities from liability for wildfires started by their equipment, including a proposed limit on the amount of money utilities would have to pay victims if they are found liable.
They’ve already notched a win: a new Utah law Berkshire calls the “gold standard” established a fund — paid for by utility customers — to cover wildfire-related legal claims. This law essentially lets utilities keep operating negligently without bearing any financial responsibility for the destruction they cause.
This aggressive push has left consumer advocates and other industries, like insurance and forestry, alarmed at the prospect of being unable to pursue limited legal action against an industry often directly responsible for wildfires.
Two weeks ago, we covered how fossil fuel companies are trying to accomplish their long-held goal of blanket immunity for climate damages through Congress. Berkshire Hathaway seems keen to play the same kind of game at the state level.
Adam Aton for E&E News: “Shielding utilities alone from the growing costs of wildfires, opponents say, will simply transfer those costs to the rest of society. That’s an alarming prospect for residents of the West, especially as property insurance becomes more expensive or unattainable.”
3. Natural Gas Companies Say “No Thanks” to $5BN
Why four companies backed out of the Texas Energy Fund’s gas loan program.
The Texas Energy Fund was intended to offer low-interest loans to build new fossil gas capacity in a state where solar and storage have been outcompeting new gas on the market. But despite strong initial interest, four companies have now backed out of consideration for loans from the $5 billion fund, representing one-third of new project capacity. Why are they leaving money on the table?
1) Supply chain issues: Gas turbines are in short supply, so new gas projects take longer than usual to go online.
2) Renewable energy is cheaper to generate, so it can be sold cheaper, too. Meanwhile, fossil fuel economics have been upended by the economic policies of the Trump administration. So, despite the "drill, baby, drill" rhetoric, the high-tariff, high-uncertainty environment is discouraging new investments.
3) The “reliability” claim is bunk. Gas plants, the primary generation source for the ERCOT grid, suffered the most failures during the 2021 winter storm.
4) They may not trust the Texas Public Utility Commission, which some say lacks the expertise to manage risks to this taxpayer-backed fund.
Adrian Shelley, director of Public Citizen’s Texas office: “Our skepticism about the Texas Energy Fund is borne out. Each time funding for one of these projects is canceled, the applicant says, ‘We're concerned about costs, we're concerned about supply chain, we're concerned about the timeline.’ These are the concerns that we raised when this was being proposed in the legislature.”
4. An Equalizing Plan for Power-Hungry Data Centers
Why a public interest group is pushing for fairer electricity rates.
Data centers to power the AI boom are devouring electricity, and it’s a huge problem for utilities and regulators struggling to meet demand (and meet their decarbonization goals).
The Southwest Energy Efficiency Project (SWEEP) has a potential solution: new utility rate structures to ensure data centers pay their fair share and be held accountable for their electricity consumption and infrastructure costs. SWEEP recommends creating a special rate class for data centers and other high-energy users, requiring them to report their renewable energy share, hourly electricity consumption, and efficiency metrics.
Some states, like Michigan, are already considering policies to prevent stranded asset risks by ensuring data centers remain in-state for a minimum period.
The bottom line: Public utilities need to protect the public interest. Data centers will be built, but it must be done responsibly, with cost burdens carried by the parties who most benefit from the new capacity.
CALLOUT: Pension Funds Keep Climate Finance Moving Forward
Despite the anti-ESG backlash, pension funds—especially in blue states and Europe — are holding strong. New York City Comptroller Brad Lander and the city’s pension funds, like NYCERS, have remained steadfast in pushing for responsible climate investment strategies, demonstrating that major institutional investors still recognize the objective financial risks of climate change.
Pension funds play a critical role in keeping climate finance on track, even as some political forces try to sideline ESG efforts. Continued support for climate-conscious investments underscores the enduring economic logic behind sustainable finance — climate risks are real, and ignoring them will come at a cost that will be borne over both the short and long term.
