Transition Finance Weekly - January 29, 2026
Winter Storm Fern, Wall Street’s Climate Walkback, Building Codes FTW
1. Grid Strain, Economic Fallout As Winter Storm Fern Rips Through
The massive storm is driving major disruptions across the South, East and Midwest — potentially shrinking Q1 GDP by 1.5pp.
On Sunday, a winter storm buried half the country under snow and in freezing temperatures, leading to at least 41 deaths across 13 states and power outages for more than a million Americans. Storms like Fern are becoming increasingly severe and frequent as climate change continues to disrupt winter weather patterns.
Fern is also stacking up economic losses across the economy, reportedly causing as much as $100 billion in economic losses and $15 billion in insured losses. Bank of America warned that the storm may have lowered Q1 GDP by up to 1.5 percentage points.
Meanwhile, electric grids mostly fell short of breaking entirely, but cracks were showing. In PJM, 15 GW of fossil generation failed and went offline as prices stayed high amid spiking demand, and the country’s natural gas delivery system was the “center” of grid challenges. The grid strain is another reminder that extreme weather is the largest driver of major power outages, and that they will get worse as climate change exacerbates extreme disasters.
What did prove helpful? Batteries and weatherization!
2. Wall Street’s Climate Capitulation
Wall Street started working on the problem of climate risk — then it cowed to political pressure.
Six years after Larry Fink showed up to Davos in a climate-themed scarf after declaring climate risk a significant investment risk, BlackRock is now positioning itself as a major backer of the Trump agenda, including its efforts to support the fossil fuel industry. In this turnaround, BlackRock has responded to the coordinated network of Republican politicians, conservative activists, and fossil fuel interests pushing for “anti-ESG” policies.
The anti-ESG campaign has long sought to undermine the energy transition and the financial sector’s ability to understand and manage climate-driven risks.
It is easy to focus on the politics and forget what prompted BlackRock’s initial reckoning with the realities of climate change: the truth that climate risk is financial risk. In 2024, the United States faced 27 disasters that cost more than $1 billion, totaling $182 billion in damages. In 2025, the LA fires took 31 lives and cost as much as $250 billion alone.
Climate risk is financial risk, and its costs will continue to rise with emissions and inaction.
3. American Automakers Face More Pressure
As Michigan Governor Gretchen Whitmer campaigned for an ease in tariffs to help automakers, Canada penned a new deal with China.
Michigan Governor Gretchen Whitmer criticized the administration’s tariff policies at the Detroit Auto Show, declaring that “America stands more alone than she has in decades” as the administration has pushed for tariffs on close allies, including Canada.
Partially in response to those tariffs, Canadian PM Mark Carney signed a trade deal with China to lower tariffs on 49,000 Chinese-made EVs annually. As the Council of Foreign Relations’ Edward Alden commented, it’s a “declaration of realignment” for global trade.
The Trump Administration’s posture on global trade and domestic industrial policy, its consistent antagonism of clean technologies, and its regular undermining of key alliances have driven our closest trading partner into the arms of a geopolitical competitor.
Michigan Governor Gretchen Whitmer said: “When we fight our neighbors, however, China wins.”
4. California’s New Energy Code
With little fanfare, California’s Energy Code went into effect with new emissions and cost reduction measures.
On January 1, California’s new 2025 Energy Code went into effect, increasing energy efficiency requirements in all forms of housing and strongly encouraging heat pumps. The code uses energy use “budgets” for buildings, requiring buildings to conform to a cap on total building energy use. Buildings built or substantially renovated after January 1 will be required to conform to the new code.
California’s new code is projected to save residents an estimated $4.8 billion in energy costs over 40 years, and eliminate approximately 4 million metric tons of GHG emissions. Buildings in California account for 25% of the state’s emissions.
What we love to see: policies that are self-ratcheting as performance improves. Since they were enacted in the 1970s, California building codes have been strengthened through a technology and market-ready driven process that spurs innovation and improves performance every three-year cycle. This is great for the climate — and great for consumers.
Sadly, last session, under the guise of expediting the LA fire response, California lawmakers disrupted this 50-year tradition of excellence and paused the process for updating new codes until 2031, likely slowing progress on efficiency and electrification.
CEC Commissioner Andrew McAllister, on the update: “When we build and upgrade homes to use less energy, California families save money, and communities get cleaner air and a more reliable electricity system.”
5. Michigan AG: Big Polluters Accused of a Big Antitrust Problem
Attorney General Dana Nessel joined the ranks of municipal and state governments bringing legal cases against major oil companies, with a new approach.
Michigan Attorney General Dana Nessel, who is running for Governor, filed a lawsuit against major polluters, including BP, Chevron, Exxon, Shell, and the American Petroleum Institute, the industry’s largest lobbying arm.
The new suit challenges the oil industry on antitrust grounds, arguing that the companies and the API formed a “cartel” and raised energy costs for Michigan residents by colluding to stifle renewable energy and suppress information about climate change. More than three dozen other challenges by state and local officials sought compensation for the effects of climate change — but Michigan’s lawsuit is an “energy affordability” case, according to Nessel.
The fossil fuel industry and its allies have reportedly sought to replicate the gun manufacturing industry’s legal immunity from lawsuits and receive a liability waiver from the federal government. The Trump Administration and Republicans across the country have largely supported such endeavors: the current DOJ has sued to block fossil fuel accountability laws and intervened against state and local climate damages claims, while state legislators in at least two states have proposed limits on liability for fossil fuel companies.
Michigan Attorney General Dana Nessel: “These out-of-control costs are not the result of natural economic inflation, but due to the greed of these corporations who prioritized their own profit and marketplace dominance over competition and consumer savings.”
SPOTLIGHT: Nevada law allowing insurers to carve out fire insurance takes effect.
In Nevada, a bill passed unanimously by the legislature in 2025, AB 376, took effect on January 1. Proponents claim the bill, which allows carriers to carve out wildfire coverage, will improve insurance access and increase insurance offerings in the state as climate-driven catastrophes drive increases in risk across the country.
But the law contains multiple provisions that advocates worry leave consumers exposed, including a “regulatory sandbox” provision that will allow insurers to test new models and ideas for product offerings without typical regulatory oversight. The Consumer Federation of America warned that these “sandboxes” are often used by insurers to shield themselves from oversight. The law also allows insurers to carve out fire insurance offerings and to sell fire insurance as separate coverage, which may worsen the insurance access and cost crises. Supporters of the bill said it would increase coverage availability and prevent insurers from leaving the state, but critics pointed out that there’s no other safety net for wildfire offerings, and excluding fire coverage would create a major coverage gap.
