Transition Finance Weekly - November 7, 2024
U.S. Clean Energy at Risk, Climate Experts React to Trump, Florida Financial “Oops!”
1. Decisive Federal Elections Put Clean Energy Programs and Transition Finance Regs at Risk
Trump and his allies aim to kill Inflation Reduction Act clean energy investments, end pollution reduction efforts, and reverse climate disclosure rules. The state elections landscape is more nuanced.
Fossil fuel interests were jubilant over the Trump win; the American Energy Alliance, a Heritage Foundation ally, called for “unwind[ing] the Biden-Harris administration’s regulatory onslaught on American energy producers.”
At the federal level, expect a dramatic shift in the government’s climate stance. Clean energy subsidies funded via IRA and other programs will be on the chopping block. And SEC climate disclosure rules could be reversed, making it harder for investors to track climate risks and mitigation efforts.
GOP treasurers and comptrollers won in multiple states, emboldening the anti-ESG movement. Even in North Carolina, which elected a Democratic governor, Republicans won the three critical financial jobs: Treasurer, Insurance Commissioner, and Auditor. Candidates associated with the State Financial Officers Foundation (SFOF) won in North Dakota, Missouri, and Utah. Pennsylvania’s GOP Treasurer Stacy Garrity, also affiliated with SFOF, held her seat.
While the red wave is reflected in state legislative election results, the results are more nuanced than at the top of the ticket. In positive news: anti-climate supermajorities were broken in Wisconsin and North Carolina; New Mexico elected stronger climate champions; and key races determining chamber balance remain too close to call in Minnesota, Arizona, and Pennsylvania.
See detailed state election results (NY Times). Scroll down for more election reactions from climate experts.
2. Climate Wins Big In Ballot Measures
In California and Washington, voters overwhelmingly approved ballot measures to protect climate progress.
Voters in Washington voted resoundingly against Measure 2117, a measure heavily backed by hedge fund billionaire Brian Heywood. Heywood poured millions of dollars into the Measure, seeking to overturn the Climate Commitment Act, which put in place a cap and trade system in the Evergreen State. More than 61% of voters said no to the measure.
Meanwhile, in California, 58% of voters said yes to Proposition 4, which will dedicate $10 billion towards water, land, and climate projects across the state. Proposition 4 will dedicate much-needed resilience and water quality projects in a state that faces major climate risks, including droughts and wildfires.
Alfredo Gonzalez, who spearheaded the Prop 4 campaign: “Voters have yet again made it clear that they believe in the need to prepare California for the ever-growing impacts of climate change. This bond enables the state to invest in climate solutions at scale, and we urge our leaders to continue to deliver results that protect our communities and economy.”
3. Climate Change Hikes Auto Insurance Rates, Too
Losses due to storms, floods, and wildfires are costing the industry tens of billions.
Combined losses from Hurricanes Helene and Milton could reach $55 billion, exacerbating the homeowner’s insurance crisis in state after state — and spiking premiums by up to 14%. But it’s not just property and flood insurance that are becoming increasingly expensive and hard to get due to climate-driven weather events; car insurers are feeling the pinch, too.
Floridians alone have filed more than 90,000 auto insurance claims following recent hurricanes; volumes like those are one of many reasons premiums have risen by 22% on average, and up to 50% in some states.
Ocean warming is driving more frequent hurricanes, but insurers say those megastorms are only part of the problem; routine storms are now hitting harder and more often, too, adding up to an even greater financial impact.
Alex Schlesinger of Active Mutual: “Something terrifying is happening in the Sunshine State — one in five seniors I talk to are planning their move — or at least exploring options. These are desperate people watching their fixed incomes dissolve under astronomical costs."
4. Oops! Florida Accidentally Suspends Its Entire Securities Industry
Banks were barred from the state for four weeks, in the latest episode of Florida’s mismanagement of its financial sector.
A law that took effect October 1 banned banks that had ever received federal penalties from selling securities in the state. Legislators said they meant to protect investors from unscrupulous banks, but since most big banks have been penalized by the SEC at one time or another, the law effectively suspended securities sales statewide. Embarrassed officials invoked hurricane emergency powers to suspend the law until legislators could pass a fix.
Earlier this year, a politically motivated “anti-woke” banking law in Florida drew a strong response from the U.S. Treasury Department, which agreed with House members that such laws might force banks to facilitate financial crime, accept risky customers, and disclose information that could compromise national security.
5. Michigan Climate Investment Accelerator Will Boost Community Clean Energy Funding
Scaling up state support for local clean energy initiatives will unlock funding from the IRA and private sources.
Michigan is making a big bet on clean energy by launching its Climate Investment Accelerator, a state initiative to help community lenders unlock federal clean energy funding.
Community development finance institutions (CDFI), credit unions, and green banks will get state help to secure funding from the EPA’s Greenhouse Gas Reduction Fund (GGRF) program, an IRA initiative. The state has put up $11 million, mostly as matching fund grants to unlock IRA funding; and it’s launching a Climate Investment Hub to help steer private funding toward shovel-ready projects.
Elissa Sangalli, MI CDFI Coalition chair: “The 21 mission lenders who are members of the Michigan CDFI Coalition… are able to leverage up to $8 for every dollar of public funding…. all of Michigan’s small businesses and under-resourced communities will have the capital needed to make themselves resilient to our changing climate….”
THE CLIMATE WORLD REACTS TO THE U.S. ELECTION
U.S. influence will wane. Simon Lewis, University College London: “The U.S. has voted to continue its long-term loss of power internationally as it backs fossil dinosaur industries and not those of future growth and prosperity.”
Global clean energy momentum can’t be stopped. Christiana Figueres, former UN climate head: “The result from this election will be seen as a major blow to global climate action, but it cannot and will not halt the changes under way to decarbonise the economy and meet the goals of the Paris agreement.”
Reducing IRA investment will meet resistance. Todd Stern, former U.S. climate envoy: “[I]n many cases, they won’t be able to” cut IRA programs, because GOP legislators and governors are “not going to want those things to be undermined because of jobs and employment.”
States and cities are key. Dr. Friederike Otto, Imperial College London: “The U.S. will get hit by stronger storms and hotter heatwaves as long as the world burns oil, coal and gas. Saying climate change isn’t real or dismantling climate policies won’t change that. I hope local governments will be able to step up in many places.”