|  | | Transition Finance Weekly |
| Exploring the policy, politics, and economics of the clean energy transition |
| Each week here in Transition Finance Weekly, researchers and analysts from Pleiades Strategy summarize the top stories and trends related to the policy, politics, and economics of the clean energy transition in the states.
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| | | This week, the Minnesota Star Tribune’s editorial board highlighted the steep costs of climate-driven unnatural disasters. Minnesota is not alone — Texas, Louisiana, and Florida are all experiencing this ‘double disaster.’ Since 2021, more than 150,000 families in Texas and Louisiana have dropped their FEMA flood insurance, as increasingly steep payouts raise premiums and drive insurers out of the market. And nationwide, 6 million families go without homeowners’ insurance, which covers hail and wind damage and is growing increasingly unaffordable. Hurricane Beryl demonstrated the power of modern storms, killing at least 9, damaging thousands of homes and businesses, and leaving almost 3 million without power for days in dangerous heat. With little information on power recovery from their utility, some residents tracked power outage recovery using local fast food chain Whataburger’s phone app. Florida requires flood insurance, even as it makes it a money-loser by pushing back on premiums; it’s joined Texas and Louisiana in a lawsuit to prohibit rate hikes. That circle has to be squared somehow. One idea: Congress should act on FEMA recommendations for making flood insurance more affordable. Meanwhile, utilities are spending billions to harden infrastructure against increasingly frequent superstorms. Houston-area CenterPoint alone expects to allocate a total of up to $3 billion to resilience through 2027.
Star-Tribune editorial: “Many of the states devastated by these storms are predominantly red states, run by governments that historically have denied climate change and have pushed against sustainable developments.”
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| | 2. First Post-Chevron Test: A Second Chance With Kacsmaryk. |
| 10 days after the Supreme Court ruled, anti-ESG opponents are back in court for a second bite at the apple. 25 GOP states sued in federal court to block a Biden administration rule that allowed employee retirement plans to consider ESG factors in investment decisions. Infamous Texas Trump appointee Matthew Kacsmaryk ruled against them last year, citing the 1984 Chevron doctrine, which required judges to defer to agency expertise.
But last month in Loper Bright v. Raimondo the Supreme Court overturned Chevron, which will trigger a flood of cases challenging regulations at the EPA, SEC, DOL, and more. So the GOP AGs are back in federal court to try again. Given Kacsmaryk’s right-wing leanings, the chances the rule will survive are bleak. This lawsuit is part of a much broader campaign to hobble responsible investing and promote GOP-favored industries like fossil fuels and gun manufacturing. In more than 30 GOP-run states, AGs and legislators have taken dozens of executive actions and considered dozens of bills to prohibit rational investor behavior.
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| | 3. The Right Wing Notches A Culture War Victory In Tennessee… |
| The national online mob isn’t Tractor Supply’s primary customer base, but they managed to shut down responsible corporate policy. At Fortune 500 Nashville-based home improvement and “rural lifestyle” retailer Tractor Supply, CEO Hal Lawton has long taken a leadership position on climate change and diversity among his corporate peers. But good governance amid a culture war can be hard. Last month, the company caved to an organized online takedown campaign led by an anti-LGBTQ activist, and announced it was eliminating its emissions goals and ending its diversity and inclusion programs. The rabblerousers behind these campaigns aren’t acting on their own. They’re riding a wave of bad-faith GOP rhetoric, amplified in a national online echo chamber and orchestrated by right-wing front groups like the Heartland Institute and the Buckeye Institute. Plenty of Tractor Supply customers, like the National Black Farmers Association, pushed back. Lawton’s positions were good business, and good corporate stewardship: a quarter of rural Americans are people of color, millions more identify as LGBTQ+, and agricultural communities are already heavily impacted by climate change.
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| | 4. …but An Anti-Esg Legal Challenge Dies In New York |
| A state judge dismissed a lawsuit by a group of retired New York City public employees against three of America’s largest municipal pension plans, with a combined 600,000 members. The lawsuit alleged that pension plan participants were financially harmed by the plans’ divestment from fossil fuels. One plan trustee: “[A]s fiduciaries we use prudence and integrity when making the decisions that we make.” With leadership from NYC’s elected Comptroller Brad Lander, the plans engaged in a “deliberative and extensive fiduciary process that assessed portfolio exposure to fossil fuel stranded asset risk, industry decline, and other financial risks stemming from climate change.” In her decision, Judge Andrea Masley noted that the plaintiffs were on defined-benefit plans, so they would receive the same payouts regardless of investment decisions and had no standing to sue. More good news: in other states, lawsuits in the other direction — aiming to stop anti-ESG laws — are picking up steam. A pensionholder’s lawsuit against Oklahoma’s anti-ESG law has already led to a preliminary injunction, and arguments are pending in SIFMA’s suit against Missouri.
Bryan Berge, chair of two NYC pension plans: “This lawsuit was just hot air—the last thing we need in the fight against climate change.” |
| | 5. Florida Law Requiring Banks To Serve Objectionable Customers Goes Into Effect |
| It’s directly contravened by federal statute, so expect a challenge soon. Florida GOP governor Ron DeSantis extended his “anti-woke” agenda when the state’s anti-ESG law went into effect on July 1, supplementing an anti-ESG law already in force. The new law gives customers — including fossil fuel businesses, hate groups, and others — the right to file a complaint if they believe banks denied them service on “political” grounds. The Florida law, and a similar law Tennessee passed this spring, sets out a path other right-wing state legislatures can follow to try to force banks to make bad business decisions. The Florida Bankers Association was strongly opposed, noting that it also interferes with their federal obligations to investigate suspicious activity and combat money-laundering. In 2020 under the Trump administration, the Office of the Comptroller of the Currency tried to establish a similar rule nationwide — opposed by banks on similar grounds as the Florida law — but the OCC reversed course and prevented it from taking effect a week after President Biden's inauguration. The OCC and other federal banking agencies have since issued principles for climate-related financial risk management for large banks.
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| | | THE RURAL COMEBACK:
FOCUS ON RURAL ELECTRIC FUNDING
Under the Biden administration, rural economies have come roaring back to life. Investment in clean energy projects is part of the reason — and will keep the recovery going. One investment channel is the USDA PACE program, funded by the Inflation Reduction Act.
PACE will invest up to $1 billion in low-interest, partially forgivable loans for solar, wind, battery storage, and other renewable projects, mostly through rural electrical cooperatives — the community-owned utilities that power much of rural America.Some projects funded so far include: Alaska: $100 million for energy storage on the Kenai Peninsula south of Anchorage Arizona: $83 million for energy storage to serve the sparsely populated surrounding areas of Tucson, including the Pascua Yaqui Reservation Colorado: $72 million for grid-connected solar in rural Delta and Montrose counties Hawaii: $24.4 million to expand solar and reduce fossil fuel use during peak hours on Kauai, moving the island’s cooperative toward its 2033 100%-renewable target Kentucky: $16.6 million to fund a hydroelectric plant on the Kentucky River in rural Estill County Nebraska: $3.6 million for community solar in Madison, a town of 2,200 that’s home to a Tyson Foods plant
Colorado Sun on the Delta-Montrose project: “This investment not only enables us to produce affordable energy, further stabilizing member rates, but it also improves local grid reliability. The energy we generate right here at home can be efficiently delivered to our members, bypassing the reliance on distant power plants and extensive transmission lines.” |
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