August 1, 2024

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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1. Local Leaders Unite In Opposition To “Anti-ESG” Movement

The National Association of Counties (NACo) — the association representing America’s 3,000+ counties — unanimously voted in support of a resolution condemning attacks on responsible investing.

• In their 2024-2025 American County Platform, the National Association of Counties (NACo) included a resolution opposing the “anti-free market” attacks on corporate responsibility and local control over municipal finances. NACo emphasized the need for policies that protect “local governments’ ability to invest and borrow as they self-determine,” including open access to “free capital and credit markets.”

• NACo’s resolution signals its commitment to lobby against efforts to undermine municipal finances, including through opposition to Federal anti-ESG legislation.

• It is tough to get a majority of America’s 3,143 counties — 2,584 of which voted for Trump in 2016 — to agree on anything. Yet this resolution passed with a unanimous committee vote and signals the counties’ united front against the anti-ESG movement interfering with their ability to deliver services and infrastructure for their communities.

• Anti-ESG laws can have big consequences for counties, who both are key municipal infrastructure borrowers and manage thousands of pension plans on behalf of public servants. Local leaders have been on the frontlines of navigating the high costs of anti-ESG policies in states where they have passed, as borrowing costs have skyrocketed.

2. Yellen Calls For $3 Trillion a Year in Climate Investment

As nations face the “existential threat” of climate change, Treasury Secretary Janet Yellen reminds us the energy transition is an opportunity, too.

• Speaking in Brazil at a meeting of G20 finance ministers, Treasury Secretary Janet Yellen called the energy transition “the single greatest opportunity of the 21st century,” saying strengthened policies and $3 trillion in new capital investment will be needed each year through 2050 to move the global economy toward net zero.

• Yellen said the path to success involves global coordination to finance lower-carbon agriculture, invest in clean energy deployment, end the support of climate-damaging activities like rainforest logging, and equitably distribute costs and benefits around the world. Because of the role the U.S. plays in the world economy, agencies like the Treasury will have to step up their commitment to making that coordination happen.

• Meanwhile, the Treasury Department sent a letter to lawmakers last month warning that a Florida anti-ESG law threatened national security by allowing criminals and terrorists to manipulate the financial system.

From Yellen’s remarks: “Neglecting to address climate change and the loss of nature and biodiversity is not just bad environmental policy. It is also bad economic policy….”

3. Methane Gas Generation Proposals Proliferate in the U.S. Southeast

Plans for new gas plants in this one region could make national decarbonization targets impossible to reach.

• Georgia Power has asked state regulators to let it speed up the construction of three new methane plants near Atlanta, in part to support the rapidly growing power needs of AI data centers. In North Carolina, Duke Energy has proposed a new 850 MW gas plant north of Charlotte. The Tennessee Valley Authority has proposed its eighth new gas plant in three years.

• These few utilities alone propose to add more than 12,000 MW in gas capacity, 40% more than the entire country built in 2023. But new fossil fuel plants are economically irrational; they’ll become stranded assets as renewables costs continue to plunge.

• Utilities’ claims that gas generation is more reliable don’t hold up. Gas delivery has failed when reliable electricity is a life and death need, such as during recent  severe weather. Many recent weather generation problems, including in the 2021 storms that devastated the Texas grid, were furthered by failing gas plants and distribution systems.

• To guarantee real reliability in a time of heightened climate-driven extreme weather, we need more sustainable carbon-free generation — such as pairing renewables,  battery storage, and grid management to match generation with demand, like the IRA is funding in rural communities.

From NERC’s grid reliability assessment: “As natural-gas fired generation continues to increase, vulnerabilities associated with natural gas delivery to generators can potentially result in generator outages.”

4. Energy and Climate Decisions Happen in the States — and Lobbying Does, Too

The U.S. clean energy transition requires taking action in all 50 states. That gives a significant role to 50 governors and 7,000 state legislators. But they’re not the only ones: hundreds of other state regulators, officials and agency heads can advance or block critical clean energy and climate initiatives.

• Delay at the state and local level is a big challenge, with political contributions from incumbent industries (often funded by ratepayers) and lobbying a serial threat to climate action.

• State treasurers and agriculture commissioners aggressively advance anti-ESG policy, and are rewarded by political contributions: Florida’s agriculture commissioner and CFO are bankrolled by utilities and fossil fuel companies.

• Similarly, regulatory boards like the Georgia Public Service Commission and the California Public Utilities Commission make decisions with little recourse, and often in secret. In many states, utilities can make campaign contributions to legislators — and analysis shows the ones that do earn a steep return on their investment. They spend $1.4 billion on lobbying, too, some of which is funded by fees on consumer utility bills.

• State legislators are trying to address some of these problems to ensure a fair regulatory environment for clean energy and consumers. But with so much corporate revenue on the line, there are significant incentives for utilities and the fossil fuel sector to keep running their political playbook.

For more about statewide elected officials’ work to advance anti-ESG policy, see our 2024 Anti-ESG Executive Action Report.

5. Another Loss for Anti-ESG

A temporary injunction against a Florida DEI prohibition becomes permanent.

• Chief US District Judge Mark Walker has permanently blocked part of Florida Gov. Ron DeSantis’s “Stop WOKE Act.” The blocked provisions would have prohibited workplace DEI training, as part of a broader commitment by right-wing Florida officials to prevent companies from taking economic or social consequences into account when making management decisions. The action came after the 11th Circuit Court of Appeals agreed with his temporary injunction, ruling that the law violated employers’ First Amendment rights.

• During his failed presidential campaign, DeSantis talked up “Stop WOKE,” but laws like these — widely opposed by corporate and financial interests — are being challenged in court. An Oklahoma anti-ESG law was permanently blocked in July, with Texas’s similar law likely to see a similar fate.

From the appeals court: “By limiting its restrictions to a list of ideas designated as offensive, the Act targets speech based on its content. And by barring only speech that endorses any of those ideas, it penalizes certain viewpoints – the greatest First Amendment sin.”

6. Cities and States Are Building Global Collaborations And View The Energy Transition As A Diplomacy Opportunity  

Climate change is a global issue, but state and local leaders play a deciding role in making and implementing climate and energy policies. Local leaders are increasingly crossing international borders to learn from and collaborate on sustainability policy with governments around the world.

• The Truman Center’s new  Multilevel Diplomacy visualization tool shows the scale of their international coordination on key issues of the day — and a quick tour of the US shows that climate and innovation are leading collaboration drivers.

• Los Angeles has climate agreements with Canada, Finland, Indonesia, Japan, Singapore, the United Kingdom, and Vietnam. Maine is working with Finland on forest issues. Nebraska is consulting with South Korea on hydrogen. Fairfax County, Virginia, has partnered with Stuttgart on green infrastructure.

• The Truman Center, a think tank focused on national security, understands that sustainable energy is a matter of national security and that collaborative problem-solving with allies at every level around the world will help us find and implement the best solutions to energy challenges as quickly as possible.

From the Truman Center: “The safety, health, and prosperity of American communities increasingly depend on how their leaders — mayors, governors, and other local officials — connect with the world.”

7. National Climate Corps Rolls Into Action, Helping To Define What A Climate Job Is and Can Be  

FDR’s Civilian Conservation Corps, Obama’s AmeriCorps, and state climate service initiatives are models for the Biden-Harris program announced in April.

• On Earth Day, the Biden-Harris administration launched the Climate Corps, an initiative to put 20,000 young Americans to work in community-embedded clean energy and resilience projects. Hundreds of service and training opportunities are already open in 37 states, and the program is just spinning up.

• The new program, which will help build a workforce for the 8 million new clean energy jobs forecasted globally by 2030, is taking lessons from existing state climate service corps in Arizona, California, North Carolina and elsewhere that enlist locals for transition and resilience work in their own communities. Jordan Power, manager of Michigan’s corps: “Climate change affects everything. To change everything, we need everyone.”

• Young people are hungry for climate jobs, with groups like the Sunrise Movement driving the push for a robust Climate Corps. Gen Z is also voting with their feet, seeking roles in companies that take climate action seriously.  

But what exactly is a climate job? In new research based on AmeriCorps’ climate-related activities, Dana Fisher of American University shows how climate service corps participants can effectively advance the “4 Rs” of climate transition: Reduction in emissions, Resilience, Response to and Recovery from climate-related events.

SPOTLIGHT ON ARIZONA

Elections determine policy, at both the state and federal level. In Arizona, a Republican legislature with one-seat majority in each house and a Republican-majority elected utility regulator, the Arizona Corporation Commission, have stymied the growth of clean energy. The past year, the ACC has hiked rates due to methane gas price spikes while rolling back energy efficiency programs and solar, despite Arizona’s status as America’s sunniest state. Arizona is also in the top ten states for wind energy potential, but wind currently generates less than 2% of supply. Instead, utilities push for new gas plants and underpay homeowners for solar.

But if climate-friendly legislators take control of state government, all of that could change. This week’s primary elections move us one step closer to November, when analysts say Arizona could see a Democratic trifecta for the first time in almost 60 years. Flipping the legislature would give climate advocates a boost, and could likely lead to rapid progress on clean energy, emissions reductions, and more.