|  | | 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. The Inflation Reduction Act Turns 2 Years Old |
| $361 billion invested, 585 projects, 312,900 jobs, 47 states: it’s been the biggest clean energy boost in U.S. history. IRA spending has changed the energy game across America by supercharging clean energy funding; the law generated more than $361 billion in investments. Since passage, the IRA and BIL have generated more than 312,000 new jobs — with the overwhelming majority of cash going to GOP-controlled states like Georgia, North and South Carolina, and Texas. IRA spending has had equity impact, too, with more than 75% of investments in lower-income counties. Manufacturing has seen a resurgence as a result of IRA spending, especially in clean tech. More than $50 billion in spending on U.S. battery manufacturing has been announced, with an additional $16 billion for EV manufacturing — all within one year of the law’s passage. The IRA is the largest climate investment in world history, with impacts on every carbon-emitting economic sector. Brookings projects it will cut CO2 emissions by between 6 and 11 points over the next decade, and the Department of Energy says the U.S. could hit 80% clean-energy generation share by 2030.
E2 is tracking IRA clean energy projects as they’re announced, on their Clean Energy Works dashboard. |
| | 2. Clean Energy Investments Are Sending The Economy Soaring |
| The IRA is bringing sustainable industry and good-paying clean energy jobs to communities across America. Largely due to the IRA, the rate of clean investment has more than doubled since 2021, with more than $16 billion now going into solar, wind, and energy storage every quarter. Clean investment held a negligible share as recently as 5 years ago, but it now makes up 5.5% of total private investment, and is on track to hit 7% or more by next year. It’s been estimated that every $1 of IRA investment generates another $6 in private investment. In some states, investment in sustainable manufacturing and generation now tops 1% of state GDP; in Nevada, it’s 1.8%, and in Wyoming, it’s over 2%. Per Jigar Shah, director of the Department of Energy Loan Programs Office, much of the “massive growth cycle” is driven by clean energy manufacturing: by 2026, he says, 80% of the solar panels deployed in the U.S. will be made here by American workers.
Shah on the manufacturing renaissance: “I grew up in a community devastated by a closing steel plant. Today, these 800+ new facilities are revitalizing these communities, creating family-sustaining jobs and dignity. They are also inspiring people to dream bigger.” |
| | 3. A Big Win in Wisconsin |
| The right-wing legislature tried to take away the Governor’s spending powers, but voters said no. That’s good news for the energy transition and climate-fueled disaster recovery. The overwhelmingly GOP Wisconsin Legislature put two constitutional amendments on this week’s ballot that would have limited the authority of Democratic Gov. Tony Evers to spend federal funds — and voters said no to both of them. Given GOP legislators’ open hostility to clean energy and emissions reduction, the power grab by right-wing extremists — a perversion of the fundamental checks and balances in the state constitution — could have been disastrous for clean energy funding. But a coalition of opponents raised $3.5 million to encourage Wisconsinites to vote no, and both measures were defeated by 15-point margins; the AP called the contest barely an hour after the polls closed. The “no” side won in red Wisconsin as well as blue, with two dozen of the counties that voted for Trump in 2020 also voting down yesterday’s proposals.
Gov. Evers after the win: “This was a referendum on our administration’s work and the future for Wisconsin we’ve been working hard to build together, and the answer is reflected in the people’s vote tonight." |
| | 4. Catastrophe Bonds Put Florida Pension Holders and Taxpayers At Risk |
| DeSantis props up the state’s collapsing insurance industry, and Floridians pay. As accelerating climate risks force Florida insurance companies to choose between fleeing the state and going bankrupt, Gov. Ron DeSantis has doubled down on denial, banning state agencies from addressing or even mentioning climate change. DeSantis’s State Board of Administration (SBA), which runs the Florida Retirement System Pension Plan, has gambled pensionholders’ money on catastrophe bonds, a type of high-risk investment that helps prop up the insurance industry, and other insurance-linked securities. These assets have already posted massive losses, costing SBA retirees tens of millions of dollars. A proper accounting of climate risk would prevent such risky investing — but the SBA can’t consider climate change under state law. Meanwhile, the hurricanes and floods keep coming. The Florida Hurricane Catastrophe Fund (FHCF), a state program to rescue private insurers (big contributors to DeSantis) amid mounting losses, is now insolvent itself, and preparing to borrow $3.8 billion. The Citizens Property Insurance Corporation (CPIC), the state’s insurer last resort, is insolvent, too. U.S. Senate Budget Committee Chair Sheldon Whitehouse fears American taxpayers may have to bail Florida out.
Climate journalist Kate Aronoff: “Florida’s situation… — a brew of climate-denying elected officials taking big donations from insurance executives; fabulously rich, tacky, and hungry real estate development; massive climate risk; and millions of ordinary people struggling to make ends meet — offers an especially chilling preview for what’s to come….” |
| | 5. Louisiana Regulators Bypass Their Own Anti-ESG Law |
| They’re approving contracts with big banks, even ones on their “woke list.” Like Texas and Oklahoma, Louisiana has blacklisted banks that take climate risk seriously from doing business with the state, under a state law that prohibits investors from using ESG criteria in investment decisions. But last week, the State Bond Commission gave big banks, including Wells Fargo, Bank of America, and JPMorgan Chase, a three-year reprieve. It’s effectively an acknowledgment that anti-ESG laws are bad business, and blacklisting every bank that makes rational climate risk decisions that would leave the state and its pension holders with higher borrowing costs and lower returns. The state AG did recommend dealing with the banks under a “yellow caution flag,” leaving open the door that they might be kicked off the approved list for political reasons in the future.
Even fossil fuel companies understand the cost of anti-ESG rhetoric: the Texas Association of Business, a chamber of commerce whose members include ExxonMobil, Chevron, and ConocoPhillips, estimates that anti-ESG laws have cost Texas $700 million in higher borrowing costs and killed thousands of jobs. Anti-ESG laws have cost Oklahoma taxpayers at least $185 million. |
| | 6. Missouri Financial Gag Rule Struck Down By Federal Judge |
| The judge strikes unconstitutional state rule, affirms that federal law requires financial advisors to protect their clients — which includes protecting them from climate risk. U.S. District Judge Stephen Bough issued a permanent injunction yesterday that struck down a Missouri rule that would have forced investment advisors to make unfactual, politically charged statements using a state-mandated script. The trade group SIFMA had sued to void the rule, noting their members are federally regulated and saying the state couldn’t impose its own rules, and the judge agreed. The judge also said the rule was too vague to be enforceable, and violated the First Amendment. GOP Secretary of State Jay Ashcroft, who very recently lost his primary bid for governor, put the rule in place on his own authority after state lawmakers declined to pass anti-ESG legislation last year. He had requisitioned up to $1.2 million in taxpayer money for outside counsel to defend the suit, triggering sharp questioning by members of the state House Appropriations Committee.
SIFMA CEO Kenneth Bentsen: “This decision marks a major victory not only for our national securities market system, but also for our nation. Under today’s federal securities laws, financial professionals are already required to provide investment advice and recommendations that are in their customers’ best interest.” |
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