August 22, 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. Fed Meeting Soon in Jackson Hole, Wyoming, A Ski Town Destination in a Coal State Where the Governor Knows the Clean Energy Transition is Inevitable

• Wyoming is home to the largest coal reserves in the US in the Powder River Basin, but as clean energy’s economics and health benefits have tanked demand for dirty energy, the state has been working to diversify its economy — including through an expanding wind economy, direct air capture pilots, and groundbreaking transmission projects.

• Governor Mark Gordon in 2024 vetoed portions of a rule proposed by Secretary of State Chuck Gray, which would have required all investment brokers in the state to disclose any and all “ESG principles.” Gordon wrote that the rule went “beyond the legal authority of a state agency.”

• It will take Federal and state action to navigate the complex contours of the energy transition. Hopefully, while in an energy state like Wyoming, Fed board members will take the opportunity to understand the ongoing energy transition and take concrete steps to incorporate climate and transition risks into their approach to systemic financial risk management and monetary policy.

As Former Federal Reserve Board Member Sarah Bloom Raskin highlights in a new op-ed, the Fed’s climate approach can ease the economic risks of the energy transition, including for states like Wyoming: “... the energy economy is undergoing a long-term transition from fossil fuels to renewables … The Fed can’t manufacture solar panels, upgrade the power grid, or help farmers transition to climate-resistant crops. But it can smooth the climate transition for economic actors in every sector.”

2. Virginia AG Issues Anti-ESG Opinion, Following Failed Attempts to Legislate the Same

Like other state executives, AG Miyares is leveraging anti-ESG as a culture-war weapon to prevent financial markets from addressing climate change and other urgent issues.

• Virginia’s Attorney General Jason Miyares issued an advisory opinion  suggesting that Virginia Retirement System trustees are prohibited from considering ESG factors in their decision-making. His opinion isn’t legally binding, but it could still discourage state pension managers from taking climate risk and other key corporate policies into account.

• State legislators in Virginia have considered three anti-ESG bills, two of which were modeled off the Heritage Foundation’s State Pension Fiduciary Duty Act, and all of which failed. Virginia Investment Management Board member Michael Payne warned that the bills would have a “dampening effect” on investment performance.

• Meanwhile, Miyares has been involved in 19 total actions attempting to curtail corporate responsibility — the bulk of which he has undertaken as part of a broader network of right-wing, anti-ESG state executives. Miyares has attempted to undermine federal rulemaking and targeted non-profit organizations with investigatory and legal threats.

We’re tracking right-wing anti-ESG state executive actions: see our Executive Actions Report.

3. Proposed “Sunshine Freedom Bank” Is Just Crony Capitalism As Usual

A bad-faith plan by Florida’s CFO would shovel taxpayers’ money into culture war priorities — playing politics with big financial responsibilities.

• Florida state CFO Jimmy Patronis has proposed to “protect taxpayers” from what he calls “woke banks and regulators” by creating a state-owned bank he called the “Sunshine Freedom Bank.”

• Patronis and other state leaders have ginned up a culture war panic against “woke capitalism,” seeking to ban financial professionals from risk-aware management practices and forcing financing into preferred industries, like fossil fuel companies and gun manufacturers.

• The Sunshine Freedom Bank would be the first state-controlled anti-woke bank, but so-called “anti-woke” financial institutions have a terrible track record. Peter Thiel-backed Texas startup GloriFi wasted its investors’ funds and failed after just a few months, and billionaires are fighting over the wreckage in court. Vivek Ramaswamy’s Strive Asset Management has been sued by former employees who say they were pressured to violate securities laws. Oklahoma’s Old Glory Bank is under a consent order from the FDIC.

Patronis: “[W]oke banks and regulators in New York, California and Washington, D.C. have been imposing their toxic ideology on hard-working Floridians by controlling their money….”

4. Giant Batteries Are Key to Grid Resilience

On peak days, California battery storage facilities already deliver as much electricity as four nuclear plants.

• High-tech battery storage, built from thousands of lithium-ion cells like those in electric cars, are proving to be the key to solving grid resilience woes.

• California has passed 61% non-fossil fuel generation, much of which is held in battery storage facilities and released when it’s needed. The state now has 10,383 MW of battery storage available, more than anywhere except China, which is enough to run almost 8 million homes.

• The past few years, California has been hit by record-breaking heat, which caused rolling blackouts just four years ago and a flurry of “flex alerts” two years ago. This year, thanks to California’s battery reserves, residents were free from flex alerts.

• On August 14th, a record 8,320 MW of battery power hit the California grid in the evening. California Energy Commission Chair David Hochschild calls the batteries “the difference maker,” saying, “They are the reason we haven’t had flex alerts. These storage facilities have provided an incredible cushion.”

State grid CEO Elliott Mainzer: “Think of it like an energy bank account. In the middle of the day, you are making big deposits. At the end of the day, we withdraw from that account…. It’s definitely been a game changer in improving reliability.”

5. Regulatory Capture Hijacks State Legislative Agendas

Case in point: CenterPoint Energy’s country retreat, where more than 80 elected officials have come to enjoy Texas’s best fishing, an open bar, and more.

• The Houston Chronicle spotlighted “The Pond,” CenterPoint Energy’s private getaway spot where state and local lawmakers catch bull redfish, shoot skeet, play poker, and drink and hobnob with lobbyists and execs.

• CenterPoint, which serves 7 million customers in 6 states and has spent millions on lobbying, calls this “legislative advocacy.” GOP state senator Phil King has been to The Pond five times — and wrote five recent bills that loosened utility regulations. “It’s really hard to vote against them,” one legislator reportedly said.

• It’s not just Texas where utilities are wooing lawmakers with campaign cash and perks. Virginia-based Dominion Energy has made $4 million in contributions to dozens of campaigns this year alone. Outside reportable political spending, utilities have funded lawmakers’ pet charities, made illegal job deals, backed fake candidates to throw elections, and offered outright bribes.

• These practices by utilities threaten regulatory capture — the practice by which incumbent industries, like utilities, improve their economic fortunes by rigging the rules rather than building better products. Utilities in Virginia have already been caught hijacking the legislative process, and Texas lawmakers have gone to bat for CenterPoint.

Electricity consultant Alison Silverstein: “[The access CenterPoint gets] is an extraordinary benefit that is not available to folks like the Texas Consumer Association or the teachers’ association. What are they going to do, invite you to a kindergarten and feed you graham crackers?”

6. Project 2025 Highlights Existential Stakes

Under a Trump administration, climate pollution would continue unchecked.

• If the Project 2025 climate and energy provisions are enacted, every aspect of our country’s climate response will be impacted, and the damage will be massive, according to a new study by Energy Innovation.

• Their analysis found that Project 2025 would entirely stall progress on emissions reductions, lead to millions of lost jobs, and cause tens of thousands of early deaths compared to climate leadership policies. And by 2030, it would cut GDP by $770 billion, with the losses mounting every year.

• Under a second Trump administration, we could see changes at the SEC and Department of Labor, too, like repeal of climate disclosure rules and new “anti-woke” pension investment rules. (And, of course, Project 2025 calls for repealing the Inflation Reduction Act and abolishing clean energy programs.)

Study authors: “Future policy changes could build upon America’s success to date, further cutting emissions, adding millions of jobs to the economy, and improving public health. Or they could undo this progress, jeopardizing U.S. climate targets, adding billions in energy costs to American households, costing the U.S. economy millions of jobs and billions in GDP, and increasing pollution-driven early deaths.”

PATH TO A GREENER, STRONGER ECONOMY

• NEW ELECTRIC TRAINS: In California, rail service started on the newly electrified CalTrain corridor between San Francisco and San Jose, improvements which will decrease travel time, increase frequency, cut emissions by 250,000 tons a year, and prepare for high-speed rail. In addition to the improvements in reliability and operating costs, Caltrain’s new electric trains are also faster and quieter.

  
  

• UNIONIZING THE SOLAR INDUSTRY: With the support of the Biden-Harris administration, the United Steelworkers have made advances toward forming a union at solar manufacturer Convalt Energy. Labor activists say unions will help ensure fair pay, fair labor practices, and job protections in the fast-growing industry.

  
  

• CLEAN ENERGY MILESTONE IN CALIFORNIA: For 100 days this year, California has run on 100% clean energy for part of each day. This year, statewide renewable energy availability has exceeded demand for 945 hours during 146 days — that’s enough to power the entire state for a month and a half.

  
  

• TEXAS GRID CREDITS RENEWABLES, BATTERIES: ERCOT, the Texas grid manager, credited wind, solar, and battery storage for successfully allowing the state to navigate high energy demand driven by extreme heat. Together, renewables and storage have beat back blackouts, keeping a/cs on and Texans safe.

As Illinois Governor J.B. Pritzker said at the DNC Convention this week, “Let's be clear, it's not woke that limits economic growth, it's weird, and these guys aren't just weird, they're dangerous."