Reading the room on IRA

From: POLITICO's The Long Game - Tuesday Aug 15,2023 04:02 pm
Aug 15, 2023 View in browser
 
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By Jordan Wolman

THE BIG IDEA

Brian Hoeppner, left, and Even Berrios, install a solar panel on the roof of a home in Frankfort, Ky., Monday, July 17, 2023. Since passage of the Inflation Reduction Act, it has boosted the U.S. transition to renewable energy, accelerated green domestic manufacturing, and made it more affordable for consumers to make climate-friendly purchases, such as installing solar panels on their roofs. (AP Photo/Michael Conroy)

Brian Hoeppner, left, and Even Berrios, install a solar panel on the roof of a home in Frankfort, Ky. | Michael Conroy/AP Photo

POST-IRA USA — It seems like only yesterday, but we’ve made a full trip around the sun since the Inflation Reduction Act was signed into law. So we thought it might be a good moment to take a look at how things are going with the biggest-ever U.S. investment in climate-related projects.

First things first: Money is flowing. Still, politicians continue to wrangle over the issues that strained negotiations over the law aimed at fighting global warming and creating jobs while shoring up the domestic supply chain to reduce reliance on China without angering allies.

Those confused by the name given to a law that was never likely to play a substantive role in reducing inflation may be relieved to learn that President Joe Biden himself now apparently regrets that decision. But that’s not stopping him from throwing a birthday party for the $370 billion package, Robin Bravender and Kelsey Brugger at POLITICO’s E&E News report.

And if you recall that Sen. Joe Manchin (D-W.Va.) agreed to cast a pivotal role in exchange for a promise to enact legislation easing the permitting process for energy, mining and infrastructure projects, you may be shocked to learn there’s still no deal there.

The Manchin machinations were needed because Republicans broadly opposed the Inflation Reduction Act, even though it was well understood that many of the projects would benefit red states. A year later, Biden is still drawing GOP criticism even as some opposition politicians celebrate new clean energy projects bringing an economic boost to their communities. Josh Siegel, Kelsey Tamborrino and Jessie Blaeser report that of the 200 project locations that have been announced through July, more than 60 percent are in Republican-held districts.

There are also concerns over whether projects funded by the law will be as effective as promised. David Iaconangelo of POLITICO’s E&E News reports, for example, that BloombergNEF analysts question the solar industry’s predicted surge, citing supply chain issues and overseas competition.

Still, Treasury Secretary Janet Yellen isn’t shy about touting the progress that has been made, saying during a speech in Las Vegas on Monday that it hasn’t just occurred by “happenstance.”

“These incentives spur greater innovation and competition in the clean energy industry,” Yellen said. “And they drive down the cost curves of these technologies. Lower costs mean greater adoption. This will not only help the United States mitigate our greenhouse gas emissions. It will help the rest of the world as well.”

AROUND THE WORLD

HE WEARS MULTIPLE HATS — He would seem to have a lot on his plate, given that he’s in charge of running the world’s fifth-largest economy, but Gavin Newsom seems to have found time to take on a side gig as America’s leading shadow climate diplomat.

The California governor is cementing the Golden State’s status as a climate policy power broker, striking deals with China and other major polluters, Blanca Begert reports.

Newsom’s administration has sealed pacts with China and Australia to phase out fossil fuels, improve energy efficiency in buildings, boost resilience against wildfire, heat and drought, and freely exchange ideas on policy and academic matters.

And California Lt. Gov. Eleni Kounalakis recently led a delegation to Japan of some 80 renewable energy and transportation industry executives.

“These are more than just ceremonial meetings,” Mary Nichols, the former chair of the California Air Resources Board, said in an interview. “These are planned sessions where people will spend a day, a week, or even more doing a deep dive into some specific issue.”

Newsom’s decision to wade into the global climate scene follows in the footsteps of his two predecessors in Sacramento, Jerry Brown and Arnold Schwarzenegger, who also actively engaged in climate diplomacy.

AROUND THE NATION

UPPING THE ANTE — California lawmakers and businesses are increasing pressure on the state's Legislature to pass first-in-the-nation legislation requiring companies to disclose both their environmental impact and the financial risks they face due to climate change.

Lawmakers are set to consider two bills, SB253 and SB261, in the Assembly Appropriations Committee around Sept. 1. Passage there would set up an Assembly floor vote by Sept. 14, where the emissions disclosure bill sponsored by state Sen. Scott Wiener (D-San Francisco) narrowly failed last year.

Companies including Microsoft, Patagonia, and REI Co-Op sent a letter to Assembly Appropriations Chair Chris Holden urging his panel to pass the bills, and Adobe last week also signed up in support of SB253, according to Jack Persons, a spokesperson for Wiener. Bill sponsors have scheduled a rally for SB253 at the California Capitol on Aug. 23 to gin up support.

Wiener’s bill would require public and private companies that do business in the state and generate at least $1 billion in revenue to disclose their direct and supply-chain emissions starting in 2026, going further than proposed federal disclosure rules.

SB261, led by state Sen. Henry Stern (D-Calabasas), would require public and private companies generating at least $500 million in annual revenue to prepare climate-related financial risk reports, starting by the end of next year. A similar measure proposed by Stern failed to advance last year.

Sustainable Finance

A chart showing sustainable debt's decline.

SUSTAINABLE SLOWDOWN — Global sustainable debt issuance saw its first-ever year-over-year decline last year, and the first half of 2023 isn’t looking much better, according to new data from the Climate Bonds Initiative.

Global green, social and sustainable debt issuance fell 15 percent in the first six months of this year compared with the first half of 2022. The U.S., the country with the most sustainable finance transactions, saw a 39 percent drop.

Caroline Harrison, CBI’s head of market intelligence research, said in an interview that the decline could be due to factors including a drop in the number of green debt deals that align with CBI’s screening methodology, the anti-ESG campaign in the U.S. and interest rate hikes.

Questions around transparency and integrity still linger as the market tries to bolster its ability to deliver real environmental and social benefits. That means there’s urgency to not only minimize greenwashing, but to ramp up sustainable debt issuance.

“Though sustainable finance is on its way to being a $5 trillion market, we need to see $5 trillion of sustainable finance being raised annually in the latter half of the decade to prevent future climate collapse,” Sean Kidney, CBI’s CEO, said in a statement.

 

SUBSCRIBE TO CALIFORNIA CLIMATE: Climate change isn’t just about the weather. It's also about how we do business and create new policies, especially in California. So we have something cool for you: A brand-new California Climate newsletter. It's not just climate or science chat, it's your daily cheat sheet to understanding how the legislative landscape around climate change is shaking up industries across the Golden State. Cut through the jargon and get the latest developments in California as lawmakers and industry leaders adapt to the changing climate. Subscribe now to California Climate to keep up with the changes.

 
 
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GAME ON — Welcome to the Long Game, where we tell you about the latest on efforts to shape our future. We deliver data-driven storytelling, compelling interviews with industry and political leaders, and news Tuesday through Friday to keep you in the loop on sustainability.

Team Sustainability is editor Greg Mott and reporters Jordan Wolman and Allison Prang. Reach us all at gmott@politico.com, jwolman@politico.com and aprang@politico.com.

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WHAT WE'RE CLICKING

— A Montana court ruling in favor of young plaintiffs in a landmark climate case could have repercussions beyond Big Sky Country, Lesley Clark reports for POLITICO's E&E News.

— A project underway in California's redwood forest is aimed at undoing the impact of unbridled logging — by doing more logging, among other things. The New York Times explains.

— Gabon has cut a deal to use a controversial financial maneuver to reduce its debt burden while generating funds for conservation efforts. The Associated Press has that story.

 

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