The GOP's retro playbook just might work

Apr 28, 2023

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By Debra Kahn

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THE WEEK THAT WAS

House Speaker Kevin McCarthy walks to a press conference at the U.S. Capitol, with other people walking around him.

House Speaker Kevin McCarthy's (R-Calif.) bid to stymie the Inflation Reduction Act is spooking clean-tech investors. | Francis Chung/POLITICO

A CHILL PILL — Republicans' retroactive bid to cancel the Inflation Reduction Act's clean energy tax credits is going nowhere fast, but it could still throw cold water on clean energy projects.

Process-wise, the House-passed proposal to nix billions of dollars in renewable energy incentives as part of raising the national debt ceiling is DOA, as Emma Dumain and Kelsey Brugger report for POLITICO's E&E News.

It has zero chance of passing in the Democratic-controlled Senate, which is insisting on a clean bill, and President Joe Biden has pledged to veto it if it comes across his desk.

But as a gambit to slow down the clean energy transition, it may be working already. Investor types are worried about its chilling effect on private spending, especially coming after/amid the drawn-out drama over Treasury's electric vehicle tax credit guidance.

It's just another blow to confidence in Washington's ability to do anything.

"Uncertainty hurts deals and dealmaking, especially for startups," Danny Kennedy, CEO of New Energy Nexus, a nonprofit climate tech accelerator, told your host. "Now the shadow of political risk will add cost to the work that we need to be getting on with to meet our targets."

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WASHINGTON WATCH

CLIMATE DELAY? — A former Securities and Exchange Commissioner is predicting a fall release for the agency's hotly anticipated final version of its climate disclosure rule, our Jordan Wolman reports.

"It looks more like the fall of this year," Robert Jackson Jr., a New York University law professor who served at the agency from 2018 to 2020, said on a Thursday webinar hosted by Watershed, a carbon accounting firm. The rule, which people expect to be scaled back due to potential legal challenges, had been expected to be released as soon as this month.

But also: Even green-minded investors are questioning whether the rule will ever take effect. "Is that going to be litigated and held up in court and never come to pass, which I think is probably likely?" Daniel Firger, managing director of Great Circle Capital Advisors, a consulting firm, said last week.

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SHAREHOLDER SCOREBOARD

SURVEY SAYS — Shareholders at three big banks this week voted down proposals to curb support for fossil fuels, Avery Ellfeldt reports for POLITICO's E&E News.

None of the eight climate-related resolutions at Citigroup, Bank of America and Wells Fargo received a majority vote at annual meetings on Tuesday. Climate campaigners had been optimistic that resolutions asking the banks to phase out support for new fossil fuel production would do better this year because they tailored them to specify that they weren't asking companies to immediately cut ties with clients.

It actually did worse: At Bank of America, just 7 percent of investors voted in favor of the proposal, compared with 11 percent last year. Campaigners blamed the outcome in part on the companies characterizing the proposal as overly prescriptive, as well as major investors who say they are taking a “hands-off” approach to climate risk mitigation.

“The fact that so many investors voted against asking banks to reconcile their climate pledges with their fossil fuel financing activities suggests that most investors still don’t understand that climate change poses a systemic risk to their entire portfolios and the economy,” Jessye Waxman, a climate finance campaigner with the Sierra Club, said in a statement.

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CORPORATE PROMISES

NUTS TO BOLTS — GM's decision this week to stop making its Chevy Bolt will leave a hole in the electric vehicle market, David Ferris reports for E&E News.

At $26,500 to start, it's the cheapest car on the market that's so far eligible for the IRA tax credit. GM is getting ready to introduce electric versions of the Chevy Equinox, which will start around $30,000, and the Chevy Blazer, at around $45,000, but those aren't really substitutes.

Some think retirement is premature. It's GM's top-selling EV. “The Bolt is at its peak right now," Joel Levin, executive director of Plug In America, a nonprofit group that aims to broaden EV acceptance, told David.

But sales aren't that high, customers have shown more appetite for bigger cars and trucks, and GM is transitioning to a new battery technology that would have required it to update the Bolt. All told, the Bolt's obituary is far less tragic than that of GM's first foray into EVs, the EV1.

"The Bolt represents GM’s electric vehicle past, not its future,” said Karl Brauer, an analyst for automotive search engine iSeeCars.com.

AROUND THE WORLD

RISKY BUSINESS — A new report warns that high-emitting companies are "in the firing line" of an increasing number of lawsuits alleging human rights violations tied to climate change, Lesley Clark reports for POLITICO's E&E News.

The report released Thursday by U.K.-based risk advisory firm Verisk Maplecroft notes that more than 150 countries have established constitutional rights to a clean environment and that “momentum is building,” spurred by a resolution passed by the U.N. General Assembly in July 2022 that declared the right to a healthy, clean and sustainable environment as a universal human right.

Even if the lawsuits don't succeed, they bring added costs, and perceptions of risk. “For companies already grappling with investor and regulatory demands to show how growing physical risks and declining natural capital threaten investments and strategy, litigation is the next hurdle to clear,” wrote Verisk Maplecroft's Will Nichols, head of climate and resilience, and Victoria Gama, a senior human rights analyst.

As “environmental degradation and human rights accelerate, we will likely see an expansion into other sectors, such as agriculture, chemicals production and some areas of manufacturing."

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YOU TELL US

GAME ON — Happy Friday! 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, deputy editor Debra Kahn, and reporters Jordan Wolman and Allison Prang. Reach us at gmott@politico.com, dkahn@politico.com, jwolman@politico.com and aprang@politico.com.

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WHAT WE'RE CLICKING

— Dozens of startups and researchers are developing technologies that could potentially make “forever chemicals” less so. The Wall Street Journal takes a look at their efforts.

— Chile’s plans for nationalizing extraction and production of lithium from the world’s biggest reserve is making the country look like a less-reliable source, according to Bloomberg.

— Michigan Gov. Gretchen Whitmer is backing efforts by a company that specializes in dismantling nuclear power plants to reopen one that it acquired last year, the Associated Press reports.

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