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Stocks TradingFor EVs, solar tax breaks and climate change, here are the midterm...

For EVs, solar tax breaks and climate change, here are the midterm elections that matter

Climate change may not top inflation when it comes to burning midterm election issues, but the younger the voter, the more important the topic grows. Clean-energy jobs are at stake, as are a handful of popular tax incentives in favor of electric vehicles and efficient home energy upgrades, passed just a few months ago.

No doubt, big spending from special interest groups, some pushing traditional fossil fuels

and others backing a faster transition to solar, wind, nuclear, hydrogen

and the rest of a diverse portfolio of alternative energy, reveals many voters and operatives do believe climate-change issues are gathering strength.

Read: Biden zeroes in on economic message as midterm campaign winds down

“This is a very high stakes election for climate change,” said Geoffrey Henderson, a climate policy scholar at Duke University.

“If history is any guide, congressional Democrats are facing headwinds as the incumbent president’s party,” he said. “And if the Republican party wins a majority in the House of Representatives, Congress is going to lose its ability to enact climate policies that have solid majority support in every single congressional district.”

Notably, it is new climate policy, more than what emerged via last session’s spending and infrastructure laws, that could be scuttled in a new congress.

Most analysis suggests that the tax incentives — such as a $7,500 tax rebate for new EVs and a first-time benefit for used, plus sweeteners for qualifying consumers who add efficient heat pumps, rooftop solar, electric HVAC and electric water heaters to their homes — will prove difficult to overturn.

That’s for a couple of reasons. Even though the bill was hard-fought and subject to many iterations, signed law has a tendency to stick, at least for a time. What’s more, Republicans, if they win, aren’t projected to grab a large enough majority to easily advance an agenda favoring traditional energy over climate-change action. Talk is, however, turning to speculation that a Senate win for the GOP in 2022 could pave the way for a 60-vote Senate super-majority in 2024.

Dismantling the spending bill, known as the Inflation Reduction Action (IRA), for instance, would require passage of a new law to either repeal or replace it, and doing that will either take a two-thirds majority in both the House and Senate, or a shocking about-face from a gaggle of Democrats.

“If there is a landslide victory for Republicans, if they overtake a majority in the House, it’s possible that the Inflation Reduction Act could be at risk,” said Kay Jowers, also an environmental policy scholar, at Duke. Instead, “we tend to see that when major bills like this are put in place and are in place for a while and have begun to be implemented, it’s difficult to completely overturn them. But they certainly could throw up road blocks and barriers.”

Read: Here’s what the midterm elections could mean for the financial sector, energy, healthcare and more

Partisanship often clouds specific election issues and, while Americans are not electing a president in 2022, some perceive the midterms as a referendum on President Joe Biden, who with the big-ticket IRA arguably made climate change a priority like no president before him. A Biden team will also be on the ground in Egypt for the next pivotal U.N. climate talks, known as COP27, at the same time U.S. voters reveal their confidence in his party.

These high stakes aren’t lost on those funding the races. Total spending on state and federal races during the 2022 midterm elections is expected to exceed $16.7 billion, according to OpenSecrets estimates, meaning this election cycle is the most expensive to date.

But how much of that effort could move energy issues, and specifically, climate change, up the ranks of importance? Vote tallies will be the true test. What is known is that companies tied to major impacts on U.S. environmental and sustainability goals have donated millions of dollars to Republicans who have questioned the 2020 election results, according to a new analysis of ProPublica data. Food, energy and chemical producers — led by companies like ExxonMobil
Marathon Petroleum

and Williams Cos.

— donated a little more than $2.4 million for election-denying GOP candidates.

On the other side, Biden and Democratic lawmakers have touted the IRA spending bill as a milestone achievement leading into the midterms, and environmental groups have spent millions to boost the measure in battleground states.

All the political maneuvering intensifies as some polls shows Americans feel the clock is running out on climate change, a view reflected in the urgency of recent U.N. reports that aruge developed nations aren’t moving fast enough. Nearly two-thirds of Americans think the federal government is not doing enough to fight climate change, according to an Associated Press-NORC Center for Public Affairs Research poll.

The same poll showed that despite the will of the people, too many remain unclear that the sweeping IRA commits the U.S. to its largest ever investment to combat global warming, and they’re cloudy on specifics.

In a separate University of Maryland Critical Issues Poll, conducted around mid-October, five issues appear among the top of voters’ priorities, among Democrats, independents and Republicans: inflation, abortion, democracy, immigration and climate change.

The ranking of these issues varies depending on partisan affiliation: 48% of Republican respondents ranked inflation as their first issue priority, 12% ranked immigration first, 11% ranked abortion first and 7% ranked democracy as the top issue. In contrast, 24% of Democrats ranked democracy at the top, 19% ranked abortion as first, 16% ranked inflation first and 10% ranked climate change as a priority.

It’s also not clear how much candidacy spending can actually move the needle.

According to the left-leaning Center for American Progress, there are 139 elected officials in the current 117th Congress who’ve denied the scientific consensus of human-caused climate change.

“Every election is a climate election. The midterms will decide Congressional action on the man-made climate crisis for the foreseeable future,” said Liv Schroeder, U.S. policy director for the campaign created by young activists called Fridays for Future. She made the comments as part of her group’s rollout of vintage-looking movie posters that depict politicians as the aliens attacking Earth by not acting for Earth.

“Whether it’s the denial of climate change or the lack of action to address it, these ‘aliens’ are already destroying our planet — one local election at a time,” Schroeder said.

Read: Fetterman and Oz focus on abortion during pair’s only Pennsylvania Senate debate

And: Who’s giving to Dr. Oz as he seeks to represent Pennsylvania? Not many Pennsylvanians

What about ‘green’ jobs?

Georgia is an interesting swing state when it comes to its role in energy policy, and relatedly, climate change. It’s a growing state, focusing on high tech and services, which often covers “green technology.” Plus, its Senate seat is crucial in the chamber likely to be divided by a thin margin.

The state once again finds its Senate race among those dominating national news cycles as it pits incumbant Rev. Rafael Warnock against NFL veteran, the Trump-backed Herschel Walker.

Walker has taken a partisan line against the IRA, criticizing Warnock for “spending $1.5 billion on ‘urban forestry.’” Walker added in a tweet, “I have a problem with that.”

But there is contrast in Georgia. Few Democrats or Republicans up and down political office ranks grouse over the “green” industry pushing in to the state, including solar panel manufacturing.

What’s more, TennesseeSouth CarolinaOhio and other traditionally red-voting states have joined Georgia in vying for clean-tech factories. 

Read: Some 75% of surveyed Americans would jump at a ‘green’ job in solar, wind or EVs, which tend to pay 21% more

What about climate investing? The fate of the SEC’s regulation

The Securities and Exchange Commission proposed more stringent climate change risk and reporting rules in March and they continue to work their way through a comment and rewrite period.

The proposal would require publicly-traded companies to disclose the risks they face from global warming, including their likelihood of having to eat the costs of stranded assets. And it requires them to disclose their greenhouse gas emissions. GHG reporting could include the much-tougher Scope 3 emissions, which detail the carbon impact of suppliers and customers.

Essentially, the rule doesn’t require companies to change what many are doing voluntarily, only to make it known to potential investors. Investment groups generally think it will level the playing field, but industry has its qualms.

A separate proposal would toughen the reporting around ESG (environmental, social and governance) stocks and funds.

Already at least 16 Republican state attorneys general have contested the proposed rule and it’s anticipated that multiple lawsuits will be brought against it, bolstered by a GOP congress.

Others believe it will survive opposition. CDP, a nonprofit whose climate disclosure system has been one of the most robust in voluntary use by companies, has said in commentary that it believes the rule has been fortified against most legal challenges.

Could these state ballot measures set the tone elsewhere?

In California,  a ballot measure known as Proposition 30 would increase by 1.75% the tax on people who make more than $2 million. The resulting revenue, penciled in at as much as $5 billion per year, would go toward building electric and hydrogen vehicle charging stations, as well as wildfire suppression and prevention programs.

And: In the midterm elections, voters in California and Massachusetts must decide if millionaires should pay more tax — which way would you vote?

California, whose economy ranks fifth in the world, can carry much broader influence when it comes to climate change than what’s contained within its borders. The effectiveness of an “uber-rich” tax in democratizing more green efforts could impact other states’ upcoming elections.

Meanwhile, on the other coast, New York is putting Proposal 1 to the voters. It would allow the high-population and influential state to issue $4.2 billion in bonds for environmental, natural resources, water infrastructure, and climate change mitigation projects. 

At least two governors’ races are climate races

Two Western state governors’ races could affect the 40 million people who get their water under the century-old Colorado River compact.

A megadrought that’s lasted for two decades has left the Colorado River dangerously low. Scientists estimate about 40% of the drought is attributable to human-caused climate trends.

To deal with the extreme lack of water, the Department of the Interior took an unprecedented step earlier this year, telling the governors of Wyoming, Colorado, Nevada, New Mexico, Utah, Arizona, and California if they didn’t come up with a crisis proposal, the agency’s Bureau of Reclamation would do it for them.

Now, the elections in Arizona and Nevada could delay a state-run plan, causing the Department of the Interior to step in. And, as USA Today reports, in both states, Republicans with unorthodox water plans are polling well.

In Arizona, Republican candidate Kai Lake wants to prioritize finding additional water supplies rather than conservation. In Nevada, Republican candidate Joe Lombardo says California gets too much water under current rules and the entire Colorado River Compact should be renegotiated. But to rewrite a compact was ratified in 1922, the approval of Congress, state legislatures and governors is required, a potentially tall task.


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