In the upcoming midterm elections, the future of Oregon’s cap-and-trade program, Maryland’s net-zero emissions goals, and Arizona’s solar subsidies are all up in the air, and what happens to them could affect how well the U.S. does with climate change.
In the last few years, when there was no federal policy on climate, the states took the lead. Several states have already promised to have net zero greenhouse gas emissions by 2050, and investors who care about environmental, social, and governance (ESG) issues have bought municipal bonds to pay for these efforts. But voters in some states are now worried about rising energy costs, while voters in other states have to deal with poor air quality and higher emissions.
With the passage of the federal Inflation Reduction Act, President Joe Biden’s administration is trying to reduce the U.S.’s reliance on fossil fuels to cut emissions and reliance on volatile global oil-and-gas markets, where supplies have tightened since Russia invaded Ukraine and Moscow cut off supplies to Europe.
Fossil fuel supporters have called for more oil and gas production in the U.S., while fossil fuel opponents have called for more development of renewable resources to free energy costs in the U.S. from what Russia and Saudi Arabia do.
The close race for governor in Oregon could decide whether the state will keep its cap-and-trade program. This year, Governor Kate Brown, a Democrat, put the program in place with an executive order.
John Burke, who is in charge of communications, said that if Republican candidate Christine Drazan were elected, she would “rip up the cap and trade executive order” on her first day in office. Drazan said that the program would make gas more expensive, put jobs at risk, and do little to help the environment.
Tina Kotek, a Democratic candidate who supports the program, did not answer when asked for a comment.
In Maryland, Democratic gubernatorial candidate Wes Moore, who is expected to win, said he would speed up a state plan to get 100% clean energy by 2035. About 42% of the state’s electricity comes from fossil fuels.
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ENERGY IN ARIZONA
Utility regulator elections are a type of non-gubernatorial election where energy issues are at stake. On Nov. 8, voters will choose two of the five members of the Arizona Corporation Commission, which runs state utilities.
Right now, Republicans have three seats on the commission and Democrats have two. Troy Rule, faculty director of Arizona State University’s Program on Law and Sustainability, said that if it were turned around, it could lead to more renewable energy power being made.
Rule said, “That could make it possible to raise the state’s Renewable Energy Standard, which, with a goal of 15% renewable energy by 2025, is far behind most neighboring states.”
The U.S. Energy Department says that 12% of Arizona’s electricity comes from renewable sources. New Mexico and California, which are close by, are at 25% and 48%, respectively. Texas, which is a big oil and gas producer, is at 23%.
Lauren Kuby, a Democratic challenger, said there was an “urgent need for rapid decarbonization.” She said she would push for Arizona to switch to 100% renewable energy by 2035, saying it would lead to cheaper power rates, a stronger energy grid, and better-paying local jobs.
Kevin Thompson and Nick Myers, both of whom ran as Republicans, said that current technology doesn’t support a quick switch to all clean energy and that it could make Arizona’s power grid less reliable and drive up costs.
In a statement, the two said, “Eliminating mandates and rebates, which are the two things that drive up energy costs the most quickly, and improving the regulatory climate to create efficient processes and decision-making will help keep Arizona’s energy grid reliable and our utility bills low.”
Rule said that if the Republicans win, there would be no chance that Arizona’s policy on renewable energy would change in a meaningful way over the next two years.
Control from the statehouse could also affect the issuance of sustainable municipal bonds, which are becoming a bigger part of the municipal bond market. These bonds are used to build wind and solar projects, make infrastructure more weatherproof, and do other things that help cut down on pollution.
Citi said in a recent note that states run by Republicans are less likely to issue ESG debt. S&P Global Ratings said earlier this year that the total amount of sustainable municipal bonds that could be sold in 2022 could reach $60 billion, which is $14 billion more than in 2021.
Citi said that because states have the most power in U.S. corporate law, the state gubernatorial elections could have a much bigger effect on ESG measures than the midterm elections for Congress.
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