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Stocksak: The U.S. midterm outcome could impact energy policy in certain states By Stocksak


© Stocksak. FILEPHOTO FILEPHOTO – The sun is seen behind an oil pump jack in Texas’ Permian Basin, Loving County, Texas. November 22, 2019. REUTERS/Angus Murdant/File photo/File photo

By Laila Kearney

NEW YORK (Stocksak) – Oregon’s cap-and-trade program, Maryland’s net-zero emissions targets, and Arizona’s solar subsidies all hang in the balance in upcoming midterm elections, and their fate could have affect U.S. climate performance.

In the absence of federal policy, states have taken the climate lead in recent years. Numerous states have pledged net zero greenhouse gas emission by 2050. Investors concerned about environmental, social, and governance (ESG), have purchased municipal bonds to finance these efforts. Some voters are concerned about rising energy costs while others are more concerned with poor air quality or higher emissions.

Through the passage of the federal Inflation Reduction Act by President Joe Biden, the administration aims to reduce America’s dependence on fossil fuels and cut emissions.

Fossil fuel supporters have advocated more U.S. oil production, while opposition advocates for more development of renewable resources to reduce domestic energy costs.

Oregon’s tight gubernatorial race could decide if the state will keep its cap & trade program, which was enacted by Governor Kate Brown (a Democrat) this year.

John Burke, communications director said that Christine Drazan, Republican candidate, would “tear up” the cap-and-trade executive order on her first day of office if elected. Drazan believes the program will increase gasoline prices and threaten jobs, but offer no environmental benefits.

Tina Kotek, a Democratic candidate, has not responded to a request for comment.

Maryland Democratic gubernatorial Candidat Wes Moore, who is highly favored to win, stated that he would accelerate a state plan to produce 100% clean energy within a decade to a 2035 target. About 42% of Maryland’s electricity generation comes from fossil fuels.

ENERGY IN ARIZONA

Utility regulator elections are a non-gubernatorial election with energy-related agendas. Two seats on Arizona Corporation Commission, which governs the state utilities, is up for grabs. It consists of five members.

Republicans currently control three-to-2 of the commission. Troy Rule, Arizona State University’s Program on Law and Sustainability faculty director, said that if the commission were to be flipped, it would increase renewable energy power generation.

“That could open the door for an increase in the state’s Renewable Energy Standard, which at 15% renewables by 2025, now lags far behind most neighboring states,” Rule said.

According to the U.S. Energy Department Arizona generates 12% of its electricity using renewables. California and New Mexico are neighbors at 25%, 48% and 48% respectively. Texas, a giant in oil-and-gas production, is at 23%.

Lauren Kuby, a Democrat challenger said that there was an “urgent necessity for rapid decarbonization.” She would advocate for Arizona moving to 100% renewable energy by 2035. This would result in lower power rates, a stronger grid, and better-paid jobs locally. 

Republican candidates Nick Myers, Kevin Thompson, and Nick Myers stated that the current technology is not able to support a quick move to all-clean energy. They also warned that it could make Arizona’s electrical system unreliable and raise costs.

“Eliminating mandates and rebates – two things that drive up energy costs the fastest – and improving the regulatory climate to create efficient processes and decision-making will help ensure we keep Arizona’s energy grid reliable and our utility bills affordable,” the pair said in a statement.

Rule stated that if Republicans win, it would “effectively wipe out the prospect of any meaningful progres on Arizona renewable energy policies over the next couple years.”

The issuance of sustainable municipal bonds could also be affected by statehouse control, which is a growing segment of the muni market. These bonds can be used to build wind and sun projects, weatherize infrastructure, and other emission-reducing activities.

Republican-controlled states are less inclined to issue ESG debt, Citi said in a recent note. Total municipal sustainable bond issuance could reach $60 billion in 2022, up $14 billion from a year earlier, S&P Global (NYSE:) Ratings said earlier this year.

Citi stated that “Given the primacy state in U.S. corporate laws, the state gubernatorial election could have a greater impact on potential ESG actions than the midterm Congressional elections.”

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Stocksak Editorial

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