Sustainable Finance Briefing: State Governments Step Up Climate Change Fight as Trump Admin Balks

If he’s not tweeting about how a record cold snap means climate change isn’t real, President Trump and his administration are actively taking measures that go directly against efforts to reduce carbon emissions and limit climate change.

The federal government sticking its head in the sand makes it more important than ever for state and city governments, and the private sector, to boost their own efforts. And many of those entities are doing just that.

In late January, as a polar vortex was pushing temperatures in the midwest down to near-record lows in the -30s F, Trump tweeted — typo and all — about how he wished for some “global waming.” That was about a month after the EPA proposed new regulations that would dramatically weaken the 2015 rule that requires new coal-fired power plants to install carbon-capturing technology. The administration has, of course, taken many other steps that run counter to the need to dramatically slash carbon emissions.

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In this report, we take a look at what some state and city governments are doing to pick up the slack, as well as the latest moves from investors, corporates and researchers. 

States Increase Their Efforts

The state government of New York continues to be a leader in the space. On Jan. 17, Gov. Andrew Cuomo announced a new “green deal,” mandating 100% zero-carbon energy production in the state by 2040 — the most aggressive goal in the U.S. — as well as $1.5 billion to be invested in renewable energy and $200 million to make New York the nation’s “offshore wind hub,” with a quadrupling of the target for offshore wind deployment, from 2,400 megawatts by 2030 to 9,000 MW by 2035. This comes on the heels of an announcement last year that the state will put $6 billion into offshore wind development.

Cuomo is also targeting a doubling of distributed solar deployment, to 6,000 MW by 2025, up from the previous goal of 3,000 MW by 2023

Other states are also committing to clean energy. Among the announcements made last year:

  • In September, then-California Gov. Jerry Brown signed legislation that sets a goal for the state to use 100% clean energy by 2045. He also issued an executive order targeting carbon neutrality by the same time.
  • New Jersey Gov. Phil Murphy in May signed an executive order calling for 100% clean energy by 2050. Lawmakers also passed legislation to expand the state’s renewable portfolio standard (regulations that require the use of renewable energy) to 50% by 2030, and set an energy storage goal of 2 gigawatts by 2030.
  • In Massachusetts, the state senate approved a 100% renewable energy target by 2035 and also called for an economy-wide transition to renewables in the transportation, heating, manufacturing, and other sectors by 2045. Lawmakers also passed legislation that removes the state’s net metering caps and increases the state’s energy storage mandate to 2 GW by 2025.
  • Also in Massachusetts, construction is slated to start this year on the nation’s first large-scale offshore wind project, the 800 MW Vineyard Wind project. The project came out of energy legislation the state passed in 2016 that called for 1,600 MW of new offshore wind energy by 2027.
  • On Dec. 18, the District of Columbia approved a law that requires utilities to generate 100% of their energy supply from renewable sources by 2032. That makes Washington the first city in the U.S. to aim for 100% renewable energy.
  • In September, California regulators approved a plan that requires rooftop solar panels on most new single-family homes built in the state. California is the first state in the nation to mandate such installations on most single-family homes as well as on many condos and apartment buildings. The mandate for new homes includes compliance credits for battery installation. 
  • In November, Nevada voters approved a ballot measure which would increase the state’s renewable portfolio standard to 50% by 2030. (However, state law requires voters to approve the measure again in 2020 for it to go into effect.)

 

The federal government isn’t ignoring climate change entirely. Rep. Alexandria Ocasio-Cortez has gained widespread attention for her call for “green new deal” legislation. While no such bill has been drafted as yet, Ocasio-Cortez has been lining up support from fellow lawmakers and outside organizations for a resolution that calls for a “national, social, industrial and economic mobilization at a scale not seen since World War II.” Such a resolution, which would be a precursor to actual legislation, could be introduced to the House of Representatives very soon.

There’s no way to know yet if any “green new deal” legislation will make it out of Congress, let alone get Trump’s signature.

States Look to Reduce Transportation Emissions

 As electric vehicle sales keep rising — 1.9 million EVs were sold in the US last year, up from 1.1 million the year before, according to Bloomberg New Energy Finance — state governments are also targeting carbon emissions and air pollution from the transportation sector. For instance, nine Northeast and mid-Atlantic states are cooperating in a new system to cap and reduce carbon emissions from transportation in the region. The states involved are Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont and Virginia as well as Washington, D.C.

Other transportation-related targets can be found in Colorado, where on Jan. 20, the state’s new governor, Jared Polis, signed an executive order requiring a transition to zero-emission vehicles in the state. And in December, the California Air Resources Board approved a measure requiring public transit agencies to transition to 100% zero-emission buses by 2040. 

Agreements and Fundings at COP 24

At the COP24 meeting in Katowice, Poland in December, diplomats from nearly 200 countries reached a deal to require every country in the world to follow a uniform set of standards for measuring their greenhouse gas emissions and to track climate policies. It also calls calls on countries to step up their plans to cut emissions The United States agreed to the deal, despite Trump’s vow to abandon the Paris Agreement.

Among the new funding announcements made at COP24:

  • The World Bank said it is doubling its current five-year investments to around $200 billion for projects tackling climate change in developing countries.
  • Five of Europe’s largest banks, with a combined $2.7 trillion in assets, promised to measure the climate alignment of their lending portfolios, with the aim of aligning those portfolios with the Paris Agreement.
  • Several countries increased their funding to the Green Climate Fund, which supports renewable energy and climate resilience projects in developing countries. The fund’s total financing now stands at $7 billion. 

 

Not everyone believes these commitments are enough to keep global warming from catastrophic levels, with many experts calling for increased funding and commitments from corporations and governments to increase meaningfully. The International Renewable Energy Agency (IRENA) says an additional $25 trillion of renewable energy investment is needed to limit a rise in temperature to 2 degrees C. That comes to more than $700 billion per year. 

Investors and Companies Taking Steps to Cut Emissions

Institutional investors continue to band together, looking to use their combined financial clout to pressure companies into taking more steps to reduce emissions.

On Dec. 17, a group of institutional investors with $1.9 trillion in assets, led by the New York State Common Retirement Fund and the Church of England, filed a shareholder resolution calling on ExxonMobil to set and disclose goals for reducing greenhouse gas emissions from both its operations and the use of its products. 

The resolution was part of an effort by the Climate Action 100+, which comprises 310 institutional investors with $32 trillion in assets around the globe, that focuses on getting the world’s 100 most-polluting companies — representing two-thirds of global greenhouse-gas emissions between them — to reduce emissions faster, as well as to provide investors with more climate-related information. Other members of the group include pension giants CalPERS and Japan’s GPIF.

On December 6, a coalition of 415 institutional investors representing $32 trillion in assets put out a statement urging both governments and businesses to increase efforts to tackle climate change. Among the needed efforts, the group says, are the phasing out of fossil fuels, setting a price for carbon emissions and better disclosure of climate risks. The group says it’s concerned that the goals of the Paris Agreement are becoming increasingly out of reach.

Also in December, the Institutional Investors Group on Climate Change filed a shareholder resolution demanding that BP set hard targets for cutting carbon emissions. The group says it will target ExxonMobil and Chevron with similar resolutions. 

The increased pressure is already showing impact, as some utilities and energy companies have taken steps to lower their emissions.

  • Royal Dutch Shell said that it will establish short-term carbon emissions targets starting in 2020, after it came under pressure from investors. In an industry first, it plans to link executive pay to hitting those targets.
  • In the U.S., Xcel Energy has pledged it will provide 100% carbon-free electricity to its customers by 2050. Xcel becomes the first major US utility to target 100% carbon-free electricity by 2050, and reflects a growing number of utilities that are recognizing the deteriorating economics of coal plants.
  • On Jan 28, Baker Hughes, one of the world’s largest oil field services companies, announced plans to eliminate net carbon emissions, also by 2050.

 

Meanwhile, corporates are buying more renewable energy than ever before. Companies bought a record 13.4 GW of clean energy through power purchase agreements in 2018, far outpacing the previous record of 6.1 GW set the year before, according to Bloomberg NEF. More than 60% of this activity took place in the US.

And in terms of dollars, corporate spending on solar and wind power in the US grew 13% last year to surpass $16 billion, consulting firm Wood Mackenzie says. The pace of growth is expected more than double this year.

It’s not just investors; consumers, too, are increasingly pushing corporates to boost their spending on sustainability, Angie Slaughter, v.p.of sustainability at Anheuser-Busch InBev NV tells the Wall Street Journal. “They’re informed, they have high expectations on companies concerning the products we make.”

The company signed a 15-year deal in 2017 to buy about half of the 298 MW a new wind farm in Oklahoma is producing, which covers about half of Anheuser-Busch’s annual electricity use in the US.

Energy Storage Gets a Boost

New York has set ambitious energy storage goals. On Dec. 13, the New York Public Service Commission set an energy storage target of 3,000 MW by 2030, with an interim goal of 1,500 MW by 2025.

That energy storage target is the most ambitious nationwide. It surpasses New Jersey’s recently adopted target of 2,000 MW by 2030 and compares favorably with California’s goal of 1,300 MW by 2020.

The Internal Revenue Service has also indicated that federal solar tax credits extend to battery systems added as retrofits. A recently published Private Letter Ruling says residential taxpayers can get a 30% tax credit if they add a battery to a rooftop solar system. The ruling is likely to drive growth in the residential energy storage market.

New Reports Urge More Action and Investment

Evidence continues to mount that the world needs trillions of dollars worth of green and sustainable investment in coming years global warming is to be kept below 1.5 degrees Celsius threshold.

A recent report from the UN Intergovernmental Panel on Climate Change warned of the consequences if 1.5 degrees is breached, including extreme drought, wildfires, floods and food shortages for hundreds of millions of people.

The IPCC stated that global carbon emissions in 2030 need to be about 50% less than 2010 levels and reach “net zero” by 2050. It also says coal-generated power must be cut very sharply while the use of renewable energy more than doubles by 2030, and calls for scaling up of carbon capture technologies.

That report comes amid new data from the Global Carbon Project, which announced that global emissions of carbon dioxide have reached the highest levels ever recorded.

And in November, the National Climate Assessment, which focused on the impacts of global warming in the U.S., reached similar conclusions: “Climate change creates new risks and exacerbates existing vulnerabilities in communities across the United States, presenting growing challenges to human health and safety, quality of life, and the rate of economic growth.”  

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