On Friday 18 November, Glennmont Partners from Nuveen held a webinar on USA Clean Energy Politics and Policy. Speaking were US Congressman Sean Casten, Member of the House of Representatives’ Select Committee on the Climate Crisis, and Melanie Steele, Vice-President at COEFFICIEENT. The event was hosted by Scott Lawrence, Founding Partner at Glennmont.
Congressman Casten began by outlining a belief that top-down legislation is needed to stimulate behavioural change in the market – something the current US administration has recognised in its climate package totalling over $550bn. He set out how a key focus of the package has been giving incentives for the private sector to invest in US-made solutions to climate change.
Casten also noted some side effects of the bill, including the way it has drawn huge amounts of foreign investment into the US. He explained the US is now a target market for overseas investment funds, something that recently created at COP27 tension with developing world countries who want access to climate capital.
Turning to supply chain issues, he conceded the requirement to buy American has caused issues in sectors such as Solar PV where China has a near-monopoly. Casten also pointed to bottlenecks in the labour supply as the US attracts manufacturing back into a nation with a low rate of unemployment. He said the Biden administration was working to mitigate both issues.
To conclude, Casten set out that clean energy is synonymous with cheap energy. He spoke of the benefits of this relationship, but noted it makes the transition harder for economies built around subsidising fossil fuels. He called it a moral obligation to not leave those who relied on the old system behind as the world makes the net zero transition.
Melanie Steele, Vice-President at COEFFICIENT, told attendees the last time the US looked at climate policy seriously was under the Obama administration. There, the Government looked to penalise organisations who didn’t meet certain targets. She described this government by comparison as having adopted a more incentive-based approach, centred on three pivotal laws: the Inflation Reduction Act, the Bi-partisan Infrastructure Law, and the Chips and Science Act. She flagged the Inflation Reduction Act in particular as being incentive-based, to encourage the electricity generation sector to decarbonise and equip them with the tools to do so. Beyond this, she said it looks to reach other, harder-to-reach areas such as insulating buildings or decarbonising the construction sector.
When looking at the political situation in the US, she expressed a belief that the Republicans controlling the House of Representatives won’t make a significant difference to the Inflation Reduction Act. This is because most funding has already been given to the respective agencies tasked with spending it, and it’d take an act passing through the Democrat-controlled Senate to take it back.
Moving forward, she forecast the US will see agencies working between each other and with Congress to enact the Inflation Reduction Act as effectively as possible. She also set out her expectation that the Biden administration will continue with proposed climate disclosure rules and other green regulations.
Steele ended by saying the current US administration’s climate policy makes for a generational shift, advancing climate policy for the next decade.
When asked about supply chain risk, Congressman Casten said China-based supply chains are not exclusive to renewables, and the US needs to get accustomed to paying higher domestic wages to keep production at home. Steele added the Chips and Science Act is also looking at long term R&D and future supply chains.
Following a question on political obstruction in the House, Casten referred back to point that fossil-fuel reliant areas of the economy, especially rural Republican areas, can’t be left behind in the net zero transition. Both expressed a belief that there are areas where bipartisan support can be found, even if only in smaller, targeted provisions
After being quizzed about the capacity of the US’ energy grid to support more renewables, Congressmen Casten said the country needs to make it as easy to get permission for a high voltage transmission line as it is for a gas pipeline, though this will require bipartisan support. Steele agreed more transmission infrastructure is needed across the US, and said she was a optimistic a discussion could be had about transmission reform in the next congress as it’s not just a problem for the renewables sector.
On the topic of international relations around climate change, Congressman Casten said US has come a long way from when they left the Paris Climate Accord. Steele said COP is increasingly a space to convene countries on climate and think creatively, and the US will continue being a leader in large international events such as these.