How will the outcome of the November 2022 midterm elections affect US climate and energy policy? In this episode, seasoned energy analyst Whitney Stanco and I dig into the potential implications.
Text transcript:
David Roberts
The US 2022 midterm elections did not go how most people expected. There was no red wave. The Democrats did much better than forecasted, not only at the federal level, but at the state level.
What does it all mean for climate and energy policy? To help go through the results, I contacted Whitney Stanco, a senior analyst at Washington Analysis LLC, an independent research firm out of Washington, DC. She has been tracking energy policy for decades and in particular has kept a close watch on the states.
With Whitney's help, I walk through the election results, first at the Congressional level and then in the states, and contemplate their implications for energy policy. We pay special attention to the four states where Democrats have new trifectas and the power see their policy preferences made into law, as well as a few others where the election has shaken things up.
So, Whitney, welcome to Volts. Thank you so much for coming.
Whitney Stanco
Thank you so much for having me. I'm very much looking forward to it.
David Roberts
If you will indulge me, Whitney, for a few minutes here at the top, just before we jump into the state results, I just want to kind of mention a few things at the federal level, kind of the federal energy results, and then we'll jump in. I just want to emphasize a few things. The first thing, which I think people are probably aware of now but it's worth emphasizing, is there was no red wave. Almost everyone got that wrong. As a matter of fact, it was one of the best performances for a ruling party, for the party of the president in a midterm in years and years and years.
One of, the couple of statistics, since 1934, there have been three midterms in which the president's party did not lose Senate seats and lost less than ten House seats. So that was FDR in 1934, JFK in 1962, and George W. Bush in 2002, in the wake of 9/11. So, and Biden did that without, you know, any terrorist attack, rallying people, or any New Deal rallying people. As a matter of fact, he did it in the middle of a bunch of inflation and worries about crime and a plague. All of which is to say, it was a remarkable performance by Democrats. Remarkable and remarkably surprising.
It was — one other statistic. It was the first midterm since 1934 in which the ruling party did not lose a single state legislative chamber. As a matter of fact, Democrats made gains in the states. We're going to return to that later. But that is also remarkable, and I think what that shows, everybody's done their analysis at this point, but to me, a lot of sort of analysts and pundits in the run up to the election were saying, "Abortion is kind of faded from the headlines at this point, and no one cares about democracy. Quit trying to make people care about democracy, talk about kitchen table issues, talk about inflation and crime." And I just think that turned out to be really wrong. Turns out abortion mattered quite a bit, and democracy mattered quite a bit, and, perhaps, Democrats should learn something from that.
One other thing. So, we've got divided government now. The Republicans have the House, and the Democrats have the Senate, which means that in terms of big, ambitious legislation, Biden is probably done. That's probably it for big legislation. There might be ... some things might squeak through because McCarthy has a very narrow majority in the House. We don't know exactly how narrow yet, but it's narrow, which means a few rogue Republicans, theoretically, could cross the aisle and join Democrats and pass bills, but I would call that unlikely. And specifically, I would say that Manchin's dream of permitting reform is dead. I don't know, we can ... maybe some people disagree. I think it's dead.
Whitney Stanco
I think that's probably true for now, yeah.
David Roberts
And one other thing I wanted to mention is Dems took the Senate, and that's just a very ... I mean, some people say, like, divided government, you can't pass legislation. What does it matter? I just want to emphasize it's a very big deal to have a majority in the Senate, even a narrow, even if it just turns out 50/50. We don't know the outcome of the Georgia runoff yet, but even if it's just 50/50, a bare majority is much, much better than 49. It means that the Senate can approve judges, first and foremost, and Biden said that's going to be a huge priority, cranking out judges. They can approve appointments. If they get 51, they can hold votes, even if two of their members are absent, and the Senate can launch investigations. They have some oversight power themselves, and there's going to be a hail of bogus, attention-grabbing investigations from the House in Republican hands. So Democrats can do something to try to fight back on that score. So, holding the Senate is a very, very big deal.
And the final thing I wanted to mention on a federal level is, you know, there's a big, coordinated right wing effort to run election deniers this time around. People who insist that Trump won the 2020 election, they ran for Secretary of State. I think in seven states. There's a big slate of other candidates that almost all of those people lost. Six of the seven, the election-denying Secretary of State candidates lost. So, one of the clearest results, I thought, from the midterm elections is that democracy won. The people who were threatening, basically, to throw upcoming elections — threatening, they were saying outright that they're going to throw upcoming elections — were defeated. So democracy was defended. So, that's a striking, and I thought, extremely good result at the federal level.
So, Whitney, do you have anything to add at the big federal level before we jump down to the states?
Whitney Stanco
I mean, I think you've got it exactly right. I think maybe one thing to add on the Senate side, since Democrats are going to keep the Senate to the extent that there is legislation that moves and there will be some things, like there's a farm bill that needs to get done next year. And we'll have appropriations, and there's the National Defense appropriations, debt ceiling. New Democrats will have a bigger seat at the table than they otherwise would have. So more compromise to get the things done that have to get done.
David Roberts
Right. A better position all around. And actually something else you've mentioned, one thing maybe that puts some context around the state discussion, is that of course the Inflation Reduction Act is going to be put into effect. It's going to start.
Whitney Stanco
Right.
David Roberts
Basically, money is going to start raining down, and implementation is going to get underway at the federal level, which, all of which will be going on and providing sort of context, for what the states do.
Whitney Stanco
Yeah, that's exactly right. So to the extent that there were, what was that, $120,000,000,000, give or take, climate spending and the Bipartisan Infrastructure Bill. And then on top of that, you have the Inflation Reduction Act, which had $270,000,000,000 in tax credits and another 100 or billion so in spending. That spending goes through the executive agencies, which will still be under Biden administration. And while we should expect increased oversight in the House, since it's going to be controlled by Republicans, that spending is still going to be controlled by large part by the Biden administration. And then to the extent that that spending moves on to states, you've got some wins for Democrats in states that will then help deploy that spending.
David Roberts
Yes, it's going to be very helpful. I mean, it's going to be helpful for whoever happens to be in charge of the state ...
Whitney Stanco
Right.
David Roberts
... when the money comes raining down. But that's going to be a lot of Democrats. Okay, so that's the federal stuff. But now, let's get in to the nitty-gritty of the states. Just to sort of set the context here and to emphasize, yet again, heading into this election, the Democratic Party controlled 36 House legislative chambers and Republicans controlled 62 State House legislative chambers, 36 to 62. After the election, Democrats gained control of four chambers, and the Republicans lost control of four. So the total is now 40 to 56, which is still not parity. But again, not since 1934, has a party gained state legislative House seats in a midterm like this. So, striking as the federal results were, I think it's also really clear in the states that Democrats turned out. And as I have said on the site many times, there's one weird trick. If you want your state to pass clean energy policy, and that is putting a bunch of Democrats in charge of it. And Democrats have taken full control, as in a trifecta, governor and both chambers of the House, in four new states.
So these states had divided governments before and now have unified Democratic control. That's Michigan, Maryland, Massachusetts and Minnesota. "M" states had a really good run this year. We're going to go through those one by one. But I just want to mention, in Nevada, Democrats had a trifecta and lost it with the governor's race. And in Arizona, Republicans had a trifecta and lost it because of the governor's race. So net-net out of the election. Democrats gained three trifectas, and Republicans lost one.
So let's jump in. Whitney, let's talk first about Michigan. This is in Michigan, the first Democratic trifecta in 40 years. Gretchen Whitmer won re-election, despite a literal kidnapping plot against her. I don't know why DeSantis is out here getting all this good press. Whitmer practically dodged bullets to take this office. Michiganers put the right to abortion in the state constitution. Whitmer got both chambers of the legislatures. Big deal. Big Democratic win in Michigan. And Whitmer, previously, when she had divided House, had tried a lot of green things, had issued executive orders and whatnot, but now they've got a trifecta. So tell us, what's going to happen in Michigan, now that Dems are at the wheel?
Whitney Stanco
You are exactly right. There was a big flip for Big Gretch in Michigan, and I think — I know. It's a great nickname — from a governing perspective, it's just huge, because when Whitmer came into office after the election in 2018, there was an outgoing Republican trifecta, right? So they had a Republican governor, Governor Snyder, and then a Republican House and Senate. And so in her first term, she kept the Republican House and Senate, but now flipped both houses. And so there's a real sea change in terms of governance, I think, in Michigan.
So you're correct. Whitmer had used some executive orders to try to move ahead with climate-related issues. She was working to adopt a 26% to 28% greenhouse gas reduction for the state by 2025, and wanted to go carbon neutral for the state by 2050. But those were just executive orders. And so now with trifecta rule, what we could see happen there is for the state legislature to pursue legislation to codify that. Another thing to highlight, I think, this year Whitmer had proposed deploying 2 million electric vehicles in the state by 2030. And one of the things that she had put on the table was a $2,000 electric vehicle rebate, which was rebuffed by Republicans in the legislature. But you could absolutely see them revisiting that. I mean, I think that's particularly probably true in the wake of the, what I would call, lackluster EV credit and the Inflation Reduction Act.
David Roberts
There's a lot of asterisks. May not apply in all cases.
Whitney Stanco
Yes, many hurdles to jump through to get the federal EV tax credit.
David Roberts
Michigan is still a car state, right?
Whitney Stanco
It is.
David Roberts
So they have reason, I guess, to try to stack something on top of that federal credit.
Whitney Stanco
You got it. Yeah, I can see them bringing it back. I think what we've heard thus far is one of the things they want to focus on, initially, is changing some of the right-to-work laws, these union forming laws in the state of Michigan. But I would not be at all surprised to see clean energy come up as part of the agenda.
David Roberts
And there's a big some, sort of, pipeline...
There is.
...fight going on.
Whitney Stanco
There is a pipeline fight in Michigan. It's been going on for a while. Some of you may have heard of the Line 5 pipeline. This is an oil and natural gas liquids pipeline that's owned by Canadian energy company, Enbridge. It was built in 1953 to lay across the lake bed floor sort of at the Straits of Mackinac, which is basically like the intersection between Lakes Michigan and Huron. And it provides energy to Canada and to — some to Ohio and some to Michigan. And it's been very controversial for many years. And when Whitmer came into office in 2018, she campaigned against the existing pipeline, and the outgoing Republican governor put forward a plan to create a new tunnel, sort of drilling underneath the lake, to put a tunnel — to put the replacement pipeline underneath the lake. And so what they tried to do, as she came into office in that lame duck session, the Republican trifecta put some legislation in place that tried to tie the idea of the replacement plan sort of beyond the outgoing Republican governor's administration.
And so this fight has been going on for a while and there's really two pieces to it because one piece is whether or not you shut down the existing line, and the other piece is whether or not you build a replacement tunnel. And so as far as the existing line goes, at least from my perspective, I'm not sure that this trifecta really changes anything. I think whether or not that existing line shuts down is a question that's probably ultimately going to be decided at the country-to-country level, in treaty negotiations between the United States and Canada. But I do think a trifecta government in Michigan probably gives Whitmer more leverage over what the future of a potential, if it's going to happen, replacement tunnel would be.
David Roberts
Right. So Big Gretch in Michigan now is now empowered. We're probably going to get 100% clean energy legislation. Michigan will join the — I've completely lost count now of how many states have 100% clean energy goals, but it's got to be getting up towards half of them. So let's move on. Michigan is the biggest one, probably the most dramatic swing for Democrats, but they also have three other trifectas.
So then let's talk Maryland briefly. Wes Moore won in Maryland. Outgoing Republican governor — this is sort of a theme the next state we're going to hit too — the outgoing Republican Governor Larry Hogan was actually quite popular, one of the more popular governors in the country and a moderate, I guess what passes for a moderate these days on the Republican side, he had, as I understand it though, vetoed a big clean energy bill and then it was passed, I think, over his veto.
Whitney Stanco
Yep.
David Roberts
So there's some stuff in place in Maryland, but now they've got a trifecta. So what do you think they'll do with it?
Whitney Stanco
Yeah, I think there's a lot of interest, from incoming Governor-elect Wes Moore, to adopt 100% clean energy mandate for the state, building upon, as you mentioned, that 50% mandate that was adopted under Hogan. Over Hogan may be the right way to put it.
David Roberts
Begrudgingly.
Whitney Stanco
Yeah. So I expect to see a push there. Maryland does have a 50% renewable portfolio standard by 2030. So I think 2023 is going to be a big year for climate initiatives in Maryland. And I think it's something that Governor-elect Moore seems passionate about. And so, maybe one thing to mention is that, in Maryland, Democrats do have supermajorities in the House and Senate.
David Roberts
Supermajorities. They can do whatever they want. Going to turn all the boys into girls, and ramp up the CRT.
Okay, so next, Massachusetts, again, had a Republican governor, reasonably popular, reasonably moderate Charlie Baker, who actually, as Republicans go, was not awful on climate and energy, but his successor Republican, turned out to be not nearly so popular. So now Maura Healey is governor and has a trifecta. Anything specific you see coming down the pike in Massachusetts?
Whitney Stanco
Some of the things that Governor-elect Healey ran on was creating a cabinet level, Climate Chief, to coordinate activities across her administration, some implementation of the law that you were just talking about. She's also mentioned wanting to build a green bank through the Massachusetts Clean Energy Center, basically, help microfinance demand side management projects.
David Roberts
Love green banks.
Whitney Stanco
Yes. I think one of the things that's interesting about Massachusetts that we'll see, she's going to be coming into office at an interesting time this winter because, of course, New England is facing a particularly tight distillate and diesel fuel market this winter. All of New England is. And keep in mind, the New England is kind of a double whammy impact because it's not just high diesel prices that affect logistics, but also because so much of New England, I think, on the whole it's like 30%, gets its home heating through fuel oil.
David Roberts
Right.
Whitney Stanco
And so, I was just looking on the Massachusetts.gov website, and they're predicting a 63% higher home heating oil costs this winter compared to last winter. So you can imagine. That's tough. Particularly, if you're living on a fixed income. So one of the things that she has called for is a million heat pumps by 2030.
David Roberts
Yes, I was just going to say, sounds like a job for ...
Whitney Stanco
Yeah, exactly. And that would definitely help, right. It's a long-term solution, but it definitely helps with the long-term outlook there. There are other programs, even at the federal level, like LIHEAP and things like that, they'll be discussing. But my guess is that all sort of feeds into a federal discussion about whether or not we want more than just oil in our strategic petroleum reserve.
David Roberts
Right, right. Interesting. Okay, so the fourth then, new — just to be clear, these are not four total trifectas, just new ones — was in Minnesota, where the State Senate was Republican, flipped to Democrat, giving Governor Tim Walz a trifecta. So you can't get anything done with a Republican State Senate. Now they've got a Democratic State Senate. What does he want to do?
Whitney Stanco
Yeah, there's a lot going to go on, I think, in the land of 10,000 Lakes. So we've had this tension between Democratically-controlled State House and the Republican controlled State Senate, particularly over funding for climate-related programs. So, I think, Walz had 100% clean electricity goal that he tried to get done, I believe, both in 2019 and maybe again in 2021, and then it was stopped by the House. And so that's definitely something that you could see with a trifecta come back and cross the finish line. The other thing that we've seen hanging around in Minnesota and the legislature, is the idea of doing a low-carbon fuel standard, for the state. Minnesota, of course, is "big corn" state. And so even with the Republican Senate, there was some optimism that proved to not pan out that they might be able to get an LCFS done. But I think with trifecta government, we should keep our eye on an LCFS, because I think it — I'd be surprised, actually, if they didn't get it done.
David Roberts
Sweet, sweet. Another one in the 100% clean energy column stacking up, continuing to stack up. And low-carbon fuel standard, which California has. And, are there other states with low-carbon fuel standards, or is California still alone?
Whitney Stanco
No, there's states. Oregon has one that's been in place for a bit. Washington state has a new one, starts this year, I think.
David Roberts
Right. I should remember that I covered that when we covered that.
Whitney Stanco
I've forgotten so many things that I've covered. But also Canada, right. So the national government of Canada has one that they've been rolling out and putting into place. And I'm not sure if it's ready to go yet, if they're still sort of in the administrative process.
David Roberts
But that's definitely spreading and gaining momentum as well. Cool. So those are the four new trifectas.
Whitney Stanco
"M" states. If this were Sesame Street, this podcast will be brought to you by the letter "M".
David Roberts
By the letter "M," taken over by the letter "D." So let's hit some other states. There's some other interesting things going on. I thought Oregon was an interesting case this year. So Oregon had a Democratic trifecta going into this, even had, I think, supermajorities going into this. But there was an interesting Kate Brown, the governor, is on her way out. Tina Kotek was running as Democrat. And there was this third party in the gubernatorial race, this extremely well-funded by a single billionaire-crank type of third party bid in Oregon, which a lot of people worried would siphon off enough votes to put a Republican in office. But that didn't happen. Kotek won. And one interesting note, is that Kotek used to be in the Oregon legislature, and while she was there, was quite instrumental in helping to pass Oregon's 100% Clean Energy Law in the last session. So Oregon, I guess, hasn't changed that much in that they still have a Democratic trifecta. But what is Kotek going to focus on?
Whitney Stanco
Yeah, I think that's exactly right. I think Oregon is going to be one of these states where you're keeping a Democratic trifecta, and what you're going to see a lot of is implementation of existing law. So, as you pointed out, Oregon already has 100% clean electricity standard goal by 2040. We just talked about a clean fuels program which is like an LCFS. They want to do 25% carbon-intensity decrease there by 2035. And so, I think, some of the things that Kotek has talked about is transitioning away from use of fossil fuels and gas in homes and commercial buildings. I think Oregon is a state where there's going to be a lot of focus on climate resiliency, particularly for communities on the front line of wildfires and other extreme weather events. This is another area where some of this federal spending through the Bipartisan Infrastructure Bill and also the Inflation Reduction Act can filter down to help these governors, some of these governors, move forward on some of these priorities, I think.
David Roberts
And don't they have a cap-and-trade type of deal going into effect in Oregon? That's always an implementation, a real fun implementation.
Whitney Stanco
Administrative fun time. Yeah.
David Roberts
I would assume if they had gotten a Republican governor, that process would have been much more difficult.
Whitney Stanco
Indeed.
David Roberts
So, Oregon just to the south of me, continuing to go for it, probably accelerating, and they have a coal phase-out law already on the books.
Whitney Stanco
Yes, that's correct.
David Roberts
So I guess that's going to be more implementation. Hot times in Oregon. It's interesting. Just a brief side thing about Oregon here, is the sort of disjunct between the rural bottom part of the state and Portland, basically, is growing more and more bitter. The rural part of the state wants to bail and join Idaho, is my understanding. They want Idaho to basically be like — to take in all the benighted rural areas around it that are suffering under the yoke of urban Democratic rule. Anyway, Oregon is, at once, a climate and clean energy sort of amazing success story, and at the same time, a bit of a mess.
Whitney Stanco
I think there's a lot of parallels with that, probably in New Mexico.
David Roberts
Yes. There's our segue. Let's jump to New Mexico. Michelle Lujan Grisham re-elected, has a trifecta.
Whitney Stanco
That's right.
David Roberts
And, I guess, you could see her re-election as a small "d" Democratic endorsement of that direction. So what's going to go on in New Mexico?
Whitney Stanco
So, first off, I was born in New Mexico, so great love for the land of enchantment. Grisham was very productive in her first term. I think that's the right way to put it. And it's such an interesting state because it's the third largest oil producing state in the country.
David Roberts
Oh, is it?
Whitney Stanco
Yeah. The state budget is heavily, heavily reliant on oil and gas income, I think to the tune of like, 30% to 40% of the state budget. And the state budget itself is quite small, right. It's only, I think, $8 to $9 billion or something like that per year. And even so, they have a Democratic trifecta. And so let me just give you sort of a list of some of the things that they got accomplished in Grisham's term. So she had a New Mexico methane strategy on the oil and gas industry, that was there to create waste rules that require 98% gas capture by 2026. The legislature put in place 100% zero-carbon electricity requirement for utilities by 2045, and 100% zero-carbon electricity for all rural electric co-ops by 2050. They've doubled the number of renewable energy leases on state trust lands, and they adopted some pretty stringent air rules, as well. I mean, they get a lot done. And so I think, again, this is going to be one of those states where implementation is key. Like, if you take the methane strategy that impacted the oil and gas industry, that was a really complicated administrative process that recently wrapped up, right. And so now, over time, the impacts of those regulations are going to roll out through the different administrative agencies in New Mexico.
David Roberts
Did the oil and gas industry hate that? Do they hate her? Is that the situation in New Mexico?
Whitney Stanco
No.
David Roberts
Is it her against them? Or is there something more cooperative going on?
Whitney Stanco
There's something more cooperative going on, at least as far as I can read. I mean, look, the oil and gas industry never likes regulation, but, I think that given the givens right of how important the industry is to the state budget and the state economy, there was more of a cooperative approach that the Grisham administration took. And I think there was a lot of fear from the oil and gas industry when that process first started. But at the end of the day, I think the rules are a lot tighter. But I think folks are happy with the way that it's going to be rolled out.
David Roberts
Interesting. This is, of course, fascinating to me. It's kind of a case study in sort of if you take Democrats at their word long term that oil and gas is probably going to have to go away at some point. But as you say, the state is totally dependent on it. So it just seems like a hugely ... what do you call it ... sticky wicket for Democrats in power. Is New Mexico sort of the right, the best example of sort of that dance, trying to sort of move against oil and gas without you don't want to get the sort of, like whole industry up in arms against you and lose your trifecta? So how's that dance playing out there?
Whitney Stanco
It's interesting, right? New Mexico is such an interesting state because most of the voting population is sort of in the Albuquerque, Santa Fe area.
David Roberts
Urban areas, of course.
Whitney Stanco
Urban areas where the oil and gas production is really concentrated in the Southeast corner of the state.
David Roberts
Classic, classic situation.
Whitney Stanco
Right, exactly. You said the right word. I mean, it's a dance, right? These governors with trifectas in a state like that. And you could even point to Colorado, where the correlation, or the dependence on the oil and gas industry is less. But there's still significant industry in the state, and they've overhauled how they regulate the oil and gas industry there. And there's a lot of back and forth. I think it wasn't always pleasant.
David Roberts
Could put it that way.
Whitney Stanco
By any stretch of the imagination, a lot of different ideas. But as an analyst, the way that it ended up, is that you're going to have tighter controls on the industry, and you're still going to have room for oil and gas production, which is important to these economies, of these states. And so that's the way that it ended up. But the rules that New Mexico put in place, I think the environmental industry or the environmental group should — I don't know the right way to put this. It's a lot more stringent than, let's say, the neighbor of Texas.
David Roberts
More stringent than Texas.
Whitney Stanco
Depends on your perspective.
David Roberts
A little bit of a low bar there. And that's about leakage, those rules about methane leakage, primarily.
Whitney Stanco
Yes, that's right. I touched on a whole bunch of different things, but that's one of them. So there was a piece about cleaning up methane emissions, and the other one was about overall air emissions. So not just methane, but NOx and VOCs too.
David Roberts
Okay. One other thing that is going on in New Mexico, which might not be on a lot of people's radar, is a question about a utility merger. So tell us briefly what's going on there, and how will the governor deal with it?
Whitney Stanco
Right. So a utility company called Avangrid is trying to buy PNM Resources, which is a single state utility in New Mexico. And the Public Regulation Commission in New Mexico initially denied the purchase in 2021, but now, Avangrid has hung around, and it's going to get a fresh look by the PRC. Thanks to a constitutional amendment adopted by referendum, the PRC is now going to become appointed, an appointed body, and move from five members to three. Yeah. So Grisham will have a role in those appointments. And my colleague, Rob Rains, who covers this issue for us, thinks the purchase has a much higher likelihood of getting approved.
David Roberts
And Avangrid is just a bigger multistate utility that just wants to kind of swallow up New Mexico's utility.
Whitney Stanco
Right. Well, and I think there's a general belief that Avangrid would be a good partner to help fulfill the goals put out forth by the legislature and the Energy Transition Act.
David Roberts
Right. And just before you leave this behind, in New Mexico, voters voted on a constitutional amendment that would make the PUC appointed instead of elected?
Whitney Stanco
Yes.
David Roberts
Trying to imagine the pro and con commercials for this. Like, how do you even explain to voters what the hell that means?
Whitney Stanco
I believe that was an election cycle ago, so I don't remember exactly how that went down, but, indeed, it is so.
David Roberts
I'm a fan of doing a lot more appointments and a lot less elections. It's makes more sense to me. So alright. That's that for New Mexico, then.
Whitney Stanco
Indeed.
David Roberts
What about Pennsylvania? Big swing state. All eyes were on Pennsylvania this year, mainly because if the Republican — I never did fully learn how to say his name, and now, thankfully — Doug Mastri ...
Whitney Stanco
Oh, Doug Mastriano. I thought you were talking about the outgoing House Majority Leader.
David Roberts
No, the lunatic that lost the current race and was attempting to bring ...
Whitney Stanco
I had already forgotten about him.
David Roberts
Yes. Thank God. We could all forget about him. He was in a field of lunatics for the head lunatic and was threatening to throw Pennsylvania's electoral votes to the Republican no matter what happened, which, given how narrowly things play out in our elections, could very well have determined the next presidential election. So that was a very big deal. Scary. Everybody's watching. Shapiro pulled it out and won governor and got a Democratic state House, although the Republicans kept control of the Senate. So Shapiro's here governing a swing state with divided government. Other than a lot of heat, can we expect any actual policy to emerge from this? Is anything going to come out of this?
Whitney Stanco
Well, it'll be interesting to watch, right. You know, there are a lot of different policies that have been floated around in Pennsylvania, for a while, that have been stopped by the Republican state legislature, which will now be divided, that will probably come up again. I mean, key amongst those, is outgoing Governor Tom Wolf tried for many years to put in place a natural gas severance tax on the industry. And, at one point in time, actually, Pennsylvania State Senate voted to approve that, but it ran into an absolute brick wall in the House. Now, that was a time when the Pennsylvania state budget was sort of facing dire straits, so I'm not sure that they'll be able to repeat that, but I would expect that issue to come back up and incoming Governor Josh Shapiro to put that forward.
Another thing. Incoming Governor Shapiro was-is the Attorney General. And I don't know if you remember, but a couple of years ago he released a report following a two year investigation by a grand jury basically focusing on the repeated failures of the Department of Environmental Protection in Pennsylvania regarding the fracking industry.
David Roberts
I did not remember that.
Whitney Stanco
Yeah, it was a big report at the time. And so one of the things that the grand jury recommended, in that report, was putting in place a 2500 foot setback. This is the space between buildings and oil and gas development.
David Roberts
This was a big fight in Colorado, too? Was that the center of the fight in Colorado?
Whitney Stanco
Yes, it was. It was a ballot initiative in Colorado that went through multiple times. Never quite made it across the finish line, but as we talked about, when Colorado, post the 2018 election, ended up with a trifecta Democratic government, they overhauled the commission, and the commission put in place a setback, a bigger setback. So I think we're going to have a little bit of that debate in Pennsylvania too. But because you have divided government, I don't think it's likely that it gets done. But we'll have to see because there will be things that folks in the Republican Senate want to get done, and maybe some room for compromise.
David Roberts
Some wheeling and dealing. Is this just a straightforward sort of thing where the state wants more money and the industry hates it and they're just going to fight to the death over it? Is there any reason the industry would have a reason to sort of accept this or view it as, I don't know, is it as straightforward as it looks?
Whitney Stanco
Never is. So the two sort of both sides of the argument. On the one hand, most states that have oil and gas development have a severance tax in place, right? And so that Pennsylvania doesn't, is sort of an anomaly. But what the oil and gas industry will tell you is that they've got what they call impact fees in place in Pennsylvania, which they would argue is like the substitute for a severance tax. So that is the core of the issue there. It's always going to be contentious taxation stuff.
David Roberts
Yes. And so Shapiro, presumably knows, the skeletons in the fracking industry's closet, as well as anyone, having done this report. So what is the kind of political valence of fracking in Pennsylvania? It's big there, right?
Whitney Stanco
Yes.
David Roberts
It's big there. It's still a big part of the state budget. So, presumably, no governor is going to sort of lead a frontal assault, but what's the status of fracking in Pennsylvania right now?
Whitney Stanco
I think that's right. I mean, it's a big part of the industrial base in Pennsylvania and has a big foothold, particularly, in rural communities. Like you said. I see it more if I'm looking way out into the future. Maybe beyond the current cycle, I think it'll end up more like Colorado and New Mexico, where you, potentially, ultimately have, greater regulations in place that it's not a ban, right. It's a bigger oversight, bigger regulation, pointing the industry in a direction of greater environmental responsibility and the activities that they do.
David Roberts
Right. The other thing, I almost forgot this, but before you leave Pennsylvania, the other thing is there's some question about Pennsylvania staying in RGGI. For listeners, that's the Regional Greenhouse Gas Initiative, the quasi-cap-and-trade system they've got going in the East Coast states. What's kind of the state of play there?
Whitney Stanco
Yes, that's right. There is sort of a back-and-forth between the state legislature and outgoing Governor Wolf about Pennsylvania's participation in RGGI. I think the state legislature tried to, basically, get Pennsylvania out of RGGI, and I believe, if I remember correctly, they failed by one vote, and then they took it to court, where it remains, is my understanding.
David Roberts
Yeah. The Pennsylvania Supreme Court, I think, is taking it up.
Whitney Stanco
Yes. If it's not there, then I think there's a good chance that it ends up there and that's a different place and not as impacted by the midterm elections. Right?
David Roberts
Right, right. Is Shapiro, I mean, court is court. They're going to argue it out. Pennsylvania Supreme Court is going to come to some conclusion. Is there much Shapiro can do to affect that process one way or the other?
Whitney Stanco
I believe that there was a — one of the justices recently passed away. Pennsylvania ... I don't know if they're appointed, if they're elected, or whether or not Shapiro would have influence over the composition of the court, in the wake of that.
David Roberts
Elected Supreme Court? That seems ...
Whitney Stanco
Yeah, a lot of states have — what happens in a lot of states, actually, is they get appointed first by the governor, and then they're up for election, and then a lot of times they're not contested, even.
David Roberts
Interesting. It seems like just a weird thing for your random citizen to be voting on.
Whitney Stanco
I imagine turnout in those races is orders of magnitude less than US Senate races and government races, right. And every state, I believe, does it differently.
David Roberts
Jeez. So that's Pennsylvania. Shapiro is in there not going to crash the Democratic system. So that's good. It's pretty low bar, but it's good and, probably, going to squeak out a few, maybe narrow winds through a divided legislature.
What about Illinois? I always feel like, among clean energy types, it's like Bush said, you forgot about Poland. I always feel like people forget about ... people feel like people forget about Illinois. It's kind of a dark horse, but a lot of stuff is going on in Illinois and Pritzker won re-election. So what's the state of play in Illinois? What should your sort of average clean energy type know about that's going on there?
Whitney Stanco
Yeah, I would lump Illinois into the category of states with trifectas that have a lot of law put in place, and then now, it's sort of implementation time. Right. So Pritzker's got his second term, and first term, he signed up a bill into law that would decarbonize the energy sector. I think it was called The Climate and Equitable Jobs Act. And it became, I think, their claim to fame is the first Midwest state to commit to net-zero carbon emissions by 2050.
David Roberts
Yeah. And tons of stuff in that law, I'm remembering now, I wrote up, covered that law, a lot of good environmental justice and like union work standards stuff in that bill, more than I think you'd probably imagine when you're thinking about a Midwest state doing this.
Whitney Stanco
Yes. You know, and I think Illinois is going to be another one of these states, that the other thing that we're going to see, in addition to implementation of some of the laws they have on the books, is some disbursement of funds that get passed down to states through The Infrastructure Law and The Inflation Reduction Act. Right. So I think I read this morning, I think there was like $5 billion to build out EV charging, that was given to the Department of Transportation and the Bipartisan Infrastructure Bill. And so there was a whole process where DOT had to solicit state plans, and states put those in, and then they get approved, and then after that happens and you get disbursement of funds. So, for example, I think, now we're in that disbursement of fund stage, right. And I saw somewhere that Illinois is going to get $148,000,000, or something like that, to do EV charging in the state.
David Roberts
Exciting.
Whitney Stanco
Yeah.
David Roberts
And just must be fun to have a trifecta in place when you get a big bucket of money. You just don't have to ... you can just set about spending it instead of arguing forever. And Pritzker also has mentioned that he supports a carbon market. Right. Some sort of market mechanism in Illinois. Who knows if that will make it to law, but he seems inclined to that direction. There's a couple of sort of stray states, no offense to the state left out, of course. They are all wonderful. Connecticut. Nobody ever thinks about Connecticut. But Ned Lamont. Nobody ever thinks about Ned Lamont. Sorry, that was mean. Ned Lamont is a great.
Whitney Stanco
Sorry, Ned.
David Roberts
Sorry, Ned. He's governor, little known fact, Ned Lamont, who is sort of famous for, I feel like, losing to what's his name, is now governor of Connecticut. So Ned Lamont has been good on clean energy. He's been pushing on clean energy. I think he had an executive order setting a 2040 zero-carbon goal. And he'll probably, now that he has a second term, now that all that's been sort of reaffirmed by the voters, he'll probably push harder. So things are happening in Connecticut. Ned's got it in hand. We'll leave it at that.
Let's add a few others real quick. Nevada kind of a slight bummer. They no longer have their Democrat trifeca. They now have a Republican governor. So should we worry that Nevada's progress— and by the way, am I saying it right?
Whitney Stanco
Nevada?
David Roberts
They always correct me. Is that — okay. Nevada — sounds wrong to me — now has a Republican governor. Is he going to screw up all the progress that the Democrats made in Nevada in previous terms?
Whitney Stanco
I think Nevada Democrats are going to control both chambers of the state legislature. Right. So you'll have divided government with Sisolak, where Sisolak had adopted a bunch of legislation, and I don't know that that's going to be overturned since you've got a Democratic legislature in place.
David Roberts
Right. So Lombardo is kind of stuck with it.
Whitney Stanco
Yeah, I think they have a Nevada climate initiative, but yeah, I think that's probably right. When you're an executive, it's hard to overcome codified enacted legislation without controlling the chambers of legislatures.
David Roberts
Where is Lombardo on the — I don't know quite the right way to ask this — on the kind of lunatic scale? Is he Mastriano side or like Charlie Baker side? Where is he on that?
Whitney Stanco
I get the impression that he's more on the moderate side, right. So maybe this is an issue where they can work together on climate initiatives, particularly, on the implementation side, right. Instead of, you know — because I think it's harder if you're Larry Hogan in a solid blue state, and you're a Republican governor, to push forward clean energy agenda. But to the extent that you are the executive who is responsible for executing the agenda that the state legislature has already put in place, and you're somewhat supportive of the industry, I don't think that is quite as difficult a position perhaps that it might seem because of the RD labels.
David Roberts
Right. So he's not going to be kind of a lunatic who's throwing molotov whatever this way and then trying to screw it up. He's probably going to more or less implement what the legislature says, which I guess is a good thing. One other state where you might not think the midterms made that big of a deal, but kind of did, is in California. Newsom is safe as governor, but a couple of things I think have changed. One is, going into the election, I think he had supermajorities and, as far as I can tell, there's still some uncalled races in California, but he could lose supermajorities. The supermajorities are not a sure thing. Is that still the state of play?
Whitney Stanco
I think it's likely he's going to keep his supermajorities. Yeah, I was looking at the uncalled races mid last week, and I even looked a little bit to see if there was any reporting today. I think he's going to keep supermajorities in both.
David Roberts
And it matters in California because they have these ludicrous ballot measures that say you have to have a supermajority to raise the tax.
Whitney Stanco
Raise taxes. That's right. So one of the things that Newsom had proposed before the election, is a Windfall Profits Tax on the oil and gas industry. So in 2022, they had a supermajority. But it wasn't clear that you were going to keep it going into 2023. But you're correct. It's not called yet, but I think they're going to keep it going into 2023.
David Roberts
So you think that will lend momentum to the windfall taxing? Just for readers who may not know, and it's not really intuitive, California has a really big oil and gas state. It's not what people associate, necessarily, with California, but it's a big industry. It's a big deal there. So do you see that windfall tax happening? It would be the first in the United States. Would it?
Whitney Stanco
Yes. So the way that I look at it, I would say it's a little bit under 50% odds that they get it done, just because you have to have the supermajority in both chambers. You have to keep everybody, and keep in mind, because of the way they do elections in California, there's more Democrat-on-Democrat competition.
David Roberts
Yeah.
Whitney Stanco
So even though you have a "D" by your name, there's a broader spectrum of interest within the caucus, I think.
David Roberts
Right. Some oil and gas Dems in the legislature there, for sure.
Whitney Stanco
Or union Dems, right? So it'll be interesting. I mean, I think it's definitely something to watch. My understanding is that Newsom is going to put some more details about what the plan would be around the time that the legislature sworn in, which happens early in California. It's like December 5. Then the legislature will come back and work on it. But to your point, California is still the second largest fuel consuming state in the country, right. I think they're still in the top ten in terms of oil production and just supermajority is a big number, right?
David Roberts
Yeah. It's worth emphasizing. Just because you have a supermajority doesn't mean smooth sailing. It's still contentious. And also, I was going to say the other thing that changed in California is it's pretty clear, I think, to everyone at this point, that Newsom has, let's say, higher ambitions beyond the governorship, which could change the way he approaches things, I think, somewhat, in a couple of ways. One is like they had this ballot initiative on the California ballot about taxing rich people to support EVs, which you would think would be like, great. Why wouldn't everybody love that? Everybody hates rich people and loves EVs. But Newsom campaigned against it, and some people were speculating that that has to do with his presidential run. That he wants to run for president, saying, I fought climate change without raising taxes. Do you have any insight on Newsom's calculations?
Whitney Stanco
I agree. I think there's a lot of speculation that he is aiming for higher office. The exact calculation about why taxing individuals may not be as an attractive position for that, as taxing the oil and gas industry. And I can understand why that might be different. Right? And you might come down differently on that if you're thinking about a national audience.
David Roberts
And also what might, and I was wondering how this might affect Newsom's thinking too, if he wants to run, is the other big thing that's kind of going on in California right now is this fight over net metering, fight over solar rooftops and how well they're compensated. The CPUC issued a draft ruling a while back. Well, they issued the first one and then prompted an absolute shitstorm, and they went back to the drawing board and now have come out with a second version of this, which still is a pretty substantial reduction in what solar rooftops will receive. And solar rooftops are very very popular. So I don't know. Do you know how Newsom is inclined, whether he's involved in that fight at all, or where he's come out on it?
Whitney Stanco
I mean, in theory, right, the California Public Utility Commission should be an independent commission. I would hate to venture an opinion.
David Roberts
Yeah, I just think it'll be interesting if rooftop solar voters get a stick in the eye right as Newsom is trying to run for wider office. I guess we'll see how that plays out.
Okay, well, we're coming up on time here. We've hit, I think the big states where there's big change. We even hit Connecticut. Are there any other states where the midterm results do you think are going to shake things up? I mean, you could point to Florida. DeSantis is, presumably, going to continue doing nothing for clean energy. Point to Texas, where I assume Abbott is going to continue doing nothing. Are there other state results that you think are worth mentioning?
Whitney Stanco
Yeah, I mean, maybe Colorado. They're going to keep their trifecta, right? So Governor Jared Polis gets a second term. The Democrats, who got their trifecta, right, when Polis came into office, are going to keep their trifecta in Colorado. They're another state where, I think, you're going to see a lot of implementation of some of the programs that were put in place in the first term, but where also there's a push to do more. And so you might see more come out of Colorado.
David Roberts
Yeah, it really seems like if you get a trifecta, and then you pass a flurry of clean energy legislation, which Colorado's legislature did, for a while I felt like that was all I was covering, is they kept doing stuff, and then to have voters reaffirm your trifecta in the wake of all that just seems like they've got all the momentum in the world, now, to be out ahead on this.
Whitney Stanco
Right. And even if you have a really productive first term, which you, arguably, can say definitely happened in Colorado, also in New Mexico, there's still some things that get left on the cutting room floor that folks would like to see happen. Like New Mexico, we didn't talk about it, but there have been some push to also do a low-carbon fuel standard there.
David Roberts
Spreading, spreading, spreading. I think we hit everyone I wanted to hit. I guess maybe we can mention Arizona, will not have the Republican trifecta. Instead, we'll have Hobbs as governor, as the Democratic governor, facing Republican legislature and a highly Republican PUC, the Arizona — what the hell is it called there? The ACC? The Arizona ...
Whitney Stanco
Corporation Commission.
David Roberts
Yeah. The Arizona Corporation Commission. That is what I'm talking about. That's four to one Republicans. So I don't know. Is anything that happened to Arizona? Is hobbs going to, I mean, not a miracle worker, I guess. Do you anticipate her being able to do anything, or, I guess, maybe stop things that the legislature tries to do?
Whitney Stanco
They actually had put in place — they were early adopters of an RPS, if I remember correctly. Right.
David Roberts
But it's getting kind of moldy, though. It's pretty low and getting a little outdated.
Whitney Stanco
That is also my impression. So in that configuration, you wouldn't expect much change on that front, even though they were in an early adopter state.
David Roberts
And sunny as hell in Arizona. Get it together. Should be a 100% solar state. Okay. I think we've covered the waterfront, covered the country, covered all the big states we want to hit. Before we go, is there anything else you want to add? Just about the sort of the elections in general. It seems at a big picture level, extremely good for those of us concerned about climate and clean energy. Is there anything you want to add before we go?
Whitney Stanco
No. Other than to say, you have an outcome like that, in addition to a productive couple of years at the federal government implementing legislation that supported climate initiatives both in the Bipartisan Bill and in the Inflation Reduction Act. Right. So it's just a multiplier.
David Roberts
Yeah, multiplier. This IRA money is going to be giving, I think, momentum and assistance to these new Democratic trifectas. So it will be an interesting two years. May an interesting ten years. We are cursed to live in interesting times. Whitney, thanks so much for coming on and walking across the country with us. I appreciate it. Thank you so much.
Whitney Stanco
Absolutely, happy to do it. Thanks, David.
David Roberts
Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much, and I'll see you next time.
What the midterm elections mean for climate & energy