Hi and welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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Back up the truck
First Solar said last week it’s spending $1.2 billion on a new panel manufacturing plant in the Southeast US. The announcement joined a slew of others in recent days – including a $4.4 billion battery facility by Honda and LG in Ohio, a $2.5 billion expansion at a battery plant in North Carolina by Toyota, and a $4 billion battery plant by Tesla-supplier Panasonic in Oklahoma – all spurred by tax incentives in the Inflation Reduction Act. Reporters note how much of the financial benefits are going to red states, and how actually building some of this will still be a challenge. But the sheer amount of money headed into this space – funding now overseen by John Podesta – isn’t widely covered. It’s likely the $369 billion provisions – by leveraging loan guarantees, tax breaks and other incentives – will end up sending many times that amount to the clean energy sector. While that still likely won’t be enough to get us off fossil fuels by mid century, taking action now is far cheaper than dealing with the consequences if we don’t.
Private equity, public menace?
We found it quite interesting to see a story last week in the Journal on differing oil and gas investment strategies being adopted by private equity including Carlyle, Blackstone and other big names. Interesting because we’re helping launch a scorecard that ranks eight of the largest private equity firms for their climate risks, analyzing collective holdings of around $250 billion in energy and fossil fuels. Reach out to Shravya (sjain@climatenexus.org) to see an embargoed copy.
Backlash to the backlash
Both the Financial Times and the Wall Street Journal ran stories last week highlighting investor demand for sustainable assets, despite the pushback these products are getting from some red state officials. The FT story focused mainly on family offices and well-off individuals, while the Journal presented a host of data to back up its claim, including near record premiums being paid for shares of firms with high ESG scores, cash flow into green bonds and money raised by clean tech venture capital.
The demand could be stoked by perceptions Republican efforts to cut off this industry may fail. That was the case last week when a link to ALEC’s model legislation designed to thwart sustainable investing at the state level made the rounds in NGO circles. It included language saying the rule is designed to “protect pensioners from politically driven investment strategies,” and allows environmental factors to be considered if they have a “material effect on the financial risk.” That prompted As You Sow’s CEO Andrew Behar to ask if the bill could actually have the opposite effect than intended. For more, reach out to Behar directly at abehar@asyousow.org.
I see it, I like it, I want it...
Or maybe it’s because investors know employees want their firms to take a stance on issues. The latest survey from Edelman shows growing support from employees for their companies to take action to address a wide range of issues, including healthcare, racial justice and climate change. While the support was higher among Democrats, it was still above 50% on most issues for Republicans as well.
Or maybe it’s because they know climate risk is financial risk, the direction of travel is away from fossil fuels, and they simply want to make money.
Sep 8: Climate Central details county-level property tax losses due to rising seas. It’s expected to cost local governments over $100 billion by the end of the century. Email Peter Girard at pgirard@climatecentral.org to get an embargoed report or register here for a reporter briefing on the 7th.
