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Renewable energy enjoys broad support from both Republicans and Democrats. Still, the party control of legislative chambers and executive branches influences the types of policies that are more likely to be enacted and the aggressiveness with which clean energy may be pursued. There are Republican champions of renewable energy with a particular focus on sensible permitting policy. Democrats have traditionally been more aggressive in their support of policies to increase demand for renewables.
Implications of U.S. House and Senate Elections
The Democrats won control of the US House of Representatives with the current count at 232 Democrats, 200 Republicans, and 3 still undecided. Democrats made a net gain of 36 seats so far and comfortably surpassed the threshold of 218 seats needed for majority control.
Meanwhile, Republicans expanded their majority in the US Senate, and will go from a 51-49 majority now to 53-47 majority in 2019. Republican Senators will replace Democratic incumbents in North Dakota, Indiana, Missouri, and Florida, while Democratic Senators will take seats formerly held by Republicans in Nevada and Arizona.
With control of the House and Senate now split, bipartisan support will be needed to pass any legislation. This reduces policy change risk, which was significant for the renewable industry during the recent tax reform. There may be opportunities for infrastructure investment, including support for transmission. While we do not expect any changes to the production tax credit (PTC) and investment tax credit (ITC) phase down schedules, industry is pushing for inclusion of stand-alone storage qualification for the ITC.
Senate Majority Leader Mitch McConnell noted that confirming judges will be his “top priority” given that only the Senate has a say on Presidential appointments. Of note, federal carbon regulations will likely be reviewed by the courts again. In the last carbon-related ruling, the 5 conservative Supreme Court justices voted to stay [pause] the Clean Power Plan (CPP) proposed by former President Barack Obama, while the 4 liberal justices voted against the stay.
The Trump Administration is expected to continue to focus on executive actions. The EPA proposed replacement for the CPP, known as the “Affordable Clean Energy” rule to regulate carbon emissions in the electric sector takes a much less aggressive approach focused on inside-the-fence measures like heat rate efficiency improvements. Environmental advocates will likely bring lawsuits against the proposal. Industry is also watching to see whether the administration will act to support existing coal and nuclear plants.
Regardless of party control, it is important to note that moderate voices in Congress did not fare very well. Several Republican moderates who were leaders in clean energy policy lost their re-elections, including Senator Dean Heller (R-NV) who was a champion of the solar ITC as well as storage, Rep. Carlos Curbelo (R-FL) who was a champion on carbon policy, and Rep. Ryan Costello (R-PA) who was a champion on storage. We also see the Democrats featuring a freshman class that will demand faster action on energy policy compared to incumbent leadership.
Implications of State Government Elections
State races were particularly important this year for two reasons:
(1) thirty-six Governorships were up for election, including sixteen open seats, and
(2) in 2020 states will redraw their legislative and Congressional district boundaries which will then be in place for a decade, and in most states, the party in power leads such an effort.
After suffering heavy losses in 2010 with minimal gains since, Democrats made major gains in state control. The party picked up seven governorships and flipped seven legislative chambers. Now Republicans hold trifectas—or party control of both legislative chambers and the Governorship—in 22 states, Democrats hold 14, 13 are divided. One state, Nebraska, has a non-partisan legislature.
Source: NCSL 11/7/18 (bitly.com/ncsl2018)
Five patterns are evident:
- Democrats won greater control in the Northeast and maintained control of West Coast states
- Democrats won full control in three Southwest/Intermountain West states: Colorado, Nevada, and New Mexico. In Arizona, Republicans maintained full control of state government, but Democrats made inroads and took a US Senate seat.
- Republicans continue have firm control in the Southeast and South-Central states
- Democrats have made inroads into upper Midwest states though Republicans on balance still have more power since their 2010 electoral wave in the region. Exceptions include full Democratic control in Illinois and split control in Minnesota, Wisconsin, and Michigan
- The Mid-Atlantic is a mixed bag with Democrats in full control of New Jersey and Delaware and split control in Pennsylvania, Virginia, and Maryland. Democrats hold a veto-proof supermajority in the Maryland legislature.
We expect legislative efforts in 2019 to increase demand for renewables in numerous states where Democrats have taken greater control. The EDF Renewables regulatory and legislative team will be well engaged in those states.
We also expect other policy opportunities and challenges throughout the country. Please reach out to Virinder Singh (Virinder.Singh@edf-re.com), Tom Carlson (email@example.com) or Lynnae Willette (Lynnae.firstname.lastname@example.org) if you have any questions regarding public policy issues.