US MIDTERMS 2022: Green energy early winner; Capitol Hill hangs in balance

Renewable energy looked to be a winner at least in the early stages of vote-counting for the US midterm elections, playing out against a tense backdrop of highly competitive races to hold or flip control of the US House and Senate.

Control of both chambers of Congress remained in question late in the day Nov. 9, after Democrats performed better than expected in a swath of contested races, and a Republican "tsunami" fueled by energy price and inflation woes failed to materialize to deliver an early flip in either chamber. With so many pivotal races coming down to the wire, plus differing voting and counting procedures among states, final calls on balance of power are not expected until much later Nov. 9 or into Nov. 10 at the earliest.

A Republican majority in either chamber would bring divided government and the prospect of antagonistic oversight of Biden administration energy regulators, along with a bumpier path for implementation of the clean energy and climate provisions Democrats enacted in the Inflation Reduction Act.

Austin Metsch, director of government affairs and public policy for S&P Global, said Republicans looked likely to take a slim majority in the House, while the balance of power in the Senate could rest in a Dec. 6 runoff election for a Georgia senate seat.

"A slim Republican House majority would complicate the party's efforts to govern as a small group of Republicans could obstruct any bill's legislative prospects, including raising the debt limit and annual government funding," Metsch said in an email Nov. 9.

With the continued prospects for a House flip, Scott Segal, co-chair of Bracewell's Policy Resolution Group, stressed that there is "a long and proud tradition" of energy and environmental statutes being adopted by divided government. Removing obstacles to the energy development that both parties tend to desire through permitting reform could be the basis of bipartisan action, he said during a Nov. 9 webinar on the election results.

Abby Hopper, president and CEO of the Solar Energy Industries Association, added that support for electric transmission and domestic manufacturing could be areas for common ground.

Anticipating robust congressional oversight of the new tax credits for clean energy, Hopper said building transparency ahead of that scrutiny will be essential.

"We have been talking a lot about ensuring that the processes that we go through and the ways the monies and tax credits and eligibility is defined and applied are transparent and fair and in line with the intent of Congress," she said. That way "when there are oversight hearings, … the clean energy industry will be managing those in an appropriate way."

More broadly, Segal added that "the chances that the Congress that emerges from this midterm will ‘repeal' or otherwise do serious damage to the IRA seem to be diminished given the outcome."

Renewables gains in states

Early results in key state governor races favored renewable energy and concern over climate change. In energy-focused races, Democrats officially came out on top in California, Colorado, Pennsylvania, Maryland, Maine, Michigan and Wisconsin. For his part, Governor Greg Abbott, a Republican and staunch defender of fossil fuels, easily won reelection in Texas.

New Democratic governors will include Maryland's Wes Moore, who vowed to ramp up the state's current clean energy targets and investment in electric vehicles, and Pennsylvania's Josh Shapiro, who has called for "responsible fracking" in the state and said he would look to usher in more clean energy resources. He also threw his support behind zero-carbon technologies like nuclear power, hydrogen and carbon capture.

In a win for Maine's clean energy interests, Democratic Governor Janet Mills easily bested former Republican Governor Paul LePage.

Mills, who was first sworn into office in 2019 as the state's first woman governor, scrapped a moratorium on offshore wind permits instituted under LePage and signed a law committing the state to be carbon neutral by 2045. She also pledged to more than double Maine's clean energy jobs by 2030.

In New York, voters authorized an environmental bond act to fund multiyear capital projects aimed at improving the state's water, air and environment and mitigating climate change impacts.

The approved ballot measure allows the state to borrow up to $4.2 billion for capital projects, with up to $1.5 billion for climate change mitigation, at least $1.1 billion for restoration and flood risk reduction, up to $650 million for open space land conservation and recreation and at least another $650 million for water quality improvement and resilient infrastructure.

Also winning reelection was Michigan Democratic Governor Gretchen Whitmer, which will allow her to protect her executive order aiming to achieve economy-wide carbon neutrality by 2050. The victory could also help sustain Whitmer's fight to shutter Enbridge's Line 5 propane and crude oil pipelines to protect the Great Lakes from a potential spill.

What's more, incumbent Wisconsin Governor Tony Evers defeated Republican Tim Michels, protecting Evers' plan to achieve 100% carbon-free electricity consumption by 2050. The win allows Evers to advance implementation of the state's Clean Energy Plan, issued in April, to ensure the state satisfies carbon reduction goals in line with the 2015 Paris Agreement while prioritizing environmental justice and equitable economic development.

California Democrat Gavin Newsom, who made tackling climate change a central focus during his tenure as governor, won reelection, as did Colorado Governor Jared Polis, who has walked a fine line in his oil- and gas-producing state, setting a goal to achieve 100% renewable energy by 2040 but also issuing an executive order prohibiting the implementation of a greenhouse gas cap-and-trade program.

In one loss for green initiatives, however, Californians rejected a ballot measure that would have imposed an additional tax on affluent residents to support a push for more electric vehicles. The measure was opposed by Newsom, who worried it would interfere with the state's finances as billions from the state's budget surplus have already been committed to EV initiatives.

In Texas, Abbott's reelection dims the prospects that the state will enhance its power line connections to the rest of the US grid and shows that Democratic challenger Beto O'Rourke came up short in efforts to blame Abbott for Texas' calamitous grid collapse in February 2021.

Texas Railroad Commission Chairman Wayne Christian also easily fended off a challenge from Democrat Luke Warford, keeping the pro-oil and gas businessman in charge of the state's oil and gas regulator for a new six-year term.

Warford's campaign tried to blame Christian's leadership of the three-member commission for much of the damage caused by the February 2021 winter storm, in which frozen natural gas facilities contributed to power outages that affected millions of Texans and killed more than 200. But Christian rode his strong pro-fossil fuel message to victory, as his campaign advocated more oil and gas production in the state, claimed substantial progress on reducing flaring of gas and pointed to wind energy as unreliable.

The Associated Press had called 31 of 36 gubernatorial races at stake as of press time, with Democrats winning 15 of those and Republicans taking the other 16.

National races

In national races, Democrats appeared likely to avoid a projected large red wave of Republican gains in the House, but the chamber was still seen as leaning toward a narrow Republican majority. Control of the Senate remained at a dead heat, with a crucial Georgia Senate seat headed for a December runoff that could leave the question of majority open for weeks.

Results of tight Arizona and Nevada Senate races also may not be known for days, but if Democrat Catherine Cortez Masto prevails in the Nevada race, the Georgia runoff likely would not matter in terms of Democrats maintaining control of the upper chamber.

In signs of Democratic tenacity in battleground races, Pennsylvania's lieutenant governor, John Fetterman, topped celebrity doctor Mehmet Oz, the Republican contender for the Senate seat currently held by outgoing Republican Senator Pat Toomey. And some bellwether House races were going blue; Democratic Representative Abigail Spanberger won her closely watched race in the northern Virginia suburbs.

As of mid-morning Nov. 9, the Associated Press had declared 199 House seats in Republican hands out of 218 needed to take the majority, compared with 172 called for Democrats.

Republicans hope they can flip both chambers to make their case for rebalancing the US energy portfolio, with more attention on growing domestic oil and natural gas production. Democrats are looking to widen their margins in the House and Senate to continue advancing policies in line with meeting President Joe Biden's ambitious climate goals, including a push to decarbonize the power sector.

Party control of Congress will be the biggest factor in setting the direction of national climate and energy legislation over the next two years. But the outcome of individual races will decide who sits on and helps lead key committees and whether champions of recent energy policies continue to have a say.

A Republican majority in either chamber could also conduct rigorous oversight of the hundreds of billions of dollars that Democrats and Biden authorized through recent legislation to drive the energy transition. Oversight of that spending could be a particular focus for a restored Republican majority, since Republicans would likely lack the veto-proof majorities needed to enact legislation that goes against Biden's agenda.

Should Republicans ultimately wrest control of the House, they also have planned to showcase policies favoring domestic energy and mineral production ahead of the 2024 presidential election, and move early on an infrastructure permitting package.