There has been a lot of progress in climate and renewable energy initiatives across industry sectors over the past few years. As we head into the second half of 2024, we’re excited to share some expert insights on current events related to the green economy landscape.

It’s been a busy summer for the Green Economy Banking team since our last newsletter on hydrogen. We’ve met with business leaders from all over the country to keep them up to date in this complicated macro environment. 

Looking ahead to this fall, we’re excited about Climate Week NYC on Sept. 22-29 and interviewing Tom Steyer, co-founder of Galvanize Climate Solutions, on the What’s the Deal? podcast on Sept. 24. This event-filled week should bring together a lot of great experts and generate interesting discussion in the green economy space.

This Q3 update delves into U.S. climate policy, including a discussion of important federal and state players, and where the climate policy agenda might be headed. You’ll also find introductions to J.P. Morgan banker Prithi Balaji and Center for Carbon Transition advisor Raunak Barnwal, recent deal wins and relevant insights from J.P. Morgan thought leaders.

Q&A

Eric Cohen: What comes to mind when you think about climate policy in the U.S. right now?  

Heather Zichal: As I think about the climate backdrop today, we have several major pillars. The first is what's happening with the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law. If you look at what Congress has done regarding these two acts, they’ve moved the needle in a very meaningful way to create policies that are incentivizing the deployment of clean energy. The most recent Department of Energy (DOE) analysis shows that $800 billion in private investments have already been announced in the U.S. since the passage of this legislation. 

Another part that’s really exciting is how these policies incorporate different tools that we can use to reduce greenhouse-gas emissions from both the energy deployment and the manufacturing sides of the puzzle. After the IRA was passed, U.S. investment in manufacturing for the battery sector tripled and went from roughly $9 billion annually in 2022 to $27 billion in 2023. 

Lastly, because a lot of the IRA is written into the tax code as opposed to an administrative executive action, there’s a stronger case to be made that those tax credits will stick through changes in administrations. There are a lot of programs that are going to continue to garner support from Democrats and Republicans. 

Cohen: Which agencies are the key players at the federal level? Can you talk about the ones that come to mind for you and  which ones may be either at risk or have a change in mandate?

Zichal: The Department of the Interior, which has oversight for the permitting of energy projects related to anything from oil and gas all the way to major utility-scale solar and wind projects, both on- and offshore. You could foresee the Department of the Interior having a very different approach to energy based on the administration in charge.

The DOE and the Environmental Protection Agency are the next two agencies that are key players. The DOE controls things like the loan-guarantee program for clean energy projects. The EPA has authorities like fuel-economy standards, a lot of the Clean Air Act standards, etc. At the end of the day, you’re going to have one administration really focused on decarbonization and another focused on domestic oil and gas production, and doubling down on energy independence.

Cohen: How impactful are the state governments?  What role do you see them playing in shaping the climate and implementing climate policies?

Kathleen Mellody: There are several successes that we've seen in the states. For example, California has been pursuing green economy initiatives for a number of years. Going back to 2006, California established a rebate program for solar on homes and small businesses. The original goal was for a million homes to be powered by solar. It was a huge success. They also had a very generous state-level electric vehicle tax credit program that lowered the cost of EV purchases. Sales then went up by more than 20% in the state.  

In 2020, New York passed regulatory streamlining aimed at reducing the time for permitting for these large-scale renewable energy projects. Prior to the act, it took about five to 10 years for a renewable project to get to scale. Now, the vast majority of projects are approved within two years.

Cohen: What is your level of optimism as it relates to climate policy? Are we going to figure it out, or where are you seeing the biggest challenges?

Zichal: From my perspective, I think the passage of the IRA was such a game-changing moment. It really put the U.S. in the driver’s seat globally to allow us to deploy clean energy technologies at a scale and with more policy support than we've ever had.

Mellody: Heather said it really well. We’re at a different starting point now with the IRA. Hopefully more progress can be made, but it’s going to be really hard to roll back to pre-IRA, and I think we have to take that as a positive.  

Employee showcase

Meet some of the people supporting our clients in the green economy space.

Name: Prithi Balaji

Title: Vice President

Location: London, UK

Years of experience: 11 years

Area of specialty/expertise: Our team provides dedicated corporate banking services for early to mid-stage corporate clients in the Energy Transition sector across Europe. We’re very focused on supporting clients that are dedicated to energy transition using unique solutions.

What I’m looking forward to: We work with very exciting companies in the CleanTech space, supporting their growth journey. We’re already seeing some of these companies unlock key milestones in the last few months and look forward to supporting these names in accessing capital to scale and commercialize.

Name: Raunak Barnwal

Title: Vice President

Location: London, UK

Years of experience: 6 years

Area of specialty/expertise: I am part of the Corporate Advisory team with active involvement in the Center for Carbon Transition (CCT), where we work to develop and implement our strategy to align our financing portfolio with net zero emissions by 2050. 

Recent accomplishment I’m proud of: I have been co-author of J.P. Morgan’s Carbon Compass framework. As part of this effort, I led the setting of portfolio-level emissions intensity reduction targets for select carbon-intensive sectors—a first for U.S. banks.

Client highlights

Some of our clients are paving the way for others to make a positive impact on the environment.