Low Energy Fridays: What do the midterm results mean for energy policy?
The results of Tuesday’s midterm elections have sent a seismic jolt throughout the American political system. Democrats retook both houses of Congress with sizable majorities and won a number of governorships and control of state houses in key states like Texas. The impact of the election will be felt in areas ranging from judicial nominations to border security to healthcare. But if you’re like me, your reaction to all of this was “What does this mean for energy policy?”
Despite the starkness of the results, the short-term impact of the election on energy may be minimal. Donald Trump remains the president, and most of the action on energy and environmental issues has come via executive rather than legislative action. Trump’s second-term energy actions have been consequential: His attempts to reform federal nuclear regulation to encourage faster development of next-generation nuclear reactors have met with success. His attempts to roll back a variety of environmental regulations, such as the Environmental Protection Agency’s rescission of its Greenhouse Gas Endangerment Finding, are currently subject to court challenge but will not go away. And he is unlikely to back off of his antipathy to wind power either.
When it comes to Congress, 2027 will bring a shift from Republicans holding both chambers without a filibuster-proof majority to Democrats holding both chambers without a filibuster-proof (or veto-proof) majority. The loss of Republican control means Trump will be unable to lock in many of his executive actions on energy through legislation, leaving them vulnerable to the whims of a future administration. But because the president had not devoted much energy to enacting such legislation to begin with, the real-world change will be slight.
One big open question is what the shift in Congressional control will mean for permitting reform. With support from both Democrats and Republicans—indeed, some of the bill’s biggest proponents, such as Rhode Island Sen. Sheldon Whitehouse, are Democrats—the Bipartisan American Affordability and Jobs Act (BAAJA) remains the major vehicle for permitting reform. The change in majority control does not spell doom for the bill; however, BAAJA has sparked opposition from some environmental groups that don’t like its broad approach toward building out natural gas and clean energy infrastructure. In a world where Democrats have the majority, some will feel the temptation to alter the deal to better reflect their own priorities, which could delay or even blow up the compromise. We don’t think delay is prudent, no matter who controls Congress. It takes a long time to build big things, and laying a solid permitting foundation now will pay dividends in the future.
It’s also worth considering the impact of some state-level races. Texas, where Republicans have governed for a generation, was politically upended on Tuesday with a Democratic sweep of all statewide offices plus the statehouse, although the state senate remains in Republican hands. Governor-elect Gina Hinojosa promised during her campaign to impose a data center moratorium in the state—a significant statement, as Texas was fast becoming a data-center mecca. A quarter of data-center capacity is supposed to be built in Texas, meaning the election results could drastically impact the buildout of artificial intelligence (AI) as well as the electric generation needed to power it. To the extent the election results are perceived as partly due to the Democrats’ anti-data center turn, this could also embolden elected officials to enact similar bans and restrictions elsewhere.
It’s important to remember that a flipped seat still has similar constituencies it had six years ago; for example, there’s still plenty of oil and gas production and export in Texas, and farmers in Kansas still care about fuel prices and leasing their land for wind turbines. The change in party affiliation doesn’t change the physics or economics of the American economy. While Tuesday’s election (and the reasons why the pendulum swung as hard as it did) will be analyzed in the weeks and months to come, we still need more electricity and more energy to continue to flourish as a nation.