התמלול המלא של How two historic elections will reshape climate policy

in like really traditionally conservative strongholds like Texas and Kansas and Iowa and the U.S. 00:03:09 Speaker 1: Midwest. That signifies a bigger shift that's worth watching. I've said it before. This is more of. 00:03:15 Speaker 3: A repudiation of Donald Trump and his policies than a wholesale embrace of Democrats across the ballot. 00:03:21 Speaker 1: And that's important to appreciate. 00:03:23 Speaker 3: You know, polls show voters were upset with Republicans' handling of the U.S. economy and the high cost of living. They were obviously very angry about the U.S. war against Iran that has stoked high prices for. 00:03:35 Speaker 1: Fuel and commodities. 00:03:36 Speaker 3: So those were a lot of the motivating issues. Young voters in particular swung hard for Democrats and House contests. And that's a notable shift, particularly for young male voters. Two years ago, young male voters came out in force for President Trump. And on Tuesday, according to a Fox poll, they provided a 33-point advantage to Democratic House candidates. And if I could just say one note on the scale of this Democratic sweep just again and. 00:04:02 Speaker 1: How breathtaking it was. 00:04:04 Speaker 3: You know, the margin in the House is particularly notable and not something a lot of folks were expecting going into Tuesday's election. You need 218 seats to control the chamber. The current outlook is that Democrats will have at least 240 Democratic seats. It means that Hakeem Jeffries, the Democrat from New York who's poised to be the House speaker in the new year, will have just a commanding Democratic margin. He won't be scrapping for votes among Republicans. He won't have to worry about progressive Democrats peeling off. Like he'll have a commanding majority and have a lot of running room to do what he wants to do. 00:04:37 Speaker 2: We're going to talk about the implications of this election for quite some time to come. But going into COP, I wanted to get your reactions first domestically on the climate front. We know that this wasn't an embrace of the Democrats, but Democrats were campaigning on issues that were resonating. Well, climate wasn't one of those issues. And yet there will be implications on the climate and energy agenda as a result of what has happened. What do you think those implications are? 00:05:07 Speaker 3: Yeah, I mean, I would just say that you're right. The Democrats who were swept into power, it's not just that they weren't running on climate. Some of them were distancing themselves from climate. Some of them embracing oil. They talked about energy affordability without pitching renewables as a solution. And I would just point to James Talrico, the Senate Democrat elected senator. from Texas, he basically pledged to defend Texas's oil and gas industry. So they're coming in from a very different perspective. 00:05:34 Speaker 1: These are not. 00:05:35 Speaker 3: Green New Deal Democrats that we saw push these issues in the House and the Senate, you know, several years ago. But that doesn't necessarily matter. There are some big climate and energy implications from Washington, D.C. 00:05:48 Speaker 1: To state houses. 00:05:50 Speaker 3: In Washington, D.C., we're going to see stepped up Democratic oversight of the president's environmental agenda, his policies, including decisions to withhold funding that Congress had appropriated for climate grants, for clean energy deployments, for scientific studies. We're going to see scrutiny of his environmental regulations, which have generally tilted toward fossil fuels and in some cases created new barriers for renewable deployment. It is important to note that President Trump has done a lot through administrative executive action. And while Democrats can scrutinize this, there can be a lot of oversight hearings. There's a limit to what they can actually do to affect that. to really reverse that agenda. So, you know, and that's true for the international climate agenda too. A lot of international climate engagement and other foreign policy is controlled by the executive branch. So it's harder for Congress to influence. But, you know, I've talked with some Democrats about possible discrete openings for common ground with Republicans on climate and energy policy, possibly a carbon border adjustment that aligns some of President Trump's domestic manufacturing goals with Democrats' emission cutting objectives, for instance. 00:07:02 Speaker 1: One member was talking to me about how U.S. 00:07:04 Speaker 3: Natural gas can have an advantage globally, of course, if methane emissions and intensity are addressed. So there may be some opportunities to harmonize what the EU is doing in terms of facility level carbon accounting with U.S. proposals that focus on industry averages. And I would just say, you know, beyond Washington, you know, we all think Congress and the presidency are key. But a lot of the really meaningful policy around energy and climate, the work of this stuff actually happens at a much more local level. You've got state public utility commissions that regulate power utilities and infrastructure and can have a big say in how quickly new renewable energy gets deployed and the pricing of that. 00:07:44 Speaker 1: And then you've got states and. 00:07:46 Speaker 3: Mayors who are doing the hard work on the ground to mitigate climate change, to adapt to it. Washington state has a cap and invest program. There are carbon trading initiatives. There's efforts in Phoenix to expand natural and built shade because it's so hot. And there's efforts to boost EV adoption in Miami. Like, this is the work that many Democrats will be newly empowered to do over the next few years, even if they didn't run on a climate change agenda. 00:08:15 Speaker 2: That's right. Because, you know, in the last two years, President Trump has had both houses of Congress that have essentially approved almost everything that he wanted to get done. And from the

outside, it has looked like a climate wrecking ball on all sorts of policies. And of course, that's been true to a large extent. But there are all these ways in which states and cities can participate, which did not feel significant as the wreckage was being looked at. But now that might be the place where we will see action, perhaps beyond the national numbers on the election. Could you talk us through some of the state level elections that have happened? How many States are now controlled by the Democrats. What kind of climate and energy policy we might see as a result? Right. 00:09:04 Speaker 3: Well, we saw Democrats at the state level gain new opportunities to advance clean energy policies through state governments. And voters also approved a bunch of measures that address energy costs, power utility accountability and climate investment. A big change is that Democrats gained basically a net five governorships on Election Day. They They flipped five Republican held states. They didn't lose a single governorship to Republicans. And also in a number of these states, those Democratic governors will also be able to work with Democratic houses and Democratic senates. They'll have basically a governing trifecta. That gives them a lot of power to set a new course on climate policy, to impose renewable power standards, to address the data center build out, you know, and concerns about energy demand from that. So they'll have a lot of ability to enact policy that we haven't seen before. Former Representative Jay Inslee, he was also the Washington state governor, did a briefing with reporters after the election and highlighted how virtually every policy you can think of to decarbonize our economy can be done at the state level. And now Democrats will just have a lot more power to do that. And if you look across the landscape, beyond the governorships, And those wins, you saw a lot of referenda and local initiatives that were related to climate. Michigan voters restricted political contributions from utilities. And that's a bid, obviously, to weaken the influence of large electric utilities over state policy. Colorado voters, a big oil and gas state, they rejected a proposed constitutional right to natural gas, which means that local governments will have a little bit more power and flexibility to pursue electrification standards and maybe ban gas infrastructure and new construction. And then Oregon voters approved a new tax on large corporations with the revenue directed to climate-related projects. So, you know, you just saw, you see a lot of shifts at the state level that are impactful on top of what's happening in Washington. 00:11:05 Speaker 2: And you mentioned AI here. Now, that seems to have been one place where there was clear bipartisan support on trying to slow down the build out of data centers, or in some cases, outright reject them. Why did that happen? And is that a good thing for climate? 00:11:24 Speaker 3: Those are both interesting questions. Why it happened is a little bit easier and knowable, which is, you know, there's just this striking deep bipartisan backlash against AI data centers and the rapid build out of this infrastructure that is provoking alarm in conservative regions, the deep south, as well. 00:11:41 Speaker 1: As liberal areas. 00:11:43 Speaker 3: So it's a really uniting force, this kind of local opposition and worry about data centers that's driven not as much by concerns about the energy demand and the impacts on the climate, The energy demand and the impacts on power bills, the impacts on water supplies, you know, noise concerns, what this will do to tax revenue and jobs in the area. So, you know, there are a lot of local concerns that drove this bipartisan, you know, rejection of data centers for artificial intelligence. You know, these measures that restrict their build out, some ban them altogether, some impose other limits. 00:12:24 Speaker 1: Will this affect climate? 00:12:26 Speaker 3: Look, And data centers, the concern around them is, of course, that they are a huge source of energy demand. And all that electricity that's going to supply them is not coming from emission-free sources. It is coming from coal. It is coming from natural gas. You know, there are a lot of concerns about the growth in carbon dioxide emissions from this buildout. It's not clear that voters saying they want to hold big tech accountable over this and manage the pace of this buildout will actually translate to lower emissions. There's not a lot in these referenda that say they need to rely on clean energy, for instance. And then there's always the unintended consequences. If you block a data center in one community, you might push the development somewhere else to a dirtier electric grid in the US. So there's a lot here that's unknown. But what is very knowable and very clear is that there is a lot of building bipartisan concern about data centers and what they're doing to communities. 00:13:25 Speaker 2: So now coming to COP31, where you and I are, what is it going to do to climate diplomacy conversation that's going to happen here in Antalya? Because it's not like the U.S. is part of it anymore, officially, because there is no membership of the Paris Agreement or soon the U.N. climate body itself. But the U.S. is the world's largest historical emitter and the second largest emitter. There is no way around not talking about the U.S., What kind of change do you anticipate at this COP? 00:13:57 Speaker 3: The world has grown pretty used to the vagaries of the U.S. on climate diplomacy, on climate action. And President Trump has just accelerated that trend, obviously in a very huge way with the pullout from the Paris Agreement, the extrication from the underlying framework accord. But what's interesting is this year, there is a coalition of roughly 20 House Democrats and maybe a few other members from the House and Senate, plus some mayors and governors that are expected to

show up at COP 31 in Turkey. And they were already feeling pretty positive about delivering a message of continued U.S. progress, particularly in the private sector and at the state and local level when they're on the ground in Antalya. After the election, I got a text from someone with visibility to their plans who said they're going to be very popular now. And let me tell you, they are. You know, the world recognizes that while the U.S. presidency controls most of the U.S. foreign policy agenda, a lot of the big action happens on the ground, as we've been discussing, right? They understand that these are representatives of a climate commitment in the U.S. that comes from a local level, comes from a private sector level, doesn't necessarily reflect the big national figures in Washington and certainly what President Trump is trying to do. They're gonna be delivering this message of sustained committed action, even if the US has withdrawn its NDC, withdrawn its membership at the federal level. And I'll just say that they are getting a lot of receptivity from other countries and leaders who wanna sit down with them and pick their brains about how they are dealing with some of these climate concerns in their jurisdictions. How are they addressing heat surges? How are they dealing with transportation questions and questions about affordability and the nexus with renewable deployment. These are the folks, the leaders on the ground that are delivering a really interesting message about what action can look like even when you have a federal government that is opposed. And that's relevant to a number of other countries as well. 00:16:09 Speaker 2: Well, we'll talk a lot more about COP 31 in the days ahead on the pod. But of course, folks should follow our coverage, your coverage on Bloomberg.com forward slash green. Now, this is a jokey question, but kind of serious question, which is, well, 2028 is only two years away now. Do you think this kind of momentum, this kind of historic shift that the Democrats have seen in this election can be carried through into 2028 when Trump will not be on the ballot? 00:16:39 Speaker 1: Anything can happen over the next two years. I think the U.S. 00:16:42 Speaker 3: Electoral process and the politics of the last few cycles have shown us that. Midterm elections historically are a loss for the sitting president and his party. And, you know, that happened to Barack Obama. It certainly happened to Donald Trump the other night. Whether that can be translated into sustained gains for Democrats over the next two years depends. It isn't really knowable now, but it depends on a lot of things. One, are Republicans going to kind of implode as they try to figure out what they're going to do to resuscitate the party and rebuild some of their own momentum? What happens, you know, what candidates are they going to pick and how much moderate or bipartisan appeal will they have? Will Democrats be able to seize this momentum and and and

also unify in ways that don't split up the party and cause bigger fractures before 2028? There's a lot of room between now and then. We'll see what happens. 00:17:36 Speaker 2: Thank you, Jen. 00:17:37 Speaker 1: Thank you, Akshat. 00:17:42 Speaker 2: After the break, I speak with my Bloomberg Green colleague, Fabiano Ramos. Maisonave about the recent election in Brazil and what President Lula's victory over Flavio Bolsonaro means for the Amazon rainforest. If you're enjoying this episode, please take a moment to rate and review Xero on whichever platform you're listening on. Thank you. Welcome to the show, Fabiano. 00:18:15 Speaker 4: Thank you for having me, Akshat. 00:18:17 Speaker 2: So in the first round of voting, Flavio Bolsonaro was leading President Lula, but neither got 50% of the vote. And so there was a second round of voting and Lula came back from behind to win with 51.8% of the vote. This hasn't happened since Brazil's return to civilian rule in 1985. How exactly did Lula pull this off? 00:18:41 Speaker 4: Well, it was quite a surprise. The most remarkable thing about the campaign during the second round was the mobilization. People from all parts of the country were supporting Lula. They decided to take action. And there was a very big mobilization online. And also people were trying to get as many votes as they could. And that helped a lot. And besides that, Lula also announced a lot of measures to promote his campaign. One of them was to reduce the work, the weak work from six days and one day of rest to five to two. He pulled that out during the second round campaign. But above all was a very strong mobilization, which has actually inspired other leftist movements in other countries to do the same. So this might be the beginning of a new way of campaigning for the left. 00:19:39 Speaker 2: The election, of course, has global impact because the future of the Amazon affects us all. What does Lula's victory mean for the future of the forest? 00:19:49 Speaker 4: The mainstream... is continuity rather than policy reversal. Lula's reelection means that Brazil will continue with stronger environmental enforcement, the greater creation of protected areas in the indigenous lands, and the goal of reaching net zero deforestation by 2030. The alternative would have looked very different. A Flavio Bolsonaro victory would likely have represented a sharp reversal. He questioned human-caused climate change during the campaign and has argued that the planet is cooling rather than warming. And during his father's rule, deforestation rose by roughly 60% and reached a 15-year high. So this election presented two very different directions for the Amazon. Lula has already made remarkable progress. Official monitoring recorded this year the lowest level of deforestation since measures began roughly four decades ago. But going from the lowest level in almost four decades to zero is a very big leap still. 00:20:53 Speaker 2: And now that Flavio Bolsonaro has fled to the U.S., his father Jair Bolsonaro is under house arrest. Does this mean Lula will be able to execute on his goal and reach zero deforestation by 2030? Well, it's hard to tell. 00:21:11 Speaker 4: And the main reason is that Brazil has taken, several years ago, a macroeconomic decision to deforest. And when I say that, it's because of the economics behind deforestation. Brazil has built an enormous commodity economy around activities that put pressures on forests. It's a global leader in beef and soy productions. And cattle ranching is by far the largest driver of Amazon deforestation. This infrastructure, it doesn't depend on Bolsonaro or Lula. It's already there. 00:21:46 Speaker 2: And so what will be needed to really go to zero deforestation? Like if this is really macroeconomic policy for such a long time, how much of a change can Lula bring to actually go all the way? 00:22:00 Speaker 4: It's to change the economy in the Amazon. It's a very tough task. You've been to Belém last year. You've seen a lot of discussions on forest restoration, agroforestry, bioeconomy. But so far, none of these sectors has reached anything close to the scale of cattle, soy, mining, or infrastructure development. So that matters politically. In many frontier towns, clearing forests is deeply embedded in the local economy. And the story of Brazil... itself is occupying forests and expand agriculture. 00:22:36 Speaker 2: There was a story you wrote in the run-up to the election, which we'll link in the show notes, about this highway that is going through the Amazon, among the most pristine bits of the Amazon. And we know from history that building a highway through the forest tends to be essentially an open invitation for more deforestation. So there is clearly, even within the Lula platform, a contradiction in the fact that on the one side, he's very much committed to the zero deforestation goal by 2030. But then it's the same timeline in which this highway is going to be completed. And that's likely going to lead to deforestation as most experts think, right? 00:23:19 Speaker 4: Yes. This was a gamble by Lula. This highway connects to state capitals, Manaus and Porto Velho. And because of a change in the law last year, the government was able to start the repaving without environmental licensing. That would be very dangerous if Flaga Bolsonaro won because the governance would be even weaker than it is now. And if they put out this one, building a highway across the Amazon without creating the first issue, that'll be a first time in history. 00:23:56 Speaker 2: Beyond the Amazon, how did the two candidates differ on climate and energy? 00:24:03 Speaker 4: They don't differ much. The energy transition is already underway in Brazil. There has been a big expansion of solar and aeolic energy. Brazil already has very clean energy metrics, but that's mostly because of hydropower. And it's not because we're environmentally friendly. It's because we

have these amazing rivers across the country. Now there's a challenge of accoutrements. Brazil will hold its first battery action in the next few weeks. But that will be a big game changer so far. So with Lula and Bolsonaro, these economic forces were likely to be moving on anyway. 00:24:48 Speaker 2: The other thing that Lula and Bolsonaro agreed on is continued oil exploration around Brazil, especially the exploration even at the mouth of the Amazon, which is something that we talked a lot about at COP30 in Belém. 00:25:02 Speaker 4: Yes, it's already underway. Crude oil is now Brazil's top export product. It's surpassed soybeans. And to keep that up, they have to open new oil frontiers. And the priority is to start production in the mouth of the Amazon River. It's offshore production, but still you have to build infrastructure on land, and that's going to be in the Amazon too. So besides adding local pressure. 00:25:30 Speaker 3: To the region. 00:25:32 Speaker 4: for deforestation, to attract more people, it also means that we're still producing fossil fuels and we're still producing energy that warms the planet. 00:25:42 Speaker 2: Is there any chance, given this is Lula's fourth term, likely to be his last term, he has had this victory in circumstances that are unexpected, there's this wave of support that he is getting, is there any chance that all that momentum makes him and his party be more ambitious on the climate agenda and maybe reverse some of these decisions around the highway or on oil exploration? 00:26:11 Speaker 4: I don't think so. I think Lula will keep promoting the agenda of forest protection on the international platform. He has been arguing that rich countries should finance forest preservation. So he'll keep pushing for Tropical Forest Forever Facility, which is an initiative that creates a fund to finance forest protection in tropical countries. He'll keep pushing rich countries to finance energy transition. But I don't see him, for instance, pressuring Bolivia or other Amazon countries over deforestation. And actually, Brazil is playing a big role in forest clearance in Bolivia, in Guyana, because Brazilian agribusiness is exporting its model to this countries, even as they can't expand in Brazil due to more strict environmental rules, they're expanding there. And the government is not paying attention to this. So we're kind of being very successful to protect the forest in Brazil, but Brazil is also exporting. And in the end, for the planet, it doesn't make a difference whether the forestation is in Brazil or in other Amazon countries. 00:27:26 Speaker 2: And that matters because only two-thirds of the Amazon forest is in Brazil. One-third is in other countries. And those countries have seen right-wing elections actually go through. So the export of these deforestation business models is likely to have quite severe impacts. On that Tropical Forest Forever facility, there was a goal to reach $ 10 billion under that fund. There was $ 3 billion committed from Norway on the condition that Brazil will ensure that it is $ 10 billion in that fund by the end of 2026. So far, that fund has $ 7. 8 billion. We are in November. Is there a likelihood that the $ 10 billion goal is actually met? 00:28:10 Speaker 4: Well, they're negotiating with other countries, even with China. But there was this impression that many countries were not willing to commit to the fund before the result of the elections because if Bolsonaro won, Brazil would abandon this, most likely. So a good sign for TFFF was that hours after the results came and Lula was declared winner, Holland committed, I think, $ 500 million over a 10-year period to the fund. So that might be a sign that other countries will do the same. 00:28:46 Speaker 2: Lula is now going to be coming to COP31 at a time when there are not that many world leaders who will show up. The UK's Andy Burnham is going to be there, but, you know, Mark Carney is not slated to be there. You are not going to get Macron from France or MERS from Germany. Many, many big economies, climate-forward economies, are not sending their world leaders. When Lula comes, what is he going to bring to the climate summit? 00:29:12 Speaker 4: So Brazil's corporate presidency committed to prepare two roadmaps. One of them was about ending fossil fuels. The other was about ending deforestation. So I think he'll most likely promote those two when he's there. They are two very long documents, roughly 200 pages each. So he'll have a lot to talk about this. And I think that he will also promote CFFF. and multilateralism, which has been one of his key goals in foreign policy. 00:29:46 Speaker 2: Thank you, Fabiana. Thank you, Akshat. And thank you for listening to Zero. Me and my colleagues from Bloomberg Green are at COP31. You can check out our coverage on bloomberg.com forward slash green. And now for the sound of the week. That is the northern mockingbird, a native of the state of Texas, which, after nearly four decades, flipped from Republican to Democrat at this midterm elections. If you liked this episode, please take a moment to review Xero on Apple Podcasts, YouTube and Spotify. This episode was produced by Oscar Boyd. Special thanks to Zahra Hirji, Somer Sadi, Moses Andim, and Alyssa McDonald. I'm Akshat Rathee, back soon.