Climate change

The steady demand for municipal bonds in high-risk areas underscores the complex relationship between climate change and financial markets.

Municipal analysts have been tracking the challenges faced by home insurers in California and other states plagued with extreme weather events as a harbinger of credit risk.

Enviva's $353 million in tax-exempt bonds currently are among the liabilities at stake in the company's Chapter 11 bankruptcy.

Climate change presents a higher risk for muni bonds, compared to other investments, because the debt often has longer maturities and therefore, higher vulnerability to the long-term effects of climate change, said S&P' Sustainable1's global head of research and methodology.

The extension of the current solar net metering system could lower revenue for the utility.

"The financial and engineering industries need to align to get the owners to do what it is they need to do to make sure it's a durable asset," said Maria Lehman, immediate past president of ASCE.

Major headwinds for the muni market include climate change, growing federal debt, shrinkage of the workforce, the impact of remote work, cybersecurity attacks, and political polarization. And they are poised to be costly for states and municipalities.

The grants come from the IRA's flagship Greenhouse Gas Reduction Fund program, which separately provides $7 billion for states and cities that has yet to be announced.

In "my nearly 50 years in finance, I've never seen more demand for energy infrastructure," BlackRock CEO Larry Fink said in his latest investor letter.

The loan is part of an Inflation Reduction Act program that finances the restart of renewable energy projects that have ceased operations.

Only one of 14 legacy generation facilities were operating normally at the end of January, suggesting less recovery for bondholders.

The House Financial Services Subcommittee on Oversight and Investigations gathered in Tennessee on Monday to discuss the implications of the SEC's newly finalized climate rule.

"Insurance rationing by the leading insurers is becoming the mechanism by which climate risk is starting to impact municipal issuers," said Triet Nguyen, vice president of strategic data operations at DPC Data.

The new SEC climate rule does not apply directly to municipal issuers but they may very well be on the hook for violating SEC antifraud provisions if they don't disclose those risks defined in the new rules.

Detroit, which has several climate-friendly projects in the pipeline, is seeking a tax advisor to help navigate snag tax credits in the Inflation Reduction Act.

In addition to repowering the nuclear plant, the Palisades owner wants to build a pair of new small modular reactors, which would mark another first in the U.S.

Extreme weather could aggravate growing property insurance pressures on governments.

A new regulation requiring state and local transportation departments to reduce greenhouse gas emissions would limit spending flexibility, opponents say.

The current property insurance crisis in several states may dramatically shorten the climate risk horizon for municipal investors. The municipal market's relaxed attitude toward climate risk may be seriously challenged in the years ahead.

Ohio last week opened the first, and so far only, electric vehicle charging station funded under the Bipartisan Infrastructure Law.