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What a Democratic sweep would mean for climate and energy policy

There are lots of energy policy implications if Democrats have indeed pulled off a surprising sweep of Georgia's Senate races that hands them both chambers of Congress. As of 10am Wednesday, Raphael Warnock has defeated Kelly Loeffler, and Jon Ossoff is on track to beat David Perdue.

The big picture: Senate rules work against moving big bills without a supermajority (a topic we explored yesterday). But that said, the party in power controls the agenda and has some room to maneuver even with the thinnest possible margin.

Why it matters: Here are a few very initial takeaways if Democrats indeed have the majority...

1) Sen. Joe Manchin will be an important player. The West Virginia Democrat will run the energy committee, as every industry and environmental lobbyist already knows.

  • It's an intriguing dynamic. He's among the Senate's most conservative Democrats at a time when activists and progressive senators want to use this super-rare White House-Senate-House trifecta to yield aggressive moves.

2) Get ready to hear a lot about "budget reconciliation."

  • That's the procedural maneuver that allows filibuster-proof passage of policy measures with fiscal implications.
  • For instance, it's how Republicans opened ANWR to oil-and-gas leasing in a 2017 bill, with leasing revenues providing the needed hook.

3) The results will have a bankshot effect on President-elect Biden's executive plans.

  • Back in 2013 Senate Democrats got rid of filibusters for Cabinet nominees and a vast array of sub-Cabinet positions.
  • That will help Biden get his picks into place more quickly (just as it helped President Trump).

4) Get ready for more of the Congressional Review Act (CRA) — the mid-1990s law that was part of then-Speaker Newt Gingrich's "Contract with America."

  • It allows filibuster-proof resolutions that overturn recently completed federal regulations, so look for Democrats to try and upend, say, EPA's new rules on how it weighs scientific studies.

5) Cars will be a big focus. Sen. Chuck Schumer, now poised to become majority leader, has previously floated a plan to speed deployment of electric vehicles that he vowed to push if Democrats won the chamber.

  • And Biden talks a lot about an EV charging infrastructure build out, so look for that to become a focus of an economic recovery or infrastructure package.

6) The results are a political Rorschach test. Last night the Sunrise Movement, a group on the left flank of the green movement, emphasized their voter mobilization in the Georgia races.

  • But neither Georgia Democrat ran on the Green New Deal. Look for moderates to argue the wins show the political merits of more cautious candidates.

Zoom in: A note from the research firm ClearView Energy Partners gamed out the implications if Democrats' won narrow Capitol Hill control.

  • Their analysis yesterday points out that Manchin could be in a "conflicted position because Democratic Party leaders would likely expect him to advance a green agenda."
  • But they also caution that "Manchin’s fossil-sensitive power broker status seems unlikely to be the only constraint on the green ambitions" of Schumer and House Speaker Nancy Pelosi, given the razor thin margin in the House too.

Yes, but: ClearView nonetheless sees an opening for moving Senate measures including...

  • An economic recovery package that "includes robust incentives for green energy and transition technologies."
  • Tax policy changes that hit fossil fuel producers.
  • Use of the CRA, as we noted above.

Separately, a Wedbush Securities note this morning says a Democratic-run Senate is "bullish" for the EV sector.

  • "We believe a doubling down on EV tax credits and further consumer incentives and government initiatives around the EV sector will be on the horizon, which is a major positive for Tesla, GM, Fisker, and other auto players/EV supply chain[s]."

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