Democratic wins in Tuesday's midterm elections will likely affect US energy and environment policy, according to Reuters. Democrats take control of the Senate and House in January, and could act on the Iran war, the permitting bill and oil and gas probes, while data centers and clean energy tax credits also come into play.
Big Democratic victories in congressional races on Tuesday were a rebuke to President Donald Trump and will likely affect US energy and environment policy in many ways. Democrats take control of the Senate and House of Representatives in January.
Iran war and the permitting bill
Unified Democrats in Congress could take several actions to slow the US war with Iran, which has led to soaring prices for diesel and gasoline. Those measures could include attaching spending conditions to encourage a deal that keeps the Strait of Hormuz open, and holding back confirmations of officials. Claudio Galimberti, chief economist at Rystad Energy, said the administration faces "greater institutional pressure to find a Hormuz deal".
Meanwhile, lawmakers had hoped to pass the permitting bill this year, legislation that would sharply reduce the deadlines the government has to approve large fossil and renewable energy projects. Environmental groups say the bill has too many concessions for oil and gas, and the Democratic wins could increase their pressure to push it into next year. TD Cowen cut its outlook for the bill's success from about 40% to about 25%.
Probes and trade partners
Democratic lawmakers, who will now head congressional committees, could launch probes ranging from US oil deals with Venezuela to a diesel deal with Russia. They could also examine whether oil and gas companies received tax breaks, subsidies and rollbacks of environmental regulations after then-candidate Trump asked them for $1 billion in donations during the 2024 presidential campaign. The administration could refuse or delay responses to subpoenas, but investigations could slow its energy policy.
The sweep could also embolden Japan and South Korea to delay committing hundreds of billions of dollars in US investments. One example is the proposed Alaska LNG project, worth up to $54.4 billion, which would transport natural gas from northern Alaska to domestic and Asian customers. Last month Seoul confirmed it would invest $22.3 billion in a Texas gas project and $120 billion in eight US nuclear reactors, but those agreements are not binding.
Data centers, tax credits and state regulators
Voters backed restrictions on the buildout of AI data centers: 33 of 34 ballot initiatives aiming to restrict construction won. That brings an increased likelihood of more oversight of AI risks, more protections for utility ratepayers and stricter reporting requirements for energy consumption and pollution. Some industry advocates also see a possible path, this year or in 2027, to extending or reviving tax credits for wind and solar projects.
In Georgia, Democrats won a majority on the five-member Public Service Commission for the first time in 31 years. In Texas, Democrat Jon Rosenthal won an open seat on the Railroad Commission, the first Democrat on the three-member body since 1990, though it keeps a Republican majority.
Source: Reuters via Investing.com
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