Leftists are desperate to have the Federal Reserve cut interest rates, believing that higher rates are hampering the “country’s ability to combat the climate crisis.”
As the media increasingly speculates about the prospect of the Federal Reserve cutting rates in September, clean energy companies and their backers on Wall Street are hoping that the presumed rate cuts would alleviate the heavy borrowing costs for “Big Renewables” over the last two years.
Charlie Gailliot, a global cohead of climate at the private equity firm KKR, said, “The energy transition is very capital-intense. In a lower rate environment, you’ll see a tailwind for the renewable energy industry.”
Semafor’s Tim McDonell wrote:
But interest rates touch on a particularly sore spot for the industry: its ability to turn a profit in the volatile, cutthroat power market. Cheaper borrowing means better margins, and gives the industry a buffer, albeit modest, against the political risk to the energy transition from Donald Trump’s presidential campaign.
Renewables started to go mainstream during the 2010s in a period where interest rates were at or close to zero, a kind of training-wheels environment in which cheap borrowing made it easier for project developers to deliver on their investors’ profit expectations.
Jen Harris, the director of the Economy and Society Initiative at the William and Flora Hewlett Foundation, wrote about how the Federal Reserve raising interest rates to fight inflation is “slowing our fight against climate change:”
In March, Sens. Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI) wrote to Federal Reserve Chair Jerome Powell, arguing that higher interest rates are blocking America’s transition to green energy:There is also the damage that unnecessarily high interest rates are inflicting on our battle against climate change. Clean energy projects typically involve heavier upfront financing costs that become more expensive with higher rates. A 2020 report estimated that raising rates to 7 percent from 3 percent could increase the cost of a renewables project by roughly a third for projects in the United States. And of course, higher interest rates have hurt poorer consumers who depend on variable credit card rates and auto loans.
Your decision to rapidly raise interest rates beginning in 2022, and the potential that they may remain too high for too long, has halted advances in deploying renewable energy technologies and delayed significant climate and economic benefits from these projects. Even as demand for clean solar, wind, and electric power grows – driven by the Inflation Reduction Act’s (IRA) federal tax incentives – the Fed’s interest rates have stalled progress and hampered the country’s ability to combat the climate crisis.
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Your interest rate increases have jeopardized the IRA’s opportunities to create new green jobs and cut electricity costs, despite the Fed’s mission to “promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy.”
Watch — Warren: Republicans Want the Fed to “Raise Interest Rates and Put Millions of People out of Work”
The Senate Democrats concluded, “As you consider the Fed’s interest rate policies in the upcoming March Federal Open Market Committee meeting and beyond, we urge you to cut interest rates throughout 2024 to allow for continued progress on clean energy projects and the climate and economic benefits these projects provide.”
Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter @SeanMoran3.
