The real danger of killing the endangerment finding (it hurts AI)
Welcome to Callaway Climate Insights, your daily guide to global climate finance. Was this newsletter sent to you? Please enjoy and subscribe.
Today’s edition of Callaway Climate Insights is free for all our readers. We really want to bring you the best and latest in climate finance from around the world. Please subscribe now.
Much gnashing of teeth and thrashing of garments in climate circles this week as the Trump administration finally acts on its promise to wipe out the scientific finding that backstops most U.S. regulations against pollution. But aside from the symbolic meanness that is a hallmark of this administration, the immediate impact on climate of canceling the endangerment finding is quite limited.
The real impact will be on AI data centers.
Taking out endangerment — the 2009 finding under the Obama administration that pollution causes the earth’s temperatures to rise and threatens the health of humanity — basically guts the ability of the Environmental Protection Agency to issue or enforce regulations to limit greenhouse gases from factories and manufacturing plants to automobiles.
The rules have been used to great effect for two decades to protect communities around big plants and factories from aggressive pollution, such as this example in a Propublica story this week.
But aside from some minor impacts on auto companies, which can retool quicker than most manufacturers and can adjust to changes in exhaust rulings, most of what Trump’s move does is simply paralyze the manufacturing industry — including future data centers — with legal uncertainty.
The reason killing endangerment has taken so long is that the administration is not convinced it will survive legal challenges. Maybe they are now. Or they want to test it with a conservative-leaning Supreme Court. But the legal challenges are coming anyway, and they will take the rest of Trump’s term to make it to the Supremes.
That means that most manufacturers will be hesitant to make any major changes that will need to be overturned if the ruling doesn’t go through. In the meantime, the manufacturers will be subject to a barrage of conflicting state rulings, lawsuits, and likely protests, so their most likely move here is nothing.
This will be particularly painful for the burgeoning data center business, which relies heavily on natural gas to power its AI processing demands. That’s why most business leaders were against tampering with endangerment, which really has no teeth anyway if the administration behind the EPA doesn’t care about climate.
The other reason for the move this week — the meanness — is to prevent future administrations from re-enacting the finding. But a simple act of Congress will achieve that, as soon as the country gets a Democratic Congress and favorable administration.
So, as the British say, the whole thing this week is a tempest in a teacup, at least in terms of immediate impact. The tempest from global warming, as we can see from the smog in the photo from pollution-clogged New Delhi above, will come in due time.
Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.
Follow us . . . .
Twitter | LinkedIn | Facebook | Instagram
Zeus: Lessons for green energy investors from gold and silver’s collapse
. . . . It’s only been two weeks since the sudden collapse in the gold and silver rally and already investors are talking about new targets for records again, writes David Callaway. In an age in which buying the dips — and dramatic drops — has become the norm for many investors, taking aboard the history of market cycles has become less and less of a priority. It’s a lesson for climate and green investors, who have enjoyed some ups and downs but mostly ups in the past year as the data center frenzy has lifted all types of energy companies. But the potential for a big correction in AI stocks also extends to those green energy companies, and lessons like the gold drop a few weeks ago should not be ignored.
Thursday’s subscriber insights
The sustainable investing angle to the Nuveen-Schroders merger
. . . . The asset management world saw an historic merger this morning after Nuveen announced it would buy Britain’s 222-year-old Schroders Plc for $13.5 billion, a deal which creates a European fund powerhouse and also grows two already major players in sustainable investing.
Schroders is the last of the old-time British merchant banks, most of whom sold out in the 1990s when I was a young reporter covering The City in London for Bloomberg. It traces its roots to financing transatlantic trade in the 19th century but has lately become a leading green investment house, with particular emphasis on deforestation plays. The Schroder family sold the investment bank in 2014 but had kept the asset manager business until now.
Nuveen traces its own roots to 1898 although it sold itself to U.S. teacher’s pension giant TIAA in 2014. It was among the top 10 ESG fund managers in Sustainable Magazine in 2024 and together with Schroders will become one of the world’s 10 largest asset managers, with $2.5 trillion in assets under management.
These types of deals don’t come along too often so it’s worth taking note. While ESG, or sustainable investing, is out of favor for the moment in the U.S., it’s still a big deal in Europe and the UK, where the Schroders name carries enormous weight.
As with any fund merger, the deal will now kick off a major reshuffling of investing clients over the next few years as the new company, Nuveen-Schroders, takes shape. How large pensions with sustainable bents react to the new offering will be a major storyline in climate finance going forward.
Editor’s picks: Climate, insurance and municipal finances; plus, Trump wants to boost coal power
Listen to the podcast: Climate adaptation is increasingly a matter of financial resilience, not just physical protection. Across the U.S., climate risk is filtering into rising insurance costs, shifting property values and heavy reliance on property tax revenues, exposing some cities and counties to mounting fiscal strain and potential spillovers into municipal bond markets. With climate exposure, tax dependence and access to federal aid varying sharply by location, risks are emerging unevenly across the country. So how are climate stresses reshaping municipal finances, and what should investors and policymakers be watching? On this show from BloombergNEF, Tom Rowands-Rees is joined by Danya Liu, a BNEF specialist in climate resilience and adaptation, to discuss findings from her note “Climate Risk and U.S. Municipal Finances: Storm Ahead.”
Trump wants Defense to buy power from coal-fired plants
President Donald Trump plans to direct the U.S. Department of Defense to buy electricity from coal-fired power plants. Inside Climate News reports the order, first reported by The Wall Street Journal and confirmed by a White House official, comes as the administration plans to repeal the endangerment finding. “President Trump will be taking the most significant deregulatory actions in history to further unleash American energy dominance and drive down costs,” White House press secretary Karoline Leavitt said in a written statement. Erin Sikorsky, director of the Center for Climate & Security at The Council on Strategic Risks, told ICN, “It’s expensive, it’s outdated, and it just puts us at risk. Coal is just going backwards, not forwards, for the Department of Defense.”
Latest findings: New research, studies and projects
Who’s polluting in your neighborhood?
Do you know if there are major climate polluters near you? Yale Climate Connection has a report on some tools that display different types of pollution and help people learn ways to track down the sources of pollution to reveal who’s responsible. The report details online tools for finding climate pollution, including ClimateTRACE, WasteMAP. Also, information about air pollutants from the methane risk map and the TEMPO satellite project. The report lists ways and resources for tracking the source of the pollution, including power plants, landfills, gas compressor stations and large livestock operations.
Words to live by . . . .
“The hard soil and the long winter are challenges that encourage resilience.” — Andy Goldsworthy, British artist and environmentalist.