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Even critical minerals can get complicated.

In northeastern Minnesota, a fight over the proposed NewRange Copper Nickel mine, better known as PolyMet, has dragged on for nearly two decades. Permits have been issued and revoked; state and federal agencies have been sued. The argument at the heart of the saga is familiar: Whether the pollution and disruption the mine will create are worth it for the jobs and minerals that it will produce.
The arguments are so familiar, in fact, that one wonders why we haven’t come up with a permitting and approval process that accounts for them. In total, the $1 billion NewRange project required more than 20 state and federal permits to move forward, all of which were secured by 2019. But since then, a number have been revoked or remanded back to the permit-issuing agencies. Just last year, for instance, the Army Corps of Engineers rescinded NewRange’s wetlands permit on the recommendation of the Environmental Protection Agency.
The messy history of this mine displays the difficult decisions the U.S. faces when it comes to securing the critical minerals that are key to a clean energy future — and the ways in which our current regulatory and permitting infrastructure is ill-equipped to resolve these tensions.
All sides in this debate recognize that minerals like nickel and copper are vital to the energy transition. Nickel is an integral component in most lithium-ion EV battery chemistries, and copper is used across a whole swath of technologies — electric vehicles, solar panels, and wind turbines, to name a few.
“We recognize that you're going to need copper, nickel, and other minerals in order to have a functioning society and to make the clean energy transition that we're all interested in,” Aaron Klemz, Chief Strategy Officer at the Minnesota Center for Environmental Advocacy, told me. But along with a number of other environmental groups and the Fond du Lac band of the Minnesota Chippewa tribe, which lives downstream of the proposed mine, MCEA opposes the project. “You can’t not mine. We understand that. But you have to take it on a case-by-case basis.”
On the one hand, the Duluth Complex, where the NewRange mine would be sited, contains one of the world’s largest untapped deposits of copper, nickel and other key metals. However, the critical minerals in this water-rich environment are bound to sulfide ores that can release toxic sulfuric acid when exposed to water and air. The proposed mine sits in a watershed that would eventually flow into Lake Superior, a critical source of drinking water for the Upper Midwest.
Many advocacy groups believe water pollution from the mine is inevitable, especially given NewRange’s plans for its waste basin. The current proposal involves covering the waste products, known as tailings, with water and containing the resulting slurry will with a dam. That’s considered much riskier than draining water from the tailings and “dry stacking” them in a pile. NewRange’s upstream dam construction method is also a concern, as the wet tailings can erode the dam’s walls more easily than with other designs. An upstream dam collapsed in Brazil in 2019, leading the country to ban this type of construction altogether.
And lastly, there’s the narrow question of the NewRange dam’s bentonite clay liner. Late last year, an administrative law judge recommended that state regulators refrain from reissuing NewRange’s permit to mine on the grounds that this liner was not a “practical and workable” method of containing the tailings.
Christie Kearney, director of sustainability, environmental and regulatory affairs for NewRange Copper Nickel, called these criticisms “tired and worn talking points” in a follow-up email to me, and said that the concerns simply don’t hold water “after the most comprehensive and lengthy environmental review and permitting process in Minnesota history.” The bentonite issue in particular, she told me, represents one of the main reasons permitting has been so challenging. “Instead of allowing agencies (who have the expertise) to make these decisions as established in Minnesota law, the regulatory decisions get challenged in court by mining opponents, leaving it to judges (who don’t have the technical expertise) to make these determinations,” she wrote.
The whole process could have gone more smoothly if all the stakeholders were involved from the beginning, she told me when we spoke. “In particular, we have a number of state permits that are overseen by the EPA, yet the EPA isn't involved until the very end, which has caused frustration both in our environmental review process as well as our permitting process.”
Klemz has another approach to ending the confusion. What is needed, he said, is a pathway to shut down projects once and for all if they’re deemed too environmentally hazardous. “There is no way to say no under the system we have now,” he told me. While courts can deny or revoke a permit, companies like NewRange can always go back to the drawing board and resubmit. “What we have instead is a system where the company has the incentive to keep on trying over and over and over again, despite whatever setback they encounter.”
While there’s no systematic way to block a mine, myriad avenues can lead to a “no.” Last year, the federal government placed a moratorium on mining on federal lands upstream of Minnesota’s Boundary Waters Canoe Wilderness Area, effectively shutting down another proposed copper-nickel mine. And the EPA banned the disposal of mine waste near Alaska’s proposed Pebble mine, blocking that project as well.
It’s a delicate balancing act, because ultimately the administration does want to incentivize domestic critical minerals production. The Inflation Reduction Act provides generous tax credits for companies involved in minerals processing, cathode materials production, and battery manufacturing. Then there’s the $7,500 credit available to consumers that purchase a qualifying EV, which depends on the automaker sourcing minerals from either the U.S. or a country the U.S. has a free-trade agreement with.
Under the current interpretation of the IRA, it’s possible that none of this money would flow directly to NewRange, since mineral extraction isn’t eligible for a tax credit, and it’s yet unclear whether the company will process the metals to a high enough grade to be eligible for credits there, either. Automakers that source from NewRange could benefit, but the project doesn’t currently have offtake agreements with any electric vehicle or clean energy company. That’s something that critics of the mine point to when NewRange touts its clean energy credentials.
“It's much more likely that this will end up in a string of Christmas lights than it will end up in a wind turbine in the United States,” Klemz told me. Of course, more critical minerals in the market overall will lower prices, thereby benefiting clean energy projects. But NewRange is a less neat proposition than, say, the proposed Talon Metals nickel mine, which is sited about two hours southwest of NewRange. As MIT Technology Review reports, this mine could unlock billions in federal subsidies through its offtake agreement with Tesla.
That hasn’t inoculated Talon from fierce local opposition, either. “As disinterested as the public may be in a lot of things, they are really engaged in a new mining project in their backyard,” said Adrian Gardner, Principal Nickel Markets Analyst at the energy and research consultancy Wood Mackenzie, which has been tracking both the Talon and NewRange mine since they were first proposed.
The Biden administration is also engaged. Two years ago, the Department of the Interior convened an interagency working group to make domestic minerals production more sustainable and efficient, starting with the Mining Law of 1872 — still the law of the land when it comes to new mining projects. The group released a report last September recommending, among other things, that the Bureau of Land Management and U.S. Forest Service provide standardized guidance to prospective developers and require meetings between all relevant agencies and potential developers before any applications are submitted. That means Congress will need to provide more resources to permitting agencies.
Those resources could come from a proposed royalty of between 4% and 8% on the net proceeds of minerals extracted from public lands, a fee that would also go to help communities most impacted by mining. The National Mining Association, of which NewRange is a member, has come out strongly against the report’s recommendations, highlighting the high royalties as a particular point of contention.
But many of the report’s proposals might have helped NewRange in its early days. “There were a lot of early missteps by the company,” Kearney admits. “The first draft [Environmental Impact Statement] that the company went through received a very poor reading from the EPA, and the company went back to its drawing board, changed out its leadership and its environmental leads.”
More stern rebukes, of course, would be the ideal for many advocacy groups. “I don't know how they could redesign it quite honestly, given what we know about the science, to comply with the law,” Klemz said.
Kearney is adamant, though, that even after five years of litigation, NewRange has no plans to give up the fight. “Not many companies can weather that,” Kearney said. Not many companies, however, are backed by mining giant Glencore. PolyMet, the project’s original developer, “really only survived because Glencore came in a few years back and invested over time until the point where they got 100% control,” Kearney told me.
Glencore, a $65 billion Swiss company, is pursuing the NewRange project in partnership with Teck Resources, which is worth $20 billion. The companies can afford to fight for a very long time, meaning nobody knows quite how or when this all ends.
“We do need this material. I get that,” Klemz told me. “So I don't really know if there's going to be some kind of neat future resolution to this.”
Kearney put it simply. “We don't have a timeline right now.”
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A new version of the bill strives to address environmental and tribal concerns while strengthening some of its transmission provisions.
We now have the updated final text of the bipartisan Senate permitting deal. Will it be enough to get the bill across the finish line?
On Saturday morning, senators released a reworked version of the Bipartisan Affordability and American Jobs Act. This version, known as a “manager’s amendment” under parliamentary procedure, aims to address many of the concerns and criticisms raised about the bill and will become the official legislative text that ultimately gets a vote in the Senate. There’s something in these changes for everyone – environmentalists, tribes, utilities – but it remains to be seen if they put the bill into a Goldilocks zone.
Let’s walk through some of the most significant changes. There are a lot of changes, and we’re sure people will spend the coming weeks poring over them, but here are a few key ones.
The amendment preserves — and even strengthens — many of the bill’s most important (and praised) transmission provisions, while addressing and easing some of the loudest Republican criticisms of the bill.
The new text leaves the bill’s core transmission mechanisms intact: Every grid region will have to run a long-term planning process with its neighbors, overseen by the Federal Energy Regulatory Commission, focused on how it can build more interregional lines. The bill lays out how these new power lines should be paid for, via a cost allocation formula that says customers who benefit from the lines need to pay for them. And it creates a new federal siting backstop, which allows the federal government to step in and approve the route for a line if a state has refused to do so.
The amendment deals with one of the provisions that faced the most criticism from former Republican regulators and ends one — but not all — of the bill’s mandates for vertically integrated monopoly utilities, which are largely in the Southeast.
In return, it strengthens the bill’s federal backstop siting provision for transmission lines, and it makes the overall bill more useful for transmission developers. It also clarifies that transmission developers can use some of the bill’s expedited powers without needing to use all of them.
“I think there’s some really good improvements in [the new text], and they provide more flexibility for more types of projects to go through,” said Rob Gramlich, a longtime advocate of federal transmission reform and the president of Grid Strategies, a power sector consulting firm.
In the original bill, a transmission developer could apply for state permits and the FERC federal backstop permit at the same time. A former Republican FERC Commissioner Mark Christie had savaged that provision, arguing recently in Utility Dive that it “effectively renders the state proceeding meaningless, and states will perceive it exactly that way.”
Now, for some advocates, rendering the state process moot was the whole point. But it also wasn’t clear whether developers would ever actually go to FERC and states simultaneously. Doing so would shove a finger in the eye of state regulators, essentially telling them, “We can do this the easy way or the hard way.” The amendment removes the possibility of a simultaneous process; now developers must go to states for a year before they apply for the federal backstop.
The new version of the bill also exempts vertically integrated utilities that aren’t in an electricity market from an otherwise mandatory new process that will require utilities to plan their long-term transmission and their power plant expansion at the same time. That new process is inspired by the planning process used in the Southwest Power Pool, a Midwestern electricity market Midwestern grid.
The Southeast’s monopoly utilities, which are vertically integrated and don’t participate in a regional transmission organization, had disliked that provision, and it wasn’t clear the bill as written actually worked for their operations. That requirement has now been removed from the bill. Utilities won another victory by preserving existing rights of first refusal to build transmission infrastructure in federal law.
But they didn’t win every fight. These utilities will still be subject to the mandate requiring them to participate in an interregional planning process for transmission.
And the utilities will remain subject to a provision, particularly praised by anti-monopoly advocates, that allows states and FERC to exercise oversight over local transmission projects that can drive up electricity costs. The new bill clarifies that state public utility regulators are responsible for asking FERC to investigate these types of projects, and that a utility can invite scrutiny even if it’s replacing an old line, not just building a new one.
“I am relieved that the section survived generally, given what a target this was for utility lobbying. It was strengthened significantly by covering replacement of local facilities in addition to new-build,” David Pomerantz, the executive director of the utility watchdog the Energy and Policy Institute, said in a statement.
In return, Democrats secured a few big changes in the bill that could benefit transmission developers. First, transmission projects will now be able to use the bill’s cost allocation formula even if they don’t use the federal backstop authority. Second, transmission developers will be able to use the bill’s cost allocation formula for only part of their projects.
This makes the bill better in a few ways for transmission developers. First, a developer could get a route entirely approved by the states without having to come up with a new way to pay for it — they can use the formula that’s already in the bill. It also means a power line could use the formula to monetize one of its benefits to the grid without using them all. That could sweeten the economics for projects meant to, say, arbitrage power between two regions, allowing it to make money off its reliability benefits without altering its broader economics.
The amendment also clarifies that the new federal backstop siting authority applies to state-owned land. That closes a potential loophole in which a state government could acquire land from a property owner in order to block a federally approved project from getting built.
The bill also makes some technical changes to the 230-kilovolt floor for projects that can use the federal backstop. It establishes that a line using advanced conductoring technology — which generally allows more electricity at lower voltage — can use the backstop even if it’s not at least 230 kilovolts. But it must have a throughput roughly similar to what a conventional line of 230 kilovolts would have.
The amendment also makes it clear that a utility can’t decline to upgrade a piece of infrastructure — even one at lower voltage — in order to block a transmission line. In 2021, the utility NextEra had fought a major power line in Maine because it required the utility to upgrade a single power circuit at its Seabrook nuclear plant in New Hampshire.
These provisions broadly strengthen the most popular parts of the bill and may address some concerns from southeastern utilities, which could have torpedoed the bill in the House of Representatives.
At the same time, new text attempts to assuage opposition in both the environmental and tribal advocacy spaces, and it’s undeniable that on first blush, the manager’s amendment does address complaints from those camps about the bill. But as we’ll explain however, it’s unclear if this will be good enough for either community to lay down their arms.
First, Senate negotiators clearly took complaints about the “project certainty” provision seriously, including by dealing with language that would allegedly protect unlawful actions. Under the new bill text, agencies will be explicitly allowed to revoke or alter permits “in response to an order by a court”. The prior text of the bill did not grant federal agencies this explicit jurisdiction and said it could only rely on court orders to make those permit changes if a judge required it. As our colleague Emily Pontecorvo recently wrote, some environmental lawyers were concerned that this original text would inadvertently protect individual permits granted under policies that violated the law.
Other changes are similarly geared towards addressing complaints in the environmental legal space. The original text of the bill allowed companies to sue the federal government for “disparate treatment” against their industry, which would theoretically assist renewable energy companies gain legal leverage against the Trump administration’s permitting freeze. However, the old text used a 5-year baseline of past projects for determining “disparate treatment,” which could mean the president’s anti-wind and pro-fossil actions weren’t built into the baseline. The new bill extends that baseline to 10 years, potentially diluting the influence of Trumpian permitting practices over the next administration.
New language would explicitly stipulate that court settlements brought under these lawsuits must be approved by a court, an apparent nod to claims from critics that this provision could encourage more offshore wind buyouts.
The new text also cuts out or modifies reforms to the National Historic Preservation Act geared towards addressing complaints from Native American tribes. It strikes a controversial attempt to define “property of traditional religious or cultural importance” that was in the original text, and it eliminates a much-maligned provision that would let the Interior Secretary assume the role of a tribal historic preservation officer in certain cases.
These changes were insufficient to thaw the bloc of tribes opposed to the bill. The 106 Coalition, a group of tribal organizations including the National College of American Indians, sent a statement to media saying they’ll still oppose the bill and want the entire section of NHPA changes removed. The leader of the Coalition of Large Tribes, which has pushed for technical fixes to the bill but not opposed it outright, said in a statement it was “grateful to see many positive changes for tribes” but added there was “still room for improvement.”
Lastly, the new version of the bill adds another provision to address concerns that it doesn’t do enough to address the national backlash to data centers, which opponents have argued is necessary.
As we’ve explained, the bill already would create the toughest measure against data centers ever enacted – a ratepayer protection program that would let states and utilities require data centers to pay full freight for system upgrades. And now the bill would additionally create a new federal Data Center Community Assistance Program within the Energy Department whereby local communities could request assistance from agencies to get information and technical expertise on how data centers work and what impacts specific projects could have on their areas. The language mirrors legislation introduced last month by Sens. John Curtis of Utah and Lisa Blunt Rochester of Delaware.
Such a program could be a big deal. But it’s important to emphasize that the text leaves a lot of details to be worked out. It does not say how this program would be set up within the Energy Department and the provision does not explicitly lay out funding authorization language.
The amendment also closes a loophole that might have allowed data centers with behind-the-meter natural gas power plants to profit by selling excess power to the grid. The original bill contained a provision meant to force grids to allow more residential batteries or the creation of virtual power plants. But that provision, as written, could have applied to behind-the-meter gas plants at data centers. The new text clarifies that the requirement only applies to resources below 5 megawatts, which is smaller than a data center power source.
It remains to be seen whether these changes and the myriad other tweaks to the bill’s project certainty and historic preservation titles will win over lawmakers previously hesitant to vote yes.
The Wilderness Society, whose president is Tracy Stone-Manning, Biden’s former director of the Bureau of Land Management, released a statement shortly after the new bill text was released reaffirming its opposition. “Americans deserve permitting reform that isn’t crafted behind closed doors and rushed to the Senate floor,” Manning said in a statement. Meanwhile, House Natural Resources Jared Huffman provided comments to Punchbowl News reacting to the text that said some of the changes to the permit certainty provision represented an “improvement” but “we could improve it further in this and other areas with a hearing and a more open negotiation process with more Democrats in the room.”
It’s unclear these voices would ultimately ever support this bill. “Manager’s [amendment] does a good job of accounting for the stated concerns of anybody looking to get to yes,” Liam Donovan, a veteran GOP political strategist, wrote on the social network X.
The Senate is scheduled to vote Monday on a motion invoking cloture – ending debate – on the permitting bill, per the Senate cloakroom. The motion will require at least 60 votes to pass. Senators are probably hoping for far more than 61 votes though, because as we’ve explained, House legislative rules may require overwhelming bipartisan support to get the measure to the president’s desk.
The “35x35” electrification pledge and an AI pledge are on the table.
World leaders are flocking to the Mediterranean resort town of Antalya, Turkey, this weekend for the 31st United Nations Climate Change Conference, also known as COP31. The U.S., of course, will once again not attend, as President Trump not only withdrew the country from the Paris Agreement but also from the United Nations Framework Convention on Climate Change, the umbrella group that organizes the annual conferences. Still, 194 other governments will be there, putting their heads together on how to move another few inches toward a safer future.
This year, as with the last several convenings, the meeting arrives against a backdrop of geopolitical instability, worsening climate impacts, and growing concern about energy security and affordability. While conflicts like the Iran war in some ways bolster the case for the energy transition by surfacing the risks of fossil fuel dependence, prioritizing energy security can manifest as countries turning inward and showing less willingness to work for the global good.
Perhaps the biggest item on this year’s agenda is the “35x35” pledge, Turkey’s proposal to electrify 35% of the world’s final energy use by 2035, up from about 23% today. That would mean switching from gas-powered cars to electric vehicles and from burning fuels for heat to electric heat pumps. It would not necessarily mean generating all of the electricity to power those devices from clean sources, although countries have committed to triple renewable energy capacity during previous COPs. Turkey itself does not have a plan to phase out fossil fuels, and its use of coal and natural gas-fired power plants has been growing alongside renewables.
It’s not yet clear whether Turkey will encourage countries to sign onto the pledge outside of the main negotiations or try to get it into the final decision text of the conference. In a twist, the conference has two countries sharing the presidency this year, with Turkey playing host and overseeing the “action agenda” — the announcements, commitments, and dealmaking that happen outside the official negotiations — and its co-chair, Australia, mediating the formal talks.
In addition to the electrification goal, Turkey is also inviting countries to sign an artificial intelligence pledge declaring a “shared ambition to make AI part of the climate solution — sustainably powered, efficiently designed, transparently measured and available to all.” The pledge has no teeth, however, as it explicitly states that it creates “no new obligations” and notes that it should be implemented according to national priorities and circumstances.
Although there will be no big agreement like there was in Paris in 2015, the two weeks of talks will end, per usual, with a consensus document that summarizes the outcomes of the negotiations. The final text from last year’s conference in Belém, Brazil, set a new goal to triple finance for climate adaptation by 2035. Countries also agreed to create a “Just Transition Mechanism,” a program to help fossil fuel-based economies navigate the socioeconomic consequences of shifting to clean energy. But the final text at COP30 did not ultimately mention the creation of a roadmap to transition away from fossil fuels, despite more than 80 countries supporting the idea, and didn’t, in fact, mention “fossil fuels” at all.
Much of the work this year will be about building on those outcomes. The climate adaptation finance goal, for example, is still fuzzy, as the parties did not agree on a baseline year from which to triple the funding, or define what types of finance count toward the goal, meaning it’s unclear what the actual target amount for 2035 is. The Just Transition Mechanism is similarly skeletal — negotiators will need to hammer out how to operationalize it into something useful. Countries are also supposed to make progress on the Global Goal on Adaptation, an as-yet ill-defined goal first established in the Paris Agreement that negotiators are still working out how to implement.
Then there’s the overarching theme of finance. As I’ve written in the past, every annual climate conference is ultimately a fight over money — specifically how much developed countries are sending to developing countries to help them fight climate change and respond to its effects.
To date, countries have agreed to mobilize $1.3 trillion annually in climate finance from all sources for developing countries by 2035, with $300 specifically coming from developed countries. Climate finance reached record levels in 2024, the most recent year with comprehensive data, with total global flows hitting $2 trillion and funding from developed to developing countries reaching $136.7 billion.
But progress is uneven. Only 2% of global investment in renewable energy over the past two decades went to Africa, said Brian Mukhaya, a senior manager on the Clean Air Task Force’s Africa team, during a recent media briefing. Finance challenges may also collide with the conference’s electrification goal. More than 550 million people in sub-Saharan Africa lack access to electricity, Mukhaya said, and the continent will need seven to eight times current investment levels to achieve universal electricity access by 2030. Also, while the rising cost of capital is becoming an impediment to building clean energy projects everywhere in the world, the problem is acute in Africa, where the average cost of capital for power-sector investments is three to five times higher than in Europe and North America.
At COP31, negotiators will try to make progress on questions such as what form climate finance should take (grants, concessional loans, private finance, etc), how it can be more effectively distributed, and what it should be used for.
Another question hanging over this year’s conference is whether the final text will acknowledge the likelihood of surpassing 1.5 degrees Celsius of warming above pre-industrial levels, the more ambitious target laid out in the Paris Agreement. Last year’s decision text contained a tacit admission, with countries resolving to limit “the magnitude and duration of any temperature overshoot.” Doing so requires a more serious discussion of carbon removal strategies than delegates have engaged in to date.
With the world seemingly careening past the 1.5 degrees target, the annual climate talks have lost some of their luster. Critics increasingly call for a new approach. Ani Dasgupta, the president and CEO of the World Resources Institute, for example, wants the COPs to center more on accountability and holding countries to their commitments. He also recommends developing a new decision-making process that does not allow a handful of countries to block decisions. Since the substance of the negotiations is becoming more and more about how to finance the transition, he argues the conference should also broaden its tent to bring in finance ministers and central banks.
“Where we are today is different from 1992 when COPs were set up,” he said during a recent press call. “The world is different. The broader needs are different. We are at a different place in the transition. And we actually haven't reformed the system.”
Progressive candidate Jane Kim declared victory in the race for California Insurance Commissioner.
Few political wonks outside of California were likely paying much attention to the Golden State on Tuesday night, as Democrats’ anticipated blue wave crested. But the state did have one close, consequential race on the ballot: insurance commissioner. On Friday, Bernie Sanders-endorsed progressive Jane Kim won the race to lead the California Department of Insurance, which oversees the state’s $452 billion insurance market.
Kim declared victory over the more moderate State Senator Ben Allen, who was backed by the California Democratic Party, after reaching a nearly six-point lead on Friday. In a brief speech before supporters, Kim said Allen called to congratulate her that morning. (A spokesman for the Allen campaign confirmed the call to The Orange County Register.) Kim ran on a proposal for a state-run, single-payer insurance program that would cover homeowners against wildfire damage — though the plan would ultimately need approval from both the California legislature and Governor-elect Xavier Becerra.
The idea is that homeowners would automatically receive public coverage for wildfire-related losses, with payouts capped at roughly what it costs to rebuild a typical California home. Policyholders would keep their regular private insurance for other risks such as theft, burst pipes, or an ordinary kitchen fire. Kim says Californians wouldn’t pay more overall, since the money for the program would come from the share of premiums that already goes toward wildfire coverage, though each household’s bill would partly depend on its own wildfire risk.
“It would be nonprofit, and so any excess capital would stay in the state of California and would be used to drive down risk,” Kim told my colleague Matthew Zeitlin a few weeks ago. “That’s the most important piece about this actually, is that it would create another revenue stream for mitigation.”
The insurance commissioner job has taken on an increasing sense of urgency as wildfires — intensified by climate change — continue ripping through communities in California. Mounting losses from hotter, drier conditions combined with decades of new construction in the wildland-urban interface have squeezed insurers’ profits, leading many to drop policyholders in high-risk areas or simply stop writing new policies in the state altogether.
California’s homeowners insurance premiums climbed 84% between December 2020 and March of this year, according to Stanford researchers. Meanwhile, a growing number of residents have been pushed onto the state’s FAIR Plan, which my colleague Matthew described as “the barebones insurer of last resort.” The share of California’s single-family homes covered by the plan has nearly tripled over that same period, from under 2% to about 5%, as homeowners in even low- and moderate-risk wildfire areas increasingly find themselves with few alternatives.
The insurance crunch has become yet another front in California’s broader affordability crisis, alongside persistently high housing, electricity, and gasoline costs. Kim’s victory suggests frustrated voters are increasingly willing to support more radical solutions that once seemed politically out of reach. And while Kim doesn’t have a background in the insurance industry, she’s no stranger to public office. The former civil rights attorney served on the San Francisco Board of Supervisors from 2011 to 2019 before becoming a regional director for Sanders’ 2020 presidential campaign.
But throughout her run for the Insurance office, critics have continually questioned how, exactly, her plan would work. No state has attempted a public disaster insurance program like this before; critics argue there’s no relevant model to work off of, no white paper laying out the details, and no price tag attached to the idea. Kim herself acknowledges that there’s plenty of uncertainty surrounding the plan. “This is a concept and a proposal, and could look quite different by the time it works its way through the process,” she told Matthew. In other words, the program that eventually emerges from negotiations with lawmakers — if one does — could end up looking considerably different from what Kim campaigned on.
Her opponent, Allen, who chairs the state senate’s Energy, Utilities and Communications Committee, argued that creating a public wildfire insurance program would impose a significant financial burden on the state. The California Earthquake Authority, an agency that sells earthquake insurance and administers the state’s Wildfire Fund, examined the potential costs of such a program this spring, estimating it would require roughly $25 billion upfront to have a 75% chance of staying solvent for 20 years. But Kim points out in her policy brief that buying reinsurance — essentially insurance for the insurer — could cut that to about $6 billion.
Allen, on the other hand, pitched a series of reforms to the existing market, including speeding up rate reviews, rewarding homeowners and communities for wildfire mitigation, expanding financing for home-hardening projects, and discouraging development in high-risk areas.
Voters opted instead for the insurance revolution. But Kim argues that her plan isn’t totally without precedent. On the campaign trail, she frequently pointed to New Zealand, where the government’s Natural Hazards Commission provides homeowners with public coverage for disasters including earthquakes, landslides, volcanic eruptions, and tsunamis — though notably not ordinary wildfires. And while France and Spain also operate state-backed disaster insurance programs, these don’t cover wildfires either, a far more common occurrence in California than the comparably rare disasters these programs were built around abroad.
Ultimately, Kim’s ambitious plan will require a champion in the legislature to go anywhere. But in the meantime, there are other issues she could get to work on. On the campaign trail, she said she wants to push insurers to fund a disaster mitigation program run by the Department of Insurance, require companies selling auto policies in a region to also offer homeowners coverage there, and impose minimum loss ratios compelling home insurers to pay at least 65% of premiums in claims and auto insurers at least 70%. It’s unclear, however, whether Kim can implement either of the latter two proposals without new legislation.
Kim will also immediately face the question of what to do with outgoing Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy reform package. Designed to entice insurers back to California, these new rules allow companies to set premiums using forward-looking risk models rather than relying on historical losses, and to pass a portion of their rising reinsurance costs onto policyholders. In exchange, insurers are required to write more policies in wildfire-prone areas.
Kim has criticized this approach, arguing that insurers have exploited loopholes to raise premiums on lower-risk customers while continuing to underserve high-risk communities, all without doing enough to address the underlying factors driving wildfire risk.
That leaves Kim in a tricky situation. Until she is able to secure legislative backing for some version of her proposed public insurance program, she’ll have to decide whether to scrap or simply build on the existing reforms. She hasn’t yet laid out any plan for doing so. But whatever direction she takes could ultimately reshape California’s insurance market well before a new state insurer gets off the ground.