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The nations’ top bank cops are prodding major lenders to pump green dollars into low-income neighborhoods.

The nudge comes in a final rule that overhauls a decades-old anti-redlining law known as the Community Reinvestment Act. A new provision explicitly offers banks incentives to help low-income communities prepare for climate-juiced disasters, giving them “credit” for such investments when assessing CRA compliance.

Think: investments in public green space to ward off extreme heat, or flood control systems in low-lying neighborhoods. The move could prompt the banking sector to pour billions of dollars into climate adaptation as hurricanes, wildfires and drought wallop communities year after year.

It’s a “win-win situation” that could boost the resilience of threatened communities while lessening risks for banks’ local lending portfolios, said Tulane University’s Jesse Keenan, a sustainable real estate expert who has advocated for the CRA changes.

If a bank invests in infrastructure to protect a coastal town from sea-level rise, for example, it would also protect the bank’s other investments in the area, such as mortgages, auto loans and small business loans.

“It’s going to force banks to open their horizons,” Keenan said.

The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. unveiled the rule the same day they released new, long-awaited guidance on climate-related financial risk. That guidance raises the bar for how the largest banks — those with more than $100 billion in assets — should handle their exposure to extreme weather and the clean energy transition.

The political upshot

The news comes at a fraught time for financial regulators, who in recent years have launched a range of climate-related efforts. Those efforts have sparked fierce opposition from Republican officials who accuse them of straying into climate policy and attempting to bankrupt planet-warming industries.

Some Republican members of the Fed and FDIC aired their own concerns with the proposals Tuesday. FDIC Vice Chair Travis Hill, for instance, did not support the climate guidance, arguing that issuing climate-related guidance is premature and unnecessary.

The two actions ultimately received enough support to be finalized. But regulators still appeared eager to head off potential criticism.

Top officials spent little time — or, in some cases, no time — highlighting the CRA’s new climate provisions. And FDIC Chair Martin Gruenberg emphasized that his agency “is not responsible for climate policy and does not tell banks which customers to serve.”

It’s Wednesday — thank you for tuning in to POLITICO’s Power Switch. I’m your host, Arianna Skibell. A huge thanks to Avery Ellfeldt for writing our lead story today. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy.

Send your tips, comments, questions to [email protected]. And folks, let’s keep it classy.

Today in POLITICO Energy’s podcast: Zia Weise breaks down the latest sticking points in global negotiations about how to set up a new international climate fund for developing countries.

After three weeks of chaos, House Republicans today elected Mike Johnson to be speaker. The fourth-term Louisianan clinched the new job with 220 votes. He is the fourth nominee since California Rep. Kevin McCarthy was ousted.

Johnson has received more campaign money from the oil and gas industry over the course of his seven-year congressional career than any other industry, and he has repeatedly downplayed climate change, write Emma Dumain and Kelsey Brugger.

Musk joins SCOTUS battle
Tesla CEO Elon Musk is dipping into a Supreme Court showdown that has the potential to handcuff federal environment and energy regulators, writes Pamela King.

Musk, along with other business magnates, signed on to a “friend of the court” brief in support of hedge fund manager George Jarkesy, who claims that he is facing unconstitutional enforcement action by in-house judges at the Securities and Exchange Commission.

Quest for nuclear revival
Centrus Energy, a nuclear fuel company, is on a mission to revitalize the nation’s nuclear power industry, writes Jeffrey Tomich.

The company hit a major milestone this month when it opened the first new uranium enrichment production plant on U.S. soil in 70 years.

Greens’ EU election campaign
Terry Reintke, a German member of the European Parliament, announced her candidacy today to lead the European Green Party, writes Eddy Wax.

“I want a Europe that fights for climate justice. A Europe of fair wages and good work. A Europe of freedom and democracy. I want to bring Europeans together to make this happen,” Reintke said.

Cutting-room floor: Honda and General Motors have scrapped a $5 billion plan to co-develop cheaper electric vehicles.

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United Nations scientists issued a warning that human activities are sending the planet hurtling toward a series of dangerous tipping points, which could reshape life on Earth.

General Electric is projecting a $1 billion loss this year for its offshore wind business as the industry grapples with inflation and an immature supply chain.

A House Energy and Commerce subcommittee advanced four GOP-led bills aimed at taking down EPA’s power plant rule and restricting new energy efficiency standards.

That’s it for today, folks! Thanks for reading.