A recent report by the Center for Climate and Energy Solutions (C2ES), Weathering the Storm: Building Business Resilience to Climate Change, evaluates how companies view risks posed by climate change. C2ES, formerly the Pew Center on Global Climate Change, found that 90 percent of companies in Standard and Poor's (S&P's) Global 100 Index identified extreme weather and climate change as current or future risks in public disclosures. Of those companies, 60 percent have experienced climate-related impacts or expect to within 10 years.
The purpose of the report is to take an in-depth look at whether and how companies are responding to the increased risks and pressures presented by climate changes and extreme weather risks. It examines how companies perceive and manage these risks as well as potential business opportunities, describes common business practices for evaluating and building resilience to physical impacts, and presents a framework for emerging best practices used by leading companies to manage the risks of extreme weather and climate-related impacts. Specifically, it examines:
- the extent to which companies acknowledge risks from the physical impacts of extreme weather and climate change
- drivers motivating companies' actions to build resilience to climate change impacts
- steps taken by companies to assess potential vulnerabilities
- actions undertaken to more effectively manage the risks and maximize any opportunities
- tools and methods used by companies to assess risks and opportunities
- barriers preventing companies from taking more focused and forward-looking action
While generally all industry sectors acknowledged climate risks, uncertainty about climate changes presents difficulties when decisions need to be made today that have long term impacts on business. Nearly one quarter of the S&P Global 100 companies report as a challenge the uncertainty associated with the nature, timing, location or severity of climate change impacts for deciding how and when to invest in resilience beyond what is considered business as usual.
The report highlights the top five current or expected impacts from changing climate:
- Reduction/disruption in production capacity (e.g., power outage or shortage of key input)
- Increased operational cost (e.g., higher costs for key supplies or backup power)
- Inability to do business (e.g., damage to facilities, communications or transport systems)
- Increased capital cost (e.g., plant or equipment upgrades, higher insurance prices)
- Reduced demand for goods/services (e.g., shifting market preferences or ability to pay)
The report provides case studies of various companies and significant insights into climate views on business decisions. The report also offers a four-step framework for managing risk.
The report, Weathering the Storm: Building Business Resilience to Climate Change, is available at http://www.c2es.org/docUploads/business-resilience-report-07-2013-final.pdf.
In a recent report, Climate Change Preparedness and the Small Business Sector,Small Business Majority and the American Sustainable Business Council analyze how small businesses, which can be particularly at risk during the extreme weather events related to climate change, can not only survive the increasing impacts of climate change but benefit from investing in climate preparedness. The authors emphasize that increasing weather variability and extremes is impacting the economy on all levels – the report notes that the U.S. GAO has determined that climate change presents a significant financial risk to the federal government and therefore added climate change to its 2013 “High Risk” list, which identifies federal agencies and program areas deemed to be high risk due to their vulnerabilities and/or need for transformation – but that small businesses are “uniquely vulnerable” due to a variety of factors. For example, small businesses tend to have less access to capital and resources; and small businesses more often operate out of a single physical location and get the majority of their business from the immediate area.
The authors observe that historical responses to climate change have emphasized mitigation efforts such as reducing greenhouse gases but that more recently there has been increased focus on adaptation and preparedness. The report presents several case studies of the efforts of certain small businesses to build climate resilience into their businesses and closes with initial recommendations for small business owners wishing to integrate climate-related strategy into their business plans:
- Identify a business continuity plan / risk management plan (to identify the risks of climate change impacts specific to one’s business).
- Partner with local authorities (promotes information sharing and helps identify potentially helpful financial incentives).
- Use education and outreach (raises awareness of the potential impacts of extreme weather events).
- Seek input from the community.
- Call for action to address climate change across local, state, and federal levels.
On July 24, 2013, the Board of Commissioners of the Southeast Louisiana Flood Protection Agency – East, sued approximately 100 oil and gas production and pipeline companies in state court. The lawsuit alleges that the defendants have been using Louisiana's coastal zone for over 100 years to extract oil and gas products. As part of the exploration and production of oil and gas in the coastal zone, the defendants dredged thousands of miles of pipeline and access canals and have altered the hydrology of the coastal area.
The Board was created to coordinate flood protection and work with local, regional, state and federal authorities to reduce the risk of flooding of the residents in its jurisdiction. The Board has jurisdiction over three districts, which include the city of New Orleans. The Board alleges that the coastal lands that have been destroyed are an integral natural component to its flood-protection system. The Board argues that coastal lands buffer populated areas from hurricane storm surge and help to reduce the intensity of hurricanes as they travel over coastal land before reaching populated areas. The complaint states that coastal lands that have historically protected the City of New Orleans have been reduced by more than half in recent decades and are at risk to lose more at an increasing rate.
The complaint contains six counts, including negligence and public and private nuisance. The Board is seeking hundreds of millions of dollars in damages as well as injunctive relief – asking the oil and gas companies to restore the coastal lands that have been destroyed. Louisiana's Governor, Bobby Jindal, quickly denounced the Board's action and demanded that the Board withdraw the lawsuit, stating in a press release that "[w]e're not going to allow a single levee board that has been hijacked by a group of trial lawyers to determine flood protection, coastal restoration and economic repercussions for the entire State of Louisiana." Board Vice President John Barry has defended the Board's decision to file the lawsuit.
Thank you very much for your support of our blog, Corporate Environmental Lawyer, over the past three years. We hope that you have found our efforts to bring you updates and insights on critical environmental, health & safety developments to be helpful and informative. Recent highlights include week-long, focused series of posts relating to President Obama’s June Climate Plan and in recognition of World Environment Day 2013; as well as posts tracking the passage of Illinois’ new fracking bill, the debates regarding the social cost of carbon, and challenges to EPA's Cross-State Air Pollution Rule.
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As previously reported here on July 2, 2013, the Department of Homeland Security (DHS) continues to make progress in managing its Chemical Facility Anti-Terrorism Standards (CFATS) program. The CFATS program identifies and regulates high-risk chemical facilities to ensure they have security measures in place to reduce the risks associated with these chemicals.
With statistics through July 15, 2013, a recent June 2013 DHS fact sheet reports the following updates on the CFATS program:
- More than 44,000 preliminary assessments were reviewed by DHS from facilities with chemicals of interest
- 4,298 facilities are currently covered by CFATS
- More than 3,000 facilities voluntarily removed, reduced, or modified their holdings of chemicals of interest
- 1264 visits to assist facilities with compliance
- 536 Security Plans authorized
- 166 Security Plans approved following an on-site inspection
CFATS is the first DHS regulatory program focused specifically on security at high-risk chemical facilities. Federal law authorizes DHS to regulate security at chemical facilities that it determines are high-risk. DHS determines a facility's initial risk profile by requiring facilities in possession of specific quantities of specific chemicals of interest to complete a preliminary risk assessment. Facilities initially determined by DHS to be high-risk must complete and submit a Security Vulnerability Assessment. If DHS makes a final determination that a facility is high-risk, the facility must submit a Site Security Plan for DHS approval or an Alternative Security Program that includes security measures to meet applicable risk-based performance standards established by DHS.
It is interesting to note that the CFATS program is not 100% focused on chemical manufacturers. In fact, the majority of the first 100 approved security plans (26%) were at semi-conductor manufacturing sites. Approvals also have been completed for chemical and non-chemical manufacturing facilities, distribution warehouses, industrial gas plants, research and development facilities, waste management facilities, food processing plants, pest control facilities, and one university.
For more information about the CFATS program, visit www.dhs.gov/chemicalsecurity or call 1-866-323-2957.
Energy and Water in a Warming World Initiative Releases Report on Intersection of Electricity Production and Water
A recent report by the Energy and Water in a Warming World Initiative ("EW3"), entitled Water-Smart Power: Strengthening the U.S. Electricity System in a Warming World, examines the issue of water stress/scarcity with a focus on the interaction between electricity production choices and water resources. It follows a previous (2011) EW3 publication entitled Freshwater Use by U.S. Power Plants, which found that past fuel and cooling technology choices in the power sector have contributed to water stress around the country. The current report "aims to provide critical information to inform decisions on U.S. power plants and the electricity supply, and motivate choices that safeguard water resources, reduce carbon emissions, and provide reliable power at a reasonable price . . . ." (2).
The report, which recognizes that the challenges associated with the "electricity-water landscape" include the impact of climate change on water availability and quality, discusses lessons learned from an investigation into certain electricity production decision-making scenarios and their respective impacts on water withdrawals and consumption, carbon emissions, and power prices. (2-3). The investigation included comparison of a "business as usual" scenario with several low-carbon scenarios (e.g., a carbon capture and storage and nuclear power scenario). The report concludes that the business as usual approach would reduce neither carbon emissions nor water consumption in an appreciable way, at least in the near future; it would be possible to reduce both carbon emissions and effects on water significantly, through use of a pathway focused on renewable energy and energy efficiency; technologies that reduce carbon emissions are not necessarily water-efficient; and combining use of renewable energy with energy efficiency efforts "would be most effective in reducing carbon emissions, pressure on resources, and electricity bills." (4). The report notes that in such a scenario, "[e]nergy efficiency efforts could more than meet growth in demand for electricity, and renewable energy could supply 80 percent of the remaining demand." Id.
Hearings on the White House's recently increased social cost of carbon (SCC) held yesterday offered differing views on this important consideration key to many federal rulemakings. The White House's Office of Information and Regulatory Affairs Administrator, Howard Shelanski, defended the SCC increases saying "Entities outside of the Federal government are using estimates that are similar to the updated SCC values. For example, these updated estimates are consistent with the SCC values used by other governments, such as the United Kingdom and Germany."
Mr. Shelanski further noted that "Major corporations, such as ExxonMobil and Shell, have also used similar estimates to evaluate capital investments. The Administration will continue to investigate ways to improve the social cost of carbon estimate."
Also testifying was Robert Murphy, Senior Economist for the Institute of Energy Research. Mr. Murphy's testimony focused on the fact that the SCC is a flexible concept premised upon modeling assumptions that can have an enormous impact on the cost-benefit analyses of federal regulations. He concluded his testimony by advising lawmakers that "… the public and policymakers have not been fully informed on what the economics profession actually has to say about climate change. Before justifying economically damaging regulations by reference to 'the' social cost of carbon, policymakers must realize the dubious nature of this concept."
In contrast, Mr. Shelanski concluded by adding "… The current estimates will be used in the economic analysis of rulemakings, and we fully expect comments on the SCC values in the context of future rules. We will consider those comments to ensure that we use the best available information to evaluate the costs and benefits of our regulation."
The SCC is at the center of growing debate about the costs associated with possible new greenhouse gas rules. Many feel that the Administration failed to adequately justify the boosted estimates of damages from climate change particularly given the significant implications these increases will have on various federal rulemakings. Those in opposition to climate change-related policies and science see this issue as another way to slowdown or make more difficult the Administration's commitment to better manage greenhouse gas emissions. Others believe that the SCC, even as recently increased, does not truly account for all of the damages and related costs associated with these emissions.
The written testimony of both Mr. Shelanski and Mr. Murphy are available here.
A new report recently released by the Rainforest Action Network (RAN) Dump Now, Pay Later: Coal Ash Disposal Risk for the U.S. Electric Power Sector concludes that investors may be liable for cleanup and litigation costs associated with certain coal ash ponds. RAN suggests that forthcoming EPA regulations may require closure of coal ash ponds lacking a bottom lining at an estimated cost ranging from $1M to potentially over $100M per pond. RAN notes that coal ash ponds and landfills also have prompted environmental groups and plaintiffs' firms to file lawsuits on behalf of residents near coal ash sites.
According to RAN, unlined coal ash ponds and landfills can leach contamination into groundwater for decades, leaving investors in publicly traded electric power producers potentially exposed to litigation risks. And forthcoming EPA coal ash disposal regulations may force power plant operators to incur substantial compliance costs and potentially shutter several coal-fired power plants.
Coal ash (also known as coal combustion residuals or coal combustion byproducts) is the solid waste that is produced when coal is burned. Coal-fired power plants generate both fly ash, the fine particles filtered from smokestacks, and bottom ash, the larger particles that fall to the bottom of coal furnaces. Coal ash waste streams often are recycled into components of concrete and other building materials, but the remainder is disposed of in landfills or mixed with power plant wastewater for storage as slurry in a holding pond. According to the EPA, there are over 2,000 coal ash holding ponds and landfills in the U.S.
In more news impacting the coal industry, the World Bank Group (WBG) announced this week that it will only give out loans for coal power plants in the rarest of circumstances. The WBG now prefers to fund renewable energy sources that may cost more but protect the environment. Poor developing nations look to the WBG to finance new power plants and energy projects which investments total about $8B annually. The WBG Board this month adopted a new report confirming the bank's goal to double its global share of renewable energy by 2030.
The Rainforest Action Network's report, Dump Now, Pay Later: Coal Ash Disposal Risk for the U.S. Electric Power Sector, is available at http://ran.org/sites/default/files/coal_risk_update_07_2013_vhigh.pdf.
Last week the Council of the Commission for Environmental Cooperation (CEC) agreed to a new Operational Plan for 2013-2014 that focuses on collaborative actions in three strategic areas to maximize the overall impact: greening transportation, tackling climate change while improving air quality, and addressing waste in trade. Key developments included:
- Participants at the town hall meeting on transportation and the environment, as well as the Joint Public Advisory Committee members during their round table on sustainable transportation yesterday, called for action to reduce the environmental impact from CEC member transportation networks that serve as vital links between our countries. To this end, we are announcing new initiatives to reduce emissions from trucks and buses, as well as from maritime transportation, especially at our borders and along our coasts.
- We have also decided to bolster joint efforts to combat climate change as well as harmful air pollutants that threaten the health of our communities and our economies. These efforts are intended to focus on reducing carbon in the atmosphere through protecting coastal and forest ecosystems, avoiding black carbon emissions, collecting and disseminating reliable and comparable data on greenhouse gas emissions and other pollutants, and promoting green building construction.
- The management of hazardous wastes in trade, including electronic wastes and spent lead-acid batteries (SLABs), requires particular attention from our governments. The CEC Secretariat's recent Hazardous Trade? report on SLABs made specific recommendations that have been considered in developing a North American response, through our enforcement and regulatory officials, to ensure that these wastes are properly managed to avoid harming the environment and the health of our communities.
- Finally, as part of the new Operational Plan, CEC intends to continue the collaboration on key North American initiatives tracking pollutants, protecting shared ecosystems, reducing risks from chemicals, and coordinating environmental enforcement.
Meeting in Canada in 2014, CEC plans to celebrate the 20th anniversary of the North American Agreement on Environmental Cooperation, an agreement of historic significance borne out of trade agreement negotiations, which has enabled our three countries to work together on issues affecting our shared environment.
The CEC was established by Canada, Mexico and the United States to build cooperation among the NAFTA partners in implementing the North American Agreement on Environmental Cooperation (NAAEC). The CEC addresses environmental issues of continental concern according to the priorities and objectives set out in the Council Strategic Plan.
The Council, the CEC's governing body, is composed of the federal environment ministers (or equivalent) of the three countries, and meets at least once a year. The Council members are Canadian Environment Minister Peter Kent, Mexican Secretary for Environment and Natural Resources Juan José Guerra, and Acting US Environmental Protection Agency Administrator Bob Perciasepe. The Joint Public Advisory Committee (JPAC) is a 15-member, volunteer body that provides independent advice and public input to Council on any matter within the scope of NAAEC.
For more information on any of the topics reviewed by Council, visit www.cec.org.
The World Resource Institute (WRI) has launched an online initiative to make global greenhouse gas emissions data more accessible and easier to understand. The free, online portal, referred to as Climate Analysis Indicators Tool or CAIT 2.0, provides data on GHG emissions from 186 countries and all 50 U.S. states, as well as other climate data. CAIT 2.0 allows users to view, sort, visualize, and download data sets for comparative analysis. By providing comprehensive emissions data in an easy-to-use tool, users from government, business, academia, the media, and civil society can more effectively explore, understand, and communicate climate change issues.
WRI maintained the original Climate Analysis Indicators Tool from December 2003 through May 2012. CAIT received an average of more than 5,000 visits per month, and was frequently referenced in news articles, policy briefs, and government documents. To provide just some examples, CAIT was regularly used to inform policy discussions within the United Nations Framework Convention on Climate Change and other forums. It was also cited in the Stern Review on the Economics of Climate Change, and used in online tools and campaigns such as NPR's "Climate Change Trends: Carbon Emissions Giants" and the U.S. Climate Action Network's "Who's On Board with the Copenhagen Accord?"
CAIT 2.0 seeks to build on the strengths of its predecessor in providing a reliable online data platform. The platform draws on key climate data from respected research centers, government agencies, and international bodies, providing a complete, six-gas inventory for almost all countries and U.S. states. We choose data sets based on criteria such as completeness and relative accuracy, and we produce country data sets by applying a consistent methodology.
CAIT 2.0 also adopts technological advances to make for a more efficient user experience. For example, with just an Internet connection and a few clicks of a mouse (or a few swipes of an iPad), a CAIT 2.0 user can quickly pull up the international GHG emissions data set, narrow it down (by year, gas, country, etc.) for comparative analysis, and create simple data visualizations that can be downloaded or embedded. In addition, each specific data view has a unique URL, so users can share links to findings with colleagues, or save and return to a particular data view later. Users also can easily download the raw data for more detailed analysis and advanced visualizations.
WRI is seeking feedback from users on what works and what could be improved. WRI encourages users to try out CAIT 2.0 at wri.org/project/cait and send them your feedback via the online form, which will help inform site development in the months ahead.
On July 9, 2013, Chicago Mayor Rahm Emanuel announced that the City of Chicago had taken steps to reduce its carbon footprint by negotiating an agreement pursuant to which the City will obtain at least 5% of its electricity from Illinois wind farms. The remaining 95% of electricity will be supplied by facilities burning natural gas via combined cycle combustion turbines. The agreement, which is part of the City's Community Choice Aggregation ("CCA") plan, is intended, at least in part, to eliminate the City's historical reliance on electricity from coal-fired power plants. The CCA plan also promised Chicago consumers reduced electricity bills; whether these cost saving will continue to be realized in the future remains to be seen. For further information on Chicago's CCA plan, please click here.
Department of Homeland Security (DHS) announced in a May 2013 fact sheet that it had approved 85 site-security plans for chemical facilities and authorized 380 security plans. Speaking at a conference last week, DHS Director of the Infrastructure Security Compliance Division, David Wulf, confirmed the Chemical Facilities Anti-Terrorism Standards (CFATS) program has increased those numbers with 500 site-security plans authorized and 130 site-security plans approved.
Under the CFATS program, which was first authorized by Congress in Section 550 of the DHS Appropriations Act of 2007, facilities with quantities of chemicals above a certain threshold must complete a "top screen" listing the chemicals on site. Following the submission, facilities are assigned to Tier 1 through Tier 4, based on the security threat posted on site. Tier 1 facilities are considered most at risk.
Facilities then complete site-security plans and, once complete, have the security plans authorized. Prior to ultimate approval of the site-security plan, the facility is inspected.
CFATS has been the subject of significant criticism over the Agency's inability to authorize and approve site-security plans in a timely manner. An inspector general report in April 2013 concluded that lingering problems raised questions as to whether the program could achieve its mission.
According to the May fact sheet, the number of facilities regulated under the CFATS program declined by 31 to 4,351 since April. The fact sheet also reports that more than 3,000 facilities have voluntarily removed, reduced, or modified their holdings of chemicals of interest over the last month, up from 2,900 in April.