SEC rule, climate impacts of a Trump vs. Biden win, and a new climate initiative in the states.

7 MARCH 2024

JOHN PERONA

Three quick items to note in the news this week. First, the Securities and Exchange Commission issued its final rule on the requirements for US firms to disclose how climate change will affect their operations (see last week's Earthward post). Viewed from a broad historical standpoint, the final rule is significant because it is the first time that the SEC is requiring such reportage. By providing investors with access to information on climate risks, the federal government is making climate change relevant to the future development of the economy and so instilling an awareness that should favor a faster transition to green energy.

But viewed from the ambitious standpoint of the initially proposed regulations, the final rule is a big disappointment and a clear cave-in to fossil fuel interests. The requirement to include reporting of "Scope 3" greenhouse gas emissions, from end use of a company's products by consumers, has been completely eliminated. Moreover, even the Scope 1 and Scope 2 emissions coming from direct operations have been watered down to include only those that the company itself deems "relevant" to what investors should know. The SEC has apparently bought into the argument that the initially proposed regulation overreached by asking for information that goes beyond what directly concerns investors' financial decisions. In other words, the long-term detrimental effects of a company's products on the global environment and ultimately the economy is, so far as the SEC cares, irrelevant. The agency is thus confirming that, as in the past, investor profitability is the only relevant variable that it will concern itself with.

Next, the UK website CarbonBrief reported this week on a new analysis that estimates the climate consequences of a Biden vs. Trump victory in the Fall elections. Trump has made climate change denial a centerpiece of his campaign, and has vowed to gut the EPA and to repeal signature Biden initiatives, such as the Inflation Reduction Act. If Biden wins, the analysis presumes continuation of his administration's present policies without adding more, while a Trump victory would roll back the IRA and other Biden initiatives (like his new methane emissions rules), but not add further policies that might, for example, increase fossil fuel production. With these assumptions, the analysis finds that US emissions would be 1 billion tons/yr higher by 2030 if Trump wins (in 2022, US emissions were 4.7 billion tons). Cumulatively, a Trump win this Fall would add 4 billion metric tons of CO2(e) by 2030 - the equivalent of current yearly emissions from the European Union and Japan combined.

The CarbonBrief analysis offers a shocking yet entirely plausible accounting of what is at stake in this Fall's election. With Trump's cementing of what appears to be absolute power over the Republican agenda, the division between the parties on climate policy is as stark as imaginable. If Biden wins, and especially if Democrats can also regain control of the House, there is the possibility of adding to recent gains and meeting US climate targets by 2030 and 2050. A Trump win, on the other hand, would all but eliminate those possibilities. For the remainder of 2024, doing everything possible to ensure a second Biden term is the most effective climate policy initiative.

Finally, a number of  outlets have been reporting on a new initiative in Vermont, Massachusetts, New York and Maryland to hold fossil fuel companies accountable for the financial damages caused by the impacts of climate change. Many states are already engaged in legal efforts to hold the firms accountable, in part under theories from nuisance or consumer protection law. Now, these four Eastern states are taking another tack: looking to pass legislation that will require fossil fuel firms to pay into a fund to compensate them for the financial burdens of flooding, wildfires and other climate-related events. Like the lawsuits, the legislation gains support from the field of climate attribution science, which allows dissection of the anthropogenic component of extreme weather events. The state legislation is akin to the Superfund law at the federal level, which requires firms that are responsible for industrial pollution pay for cleanup of the degraded sites.

These state initiatives are limited so far to the East Coast, but ClimateWire is reporting that Minnesota and California may soon join with legislation of their own. Of course, there will surely be lawsuits and other efforts by fossil fuel companies to impede the laws after they are enacted, perhaps as soon as later this year. But this could well be the start of a major initiative that will spread to many other states under Democratic governance. Lobbying state legislatures to take up and pass such legislation should be a priority for healthy climate advocates.

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SEC final rule: https://www.nytimes.com/2024/03/06/climate/sec-climate-disclosure-regulations.html

Trump vs Biden: https://www.carbonbrief.org/analysis-trump-election-win-could-add-4bn-tonnes-to-us-emissions-by-2030/

State climate legislation: https://www.eenews.net/articles/a-superfund-for-climate-these-states-are-pushing-for-it/

State climate legislation: https://grist.org/accountability/a-superfund-for-climate-change-states-consider-a-new-way-to-make-big-oil-pay/