Lethal Heating: 05/06/17

06/05/2017

Bloomberg Editors On New Climate Website: Climate Change “Is Fundamentally An Economic Story”

Salon - Media Matters Staff

Bloomberg's decision to launch website could give them a leg up over competitors

Bloomberg recently announced the creation of a new website that will provide audiences with important reporting on the economic and business implications of climate change. The move comes at a time when big businesses around the world are urging governments to take action as they increasingly recognize the reality and the risk of climate change.
On April 20, the Huffington Post reported that "Bloomberg, the titan of business and financial journalism, is adding a site devoted to climate science and the future of energy to its sprawling news empire." The website, ClimateChanged.com, will serve as "a hub for coverage of how rising global temperatures are changing the planet and moving financial markets."
Bloomberg's Sustainability Editor Eric Roston explained the decision, stating, "Climate change is fundamentally an economic story, it's an economic problem. . . . It's naturally a business story and it's naturally a concern to rationally minded executives in any sized enterprise." And Jared Sandberg, senior executive editor in Bloomberg's digital division, said, "[Climate change is] the mother of all risk. . . . If you have intelligence agencies around the world identifying climate change as one of the great, destabilizing forces, there's a massive risk to contend with for any business and any investor behind it."
The Huffington Post added that Climate Changed would give Bloomberg "a leg up" over its competitors, particularly The Wall Street Journal: "The Rupert Murdoch-owned newspaper's hard-line conservativism appears to have bled over from the opinion pages to the news section. A study published in 2015 by researchers at Rutgers University, the University of Michigan and the University of Oslo found that from 2006 to 2011, the Journal's news reporting rarely mentioned threats or effects of climate change, compared with the country's other leading broadsheet newspapers."
Bloomberg's decision to launch a website dedicated to the impact of climate change on world economies and businesses is a particularly timely one. In recent months, businesses have become increasingly vocal about the need to address climate change. Big companies, including ExxonMobil, ConocoPhillips, renewable energy groups, and major American manufacturers such as General Electric are pressuring President Donald Trump to keep the U.S. in the Paris climate agreement. And after Trump took his biggest step yet towards rolling back former President Barack Obama's "environmental legacy," Buzzfeed News reported that "billion-dollar corporations" have said that "they'll keep on battling carbon pollution regardless of what the government says" because "climate change is a significant concern for their business."

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AEMO Chief Says Clinging To Old Energy Business Models Is “Insane”

Renew Economy - Giles Parkinson

The new head of the Australian Energy Market Operators says the notion that major energy industry players can hold on to their old business models is “insane”, and has described last year’s state-wide blackout in South Australia as a “wake-up” call for all in the industry.
In a speech to the Australian Solar Council conference in Melbourne on Wednesday, and in earlier in-depth interview with RenewEconomy, Zibelman says the pace of change in the energy industry would be rapid, would focus on consumers and their use of rooftop solar and battery storage, and on demand management.

Zibelman advocates major reforms in the market, particularly in the proposed 5-minute rule, which she says would help make wind and solar “predictable”. She says it is clear that Australia will lead the world in shifting from a grid focused on centralised generation and passive consumers to one based on distributed resources and two way system.
This, she says, will require a new approach from all involved, including incumbent utilities, network operators, regulators, and AEMO itself.
“You can’t simply say that everything is changing, but I’m going to do what I have done for the last 100 years in the same way and I’m going to be successful. In some quarters that is sort of the definition of insanity,” Zibelman says.
“It’s all changing, businesses need to change and they need to think about what their role is in this new system. And that’s true for AEMO. AEMO needs to think about how things are changing and what we need to do in the market to adapt to that change. so that the markets become the platform for that enabling that innovation as opposed to a barrier.”
Key to this change was in the 5-minute rule, a push to replace the current 30-minute settlement period to 5-minutes, to match it with dispatch periods and encourage fast-acting technologies such as battery storage, and remove the ability by big generators to game the market.
“Within a 5 minute window, wind and solar are highly predictable,” Zibela says. “Being able to forecast and manage the market within a short time frame is going to allow for greater predictability and greater value of resources like storage, and the demand for the resources that have to be fast responding. That’s how we can provide a more secure grid.”
Another of her key themes is “load shifting” and using smart technology to take advantage of the fact that “we know when the sun will do down”. In past times, this focused almost uniquely on electric hot water systems, which were switched to night time to keep coal generators occupied.
Now, with fast acting technologies,smart controls and storage – both on grid level and inside homes and businesses – this can become more dynamic. And it will be critical to managing the so-called “duck curve”, when the sheer amount of solar generated during the day hollows out grid demand.
This, says Zibelman, was already starting to occur in states such as Western Australia and South Australia. “We need to look at demand itself as a resource. Traditionally, when we think about managing the power grid, it is pretty simple. we increase generation to respond to demand. We have to be smarter than this.”
Zibelman has only been in Australia and in her role for six weeks, but already her views on the changes needed to adapt rapidly to a modern grid are being described – both within her organisation, and in the broader energy industry – as a breath of fresh air.
Never before has Australia had a senior executive in the energy industry being so up-front about the possibilities, and so enthusiastic about the change that lies ahead.
Her entry could not have come at a better time for AEMO, which has been roundly criticised, by the industry, by the South Australian government, and more recently by the regulator for its actions, or lack on action, in the major blackouts and load shedding that occurred last September and earlier this year.
“I’m not lookin back and asking why, as I wasn’t here so I don’t think it’s particularly useful. What’s more important is figuring out what we need to do to move forward, and address really what our opportunitues to work the system better.”
But Zibelman does say that the “System black” event may have been wake up call that Australia needed, in the same way that Hurricane Sandy was the wake up call for New York about the vulnerability of its own energy system, and led to the ambitious “reforming the energy vision” program she led as head of the state’s regulation authority.
That program, which looked to a decentralised system, micro-grid and a 50 per cent renewable energy target by 2030, has inspired huge change. But she says Australia can go further, because no other country had gone so far with renewables, on such a continent-wide system.
“The one thing that happened in NY was we had Cyclone Sandy. That was a huge wake up call. That’s what got the attention that there had to change.
”I’m not sure we’re not at this point right now. – given the system black, the gas prices and the awakening that Australia has had that it can’t continue the way it has. Maybe what we need to do is put a name to this, New York City did this, we created a name (REV) that people can recognize and link into. Maybe, we need a name.”

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Companies Must Take Climate Change Litigation Risk Seriously

The Australian - Jason Betts* | Peter Briggs*

Climate change litigation is set to emerge as a significant risk for corporations across all sectors of the Australian economy.

This is because of the fact that momentum is gathering for regulatory investigations and shareholder class actions against companies that fail to properly disclose the transition costs of moving to a lower carbon economy.

The attraction of these claims to regulators and litigation funders is that they won’t face the traditional obstacle of “proving the science” of climate change.

They can also be brought under existing disclosure laws that are used to support the majority of regulatory investigations and shareholder class actions in respect of disclosure practices.

It is often overlooked that Australia has a history of climate change litigation — but almost always in the form of environmental impact assessment cases involving federal and state planning laws.

These cases have challenged decisions to permit major construction projects on the ground that there was a failure to properly assess the environmental and climate change impact of the projects, such as projected sea-level rises or coastal erosion.

This species of climate change litigation is limited in its effectiveness — the claims generally rely on administrative law, meaning courts cannot reassess the environmental impact of the underlying project or impose environmental sanctions. The main remedy is forcing the decision-maker to reconsider the approval decision, this time having more detailed regard to climate change issues.

That is a slow, case-by-case process that has not really engaged with the broader national and global debate over climate change impacts and remediation.

Similarly, while “mass tort” claims are possible, they generally also face major obstacles — not everyone has standing to sue in tort, and even when they can, establishing causation — the link between a particular defendant’s conduct and an impact on the environment — requires difficult scientific evidence.

The cases are fraught with uncertainty and expense. None of these avenues is attractive to promoters of class action litigation, nor do they raise issues within the ambit of the Australian Securities & Investments Commission or other financial regulators.

That may be about to change. Regulators around the world (including ASIC) are increasingly recognising the financial impact of the “transition risks” of climate change.

What are these transition risks? Examples include the increased frequency of extreme weather events creating a greater risk that a business will lose access to key inputs such as water and sewerage; or the increased risk of power outages creating greater costs for companies that depend significantly on energy transmission.

A further risk arises from the likelihood of changes to environmental or emission regulations that could cause fossil fuels to be repriced as part of a move to a lower carbon norm, meaning the balance sheet value of proven deposits in the extractive industry become unrealisable at historical values.

This risk of “stranded assets” is particularly topical, given Australia’s commitment to the Paris Agreement and the impact that policies that limit global warming will have on fuel reserves currently sitting in Australian corporate balance sheets. All of these risks could be material to an Australian company’s financial position and could affect the costs and profitability of its core business.

Material risks are required to be disclosed under a variety of Australian laws; the ASX listing rules require the immediate disclosure of material risks and the ASX has recently expanded its guidance to specifically include the disclosure of “environmental and social sustainability risks”.

Most shareholder class actions filed in Australia to date (especially those supported by litigation funders) have involved allegations that a listed entity failed to disclose its exposure to a material risk in a timely fashion.

Often this information has involved traditional business risks affecting profit and earnings forecasts, but precisely the same principles could be applied to companies that do not consider or disclose the impact of the transition risks associated with climate change.

If those risks ultimately do affect the company’s operations, it is easy to envisage ASIC or a class action promoter initiating an investigation into when it knew about the risk to its business and whether the risk should have been disclosed earlier.

We are seeing exactly that trend emerge in Britain and the US, with the regulators in both jurisdictions initiating investigations in the past 24 months into listed entities regarding the adequacy of disclosure of business risk from climate change in annual reports.

They are looking at whether the balance sheet value of proven resource reserves have been materially overstated in view of likely future emission restrictions.

The focus of foreign regulators is often predictive of local trends — both regulatory and of the class action litigation risk.

The result is a heightened need for all Australian companies to examine closely their exposure to the transition risks associated with climate change and the move to a lower carbon economy and to ensure that all foreseeable risks are assessed and disclosed where necessary.

*Jason Betts and *Peter Briggs are partners at Herbert Smith Freehills. This article was prepared with assistance from London partner Silke Goldberg.

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