04/11/2019

(US) Suing Big Oil Is How States Tackle Climate Change

Bloomberg - 

It’s not the best approach, but it’s better than none.
We’ve reached the “blame” stage in the climate grief cycle. Photographer: Spencer Platt/Getty Images
A growing number of cities and states want to turn climate change lawsuits against oil companies into the next tobacco or opioid litigation. In principle, that seems like a truly terrible idea. Such lawsuits will likely do even less to remedy the effects of climate change than similar suits did for lung cancer or opioid addiction. Yet on closer analysis, the climate change lawsuits may be the worst solution to mitigating climate change — except for all the others.
The analogy to Winston Churchill’s notorious defense of democracy isn’t an accident. In the American form of democracy, oil companies enjoy an almost unparalleled capacity to influence Congress and federal government regulators.
Local governments aren’t quite so captured. Recently, New York state’s lawsuit against Exxon began its trial; Massachusetts filed its own suit; and the Supreme Court declined an admittedly unusual request to stay suits being brought in state courts in Maryland, Rhode Island and Colorado.
Paradoxically, it’s precisely the splintered, self-interested nature of state and local lawsuits for damages that makes such litigation a potentially useful tool against big oil.
The proliferation of suits increases the likelihood that the oil companies will lose some suits, somewhere. That should be enough for analysts who cover oil companies to adjust their assessments of the probability of a lawsuit cascade like the one that culminated in the tobacco litigation settlement, and the one over opioids that is currently making its way towards a similar resolution.
And once enough states and localities start getting money out of the oil companies, the rest will jump on the bandwagon. Even if their political leaders would prefer to stay on the good side of big oil, the temptation of easy money will come to outweigh any instinct of restraint. Oil companies might respond by trying to get Congress to pass legislation protecting them from lawsuits. But by then, the states and municipalities will be lobbying in the other direction.
As I’ve noted before in the context of the opioid litigation, this is no way to run a railroad. Addressing major social crises by post-hoc lawsuits is not an efficient or logical — or indeed, particularly just — way to right wrongs on a large scale. The Anglo-American tort system was designed to resolve small-scale conflicts, not large ones, yet we’ve tried to reverse-engineer the system to deal with more fundamental social crises. The results have been mixed at best.
Nevertheless, the truth is that it’s particularly difficult to hold the energy companies responsible for the consequences of their conduct. Going back to John D. Rockefeller’s Standard Oil, which at its peak controlled more than 90% of all oil refining in the U.S., perhaps no other industry in American history has been as resistant to regulation designed to dilute its power and lawmaking aimed at meaningful taxation. The enduring lobbying power of the big oil companies has long affected U.S. policy, foreign and domestic. And, of course, oil remains necessary to lubricate the U.S. economy.
But all that might is of limited utility against radically decentralized adversaries. For a glimpse into how this could play out, look at what’s currently underway in opioid litigation: not only states but also local governments — frustrated by state-level distribution of the tobacco settlement money and eager to get in on the action — have brought scores of suits of their own. The local suits have also brought in the for-profit, contingency-fee driven plaintiff’s bar.
This decentralization is a vice when it comes to rational, organized policymaking. But it’s a virtue when it comes to subverting the lobbying power of the energy industry in Washington.
Sprawling litigation like this usually turns into a cascade of self-interested municipalities trying to get a piece of the pie. At some point, failing to bring a lawsuit starts to seem like governmental malpractice. There’s money on the table, and local government that doesn’t try to get some of it is doing harm to its own citizens.
The upshot is that, while decentralized litigation isn’t an ideal way to address fundamental social problems, it could at least drive the oil industry to internalize some of the costs of the tremendous externalities that the burning of fossil fuels has imposed on the public. That isn’t cause for celebration. But it’s probably better than nothing.

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(AU) Climate Change: Words Don't Matter As Much As Action

Insurance News



In the quarter-century that the threat of global warming has been hanging over general insurance in Australia, the debate has become fragmented and absurdly complex.
Climatologists say Australia will be one of the earliest countries to suffer from the long-term impacts of man-made climate change, but action to deal with the issue has been stymied since 2013 by internecine warfare between climate sceptics and realists in the ruling federal Coalition.
Prime Minister Scott Morrison seems to have decided the best way to maintain peace in the ranks is to pretend that by 2030 greenhouse gas emissions will have been reduced by 26-28% below 2005 levels – despite a government report last year predicting the reduction will be just 7%.
It’s hard not to feel sorry for the Insurance Council of Australia (ICA), which must deal with the consequences of climate change and transmit its views to a generally unreceptive government and a public starved of information that brings the issue to their doorsteps.
So it’s worth looking at an unfortunate tangle ICA found itself in last week over one of the many sub-issues that lie under the heading of “climate change”.
It started two weeks ago when ICA President Richard Enthoven delivered a strong “state of the industry” address to the National Insurance Brokers Association (NIBA) convention, in the course of which he noted that climate change is “sensitive politically”, despite robust industry data that aligns with climate science.
Then he said: “Changing weather systems may well make certain regions more exposed to storm, flood or bushfire, thereby potentially making parts of Australia uninsurable.”
Just as “climate change” has become Canberra’s version of Harry Potter’s Voldemort – it “Must Not Be Named” – so “uninsurable” seems to enjoy the same status in ICA’s Pitt Street headquarters.
Despite the cautious use of the adverb “potentially”, Mr Enthoven crossed some kind of Rubicon in his speech.
ICA wants to move past the whole debate about the existence of climate change to focus on the benefits of mitigation, and prefers to always point to the Productivity Commission’s recommendation that the Commonwealth invest at least $200 million a year (matched by state and territory governments) on infrastructure.
It enjoyed a small victory earlier this month when the Government announced that about $50 million from the Emergency Response Fund will be earmarked annually for mitigation works. The Labor Party made that $50 million a condition of its support for the fund.
Days later ICA’s happy glow turned to irritation when the ABC published research from the Climate Risk consultancy which states that extreme weather events caused by climate change will make hundreds of thousands of Australian properties uninsurable.
It says nearly 720,000 addresses – or one in every 20 Australian properties – will be uninsurable by 2100 if global warming continues at its current rate.
This was 130,000 fewer properties than the original assessment made by Climate Risk in March. At the time that earlier report set the consultancy and ICA into a minor skirmish over the difference between “uninsurable” and “unaffordable”.
ICA’s argument is that homeowners in high-risk areas may have to pay more, but it doesn’t believe any part of Australia will become uninsurable.
Climate Risk Director of Science Karl Mallon told insuranceNEWS.com.au his organisation is “taking a responsible position to inform communities about the risk in their suburbs that they may have no idea about”.
“The insurance industry isn’t doing that, so we see it as a responsible thing to do – to try and engage communities and also encourage them to implement resilience measures ahead of an event.”
But ICA spokesman Campbell Fuller criticised Climate Risk’s report, saying extreme weather projections based on climate change models should be “agreed upon and understood by all relevant stakeholders before they are used in a way that may unnecessarily scare householders and businesses, disrupt communities and lead to poor decisions and outcomes”.
Climate Risk charges a fee for the use of its data, but ICA says information about future risks must be based on transparent methods and data, and the insurance industry “is investing in the development of transparent risk tools for climate change, based on centuries of underwriting expertise and extreme weather knowledge”.
In other words, ICA sees its data as being far better than Climate Risk’s data. Fair enough, it should be. But is all this hair-splitting really necessary?
The ABC wasn’t slow to point out that ICA’s vehement attack on what it called “irresponsible” reporting puts the council at odds with its President’s statement that climate change “may make certain regions more exposed to storm, flood or bushfire, thereby potentially making parts of Australia uninsurable”.
It may be that ICA is concerned the focus on insurance and climate change could switch political and community focus away from the need for investment in mitigation to the relative affordability of property insurance.
As Mr Fuller put it last week: “No area of Australia should be uninsurable, provided governments invest appropriately in permanent mitigation and resilience measures to protect communities from known and projected risks, including the impact of climate change.”
That’s also a point Mr Enthoven emphasised in his NIBA speech, and it’s one that Climate Risk says it’s keen to support.
“Where we furiously agree [with ICA] is that we can do something about this,” Mr Mallon told insuranceNEWS.com.au last week.
Doesn’t the fact that without mitigation some properties may become uninsurable – or unaffordable, if you prefer – make a compelling case for government action?
Call it information the public should know or call it scaremongering, Climate Risk’s fulsomely illustrated information, circulated widely around Australia via the ABC, contributed significantly to raising public awareness of the issue.
It doesn’t really matter how you define “uninsurable”, or how many properties you put in that category. The fact is some homeowners in Australia are already faced with unaffordable premiums and the issue is going to get worse unless serious work on mitigation is done.
If Climate Risk’s data isn’t as good as ICA’s, its cut-through on the issue was nevertheless impressive and has helped raise awareness in a very personal way. A substantial change in official policy towards mitigation will come sooner if there’s pressure from the community – and to achieve that a bit of data-backed scaremongering shouldn’t be seen as all that bad.

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(AU) Climate Crisis: Business Leaders Say Cost To Taxpayers Will Spiral Unless New Policies Introduced

The Guardian -  |

Organisations such as Australian Industry Group and National Farmers’ Federation letter says greater private-sector action needed
 Groups including the Australian Industry Group and National Farmers’ Federation say the emissions reduction fund has worked in ‘the land sector’ but is poorly suited to driving cuts in industry. Photograph: Bloomberg via Getty Images
Industry, farming and investor groups say the federal government signed up to a goal of global net zero emissions under the Paris agreement and have warned unless new policies are introduced taxpayer spending on climate programs will need to be dramatically increased.
A joint letter by 10 business organisations, including the Australian Industry Group and the National Farmers’ Federation, says the government will either need to back new climate policies that drive private-sector action or boost taxpayer funding now and into the future.
The letter was sent to a panel of business leaders and policy experts appointed by Angus Taylor, the emissions reduction minister, to find new ways to “enhance” the emissions reduction fund, the government’s main climate policy. The panel’s appointment, which was not made public, is seen as an admission the fund is not reducing national pollution.
Only select groups were asked to give feedback to a discussion paper circulated by the panel. The Clean Energy Council confirmed it wasn’t approached “directly” to participate in the rapid-fire review, which began in mid-October and is expected to offer initial feedback early next month, but said it welcomed the government’s putative shift on one of its signature policies.
The business group letter says the 10 organisations have different views on policy but agreed on broad principles that should underpin what the government does.
It says Australia’s medium-term climate target set for 2030 is just a staging post on the way to meeting the Paris deal goals of keeping global heating well below 2C and pursuing efforts to limit it to 1.5C.
This would ultimately mean global net zero emissions. In Australia, it would require policy mechanisms that could efficiently deliver “immediate, cost-effective abatement opportunities” in every part of the economy and also encourage innovation.
The letter says the emissions reduction fund has worked in “the land sector” – mostly projects supporting native vegetation – but was poorly suited to driving cuts in industry and buildings and unlikely to bring change in energy and transport.
The groups would support well-designed policies that put less of the cost of cutting emissions on taxpayers, as the emissions reduction fund does, and instead encouraged the private sector to act.
“In the absence of such policies, the government will need to commit more resources – both now and over time – to finance abatement,” the letter says.
The panel, which is headed by Grant King, the outgoing president of the Business Council of Australia and a former chief executive of Origin Energy, was appointed after the government has been privately sounding out some groups about an overhaul of the fund for months. But stakeholders were taken aback when the panel approached them to provide detailed comments on options in less than two weeks.
Interviewed on the ABC, King said it was sensible for the government to look at how the fund was working and take on feedback. “What the government has done is say ‘let’s run a quick process … that’s going to listen to that feedback and see whether we can enhance the way the fund works’,” he said.
King stressed the government’s target, a 26-28% cut below 2005 levels, was not a cap. “What we want to do is exceed those targets and we can do that that, we believe, through listening to people’s experience … and improving the way it is working,” he said.
Taylor agreed the government would “like to beat our targets” and said the review was about “using the best expertise we can”.
“We are doing everything we can to use that money [committed to the fund] to maximise the abatement we get from it,” he said.
The Labor leader, Anthony Albanese, gave the Coalition a blast for failing to have a coherent policy. “The government doesn’t have an energy policy,” he said. “It doesn’t have a plan. What they need to do is to have a comprehensive plan for energy.”
Kane Thornton, the chief executive of the Clean Energy Council, said he welcomed “any steps towards stronger national climate and energy policy to provide the necessary certainty for investors”. He noted the emissions reduction fund had to date focused on areas other than energy, such as agriculture and industrial processes.
Thornton said his organisation, which represents major renewable energy players, had “not been directly approached to participate in the review of the (fund) to date”. But he would welcome any opportunity to put forward ideas that would ensure the fund played a more substantial role in providing investor confidence across all sectors of the economy.
As well as contributing to the joint letter, the Australian Industry Group (Ai Group) has contributed its own submission to the process, urging the Morrison government to pursue least cost abatement in the reboot.
Its submission says market mechanisms, including “price signals and tradable instruments”, can be efficient and effective if well designed, but there are also roles for careful regulation and public funding. “The existing landscape of policy and proposals is far from consistent with these principles,” it says.
The discussion paper floats changing the scheme known as the safeguard mechanism, which was supposed to limit emissions from big industry but in practice has allowed pollution to increase, so companies that emit less than their limit are awarded carbon credits they could sell to the government or business.
The Ai Group says adjusting the safeguards regime is an important option for the government, but will “require especially careful and consultative development”. It says in theory it should be simple to reward facilities for emissions cuts when they emit less than tight limits, or baselines, but in reality “there are many difficult issues involved”.
Other signatories to the business group letter backed by the Ai Group are the Investor Group on Climate Change, the Property Council, the Energy Users Association, the Energy Efficiency Council, the Green Building Council, the Australian Alliance for Energy Productivity, the Carbon Market Institute and the Australian Sustainable Built Environment Council.
The emissions reduction fund works as a reverse auction, rewarding landowners and businesses that make cheap, viable bids for taxpayers’ support to cut pollution. The most recent auction bought emissions cuts equivalent to only 0.01% of Australia’s annual greenhouse gas pollution after officials found just three projects worth backing.
The emissions policy review came to light as the government announced it would give the government green bank, the Clean Energy Finance Corporation, an extra $1bn to invest in projects aimed at ensuring a reliable electricity supply. The new fund is earmarked for power generation, storage and transmission projects such as pumped hydro, batteries and gas.
National emissions have risen each year since 2015 and analyses have found the government would not reach its 2030 target, a 26%-28% cut below 2005 levels, unless policies changed. Scientists say Australia should be aiming for deeper cuts if it is play its part under the Paris agreement.

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