The economic effect of the Environmental Protection Agency's carbon rules for power plants was the subject of the top three stories in Energy and Climate Report for the week ending July 4. Rounding out the top five were stories on EPA's proposed rule to control methane emissions from landfills and a new online tool that allows investors to search climate disclosures submitted to the U.S. Securities and Exchange Commission.
1. Climate Change Proposal in U.S. Poses Pascals Wager: Benefits Trump Losses
This story covers views by economists on how the EPA is exaggerating the economic benefits of its carbon rules, while industry is overly pessimistic on the effects the rule will have on the economy.
“When you consider the overall size of the U.S. economy, the types of economic changes that you're likely to see if you take actions or if you don't are actually very small,” said Kevin Kennedy, director of the U.S. Climate Initiative at the World Resources Institute, an environmental research group in Washington. He added the plan's benefits still outweigh the costs.
His conclusions are shared by Lawrence Guilder, a professor of environmental and resource economics at Stanford University. Guilder's view of the cost-benefit balance suggests a modern analogue to the famous wager on God's existence proposed by 17th-century French philosopher and mathematician Blaise Pascal.
Pascal argued that because the potential benefit of accepting God's existence is infinite, while one has little to lose from faith in a falsehood, a rational person should believe.
©2014 Bloomberg L.P. All rights reserved. Used with permission.
2. Recent Republican Calls for Climate Action Unlikely to Produce Results, Senators Say
Recent high-profile Republicans calling for action to address climate change are helpful because they frame the issue in terms of the economic costs of inaction, according to several senators whose remarks are covered in this story.
However, those calls are unlikely to have altered the prospects for legislation among current lawmakers, multiple senators said.
Democratic senators who advocate for action on climate change and several Republicans with a history of working on climate issues told Bloomberg BNA the recent calls for action from former EPA administrators and other high-profile Republicans were helpful to the debate.
Four former EPA administrators who served under Republican presidents told a Senate Environment and Public Works subcommittee June 18 that they support immediate action on climate change and urged Republican opponents of action to stop efforts to derail actions.
Then, a June 24 bipartisan report from high-profile political leaders warned that climate change could cause hundreds of billions of dollars in economic losses by the end of this century without action. Participants in the report included former Sen. Olympia Snowe (R-Maine); Henry Paulson, treasury secretary during the administration of former President George W. Bush; and George Shultz, secretary of state during the administration of former President Ronald Reagan.
3. Georgia Coal-to-Solar Shift Shows the Way on Obama Power Plant Climate Rules
This story details how some companies, such as those that install solar panels, see EPA's carbon rules as a boon for business.
For example, Julian Smith, owner of SolarSmith LLC in Savannah, Ga., said he keeps hearing that the Obama administration's latest climate regulations will drive up local electric bills.
He doesn't believe the prediction, but he isn't arguing: The fears are doing wonders for his small business. "My phone is blowing up with new customers,” he said in an interview. “It turns out that if you tell everybody the amount they will spend on electricity will skyrocket, they will believe you.”
In Georgia, as in the rest of the nation, businesses and consumers are struggling to size up competing claims about the EPA's plan to cut carbon pollution from power plants that was released June 2.
The proposed regulations are among the most sweeping and complex in the EPA's history, promising to revamp the way electricity has been generated and distributed for a century.
©2014 Bloomberg L.P. All rights reserved. Used with permission.
4. EPA Unveils Methane Limits for Landfills, Approaches New, Existing Sites Separately
As detailed in this story, new municipal landfills would have to cut their methane emissions, a potent greenhouse gas, and existing sites may also face limits under separate EPA proposals announced July 1.
The Obama administration is targeting landfill methane emissions under a March White House methane strategy that sets out regulatory and nonregulatory options for cutting emissions of the greenhouse gas.
The proposed limits for new landfills would require operators to capture two-thirds of their methane and air toxics emissions by 2023. Methane emissions have a global warming potential 25 times that of carbon dioxide, according to the EPA.
The two regulatory actions announced July 1 include revisions of EPA standards of performance for municipal solid waste landfills—which cover future sites—and a separate advance notice of proposed rulemaking that outlines EPA approaches for cutting methane at existing landfills.
5 . Investors Now Can Search SEC Climate Disclosures
As covered in this story, investors can now comb through companies' climate change-related disclosures to the SEC with a new from the nonprofit sustainability advocacy group Ceres and CookESG Research.
The online tool, launched June 30, allows users to filter company 10-K filing excerpts relating to energy, greenhouse gas emissions, extreme weather and climate-related regulatory risks and opportunities. Investors can use the tool to see how corporate disclosure stacks up against the SEC's 2010 climate guidance, which directed companies to report on climate change issues that could affect their business.
Since then, more companies have reported on climate-related risks in their 10-Ks, but the majority of financial reporting on climate change from S&P 500 companies is too brief and largely superficial, according to a recent Ceres analysis.
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