Requiring Disclosure of Financial Risks of Climate Change Is Ridiculous

It appears that New York AG Andrew Cuomo has strongarmed a utility into calculating the financial risks of climate change and providing that information to its investors. It's hard to know where to start with a concept this foolish. I generally agree that Americans benefit from the host of financial disclosures that are intended to give roughly equal access to information about companies in a way that levels the investing playing field, but this type of "disclosure" is meaningless. The utility is supposed to calculate the impact on its bottom line of regulations that are not only unwritten, but in great dispute? Or how litigation is going to play out? I particularly like the idea of requiring the utility to estimate the physical impacts of climate change, when the best meteorologists can't agree, and the models are garbage in, garbage out. will any consideration be given to the favorable bottom line impacts of climate change, such as a longer cooling season and more power demand for air conditioning?

This is pointless public posturing and does nothing to serve investors or advance the climate change debate



CUOMO REACHES LANDMARK AGREEMENT WITH MAJOR ENERGY COMPANY, XCEL ENERGY, TO REQUIRE DISCLOSURE OF FINANCIAL RISKS OF CLIMATE CHANGE TO INVESTORS
First-Ever Binding and Enforceable Agreement Requiring a Company to Detail Financial Liabilities Related to Climate Change
Xcel Energy is One of Nation’s Largest Utility Emitters of Carbon Dioxide
NEW YORK, NY (August 27, 2008) - Attorney General Andrew M. Cuomo today announced the first-ever binding and enforceable agreement requiring a major national energy company to disclose the financial risks that climate change poses to its investors. Cuomo’s agreement with Xcel Energy (NYSE: XEL) (“Xcel”) comes as many power companies, including Xcel, are investing in new coal-burning power generation that will significantly contribute to global warming emissions.
“This landmark agreement sets a new industry-wide precedent that will force companies to disclose the true financial risks that climate change poses to their investors,” said Attorney General Andrew Cuomo. “Coal-fired power plants can significantly contribute to global warming and investors have the right to know all the associated risks. I commend Xcel Energy for working with my office to establish a standard that will improve our environment and our marketplace over the long-term.”
The agreement includes binding and enforceable provisions that require Xcel to provide detailed disclosure of climate change and associated risks in its “Form 10-K” filings, the annual summary report on a company’s performance required by the Securities and Exchange Commission (“SEC”) to inform investors. These required disclosures include an analysis of financial risks from climate change related to:
• present and probable future climate change regulation and legislation;
• climate-change related litigation; and
• physical impacts of climate change.


Additionally, the agreement commits Xcel to a broad array of climate change disclosures, including:
• current carbon emissions; •
• projected increases in carbon emissions from planned coal-fired power plants;
• company strategies for reducing, offsetting, limiting, or otherwise managing its global warming pollution emissions and expected global warming emissions reductions from these actions; and
• corporate governance actions related to climate change, including whether environmental performance is incorporated into officer compensation.


Substantial financial risks for energy companies that emit large quantities of carbon dioxide are being created by a number of new or likely regulatory efforts, such as New York’s newly adopted regional carbon regulations for power plants, and other future regulatory efforts, including federal regulation, Congressional action, and climate-change related litigation. These risks are especially exacerbated for power companies that are building new coal-burning power plants or other large new sources of global warming pollution emissions. Knowledge of these risks is important for investors to make informed financial decisions.
Xcel Energy provides electricity and natural gas to commercial and residential customers in eight Midwestern and Western States. Its annual revenues are more than $9 billion. In 2006, Xcel was among the top ten largest emitters of global warming pollution by utilities in the United States. Xcel is building a new 750 megawatt, coal-fired power plant in Pueblo, Colorado.
In September 2007, Attorney General Cuomo subpoenaed the executives of Xcel and four other major energy companies for information on whether disclosures to investors in filings with the SEC adequately described the companies’ financial risks related to their emissions of global warming pollution. The Attorney General issued subpoenas under New York State’s Martin Act, a 1921 state securities law that grants the Attorney General broad powers to access the financial records of businesses. In addition to Xcel Energy, the companies that received subpoenas were AES Corporation, Dominion Resources, Dynegy, and Peabody Energy. The Attorney General’s investigation of the remaining companies is ongoing.
Cuomo continued, “I will continue to fight for increased transparency and full disclosure of global warming financial risks to investors. Selectively revealing favorable facts or intentionally concealing unfavorable information about climate change is misleading and must be stopped.”
The Attorney General petitioned the SEC last year to require better corporate disclosure of climate-related risks in securities filings. The petition was coordinated by Ceres, a national coalition of investors and environmental groups. It is supported by more than $6 trillion of investors, including the treasurers and comptrollers from New York, California, Florida, Maryland, Rhode Island and five additional states, and the nation’s largest public pension funds, CalPERS and CalSTRS. The petition remains pending with the SEC.
Ceres President Mindy S. Lubber said, “This groundbreaking settlement will send ripples far beyond Xcel Energy. It serves notice that all companies face financial exposure from climate change and will be expected to better inform investors of their strategies for dealing with it.”
Director of the Natural Resources Defense Council’s State Climate Change Program Dale Bryk said, “As New York and other Northeastern states move forward with the nation’s first cap and trade program for global warming, investors need full disclosure of the financial risks faced by power companies and others with large carbon footprints. Attorney General Cuomo’s work to create an enforceable model for climate change disclosure is a game-changer on this important issue.”
Environmental Defense Fund Deputy General Counsel Vickie Patton said, “Investors from Wall Street to Main Street have a right to know whether publicly traded companies are responsibly addressing the financial risks due to global warming. Federal regulators should take a hard look at the Attorney General’s settlement and standardize companies’ disclosure of climate-related financial risks to ensure a fair marketplace for all investors.”
This case is being handled by Assistant Attorneys General Morgan Costello, Michael Myers, and Daniel Sangeap, under the supervision of Special Deputy Attorney General Katherine Kennedy, Executive Deputy Attorney General for Social Justice Mylan Denerstein and Executive Deputy Attorney General for Economic Justice Eric Corngold.

WV DEP Announces Availability of Grants to Improve Stream Health

The West Virginia Stream Partners Program is accepting grant applications from community groups interested in improving local stream health.
More than $130,000 is available this year through West Virginia’s Stream Partners Program. Community-based watershed associations wishing to implement a watershed improvement project may apply for up to $5,000. The deadline to apply for grants is April 16.
According to Stream Partners Program Coordinator Jennifer Pauer, volunteers have used the money in the past for everything from stream monitoring to environmental education.
"Watershed groups can make a big difference in their communities with their Stream Partners funds," said Pauer. "The money and expertise that the program provides helps create awareness for the groups and encourages others to join them to make a difference in the water quality in their communities."
Pauer says that groups in the state are supported by the Department of Environmental Protection and the West Virginia Conservation Agency.
"If a group or citizen would like to get involved in watershed protection, Stream Partners offers assistance through five regional basin coordinators," said Pauer. "Basin coordinators have the expertise to assist citizens with watershed planning, project development, grant writing, partnership building and community education."
The Stream Partners Program, established in 1996 and housed within the DEP, is a cooperative effort among four state agencies – the Division of Forestry, the Division of Natural Resources, the Conservation Agency and the DEP.
These agencies provide support and resources in many areas including project planning and technical advice. Their representatives also serve on the Stream Partners Program Review Team, which determines grant allocations each year.
For more information on the Stream Partners Program, the
2008-2009 grant application process, or the organization of watershed groups, call the Stream Partners hotline at (800)
654-5227 or e-mail Pauer at Jennifer.Pauer@wv.gov.
To apply online visit http://www.wvca.us/stream.cfm.

Settlement in Mountaintop Mining Case

According to a newspaper article in the Huntington Herald Dispatch, it appears that the Ohio Valley Environmental Coalition has settled its lawsuit objecting to the extension of the Hobet 21 mine. It will now seek attorney fees. This permit was the subject of much clamor, both for and against the permit, and mining can now proceed.

EPA Proposes Fine Particle Nonattainment Areas in West Virginia

EPA has published its list of areas that it proposes designating as not attaining compliance with fine particle (PM 2.5) air quality criteria. Once nonattainment designations take effect, the state and local governments will have three years to develop implementation plans outlining how they will attain the standards by reducing fine particle concentrations.

While WV had proposed only the Charleston metro area (Kanawha and Putnam Counties) and Steubenville-Weirton (Brooke and Hancock Counties) for nonattainment, EPA has responded with a proposal to designate several areas for nonattainment. The areas proposed, and the basis for the proposal, can be found in an August 18 letter from Region III Administrator Donald Welsh. They include Charleston, Huntington-Ashland, Morgantown, Parkersburg and Steubenville-Weirton. Information about the PM 2.5 designations in Region III can be found on the EPA website.

The fine particle standard was changed in 2006 from 65 ug/cubic meter to 35 ug/cubic meter, while the annual standard remained the same at 15 ug/cubic meter .

Combined Sewer Overflows Not Unique to Charleston

Charleston residents have recently been hit with a large increase in sewer fees in order to pay for regular maintenance and upkeep of the city's sewer system. It went up by nearly half (42 %) in order to replace old and leaking sewers and fund a capital improvement fund.

The same thing is happening elsewhere. Lexington, KY is also seeing huge increases in sewer fees to pay for changes to its sewer system to avoid combined sewer overflows, or CSOs. CSOs occur when sanitary and storm sewers run together. During a heavy rain, the sewage treatment facilities are unable to handle the total water/sewage surge effluent and the excess is shunted off to the rivers, untreated. Charleston is also on the list of cities that have CSOs that will have to be addressed at great cost.

Industrial facilities have been held to a higher standard for years, and would not have been allowed to discharge untreated waste. Now it is the cities' turn to meet the same standards, and it is going to be expensive. Still worth doing, but it is always easier to tell someone else to clean up, rather than do it yourself.

Mountaintop Removal More Than a West Virginia Issue.

Mountaintop mining is under assault from all sides, not just in West Virginia. Read a news story about mountaintop mining from the Virginia-Kentucky-West Virginia area. Joe Lovett, predicts that with a new administration in 2009, mountaintop mining will be eliminated in about a year or so. I doubt it. Joe is an excellent lawyer, but I suspect he's off by a decade or more. Coal is still needed to produce electricity, and mountaintop mining is one of the most cost effective ways to get it.

To get the other perspective, including some of the favorable aspects of mountaintop mining, try this article from the Beckley Register Herald.

Ethanol Mandate Affirmed by EPA

The Bush administration has affirmed its support for ethanol production in the United States, refusing to reduce the ethanol mandate from its current 9 billion gallons. Not a lot of corn is grown in West Virginia, but we produce lots of chickens in the eastern part of the state, and growers will be hurt by rising grain costs.

My (extended) family farmed in Ohio and Indiana, and this rise in corn prices would have been a double edged sword for them. Those that were feeding hogs or milking cows would have seen higher prices, but they were all raising corn for sale, too. However, fertilizer prices are high as a result of oil selling at record levels, so their profit margin isn't as big as you might think.

Compressed Air Car to Save the World

From New York comes another invention to save the planet, an improved compressed air car. Compressed air is not new as a power source, and some cars have been proposed with regenerative braking systems that compress air during stops and feed the air to cylinders during acceleration, but this car runs completely from compressed air. An onboard electric motor, apparently powered by batteries that can be recharged overnight or in 2 hours, compresses air to 4500 lbs in a tank, and the air drives the car up to 1000 miles at speeds of up to 96 mph.



And therein lies the problem with so much new technology - excessive claims that only lead to disappointment. It is extremely unlikely (and I am being generous here) that any onboard tank of compressed air in a car as small as this (basically a Smart car) could drive the car anywhere near 1000 miles, or that it will hit 96 mph unless it's falling off a cliff. Even with a battery charged compressor on board, that's a long distance to go. Why not bill it as a commuter car that could get up to 100 miles or so a day with nightly recharging? That would still be reasonably useful, and a good deal more believable

New Solar Energy Process - Nirvana or Cold Fusion?

Claiming a breakthrough in renewable energy technology, scientists from MIT have announced a new, more efficient and less polluting way to make solar energy cost-effective. Promising almost unlimited power and the opportunity to disconnect from the electrical grid, the scientists have solved the problem of night time power generation by coming up with an electrolysis process that mimics photosynthesis. Using neutral pH water and commonly available (if platinum can be characterized in that fashion) metals, the new process can split water into its hydrogen and oxygen components more effectively than present electrolytic processes.

I hope it's true, but the hype reminds me of the promise of cold fusion a few years back. One problem that remains is the current inefficiency of solar cells, which still do not convert much of the sun's energy to power. Limited sunshine in places like West Virginia or northern Europe makes it unlikely that individual home solar energy units will be powering homes in the next 10 years, but we can hope. Perhaps Nanosolar's printed solar panels will be the cost-efficient solar collectors we've been hoping for.

West Virginia DEP Environmental Rulemaking Has Begun

In West Virginia, environmental regulations must be promulgated by the DEP, reviewed by the Legislative Rule Making Review Committee, approved by the full West Virginia Legislature and then filed with the Secretary of State. (Some, such as water quality standards, have to be approved by EPA before they become effective.) That process, not counting EPA review, can take about a year from the time the rules are filed, usually in June or July, until the time they are final filed.

The rules that the DEP has proposed for consideration by the West Virginia Legislature in 2009 can be accessed at the DEP website. Go to http://www.wvdep.org/Item.cfm?ssid=24&SS1ID=975 for a list of the rules that are being considered, as well as information about when public hearings will be held.