California Amends Climate Laws

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California made headlines in March 2023 when the legislature sent Governor Gavin Newsom three new climate laws. He signed all three into law with a cautionary message that implementing rules and adequate funding would be needed. In the intervening 18 months, the state is still struggling to implement these policies, and this week, the state Senate introduced a possible solution in the form of yet another climate bill: SB 219.???

Setting the context: The California “Accountability Package” included three separate bills: SB 253 (Scope 1, 2, and 3 emissions disclosures), SB 261 ?(climate risk disclosure), and?AB 1305 ?(voluntary carbon market—VCM—disclosures).?

?In June of this year, Governor Newsom proposed delaying the implementation of the emissions and risk policies (SB 253 and 261) by two years - meaning companies would start reporting in 2028. This was met with some pushback: The architect of SB 253 (emissions disclosure), Senator Scott Weiner, said the “law already has a 6-year phase-in .” And Dave Jones , director of the University of California Berkeley’s Center for Law, said, “There really is no reason for the delay. Both bills have timelines that are attainable.?

As the deadline for the California Air Resources Board (CARB) to issue the implementing rules approaches (January 2025), Senator Weiner released an updated, consolidated version of the two bills under?SB 219. ?This bill gives CARB an additional six months to make the rules and keeps the current deadlines for company reports—starting in 2026.

The new bill also allows companies to consolidate their reporting requirements for SB 253 and SB 261 at the parent company level. Additionally, CARB has the option, though not the obligation, to collaborate with an outside organization to produce a climate risk report and to develop a program for making the required disclosures public.?

To help address concerns about the costs of compliance, SB 219 eliminates the fees companies were expected to pay under SB 253 and SB 261. However, there is no clarification on how these costs will be covered. Given the current state budget deficit, this will be an issue.

Budget negotiations conclude on August 31st, so stay tuned for next week’s newsletter for a more definitive answer on the fate of these important climate policies.?

And, we did not forget the often overlooked AB 1305, which requires disclosure of voluntary carbon credits. This bill had the most ambitious timeline, expecting companies that use or sell carbon credits to report on the validity, verification, and progress of those carbon credit projects back in Jan 2024.

In February of this year, AB 1305 was postponed and became the amended AB 2331. The most notable change was delaying the effective date to Jan 1st, 2025. Another change said that “renewable energy certificates issued through an accounting system of a governmental regulatory body” would not be considered part of the voluntary carbon market and are not covered. This exempted carbon trading under California’s regulated emissions trading scheme?

On August 23rd, the bill was amended again, pushing the reporting deadline back an additional six months to July 2025. This amended bill has passed through every committee so far resoundingly and is expected to move through the legislative process with ease.

Does AI Help or Hurt the Climate?

A C-suite survey released this week found that 78% of executives recognize the higher footprint of AI and the need for sustainable AI strategies.

The growth of AI in recent years has dramatically increased the emissions of big tech companies like Google and Microsoft . But while AI computing is energy-intensive, will the benefits to the climate crisis outweigh its impacts? ?

Energy consumption from AI computing is expected to double data center energy use by 2026 . However, new research from my company, BCG, estimates that innovations made possible by AI technology could reduce global emissions by 5-10% - more than offsetting the increased energy demand.

Innovations in clean energy and carbon removal are some of the examples of possible climate benefits. Meanwhile, big tech is working to mitigate AI’s impacts. Meta, for example, is investing in a 150 MW advanced geothermal plant to power data centers in Texas - this is equivalent to the electricity needed to power 70,000 homes. Microsoft is investing in carbon removal carbon credits to offset its AI emissions - which is injecting life into the voluntary carbon markets.

Which Climate Policies Actually Work?

Another way AI benefits climate action is by analyzing vast amounts of data, whether in new weather models or measuring the impacts of climate policy. New research this week looked at 1,500 climate policies from around the world, finding that only 63 were successful in creating significant emissions reductions (successful policies were defined as a reduction of between 0.6bn and 1.8bn tonnes of CO2e).?

The research found that the most effective policies work when they include market instruments like tax breaks and carbon taxes. For example, the UK’s policy for a coal phase-out only worked because it was combined with a minimum carbon pricing mechanism. Nicolas Koch, a co-author of the study, said, “We show that bans on coal-fired power plants or combustion engine cars do not result in major emissions reductions when implemented alone .”

The study also found that what worked in one country did not work in another, indicating policies should be designed “specific and sensitive to each country’s special social and political conditions.”

New EU Climate Leader Plans To Improve Communication

The favorite to become the next EU leader in the environment and climate is Teresa Ribera . Ribera is the frontrunner in the process of replacing the current EU climate leader, Wopke Hoekstra, she comes from an environmentalist background but also thinks growth can be green.

She wants to avoid the farmer protests and green pushback seen in the EU over the last year while still enacting the Green Deal by changing how the EU Green Deal is communicated . She says she will achieve this with “more honest and open conversation with stakeholders” and a “bottom-up approach.” Adding that “You have to be less ideological and [have] more pragmatism, and explain how all the costs in future will be higher .”

?Sea-Level Rise SOS (Save Our Seas)

UN Chief Antonio Guterres sent out a stark warning this week about the increasing dangers of sea-level rise, especially for low-lying island nations, saying, “the ocean is overflowing ."

Guterres spoke from the Pacific Island Forum in Tonga’s capital, Nuku'alofa, where sea levels rose 21cm between 1990 and 2020. The Pacific Island Forum coincided with two reports from the United Nations and the World Meteorological Society , which spelled out the dire plight of South Pacific Islanders and the wider world. Guterres called on wealthy developed nations to accelerate their phase-out of fossil fuels and fund adaptation measures for developing countries.

Clean Energy at Record High

In good news for the future of climate change and sea-level rise, more than 40% of global energy production came from low-carbon sources for the first time in 2023 . The Bloomberg research also found that renewable investments are still far outstripping that of fossil fuels. Solar and wind made up 90% of the global energy additions in 2023.

Figures from this week’s Department of Energy jobs report found that all of the investments in clean energy in the US (mainly driven by the Inflation Reduction Act) have meant that clean energy jobs are growing at double the rate of other jobs .

The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer.?

Other Notable News:

• Dubai, the city known for its oil wealth, has released a new ESG label to promote sustainable business practices . The label assesses companies based on their ESG performance and gives them a maturity level score. Strong performers will receive a label that is valid for a year.
• US climate envoy John Podesta went to China this week for climate negotiations . The goal is to deepen US-China relations on decarbonization and promote a joint front from the world’s two largest emitters at COP29 later this year.?
• A new CDP report revealed that 1 in 5 companies see water scarcity as a significant supply chain risk and that companies engaging their suppliers are 7x more likely to effectively identify and manage water risks.
• Toy manufacturer Lego announced they would replace all of their fossil fuel-made plastic with recycled plastic by 2032.?
• I answered a few questions in this EcoVadis article announcing my appointment to their Scientific Advisory Board .
• This new report from my company, BCG, shows that the next gold rush might come from an unlikely place: e-waste . With companies now using new cleantech to retrieve some of the more than $90 billion worth of metals in global e-waste,
• The EU has managed to reduce its dependence on Russian gas through an energy sovereignty program, REPowerEU . Most of the reductions (down from 45% of gas imports to 15%) come from the surge in renewables.?

Notable Podcasts:?

• This week’s episode of the Harvard Business Review’s The Climate Rising podcast is the first in their series on climate in media and entertainment . They feature an interview with CNN’s Chief Climate Correspondent Bill Weir. Bill discusses how CNN integrates climate narratives into their news coverage and the power of storytelling.?
• In this week’s episode of the ESG Insider, they look at what's next for the voluntary carbon markets (VCM) . The beleaguered VCM has been under a lot of pressure of late to bring more legitimacy and validity to carbon credits. This episode tries to explain how the market is trying to correct some of its recent challenges, explaining that the market is new and is going through some growing pains but will still be an important facet of global decarbonization.

Notable Jobs:

• Consulting Associate, ESG & Impact Post-Investment Value Creation (Entry Level), ERM, Philadelphia, PA
• Carbon Consultant, Rye Strategy, US, Remote
• Environmental and Social Governance (ESG) Coordinator, Sony Music, Culver City, CA
• Director, Social Impact, FIFA World Cup 26 Philadelphia?, Philadelphia, PA
• Research Analyst - Climate & Sustainability, BCG, Boston, MA
• Climate Services Manager, Carbon Better, Austin, TX, US
• ESG (Environmental, Social, and Governance) Analyst, Caterpillar, Irving, TX
• Sustainability Consultant, Introba, Austin, TX, Hybrid
• Associate Consultant, Sustainability, Energy and Climate Change, Arlington, VA, Hybrid
• Specialist, Global Sustainability - Reporting, Tiffany & Co., New York, NY