Climate Implications of the Debt Ceiling Deal

This week’s news has been dominated by the US economy and the debt-ceiling precipice it teeters on. The good news is that a deal was reached, which will avoid the US defaulting and wiping out trillions of dollars from the economy and over 1.5 million jobs within a week. Importantly, the deal protects the Administration's signature climate law - the Inflation Reduction Act, which Republicans wanted to reverse.?

The bad news is that the deal came at a cost to the Biden administration’s progress on climate policy and nature conservation. It will fast-track the long-contested Mountain Valley Pipeline, moving fracking gas from West Virginia to Southern Virginia, overriding several court cases over its environmental implications. Peter Anderson of NGO Appalachian Voices said, “Singling out the Mountain Valley pipeline for approval in a vote about our nation’s credit limit is an egregious act.”?

Another provision in the debt-limit deal will weaken the US’ first environmental law, The National Environmental Policy Act (NEPA) - halving the time allowed for reviews of large-scale energy and infrastructure projects.?

Net Zero Insurer Exodus Continues

Last week we covered the defections from the Net Zero Insurers Alliance (NZIA). Things got worse this week as another founding member Lloyds of London, and others left the group. That leaves the NZIA with almost half of the members (17 of 30) it had just two months ago.?

The reason for the mass exodus is largely due to political pressure over ESG policies. A spokesperson from the Glasgow Financial Alliance for Net Zero (GFANZ - the home of the NZIA) said, “These political attacks are now interfering with insurers’ independent efforts to price climate risk, which will harm policyholders, main street investors, and local economies.”

Insurers have a pivotal role to play in mitigating climate change by protecting people's health and property. However, some insurers are increasing premiums and even pulling coverage from some areas worst hit by climate disasters. For example, in California, the state's largest insurer State Farm, this week announced that it would stop selling coverage to all homeowners across the state due to accelerating climate-related losses.?

CS3D Approved by EU Parliament

Despite a last-minute attempt to water down the EU Corporate Sustainability Due Diligence Directive (CS3D), the directive sailed through a vote in the EU parliament with 366 in favor and 225 against. The new ruling, which we covered in a previous edition, will require due diligence on human rights and the environment in large companies' supply chains. NGO, Justice for Everybody's Business, said, "For too long, big business has taken advantage of hidden global value chains to operate with impunity."

Global Plastic Agreement

This week’s UN-backed Intergovernmental Negotiating Committee on Plastic Pollution (INC2) aims to have a plastics treaty finalized in November. Key issues to resolve are ‘circularity’ -? keeping already-made plastic in circulation as long as possible and reducing plastics at the source by scaling back fossil fuel subsidies and new plastics manufacturing. Rwanda's environment minister, Jeanne d'Arc Mujawamariya, co-chair of the High Ambition Coalition, said, "We have a responsibility to protect human health in our environment from the most harmful polymers and chemicals of concern through the treaty."

Different State of Mind

Despite Texas' opposition to renewable energy, the state continues to be the national leader in clean energy.? Doug Lewin of Stoic Energy said of the current political landscape in Texas that “There is an irrational animus toward renewables” and that the only thing that stopped anti-renewables measures in recent energy legislation was a “remarkable coalition of environmentalists, industry organizations and business groups.” Energy is a hot topic in the state with, recent grid issues in the state causing blackouts, which has led to huge growth in the state’s battery sector.?

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

Other Notable News:

• In a rare moment of bipartisan action, congress agreed to a bill that could reduce the mental health effects of climate change. The Community Mental Wellness and Resilience Act of 2023 will enable the support of at-risk communities with grants.??
• Delta Airlines accused of greenwashing on carbon neutral claims. The airline is facing a lawsuit over its climate-neutral claim, which centers around a pledge of $1 billion of investment in carbon credits and sustainable fuels by 2030. The plaintiffs claim the carbon neutral claim is “false and misleading,” as it relies on offsets.
• Using pig fat as green jet fuel is unsurprisingly unsustainable. A new report claims a three-fold increase in animal fats as a fuel source is not sustainable.?
• 1,500 Extinction rebellion members arrested in Holland. The 6,000 activists who blocked a road in the Hague protesting fossil fuel subsidies were sprayed with water canons and asked to disperse. Those that did not were arrested and faced minor offenses.
• Ahead of this year's CDP reporting season, the non-profit is attempting to get more transparency from big polluters. The CDP and 290 financial institutions are requesting 1,600 major companies with a "high impact" on the planet to disclose their environmental data through the CDP.?
• Wall Street is investing heavily in new recycling and landfill-to-energy technologies. With the Inflation Reduction Act, and a green push sweeping the nation, waste management investments have never been higher.?
• A global BCG survey found that while 90% of banking executives respondents said it is very or extremely important to consider social impacts of their bank’s climate activities, only 33% said that social considerations were impacting climate-related decision-making.?BCG show how asking some important questions banks can start including social considerations in their climate transitions.

Notable Podcasts:?

• This week’s edition of the BBC’s The Climate Question? Explored some of the reasons women are disproportionately affected by the climate crisis.
• In this week’s episode of ESG Talk with Workiva’s Mandi McReynolds , she gives her guide to ESG ratings. Explains how Workiva approaches ESG ratings, how to identify what should matter most to your company, and the benefits of regularly reporting your ESG goals.?