Welcome to Monday’s Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. Subscribe here.
Today we’re looking at the SEC’s long-awaited rule on climate risk disclosure, how frayed U.S.-Saudi relations are affecting the energy crisis and a dire warning from the United Nations secretary general.
For The Hill, we’re Rachel Frazin and Zack Budryk. Write to us with tips: rfrazin@thehill.com and zbudryk@thehill.com.
Let’s jump in.
SEC proposes rules on emissions, climate risk
The Securities and Exchange Commission (SEC) proposed rules Monday that would force publicly traded companies to reveal the ways climate change could threaten their businesses and their own contributions to global warming.
The SEC voted 3-1 to propose long-awaited standards for how businesses traded on the stock market must reveal to investors the ways climate change affects their financial stability, along with their own roles in the production of greenhouse gasses. SEC Chairman Gary Gensler, a Democrat, along with Democratic Commissioners Allison Lee and Caroline Crenshaw, voted in favor of the rule, while SEC Commissioner Hester Peirce, the agency’s sole Republican, voted against it.
The regulations are open for public comment for 60 days before the SEC can finalize and enforce them, which could take several weeks or months.
What does it mean? Under the proposed rules, publicly traded companies will be required to explain in their regular disclosures to investors how certain climate-related risks can affect their finances. Potential risks include the rising frequency of severe weather, the potential costs of shifting away from fossil fuels and a company’s own efforts to limit its carbon footprint. Companies will be required to calculate these potential costs from data they already compile for regular disclosures to investors.
Companies will also be required to disclose their “Scope 1” emissions – the amount of greenhouse gas emissions they directly produce through their own business operations, such as manufacturing or mining – along with their “Scope 2” emissions, which come from the energy they purchase to keep their business running.
And what else? Companies would also be required to report their “Scope 3” greenhouse gas emissions, which include emissions from the goods and services purchased by the firm, if they have set public emissions reduction targets or if those emissions pose a direct financial risk to the business. Firms required to report Scope 3 emissions, however, will not face penalties if they come forward with mistakes or miscalculations in those figures.
The SEC has faced growing pressure from both Washington and Wall Street to set clear climate disclosure standards. Democratic lawmakers and environmentalist groups have pushed financial regulators for years to pay closer attention to the risks climate change poses to the financial system.
Some investment firms have also asked the SEC to set clear guidelines for disclosing climate risks amid rapidly growing investor interest in how businesses handle environmental, social and governance (ESG) issues.
“We have a responsibility to stay firmly focused on facts and science and their implications for financial markets. The pandemic, for example, provided a timely reminder that a crisis from outside financial markets can and often will send shockwaves directly through those same markets,” Lee said.
Read more from The Hill’s Sylvan Lane.
US-Saudi tensions complicate push for more oil
Strained relations between Saudi Arabia and the United States are complicating efforts by the Biden administration to convince Riyadh, the Middle Eastern country’s capital, to step up its oil production – which could provide some relief to consumers amid high prices exacerbated by the Russian war in Ukraine.
The U.S. government has been increasingly critical of the Saudis since the 2018 killing of Washington Post journalist Jamal Khashoggi, who was lured to and killed in the Saudi Consulate in Istanbul.
What’s the issue? Saudi Arabia’s human rights record and tensions over Yemen’s civil war, which have led to bipartisan criticism from Congress, have added to the strife.
It puts the administration in a difficult spot as it seeks to get Saudi Arabia and the United Arab Emirates to increase production.
“I hate the fact that we have to ask the Saudis to produce more oil,” Rep. Tom Malinowski (D-N.J.), who was a top human rights official during the Obama administration, told reporters this week.
“I hate that the Biden administration has to figure out how to leverage our relationship with Saudi Arabia to get them to do that so that my constituents aren’t being squeezed at the pump,” he added.
Saudi Arabia’s control over strategic oil reserves may force the Biden administration, which is under pressure ahead of the midterms to provide some relief to consumers amid inflation and high gas prices, to reassess its strategy towards Riyadh.
Read more about the tensions here.
UN: World ‘sleepwalking to climate catastrophe’
United Nations Secretary General Antonio Guterres on Monday warned that time is running out to meet the international goal of keeping climate change below 1.5 degrees Celsius, saying that the world is “sleepwalking to climate catastrophe.”
Speaking at the Economist Sustainability Summit, Guterres said the goal is “on life support” and “in intensive care” due to a combination of issues such as the COVID-19 pandemic, the Russian invasion of Ukraine and a general lack of political will.
“The world returned from [the COP26 climate summit] with a certain naive optimism” about achieving the goal, Guterres told attendees at the Economist Sustainability Summit. “Keeping 1.5 alive requires a 45 percent reduction in global emissions by 2030 and carbon neutrality by mid-century. That problem was not solved in Glasgow.”
“According to present national commitments, global emissions are set to increase by almost 14 percent in the 2020s,” he added. “Last year alone, global energy-related CO2 emissions grew by 6 percent to their highest levels in history. Coal emissions have surged to record highs. We are sleepwalking to climate catastrophe.”
Guterres added that the energy crisis created by Russia’s invasion of Ukraine and subsequent sanctions against Russian energy illustrated the risks of the status quo.
“As current events make all too clear, our continued reliance on fossil fuels puts the global economy and energy security at the mercy of geopolitical shocks and crises,” Guterres said.
He told attendees that there remained hope to “move the 1.5-degree goal from life support to the recovery room” if certain steps are taken, such as increased use of renewables and decarbonization of major industrial sectors.
Read more about his remarks here.
YOUNG, FIXTURE OF NATURAL RESOURCES PANEL, DEAD AT 88
Rep. Don Young (R-Alaska), a former chair of the House Natural Resources Committee, died Friday night at the age of 88.
Young, the longest-serving Republican member of Congress in history, chaired the House panel after the GOP won the chamber in 1994. He subsequently changed its name to the “House Committee on Resources,” with Democrats reverting to the original name after winning control in 2006.
During his time on the panel, Young was known for his advocacy for his state’s oil and timber industries, in particular opening the Arctic Wildlife Refuge for oil drilling. However, he also introduced Interior Secretary Deb Haaland at her 2021 confirmation hearing, which Senate Energy Committee Chair Joe Manchin (D-W.Va.) said was a major factor in his decision to support the nomination.
“As Dean of the House, Mr. Young taught all of us how to love the people and the states that we represent,” Haaland said in a statement. “Everything he did, every day, was for Alaska and its people, whom he loved dearly. He leaves us a tremendous legacy of bipartisanship in service of the greater good.”
WHAT WE’RE READING
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FEMA will provide flood prevention funding to these 4 states affected by Hurricane Ida (CNN)
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EPA Union Urges Agency To Scrap Trump-Era Plan To Relocate Houston Lab (HuffPost)
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These charts show how much it costs to charge an EV vs. refueling a gas vehicle (CNBC)
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Will SoCalGas’ use of hydrogen help fight climate change? (The Los Angeles Times)
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And finally, something offbeat but somewhat on-beat: Happy Peak Bloom!
ICYMI
That’s it for today, thanks for reading. Check out The Hill’s energy & environment page for the latest news and coverage. We’ll see you tomorrow.
