Tag Archives: GHG emissions

California Is On the Verge of a World-Changing Climate Bill — But It’s in Trouble

Emissions disclosure bill is testing the state’s climate resolve in the face of industry misinformation.

Illustration: Javier Palma/The Guardian

Capital & Main, by Aaron Cantù, August , 2023

It’s been more than two years since a California lawmaker first introduced a bill requiring big corporations to report their greenhouse gas emissions. The information could be criticalin the fight against climate change, with global temperatures smashing records this summer — yet it died in the Legislature last year after failing by one vote.

Now, the bill could fail anew thanks to a handful of Democrats.

The Climate Corporate Data Accountability Act, carried by Sen. Scott Wiener (D-San Francisco), would force big companies to report their emissions to the California Air Resources Board.

Altogether, the lack of information on supply-chain emissions means we know only a fraction of the global economy’s climate impacts, undermining the public’s knowledge of the crisis. Some companies already report these figures, or disclose select information on their own.

But under SB 253, thousands of public and private companies — about 5,300 — would report the full scope of their climate pollution, many for the first time. That includes recognizable brands like Walmart and Costco and any other company that generates at least a billion dollars in revenue and operates in the state.

And if SB 253 becomes law in California, reportedly the largest sub-national economy in the world, it could contribute to a wave of transparency regulations requiring more corporate climate disclosures, among them the European Union’s new policy. Bill supporters say this information helps put pressure on companies to reduce their emissions.

But business interests, including the oil and gas lobby, are aligned to sink the California legislation. To pull that off, they would need the help of Democrats.

Fence-Sitting Democrats Receive Millions From Corporate Interests

Swing-vote Democrats in the State Assembly — where similar legislation failed by one vote in 2022 — may determine whether the opposition succeeds.

As Democrats have secured a supermajority in the California Legislature, business associations have increasingly targeted so-called moderate Democrats with their giving and lobbying.

Many of the same assemblymembers who helped kill the bill previously may have a chance to vote on it again. But a review of campaign contributions suggests that opposed industries have lawmakers’ ears.

Seventeen Assembly Democrats who registered no vote or voted against the bill in 2022 are still in the chamber. They have collectively taken nearly $1.16 million from oil and gas throughout their careers, including the months after last year’s session. (A full list of figures can be viewed here, with more detail here.) Thirteen lawmakers collected oil and gas money in 2023.

Over the course of their careers, Assemblymember Mike Gipson (D-South Bay) collected the most from oil and gas, at $244,380; Blanca Rubio (D-South Bay) and Brian Maienschein (D-Escondido) came in second and third, at $212,399 and $114,950.

Staff for Rubio and Maienschein didn’t return a request for comment. In an email to Capital & Main, Gipson chief of staff Emmanuel Aguayo noted Gipson’s affirmative votes on several climate bills signed last year by Gov. Newsom.

The lawmakers also took $4.6 million from business groups, many of which, such as the California Chamber of Commerce (recently rebranded as CalChamber) and regional agricultural associations, are opposed to SB 253. Forty percent of that total went to just three lawmakers: Gipson, Rubio and Maienschein. But 10 others have collected more than $100,000 each from business groups over their careers.

The governor’s rush to pass a climate package last year may have led to fatigue among some lawmakers, claimed Sen. Wiener.

“I suspect if our bill had come up a day or two before, my prediction is we would have gotten it off the floor,” Wiener said in an interview. “We just have a stronger, more diverse coalition this year.”

Wiener said he’s also planning outreach to 15 freshmen assemblymembers who would be voting for the first time. Of them, three — Esmeralda Soria (D-Merced), Blanca Pacheco (D-Downey) and Jasmeet Bains (D-Delano) — received thousands of dollars from oil and gas this year. And seven, including Soria, Pacheco and Bains, collected contributions from CalChamber (view figures here).

“We have a lot of new members, so we have a lot of work to do on that front,” Wiener said, “but I’m optimistic.”

Supply Chain Emissions a Missing Piece of Climate Puzzle 

A handful of companies are supporting the bill, including Microsoft, IKEA, Patagonia and Sierra Nevada Brewing Co.

In a letter to the Assembly’s Appropriations Committee, they wrote that the bill “would level the playing field by ensuring that all major public and private companies disclose their full emissions inventory, creating a pathway for collective reduction strategies.” The committee has to approve the bill before it can go to the Assembly floor.

CalChamber has reiterated the same concerns over two years. A letter boils it down to difficulties tracking supply chain emissions, which it has described as “impossible” and something that would “necessarily require that large businesses stop doing business with small and medium businesses” that act as subcontractors.

Such claims are “not true,” said Simon Fischweicher, head of corporations and supply chains for CDP North America. The nonprofit supports companies’ efforts to account for their emissions, and connects them to climate-conscious investors; CDP’s member companies represent trillions in global market capital.

“A significant portion of companies disclosing emissions are small or medium sized,” Fischweicher said. “It’s already happening.”

Most company’s supply chain emissions (which are referred to as Scope 3 emissions by the World Resources Institute) account for the vast majority of their climate pollution. For oil refiners, this includes emissions generated when people fuel up their cars and drive using gasoline refined from company petroleum.

To take another example, Coca-Cola can track the emissions generated when its executives drive or fly (Scope 1), or when its office buildings use fossil fuels for electricity (Scope 2). But far more pollution happens indirectly, across the lifecycle of each Coke bottle or can. Understanding it requires gathering data points from subcontractors involved in bottling and distribution, as well as estimated climate pollution from all the trashed Cokes in landfills.

The bill directs companies to use the GHG Protocol, which determines supply chain emissions by multiplying “emissions factors” by weight or cost of products. The figures are imprecise, an ongoing concern as the need for accurate information grows. Advocates say standards will improve.

“That level of granularity involves different assumptions that can be made, so we’re not always going to end up on the same exact number, even from a Coke to a Pepsi,” Fischweicher said. “But what’s critical is that companies go through those steps, understand where their impacts lie, explain those figures, and understand the methodology to know how they got there.”

Industries “Fighting, Delaying” Disclosure Rules 

Companies have railed against Scope 3 emissions requirements to the Securities and Exchange Commission, which is working on rules requiring public companies to disclose their emissions and exposure to climate change.

The U.S. Chamber of Commerce argued that the costs of compliance to businesses would be far higher than the government’s estimates — and that investors just don’t care much about emissions.

Separately, the American Petroleum Institute, the organization that once served as the fossil fuel industry’s main disseminator of climate change denial, said the information would be unreliable and hard to gather.

Yet API’s comments contradict its endorsement of emissions-gathering in other venues. In 2020, API and two other oil associations released a guide that encourages companies to report emissions across their value chains using various frameworks, among them the GHG Protocol.

And both the state chamber and oil lobby have cited the SEC’s rulemaking to argue that California’s climate disclosure bill would be redundant — even as their national counterparts oppose that same rulemaking at the SEC.

Wiener called these actions “shocking.”

“They’re fighting, delaying and trying to kill the SEC rule, but then saying we shouldn’t legislate because the SEC will handle it,” he said. “It’s so cynical.”

Grant Cooke: Big Oil’s endgame: What it all means for Benicia

Repost from The Benicia Herald
[Editor: Benicia’s own Grant Cooke has written a highly significant three-part series for The Benicia Herald, outlining the impending fall of the fossil fuel industry and concluding with good advice for the City of Benicia and other cities dependent on refineries for a major portion of their local revenue stream.  This is the last of three parts.  Read part one by CLICKING HERE and part two by CLICKING HERE.  – RS]

Big Oil’s endgame: What it all means for Benicia

October 12, 2014, by Grant Cooke

P1010301IN APRIL 2014, THE HIGHLY RESPECTED Paris-based financial company Kepler Chevreux released a research report that has rippled through the fossil fuel industries. In it, Kepler Chevreux describes what is at stake for the fossil fuel industry as world governments’ push for cleaner fuels and reduced greenhouse gas emissions gathers momentum.

The firm argues that the global oil, gas and coal industries are set to lose a combined $28 trillion in revenues over the next two decades as governments take action to address climate change, clean up pollution and move to decarbonize the global energy system. The report helps to explain the enormous pressure that the industries are exerting on governments not to regulate GHGs.

Kepler Chevreux used International Energy Agency forecasts for global energy trends to 2035 as the basis for its research, and it concluded that as carbonless energy becomes more available, and as government policies make steep cuts in carbon emissions, demand for oil, natural gas and coal will fall, which will lower prices.

The report said oil industry revenues could fall by $19.3 trillion over the period 2013-35, coal industry revenues could fall by $4.9 trillion and gas revenues could be $4 trillion lower. High-production-cost extraction such as deep-water wells, oil sands and shale oil will be most affected.

Even under business-as-usual conditions, however, the oil industry will still face risks from increasing costs and more capital-intensive projects, fewer exports, political risks and the declining costs of renewable energy.

The report continues: “The oil industry’s increasingly unsustainable dynamics … mean that stranded asset risk exists even under business-as-usual conditions. High oil prices will encourage the shift away from oil towards renewables (whose costs are falling) while also incentivizing greater energy efficiency.” Eventually, fossil fuel assets will be too expensive to extract, and the oil will be left in the ground.

As far as renewables are concerned, Kepler Chevreux says tremendous cost reductions are occurring and will continue as the upward trajectory of oil costs becomes steeper.

Kepler Chevreux’s report is consistent with others released in 2014. One report from U.S.’s Citigroup, titled “Age of Renewables is Beginning — A Levelized Cost of Energy (LCOE)” and released in March 2014, argues that there will be significant price decreases in solar and wind power that will add to the renewable energy generation boom. Citigroup projects price declines based on Moore’s Law, the same dynamic that drove the boom in information technology.

In brief, Citigroup is looking for cost reductions of as much as 11 percent per year in all phases of photovoltaic development and installation. At the same time, they say the cost of producing wind energy also will significantly decline. During this period, Citigroup says, the price of natural gas will continue to go up and the cost of running coal and nuclear plants will gradually become prohibitive.

When the world’s major financial institutions start to do serious research and quantify the declining costs of renewable energy versus the rising costs of fossil fuels, it becomes easier to understand the monumental impact that the Green Industrial Revolution is having.

Zero marginal cost

Marginal cost, to an economist or businessperson, is the cost of producing one more unit of a good or service after fixed costs have been paid. For example, let’s take a shovel manufacturer. It costs the shovel company $10,000 to create the process and buy the equipment to make a shovel that sells for $15. So the company has recovered its fixed or original costs after 800 to 1,000 are sold. Thereafter, each shovel has a marginal cost of $3, consisting mostly of supplies, labor and distribution.

Companies have used technology to increase the productivity, reduce marginal costs and increase profits from the beginning. However, as Jeremy Rifkin points out in “Zero Marginal Cost Society,” we have entered an era where technology has unleashed “extreme productivity,” driving marginal costs on some items and services to near zero. File sharing technology and subsequent zero marginal cost almost ruined the record business and shook the movie business. The newspaper and magazine industries have been pushed to the wall and are being replaced by the blogosphere and YouTube. The book industry struggles with the e-book phenomenon.

An equally revolutionary change will soon overtake the higher education industry. Much to the annoyance of the universities — and for the first time in world history — knowledge is becoming free. At last count, the free Massive Open Online Courses (MOOCs) had enrolled about six million students. The courses, many of which are for credit and taught by distinguished faculty, operate at almost zero marginal cost. Why pay $10,000 at a private university for the same course that is free over the Internet? The traditional brick-and-mortar, football-driven, ivy-covered universities will soon be scrambling for a new business model.

Airbnb, a room-sharing Internet operation with close to zero marginal cost, is a threat to change the hotel industry in the same way that file sharing changed the record business, especially in the world’s expensive cities. Young out-of-town high-tech workers coming to San Francisco from Europe use Airbnb to rent a condo or an empty room in a house instead of staying at a hotel. They do this because they cannot find a room with the location they need, or because their expense reimbursement cap won’t cover one of the city’s high-end hotel rooms. Industry analysts estimate that Airbnb and similar operations took away more than a million rooms from New York City’s hotels last year.

A powerful technology revolution is evolving that will change all aspects of our lives, including how we access renewable energy. An “Energy Internet” is coming that will seamlessly tie together how we share and interact with electricity. It will greatly increase productivity and drive down the marginal cost of producing and distributing electricity, possibly to nothing beyond our fixed costs.

This is almost the case with the early adopters of solar and wind energy. As they pay off these systems and their fixed costs are covered, additional units of energy are basically free, since we don’t pay the sun to shine or the wind to sweep around our back wall. This is the concept that IKEA, the Swedish furniture manufacturer, is exploiting. IKEA is test marketing residential solar systems in Europe that cost about $11,000 with a payback of three to five years. Eventually, we’ll be able to buy a home solar system at IKEA, Costco or Home Depot, have it installed and recover our costs in less than two years.

All three elements — carbon mitigation costs, grid parity and zero marginal costs — and others like additive manufacturing and nanotechnology are part of the coming Green Industrial Revolution. It will be an era of momentous change in the way we live our lives. It will shake up many familiar and accepted processes like 20th-century capitalism and free-market economics, reductive manufacturing, higher education and health care. More to the point, it will see the passing of the carbon-intensive industries.

Like the centralized utility industry, the fossil fuel industries and the large centralized utilities have business models predicated on continued growth in consumption. Once that nexus of declining prices for renewables and rising costs of extraction and distribution is crossed — and we are already there in several regions of the world — demand will rapidly shift and propel us into “global energy deflation.”

Think about it: No more air pollution strangling our cities, no more coal ash spills in rivers that our kids swim in, no more water tables being poisoned by fracking toxics. Better yet, think of no more utility bills and electricity that is almost free. These are among the unlimited opportunities that extreme productivity can provide.

* * *

SO WHAT DOES ALL THIS MEAN FOR BENICIA? Our lovely town, along with some of our neighbors, has enjoyed a stream of tax revenue from the fossil fuel industries for several decades. This will end as these industries lose the ability to compete in price with renewable energy. After all, if my energy costs drop to near zero, I’m not going to pay $5 for a gallon for gas or 20 cents per kilowatt hour. If Kepler Chevreux, Citigroup and the prescient investment bankers are right — and they usually are — oil company profits will begin a death spiral accompanied by industry constriction and refinery closings. Losing $19.3 trillion over two decades is a staggering amount even for the richest industry in world history.

Benicia should begin a long-range plan to replace Valero’s current tax revenues. Two decades from now this town will be very different — we are headed toward a city of gray-haired pensioners and retired folks too contented with perfect weather and amenities to sell homes to wage earners who, in fact, may not be able to afford big suburban houses and garages full of cars.

Instead, the Millennials are choosing dense urban living that’s close to work, and they prefer getting around by foot or bicycle, with some public transportation and the occasional Zipcar to visit the old folks in ‘burbs. The last thing pensioners want to do is pay extra taxes for schools and services they aren’t using, so raising taxes to meet the tax revenue shortfall is probably out of the question.

A similar revenue shortfall is probably facing the thousands of fossil fuel and utility industry employees who are thinking of retiring in the East Bay. Many plan to live on their stock dividends and pass the stock along to their heirs. This will be difficult as the industry begins the attrition phase of its cycle. They should see a financial planner and diversify.

To gamble Benicia’s safety and expand GHG emissions by approving Valero’s crude-by-rail proposal is illogical given that the oil industry is winding down and fossil-fuel will soon not be competitive with renewables. It would better for the Bay Area if we start to help Valero and the other refineries begin the long slow wind-down process, and gradually close them while the companies are still profitable. If we leave the shutdown process to when the companies start to struggle financially, they will just lock the gates and walk away, leaving the huge environmental cleanup costs to the local communities much the way the military does when they close bases.

There’s no good reason why Benicia residents should be saddled with the burden of a shuttered and vacant Valero refinery. We should begin the process as soon as possible and work with the refinery to not only find a way to replace the lost tax revenue, but to identify who will pay for the hazard waste and environmental cleanup.

At the very least, Benicia City Council should understand the move to a carbonless economy, read the Citigroup and Kepler Chevreux reports and the other emerging research, and accept the fact that Big Oil has begun its endgame. Leadership is about looking forward, not back, and identifying and solving problems at the most opportune time.

Grant Cooke is a long-time Benicia resident and CEO of Sustainable Energy Associates. He is co-author, with Nobel Peace Prize winner Woodrow Clark, of “The Green Industrial Revolution: Energy, Engineering and Economics,” set to be released in October by Elsevier.