Energy & Environment SEC issues a rule on climate-risk

Welcome to Monday’s Overnight Energy & EnvironmentThe latest news on energy, the environment, and beyond is available at. Register here

Today, we will be looking at the SEC’s long-awaited rule regarding climate risk disclosure. We will also examine how frayed U.S.–Saudi relations are affecting energy crisis and a dire warning by the United Nations secretary-general.

Rachel Frazin, Zack Budryk and I are The Hill’s editors. Send tips to [email protected], [email protected].

Let’s get started.

SEC proposes rules regarding climate risk and emissions

Monday’s Securities and Exchange Commission (SEC), introduced rules that would force publicly traded companies, including those listed on the stock exchange, to disclose how climate change could impact their businesses and their contribution to global warming.

The SEC voted 3-1 in favor of long-awaited standards to how stock markets are traded. They must also reveal to investors how climate change affects financial stability and their roles in the production and distribution of greenhouse gases. Gary Gensler, the SEC Chairman, is a Democrat. He was joined by Democratic Commissioners Allison Lee, Caroline Crenshaw, and voted in favor. Hester Peirce (the agency’s sole Republican) voted against the rule.

The regulations will be open for public comment for 60-days before the SEC can finalize them and enforce them. This could take several months or even weeks.

What does it signify?The proposed rules require publicly traded companies to disclose to investors how climate-related risks could affect their finances under the new rules. There are potential risks associated with rising severe weather events, shifting away from fossil-fuels costs and the company’s efforts in reducing its carbon footprint. These potential costs will need to be calculated by companies based on data they already collect for regular disclosures to investors.

Companies will also have to disclose their “Scope 1”, which is the amount of greenhouse gases they directly produce from their own business operations like manufacturing or mining, and their “Scope 2”, which comes from energy they purchase to run their business.

The story continues

And what more?Companies will also have to report their “Scope 3”, greenhouse gas emissions. This includes emissions from goods and services that they purchase, if they have set public emission reduction targets, or if the emissions are a financial risk to the company. However, firms that are required to report Scope 3 emissions will not be penalized if they make mistakes or miscalculations.

Washington and Wall Street have been increasing pressure on the SEC to establish clear climate disclosure standards. Since years, Democratic lawmakers and environmentalist organizations have urged financial regulators in Washington to pay more attention the risks that climate change poses to their financial system.

Several investment firms have also asked for clear guidelines from the SEC regarding disclosure of climate risks. This is in response to investor interest in rapidly growing environmental, social, and governance (ESG), issues.

“We have a responsibility not to lose sight of facts and science, and their implications for financial market,” Lee said. Lee stated that the pandemic was a timely reminder of how a crisis outside of financial markets can, and often will, send shockwaves directly through these markets.

More from The Hill’s Sylvan Lane.

Tensions between the US-Saudi complicate push to increase oil production

The Biden administration is having trouble convincing Riyadh (the capital of the Middle East country) to increase its oil production. This could help consumers in the face of high prices and increased risks from the Russian war in Ukraine.

Since the 2018 murder of Jamal Khashoggi (Washington Post journalist), the U.S. government has become increasingly critical of Saudi Arabia. He was lured to Istanbul and murdered in the Saudi Consulate.

What’s the problem?The conflict has been intensified by bipartisan criticism of Congress from Saudi Arabia over its human rights record and tensions about Yemen’s civil war.

It makes it difficult for the administration to obtain increased production from Saudi Arabia and the United Arab Emirates.

“I hate the fact we have to ask Saudi Arabia to produce more oil,” Rep. Tom Malinowski, D-N.J., who was a top human rights official under the Obama administration, told reporters this past week.

“It is a shame that the Biden administration must figure out how to leverage the relationship with Saudi Arabia so that my constituents won’t be squeezed at every pump,” he said.

Saudi Arabia’s control of strategic oil resources may force the Biden Administration, which is under immense pressure to provide relief to consumers amid high gas prices and inflation, to reevaluate its strategy towards Riyadh.

Learn more about tensions here.

UN: Climate catastrophe is being caused by global’sleepwalking’

Antonio Guterres, Secretary General of the United Nations Monday warnedThe international goal to keep climate change below 1.5 degrees Celsius is not possible. It is now or never.

Guterres spoke at the Economist Sustainability Summit and stated that the goal was “on life support” but “in intensive” because of a combination issues such as the COVID-19 Pandemic, Russian invasion of Ukraine, and a general lack in political will.

“The world has returned from [the COP26 climate summit]Guterres spoke with attendees at the Economist Sustainability Summit, expressing a “naive optimism” about reaching the goal. “Keeping 1.5 alive requires that there is a 45 percent reduction of global carbon emissions by 2030, and carbon neutrality by the middle of the century. That problem was not solved by Glasgow.

He said that global emissions are expected to rise by nearly 14 percent according to the current national commitments. “Last year, global energy-related CO2 emissions grew by 6 per cent to their highest level in history. The record-breaking coal emissions have reached new heights. We are accelerating towards climate catastrophe.

Guterres said that Russia’s invasion in Ukraine and subsequent sanctions against Russian energy had created an energy crisis, which illustrated the dangers of the status quo.

Guterres stated, “As the current events show all too clearly, our continued reliance upon fossil fuels puts both the global economy and the security of energy supply at the mercyof geopolitical shocks or crises.”

He stated that there was still hope to “move 1.5-degree goal form life support to recovery room” if certain steps were taken, including increased renewables use and decarbonization in major industrial sectors.

You can read more about his remarks here.

YOUNG, FIXTURE of NATURAL RESURES PANEL, DEAD AT88

Rep. Don Young (R. Alaska), who was a former chair for the House Natural Resources Committee, has died Friday night at the ripe old age of 88.

Young, who is the longest-serving Republican member in Congress, presided over the House panel following 1994’s GOP victory. He changed the name of the House panel to the “House Committee on Resources,” and Democrats returned to the original name in 2006 when they won control.

Young was well-known for his support for the state’s timber and oil industries. He also opened the Arctic Wildlife Refuge to oil drilling. He also introduced Interior Secretary Deb Haland to her confirmation hearing in 2021, which Senate Energy Committee Chair Joe Manchin (D.W.Va.), said was a major reason for his support of the nomination.

Haaland stated that Mr. Young, as Dean of the House taught us all how to love the people of the states we represent.” “Everything he did, every single day, was for Alaska, its people, whom we loved deeply.” He left us a tremendous legacy, of bipartisanship in the service of the greater good.

WHAT WE ARE READING

• FEMA will provide flood prevention financing to these four states that were affected by Hurricane IdaCNN)

• EPA Union Urges Agency To Scrap Trump-Era Plan To Relocate Houston Lab (HuffPost)

• These charts compare the costs of charging an electric vehicle versus refueling a gasoline car.CNBC)

• Can SoCalGas’ hydrogen use help combat climate change? (The Los Angeles Times)

• Last but not least, something a bit offbeat, but still a little on-beat: Happy Peak Bloom!

ICYMI

This is it for today. Thanks for reading. Visit The Hill. Energy & Environment pageFor the most recent news and coverage. We will see you tomorrow.