‘Trend line is pretty clear’ on carbon curbs — White House official

Source: Hannah Hess, E&E reporter • Posted: Wednesday, November 2, 2016

With investor scrutiny mounting on climate risks, a White House official suggested yesterday that companies that plan for reduced carbon emissions are “going to come out ahead.”

Ali Zaidi, the Office of Management and Budget’s associate director for natural resources, energy and science, was asked during an Atlantic Council event about companies that use a shadow price of carbon in corporate decisionmaking.

It’s not the government’s job to tell CEOs how to run their businesses, he said, but there may be a “lagging appreciation” in the private sector for how much has happened to transform the climate landscape over the last couple of years.

“While uncertainty remains, it’s hard to say that sitting in a boardroom, this is not a material consideration,” he said, “And I would imagine that in most of these boardrooms, there’s a sense that the trend line is pretty clear.

“I think folks who are planning in this way are going to come out ahead because they are going to be on the right side of the way this issue breaks.”

To bolster his point, Zaidi nodded to implementation of the Paris climate agreement, the international aviation deal that sets up a market-based approach to offsetting emissions growth and the “huge amendment” to the Montreal Protocol that aims to limit heat-trapping hydrofluorocarbons.

Following a meeting of the Group of 20 task force that plans next year to issue voluntary guidance for companies to disclose climate-related financial risk, Zaidi spoke about OMB’s approach to climate, including input on the social cost of carbon and incorporating that calculation into federal procurement contracts.

Zaidi also talked about federal and state-level pension managers looking at how increased regulations of greenhouse gas emissions might affect their investments, a trend he said is “picking up steam.” In Maryland, for instance, officials have begun considering how to minimize the carbon footprint of the state’s $45 billion portfolio (ClimateWire, Oct. 21).

The issue is in the spotlight with New York Attorney General Eric Schneiderman (D) and the Securities and Exchange Commission investigating Exxon Mobil Corp., reportedly on how the company appraises its assets. Critics of the company have encouraged investors to ask how it accounts for climate change in the value of its reserves (ClimateWire, Oct. 26).

The Environmental Defense Fund and Principles for Responsible Investment partnered earlier this month to produce a guide to help investors engage with oil and gas companies about methane, a potent greenhouse gas that federal agencies are working to regulate. It encourages support for regulations that would require the sector to utilize new technologies to manage methane emissions.

In January, EDF released a report finding that none of the leading upstream and midstream oil and gas companies operating in the United States disclosed methane reduction targets, and less than a third disclosed baseline emissions information via accessible, investor-facing data sources.

The American Petroleum Institute, a top lobbying powerhouse for natural gas, today said the Obama administration could encourage more investment in energy with smart and cost-effective regulatory programs that address permitting, infrastructure and pipeline delays.

Western Energy Alliance’s Kathleen Sgamma noted that agriculture, not the oil and natural gas industry, is the largest industrial source of methane thanks to the industry’s efforts since 1990 to reduce emissions. Many of the figures EDF uses are misleading, she said in an email to E&E News.

“It’s quite a racket to exaggerate the scope of the issue, and then turn around and pressure Wall Street into worrying about an issue ginned up from EDF’s own misinformation,” Sgamma said.