Climate Compass Blog

Helping small businesses become more resilient

Extreme weather and other results of climate change are an increasing risk to businesses everywhere, but to small businesses, they can be devastating. In fact, almost 40 percent of small businesses never reopen their doors following a disaster event.

Because small businesses often do not have the time or resources to learn about climate change and how to prepare for extreme weather events, C2ES has prepared a new report that provides recommendations for how state and local governments can help small business owners.

Small businesses make up 99.7 percent of all businesses and account for more than half of sales and jobs in the United States. Their share of the nation’s employment and economy are among several reasons that small businesses are at particular risk to even a single extreme weather event.

Many small businesses are not aware of the risks they face from changing climate conditions, and may not have plans in place to respond and recover from weather events. Small businesses are also dispersed, diverse, and have few resources to prepare for and respond to climate risks. Businesses that have no direct experience with weather impacts may also find it hard to see the importance of the issue.

However, it’s not hard to see how one brief event can take a severe toll on small businesses. The July 30, 2016 flash flood that devastated the historic Main Street district in Ellicott City, Maryland, is a prime example. In what the National Weather Service identified as a thousand-year rainfall event, more than six inches of rain fell in two hours. The deluge sent water gushing through an area filled with antique shops, art galleries, boutiques, and restaurants. The flood damaged 90 businesses and caused more than $22 million in damages to infrastructure. Months later, many businesses remain closed.

C2ES conducted research on small business resilience in Maryland, where more than 500,000 small businesses account for more than 97 percent of all the state’s businesses, and employ about half of the state’s private workforce. A C2ES survey found that fewer than half of small businesses in Maryland were aware of their risks and knew where to go for more information. Furthermore, while 98 percent of the businesses surveyed had experienced impacts from extreme-weather events, only 38 percent of them changed their operations or planning in response. Our survey also revealed that most small businesses do not know where to find additional information on climate risks, and that available resources do not directly address local risks that would be most relevant to small business.

In response, C2ES developed a framework that outlines four key recommendations for state and local officials on engaging with small businesses on weather and climate resilience:

1.     Use trusted messengers to convey climate information. These include organizations that small businesses frequently interact with, like city or county chambers of commerce, trade associations and other business organizations.

2.     Leverage existing channels of communication. State agencies and local agencies often already interact with businesses on preparedness, emergency planning, flood management, long-term planning, and economic development. Climate resilience information can be incorporated into these interactions. Likewise, existing resilience efforts can be broadened to include the business community.

3.     Identify new opportunities. New programs and information can be developed on small business resilience, such as public-private partnerships and business resilience networks. Training materials and other resources that are available can be distributed via trusted messengers.

4.     Distribute targeted information. Businesses need more information on what they can realistically do to become more resilient to extreme weather and climate change. Sector- and location-specific information can help businesses better understand their risks and opportunities for enhancing resilience. 

Extreme weather and other climate impacts will always be a threat to small businesses and the communities they help support. By developing additional opportunities and channels to communicate with small businesses about those risks, state and local governments can enable more businesses to build resilience now to help better prepare them for the future.

Connecticut seeks to support nuclear energy

For more than a year, Connecticut legislators have been working to craft a policy to ensure that zero-emission electricity from the Millstone Nuclear Power Station continues to flow until at least 2035 and 2045, when its operating licenses expire.

Millstone, New England’s largest power plant, supplied 45 percent of Connecticut’s in-state power generation and nearly all its carbon-free electricity last year. With around 2,100 MW of installed capacity, the facility generates enough power each year to meet the needs of nearly 2 million Connecticut households. Moreover, the two reactors help avoid the emissions of more than 6 million metric tons of carbon dioxide per year.

But Millstone, like other nuclear power plants, faces economic headwinds. Challenges include sustained low natural gas prices, declining renewable energy costs, slow growth in electricity demand, and power markets structures and policies that don’t compensate nuclear for its environmental and reliability attributes. Mandated safety enhancements and other capital and maintenance investments are adding to plant costs. Since late 2012, six U.S. nuclear reactors have been retired prematurely, and seven more are set to close by 2025.

If this trend continues or accelerates, there could be serious climate implications. Nuclear power supplies 20 percent of total U.S. electricity, but makes up 57 percent of zero-carbon electricity. As all recent U.S. nuclear retirements have led to increased fossil fuel-fired generation, any additional loss of nuclear generating capacity would be expected to increase U.S. emissions of carbon dioxide as well as nitrogen oxides. These increased emissions will set back our efforts to fight climate change and regional air pollution. Although nuclear power enjoys bipartisan support in Congress, a federal remedy has failed to emerge, so individual states are taking action. Last August, New York established a clean energy standard to help assist its upstate reactors. In December, Illinois passed a law to support two (i.e., Quad Cities and Clinton) of its six nuclear power plants in a similar fashion. New Jersey, Ohio and Pennsylvania are exploring options to support their nuclear reactors.

In Connecticut, lawmakers have proposed creating additional opportunities for Millstone to sell its power. In the bill’s current form, nuclear power would be able to participate in a state solicitation for carbon-free power. Under this arrangement, the commissioner of the Department of Energy and Environmental Protection could direct electric distribution companies (i.e., utilities) to “enter into agreements for energy, capacity, and environmental attributes,” provided the proposals are in the best interests of the ratepayers and meet other criteria. At the same time, the bill would increase the state’s renewable portfolio standard (RPS) to 40 percent by 2040 from 27 percent by 2020. So as not to overwhelm the RPS and inhibit the growth of renewables, only a portion of Millstone’s output should be eligible under the final bill unless the ambition of the RPS is increased commensurately.

To remain economically viable, power plant owners rely on revenues (i.e., energy and capacity) they receive from participating in wholesale power markets. However, low natural gas prices continue to put downward pressure on wholesale electricity prices across the country. In 2016, prices in New England’s electricity market averaged $28.94/MWh – the lowest since the market was established in 2003 and below the average total generating cost for multi-unit nuclear reactors. Owners can also enter into two-party agreements directly with power consumers or other parties. While this offers an alternative revenue stream, these contract prices tend to reflect current circumstances in electricity markets.

Power markets are challenging and do not reward nuclear power for its large environmental and system reliability benefit. In the absence of a price on carbon, we need alternatives to ensure nuclear power plants do not retire prematurely. We applaud Connecticut’s proactive approach to recognizing the carbon-free attributes of New England’s largest power source. State leadership on climate has never been more critical. With reasonable policies in place to maintain the existing U.S. nuclear fleet, it will be easier for the U.S. to reduce its emissions and achieve its climate and air pollution reduction goals.

Cities and businesses can make more resilient communities by working together

The impacts of climate change are being felt today – including more frequent and intense storms, heat waves, droughts, and rising sea level. These impacts take a human and economic toll on cities and the businesses operating in them. Despite the common threat, little guidance exists for how the public and private sectors can work together to prepare.

To address that gap, C2ES, in partnership with Bank of America created a Guide to Public-Private Collaboration on City Climate Resilience Planning. The guide outlines 13 recommended actions for city planners to invite and promote collaboration with businesses on climate resilience.

Working together makes sense because both public and private stakeholders want to see economic growth in their communities. Extreme weather events have caused more than $1 trillion in damage to the U.S. economy since 1980, and the intensity of these events is expected to worsen because of manmade climate change.

Storms can be particularly devastating for small businesses. The Hartford found 52 percent of small businesses affected by Hurricane Sandy in 2012 lost sales or revenue, and 25 percent of these businesses had to slow down or stop hiring.

C2ES brought together local government and business officials in Kansas City, Mo.; Miami Beach, Fla.; Phoenix; and Providence, R.I., to assess each city’s climate preparedness and prioritize resilience needs. Despite differences in each city’s geography, size, climate threats, and economic make-up, we found common insights into how to best foster city-business collaboration.

  • Resilience planning should be an extension of existing programs and partnerships. It requires involvement of officials in multiple city departments.
  • If cities demonstrate to businesses that climate resilience planning is a key priority, it’s more likely businesses will devote the resources to collaboration.
  • Businesses respond to data. By working with partners to find localized data on climate threats and vulnerabilities, cities can help articulate the business case for climate resilience planning.
     
  • ‘Business’ is not a monolith, and city climate resilience planners will need to tailor their approach. Small businesses, in particular, have unique needs.
     
  • Innovative financing can help promote collaboration. While not all climate resilience strategies will require additional funds, some will. The private sector is more likely to collaborate when they see that the city is committed to exploring all options for financing the steps in the climate resilience plan.

As the diagram below shows, business collaboration can be a part of every step of existing climate resilience planning frameworks.

 

Our recommendations supplement existing climate resilience planning frameworks.

 

City-business collaboration in times of disaster isn’t new. When Hurricane Sandy knocked out electricity to millions, American Water, the largest publicly traded U.S. water company, had more than 400 generators ready to keep providing clean water to its customers. The only problem was, the company didn’t have any place to store the fuel to run them. Local towns had fuel storage tanks, but no fuel. So, they worked together to move and store fuel to run not only the water pumps but also fire and police vehicles.

What’s needed is more collaboration before the fact, in light of new and increased threats. Providence, Rhode Island, faces increased flooding with sea level projected to rise as much as 2 feet by 2050. At our workshop, state officials, city departments, local businesses, universities, hospitals, utilities, and others started examining the risks and ways to respond. As Mayor Jorge Elorza put it, “We simply can’t afford to kick the can down the road.”

We hope this report will be a first step toward a climate resilience planning paradigm where cities and businesses work together to find the best ways to protect their communities from climate change impacts. We believe these important partners can achieve better results by working together.

Paris Agreement: Better with the U.S. in

It is understandably agonizing for other countries to contemplate in any way condoning the idea of the United States weakening its climate commitment under the Paris Agreement. At the G7 summit later this week, other leaders are hoping President Donald Trump will heed the rising calls to keep the U.S in Paris.

But they worry: At what cost?

The unfortunate reality is that – even with a weaker target – we’re all better off with the U.S. in than out.

Getting countries on the same page in Paris was a monumental achievement, in diplomatic terms and, more importantly, in planetary terms. Simply put, the Paris Agreement gives us our best shot ever at avoiding calamitous global warming.

It does that by instilling greater confidence among countries that each is willing to do its part – and is committed to doing more in the years ahead. The agreement is hardly a guarantee. Achieving its goals will take sustained and growing effort at every level. But that effort is easier to muster knowing others are contributing their fair share.

The threat of the United States lowering its target – by all indications, the only scenario under which it would stay in – puts that basic bargain at risk.

As a matter of law (see our analysis), Paris does not preclude a party from lowering its target. The agreement is a mix of binding commitments (these are largely procedural) and normative expectations. Its exhortations to parties to progressively strengthen their efforts – and to adjust their existing targets only upward – fall into the latter category.

That said, it’s hard to conclude that a decision by the world’s largest economy to weaken its target would be in keeping with the spirit of the Paris Agreement. 

Why, then, should other countries go along?

The blunt – and undiplomatic – response is that it’s not up to them. The better response is that the agreement’s objectives are ultimately best served by keeping the U.S. on board.

For the moment, the extraordinary momentum built in Paris is still going strong. Both China and India now appear on track to meet their Paris targets ahead of schedule. U.S. emissions, meanwhile, reached a 25-year low last year, and growing state, local, and business efforts will help make up for some of Trump’s rollback of federal measures. This is especially true where market forces are already driving down emissions from power generation.

But this is just the start of the wholesale transformation of energy and transportation systems that will be required over the coming decades to even come close to the Paris goal of keeping warming below 2 degrees Celsius.

Economic competitiveness can work in our favor, as countries and companies vie for their share of the growing clean energy market. Indeed, enhanced U.S. competitiveness is one of the benefits cited by the major companies that signed recent full-page ads sponsored by C2ES and other efforts urging the president to stay in Paris.

But competitiveness is double-edged: There are in fact costs to reducing emissions. And some governments will invariably be less willing to force their industries to absorb them if their U.S. competitors are not.

The risk is not that other countries will quit Paris if the U.S. does – why expose themselves to certain international censure? The real risk is that they will be less diligent in meeting their existing targets, which after all are not binding, and will be less ambitious than they otherwise would be in the next round of targets due in 2020. 

There’s no denying there would be similar risks if the U.S. were to stay in but weaken its target. Some countries might be tempted to follow the U.S. example and relax their own goals. The Paris framework would be frayed. But we face a far greater unraveling if the U.S. withdraws outright.

The United States is not only the world’s largest economy but also, cumulatively, its largest greenhouse gas emitter. While China is now the top annual emitter, as far as the atmosphere and other nations are concerned, no country bears greater responsibility for climate change than the United States. To now detach itself from the global compact it helped forge would leave a leadership vacuum no other nation could fill.

Technically, it’s true, the United States could later rejoin. But that wouldn’t be something we could count on. Politically, Paris could be irrevocably damaged in U.S. eyes. And without U.S. diplomats at the table, the Paris implementing rules now being negotiated wouldn’t reflect U.S. concerns. 

It is unfair to ask the rest of the world to, once again, accommodate the vagaries of U.S. climate politics. The bitter reality, though, is that having pledged to “cancel” the Paris Agreement, the only politically viable pathway for the president to now stay in is to show he has secured a “better deal.”

The Paris Agreement was designed to be durable. No one expected the first major test of its resilience would come so soon. Other countries cannot be expected to welcome or endorse a weaker U.S. target. But by simply acknowledging rather than rejecting it, they can help keep an unfortunate setback from becoming an utter disaster, and can help preserve the fundamental framework that so many worked so hard to create.

The clean-energy transition is powering the U.S. economy

The federal government has an important role facilitating the acceleration of a clean, modern 21st century energy system. Ignoring that role or diminishing its effectiveness go against the tide of innovation and entrepreneurial spirit that is creating U.S. jobs and helping the economy flourish.

Companies, states, and cities are all pursuing clean energy and energy efficiency because it makes economic sense. The federal government needs to encourage this innovation, not try to slow it down.

Consider that clean energy is the fastest growing energy sector in the United States. Renewables have accounted for more than half of new U.S. power capacity for the past three years in a row. Thanks to market forces, including falling prices for renewables and relatively low and stable prices for natural gas, the U.S. energy system is getting cleaner.

The drive for clean energy and sustainability is also putting Americans to work. The latest U.S. Department of Energy report shows the solar workforce increased by 25 percent to about 374,000 in 2016, while wind employment increased by 32 percent to about 102,000. Almost 2 million Americans are employed in the design, installation, and manufacture of energy-efficiency products and services. The U.S. nuclear industry directly employs about 50,000, and growing global demand could generate thousands of U.S. industry jobs.

Private enterprise is leading this clean-energy transition. Since the election, Google announced it will meet its goal this year of running on 100 percent renewable power. HP pledged to reduce the greenhouse gas emissions from its global operations by 25 percent from 2015 levels by 2025. NRG completed the first retrofit of a U.S. coal-fired power plant to capture carbon emissions in Texas – on time and under budget.

Many states and cities are also embracing clean energy and clean transportation.

  • Twenty-nine states have renewable portfolio standards requiring utilities to deliver a certain amount of electricity from renewable or alternative energy. Since the election, several states, including Maryland and Michigan, have taken steps to raise their standards.
  • Eleven states already have limits on carbon dioxide emissions, and are using effective, market-based approaches to achieve the reductions economically.
  • Several states, including California, Connecticut, and New York, have created Clean Energy Banks or Green Banks to facilitate more private investment in clean energy projects.
  • More than two-dozen U.S. cities have committed to switch entirely to renewable energy.
  • About 30 cities have told U.S. automakers they want electric street sweepers, trash haulers and other vehicles, potentially generating $10 billion in sales.

These steps by businesses, states, and cities are significant. The National Renewable Energy Laboratory estimates the average city alone could reduce its carbon footprint nearly 20 percent by taking steps like improving building codes, increasing access to public transit, practicing “smart” growth, incentivizing solar and localized electricity systems or “microgrids.”

But all these steps are not enough to address the climate and energy issues we face. Without federal leadership, we won’t maximize the benefits of state policies and we’ll see more lawsuits and regulatory uncertainty that slow business decision-making and investment.

Delaying federal climate action also increases the risk of climate impacts such as frequent and intense extreme weather, rising sea levels, droughts and heat waves that many communities are already experiencing. Failing to act now means paying more later.

In the near term, there are opportunities for bipartisan steps at the federal level that could help both the environment and the economy, including:

Incentivizing carbon capture. Bipartisan support is growing on Capitol Hill and beyond to accelerate carbon capture deployment on power plants and industrial sources like steel and cement plants. Senate and House lawmakers introduced bipartisan bills in April to help unleash private capital to scale up the number of carbon capture projects. This is the crucial first step to bring down capture costs, which could help create a market for using manmade carbon dioxide in useful products.

Advancing nuclear energy. Nuclear, our largest source of zero-carbon energy, will have to play a role in any long-term climate strategy. There’s bipartisan support for preserving existing nuclear plants, and spurring the research and development that will lead to the next generation of nuclear energy. House and Senate lawmakers have reintroduced the bipartisan Nuclear Energy Innovation Capabilities Act to enhance collaboration between private sector innovators and the Department of Energy’s national labs.

Modernizing our infrastructure. This key goal of the new administration could create jobs and improve climate resilience. A modernized grid and support for energy efficiency can make communities more resilient while reducing their carbon footprint. We could expand charging and refueling networks for electric, natural gas and hydrogen vehicles. And as we rebuild our roads and bridges, let’s make sure they’re built to last and can withstand more frequent extreme weather.

Empowering states. Reasonable people can debate the relative roles for state and federal government in environmental regulation, however it is unreasonable to expect states to take on more responsibilities with less federal funding and support. We urge Congress to include funding for states and important agency support at the Environmental Protection Agency and the Department of Energy.

Promoting American energy, putting Americans to work, and powering the American economy shouldn’t be partisan issues. Putting “America First” also means recognizing the climate risks to U.S. communities and companies and the economic benefits of a clean energy future. As an organization committed to building bridges, C2ES is prepared to work with the private sector and public officials at all levels of government to find practical climate solutions.