Climate Compass Blog

Action on VW settlement heating up as summer approaches

Summer is around the corner, bringing barbeques, warm weather, and road trips. U.S. residents may benefit from Volkswagen (VW) funding for those last two items (and Nissan bravely experimented with the barbeque): reducing air pollutants that cause harmful health effects in warm weather through a Mitigation Trust, and extending electric vehicles’ (EVs) driving range through a series of charging infrastructure investments. Both programs are set to take effect shortly, and cities and businesses may benefit from early action.

As a quick reminder, VW is putting $4.7 billion in two separate funds for mitigating nitrogen oxides (NOx) emissions and investing in zero-emission vehicles as part of a settlement for installing devices designed to bypass U.S. auto emissions tests. (The two funds are shown below and described in greater detail in this blog post.)

Mitigation Trust to Reduce NOx emissions from heavy-duty vehicles

The Mitigation Trust will allocate funding to each state to spend on reducing the NOx emissions that were created by the altered VW vehicles. The funding will be disbursed within the state by one lead agency that must be approved by an appointed trustee. The trustee, investment firm Wilmington Trust, was selected in March. Once all parties confirm Wilmington Trust, which could happen any day, the Trust Effective Date will be established. The Trust Effective Date is essentially the “starter’s pistol” that will set the process of distributing Mitigation Trust funds to states in motion. The general timeline for applying for and receiving funds is shown below, though several deadlines are flexible and may proceed more quickly than the maximum amount of time allocated.

 

Cities and businesses should contact and work actively with the lead agencies in their states to identify and promote opportunities to replace older diesel engines and vehicles. Several states have already identified their lead agencies or principal contacts and are beginning to design plans for how the available funding will be spent. Though funding can be spent over 15 years, as much as two-thirds can be spent within the first two years. Therefore, it is in the best interest of cities or businesses to engage with state agencies early.

ZEV Investment to Expand public EV charging

VW’s initial ZEV Investment is also ready to be put into action through a $200 million California Investment Plan and a $300 million National Investment Plan that covers all other states. VW submitted separate investment plans that cover the next 30 months earlier this year to the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). The EPA approved the National Investment Plan, which allocates $40 million to lower-powered community charging in 11 major cities and $190 million to higher-powered fast charging along selected highways across the nation. Community charging will be focused in New York City, Washington, DC, Chicago, Portland (OR), Boston, Seattle, Philadelphia, Denver, Houston, Miami, and Raleigh. Estimated highway charging installations are displayed in Table 3 of the National Investment Plan (page 22).

Though the cities and corridors have been chosen, the sites and vendors have not. The process of selecting sites and vendors for the bulk of charging stations is scheduled for the second and third quarters of 2017. Cities identified for investments in community charging or nearby corridor charging can work with VW’s subsidiary, Electrify America, to identify optimal locations that may promote retail growth or adoption by low-income communities in multi-unit dwellings by hosting charging stations. Businesses may also benefit from increased traffic to use public charging stations (as C2ES has covered in a report on EV charging station business models) or from the opportunity to work with Electrify America to install charging stations.

CARB has not yet approved the California Investment Plan out of concerns for social equity and EV charging market competitiveness, sending a letter to Electrify America requesting that a supplemental plan reflect greater investments in low-income communities. Once CARB approves a plan, California cities and businesses should also consider opportunities to work with Electrify America to optimally site charging stations during the first 30-month round of investments. During the next round of investments, slated to begin in late 2019, proposals to Electrify America may be more successful if they incorporate CARB’s concerns and demonstrate air-quality benefits to low-income communities or a need to fill regional EV charging gaps.

With action on both VW settlements’ funding programs taking shape, cities and businesses should be prepared to identify opportunities to reduce NOx emissions and promote EV adoption .

 

Can the Paris deal be renegotiated?

As eager as President Trump seemed to be to denounce and bolt from the Paris Agreement, he also appeared eager to project a willingness to re-engage. Three times in his speech yesterday in the Rose Garden, he declared an openness to renegotiating the landmark climate agreement or negotiating a new deal “that’s fair.”

It’s hardly clear what the president might have in mind, but let’s consider some of the options.

First, it’s far-fetched to think that other countries are so desperate for the United States stay in that they’re going to shred the Paris Agreement. The agreement is a sensible approach to an urgent challenge, which is why it’s been universally embraced – and universally reaffirmed -- despite Trump’s skepticism.

Other countries would much rather that the U.S. stay in, but they’ve grown weary of accommodating the vagaries of U.S. climate politics. The Paris Agreement, like the Kyoto Protocol before it, was designed largely to U.S. specifications. And in both cases, after getting what it wanted, the U.S. still walked away.

As France, Germany and Italy made clear within hours of the president’s speech, the basic terms of the agreement are not open for renegotiation.

As for a new agreement, if it’s meant as an alternative to Paris, forget it. On the other hand, if the president wants to structure some kind of side deal that would bring the United States back into Paris, other countries may be prepared to listen. Such a deal could, for instance, ramp up international support for clean energy technologies.

That’s only viable, though, if the United States brings something to the table. And that doesn’t seem easy if the president is rolling back climate protections, as he’s directed Scott Pruitt at EPA to do, and drastically cutting funds for technology development, as his proposed budget would do.

So what’s left?

President Trump harped repeatedly on the “unfairness” of Paris. One relevant metric is how the U.S. target compares to other countries’ emissions-cutting goals. Another he cited is how much the U.S. spends to support developing countries. Whether or not one accepts his notions of fairness, the reality is that both of these are within his control.

Under the Paris Agreement, every party sets its own emissions goal (or “nationally determined contribution”) and is free to adjust it at any time. While a downward adjustment would hardly be in the spirit of the agreement, it’s an option available to the president, and one way he could say he’s secured a “better deal.”

This option was being actively considered in the White House and, judging from what senior aides told the press after the president’s remarks, doesn’t appear to be off the table. Maybe what we’re seeing is a political calculation that the president can play to his base now by fulfilling a campaign pledge to withdraw, while keeping open the option of “rejoining” later with a lower target.

As for support for developing countries, if the president thinks the Paris Agreement commits the United States (or any other country) to a specific level of funding, he’s misinformed. It doesn’t. It reaffirms a general commitment the U.S. made in 1992 (in the Senate-approved U.N. Framework Convention on Climate Change) to help developing countries address and cope with climate change. But, as with emission reductions, Paris leaves it to each country to decide its level of contribution.

President Obama had earlier pledged $3 billion toward the newly established Green Climate Fund, and delivered a third of that. It’s now up to President Trump and Congress whether the U.S. gives any more, and there’s very little expectation internationally that it will, at least any time soon.

Fairness is a tricky thing and, ultimately, is in the eye of the beholder. A durable deal is feasible only if all governments feel they can defend their commitments as fair both at home and to the international community. Paris works in part because it gives countries the flexibility to calibrate their commitments – and recalibrate them, when necessary – to meet this two-part test.

As far as other nations (and the atmosphere) are concerned, no country bears greater responsibility for climate change than the United States – cumulatively, still the world’s largest greenhouse gas emitter.   Yet President Trump evidently feels some recalibration is in order. If fairness in his eyes is a question of the U.S. target and U.S. support for developing countries, he has the power to adjust both, without leaving Paris. Maybe those are the makings of his “better deal.”

 

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.