Striking a balance on climate change and global trade

Op-Ed by James Bacchus, The Hill, July 19 2021.

Last week when the European Union announced plans to impose the first trade restrictions in the world for climate reasons, congressional Democrats announced they will propose similar restrictions as part of their pending $3.5 trillion spending plan. As a former Democratic member of Congress, I have noticed that while the Europeans are specific in what they are seeking, the Democrats are only beginning to consider what precisely they will propose, and whether and how it will be structured to pass muster with the World Trade Organization. 

The European proposal for a “carbon border adjustment mechanism” will impose a border levy on imported products that emit more carbon than like products that are made in the EU under tougher emissions standards. This proposal is detailed in the EU’s 291-page “Green Deal.” The EU aims to be carbon neutral by 2050, and it sees the CBAM as a key to achieving that goal. The EU insists that the proposal is consistent with its WTO obligations. Legally, though, saying does not make it so, and whether the proposed EU measure will turn out to be legal under international trade law is an open question. 

In contrast, for now, the Democrats’ proposal does not go much beyond labeling what they are envisaging as a “polluter import fee.” President Joe Biden’s goal is a 50 percent reduction in U.S. carbon emissions by 2030, as compared to 2005 levels, and the Biden administration has expressed support for the notion of a “polluter import fee” as one means of achieving that goal. Yet another open question is whether the Democrats will make a genuine effort to try to shape their legislation to comply with U.S. obligations under the WTO treaty and, if so, whether they can succeed in such an effort. 

My former colleague in the House, Sen. Edward J. Markey (D-Mass.),  long an ardent champion of climate action, has explained, “The United States and the EU have to think in terms of the leadership that we can provide and the message that we have to send to China and other countries that would take advantage of the high standards that we are going to enact.” Agreed. But will this message from the U.S. be one of taking climate action within the WTO trade rules we Americans helped write and have pledged to uphold, or will it be one of taking climate action outside those rules?

The EU proposal may do little in and of itself to curb emissions. The United Nations Conference on Trade and Development projects that it would cut global carbon dioxide emissions by only 0.1 percent. The Bertelsmann Foundation in Germany predicts a cut of only 0.2 percent. The Europeans know this. Their professed principal aim in announcing the first-ever climate-related trade restrictions is to spur their trading partners who have not taken comparable climate actions to join them in doing more, starting with promising to do more and do it sooner in the runup to the next global climate summit in November in Glasgow.

The Biden administration and congressional Democrats share the same aim. By enacting similar trade-related climate restrictions, the U.S. and the EU, through the weight of their combined economies, will surely add to the paltry percentage of emissions cuts predicted now for the EU CBAM alone. But will they have the economic leverage together to inspire many other countries in the world to shift away from their current levels of carbon-dependence? Or would such a shift be more likely to result from focusing more on the increased global cooperation that the EU and the Democrats alike routinely and rightly espouse?

In theory, climate-related restrictions on trade can be crafted to comply with WTO rules, and such restrictions, if they fall within those rules, could help send a price signal that would encourage less reliance on fossil fuels in other countries. That price signal would work best if it were market-based and not sent merely by governmental mandates and subsidies, which could run afoul of WTO rules. If reducing carbon emissions is the goal, that goal would best be achieved by a market-based approach such as a carbon tax.

A carbon tax would have the best chance of falling within the boundaries of WTO rules, which have long permitted border adjustments for indirect taxes on traded products. Of course, domestic politics on both sides of the Atlantic Ocean pose obstacles to a carbon tax. And neither the Europeans nor the Democrats seem much inclined to try to overcome those obstacles by proposing a carbon tax, despite their advocacy of urgently addressing climate change. (While in Congress, I voted for a carbon tax in 1993.)

In identifying and crafting some alternative approach that could be within the WTO rules, my experience since then in judging dozens of WTO trade disputes tells me the Democrats would be well advised to eliminate all considerations of economic motivation from their vocabulary. They should not speak about preserving economic competitiveness as a reason for their proposed actions, and they should halt all talk of “carbon leakage” — the widespread apprehension that imposing higher emissions standards in the U.S. would cause production (and emissions) to shift offshore. 

To date, there is little empirical evidence of carbon leakage. As carbon prices increase, carbon leakage may become more of a real concern. But structuring a border levy to prevent the potential loss of economic competitiveness — even if that levy is also enacted for climate reasons — would make it look much more like green protectionism and much less like a real climate measure that could survive legal scrutiny by the WTO. 

If what the Democrats are contemplating is truly a climate measure, then its best chance of being upheld by the WTO is if it is structured exclusively as a climate measure and is based solely on climate motivations. It must also be applied to all U.S. trading partners in an evenhanded way that does not constitute arbitrary or unjustifiable discrimination or a disguised restriction on international trade. In part, this means providing our trading partners with what we Americans call “due process” before imposing climate-related trade restrictions on their products.

Not least, it is difficult to see how, consistently with its obligations under the WTO treaty, the United States could impose a fee on the “pollution” caused by imported products without imposing an equivalent fee on the “pollution” caused by competing domestic products. The Europeans can point for justification to their Emissions Trading System. There is — thus far — nothing comparable in the United States.   

The European Union intends to take at least two years to try to get its measure right under the WTO rules before applying it. The Democrats should do the same — if they decide that applying such a restriction on trade is in fact the best way to accomplish their climate goals. 

James Bacchus is an adjunct scholar at the Cato Institute and a professor of Global Affairs at the University of Central Florida. He is also a founder and former chairman of the WTO Appellate Body and a former Democratic member of Congress, from Florida. His next book, “Trade Links: New Rules for a New World,” will be published by Cambridge University Press in early 2022.   

https://thehill.com/opinion/energy-environment/563680-striking-a-balance-on-climate-change-and-global-trade

The smart way to reduce emissions and outmaneuver our rivals

Op-ed by James A. Baker III & Greg Bertelsen, The Washington Post, July 4, 2021

One thing has become crystal clear during the long-running debate about climate change: Most nations won’t risk their own economic well-being in the hope of reversing what is clearly a global problem.

And it would be a mistake for the United States to do so without adopting a plan that compels other large carbon-emitting nations to do the same. The Biden administration is right to recognize the risks of climate change, but it has so far failed to come up with a way to ensure against the risk without ceding a competitive advantage to China and other nations. Republicans in Congress are right to worry about U.S. competitiveness. But by failing to meaningfully engage on the climate issue, they are handing Democrats a political advantage and missing an opportunity to strengthen our economy against international rivals.

However, there is an approach that would serve all interests — the interests of Republicans and Democrats, as well as the interest of progress on both climate change and U.S. competitiveness. It lies in leveraging an underappreciated strength of our economy: our success in low carbon-emission production.

A plan co-authored by Secretary Baker and the late George P. Shultz holds the key to placing market pressure on China and other nations to start doing their part. It would place a fee on all carbon emissions in the United States, an approach that most economists believe is the most efficient and effective way to reduce such emissions.

But rather than giving that money to the federal government, all of the revenue from the fee would be returned to Americans in the form of a quarterly dividend. A household of four would receive $2,000 annually, enough to provide the vast majority of households with more money than they would pay in higher energy costs. As a result, this fee would not expand the federal government, and therefore should not be considered a tax.

But it would incentivize the private sector to find new and better ways to reduce emissions. This is a far better route than forcing the United States to wean itself from fossil fuels (while other nations fail to do so) because it harnesses a set of critically important strategic assets of our country: our abundance of affordable and cleaner energy, and our unmatched powers of innovation.

One can almost hear the scoffing from China, India and Russia as the United States attempts to unilaterally restrict its oil and gas production, only to have a growing global demand filled by competing nations that produce fossil fuels with more emissions. And yet climate change can’t be effectively addressed unless most of the other biggest emitters follow suit. As much as some might like, we can’t force these large emitter nations to impose restrictions such as those being considered in the United States.

So, a critical component of our plan is a feature that would rebate to U.S. manufacturers their fees on exports to any nation without a similar carbon program. If any country refused to go along, it would have to pay a penalty to send its goods into the United States. Access to the world’s largest market would obviously put pressure on China and other nations to reduce their own emissions — or pay a surcharge to sell their goods in the United States.

The United States is already in a leadership position on reducing carbon emissions, a fact that is starting to gain attention in both political parties. “China, for example, has just kept emitting more, and done it shamelessly,” Senate Minority Leader Mitch McConnell (R-Ky.) recently said. President Biden’s climate envoy, former secretary of state John F. Kerry, has also noted China’s lackluster record. “They have a massive coal dependency,” he said earlier this year. “We have to try to get them to move further.”

The economic upside here is unmistakable. U.S. steelmakers, for example, are far more efficient in low-carbon production than their major global competitors, according to a recent study commissioned by the Climate Leadership Council. By applying a carbon fee to domestic and imported steel, U.S. industry would win across the board. Overall, the study found, the U.S. economy is 40 percent more carbon efficient than the world average, and nearly every U.S. industrial sector enjoys a carbon advantage over most of our key trading partners.

The European Union is already preparing legislation to charge imported goods for their emissions. Ultimately, we should partner with Europe and our other allies to form a bloc of countries that similarly price carbon. As the world’s largest economy, the United States would best serve our industries by acting first, and establishing new rules regarding global trade and climate policy that are transparent, enforceable and, above all, fair to U.S. industry.

In the global contest that is shaping the 21st century, adopting the Baker-Shultz plan offers a clear-cut and immediate way to outmaneuver U.S. rivals and, at the same time, reduce the risk of climate change in a globally effective way.

James A. Baker III was the 61st secretary of state and 67th secretary of the treasury. Greg Bertelsen is chief executive of the Climate Leadership Council.

https://www.washingtonpost.com/opinions/2021/07/04/baker-shultz-climate-plan-carbon-emissions/

Climate change has gotten deadly. It will get worse.

Researchers say they are ‘virtually certain’ that warming from human greenhouse gas emissions played a pivotal role in recent fatalities

By Sara Kaplan, The Washington Post, July 3, 2021

PORTLAND, Ore. — The emergency department at Oregon Health Sciences University had rarely been this busy, even during the worst stages of the covid-19 pandemic.

Physicians raced to provide fluids to patients who arrived breathless, dizzy and drenched in sweat. Others were brought in on stretchers, their body temperatures so high their central nervous systems had shut down. Those who could still speak told of stifling apartments and sun that made their skin sizzle. Some had tried to walk to county cooling shelters, only to collapse in the blistering heat.

“The system was overwhelmed,” said Mary Tanski, chair of OHSU’s department of emergency medicine, of the towering heat dome that toppled temperature records across the Northwest this week.

Some patients didn’t survive. In Oregon, Washington and western Canada, authorities are investigating more than 800 deaths potentially linked to the punishing heat.

It will be months before experts know precisely how many of those deaths can be specifically attributed to climate change. But researchers who specialize in the science of attribution say they are “virtually certain” that warming from human greenhouse gas emissions played a pivotal role.

It is a sign of how dangerous the climate crisis has gotten — and how much worse it can still become.

Here's what's causing the record-breaking temperatures in the Northwest

The heat dome was just one of a barrage of climate catastrophes that struck the world in recent weeks. Western wildfires are off to a scorching start, with firefighters actively battling 44 large blazes that have burned nearly 700,000 acres. Parts of Florida and the Caribbean are bracing for landfall of Hurricane Elsa, the Atlantic’s fifth named storm in what is one of the most active starts to hurricane season on record. Nearly half a million people in Madagascar are at risk of starvation as the country grapples with dust storms, locusts and its worst drought in decades. In Verkhoyansk, Siberia — usually one of the coldest inhabited places on the planet — the land surface temperature was 118 degrees.

“Climate change has loaded the weather dice against us,” said Katharine Hayhoe, a climate scientist at Texas Tech University and chief scientist for the Nature Conservancy.

“These extremes are something we knew were coming,” she added. “The suffering that is here and now is because we have not heeded the warnings sufficiently.”

Humans burning fossil fuels have caused the globe to warm roughly 1 degree Celsius, or 2 degrees Fahrenheit, since the preindustrial era. It’s a seemingly incremental change, but it has led to disproportionately frequent and severe natural disasters.

Think of the climate as a bell curve, Hayhoe said, with temperatures distributed according to how common they ought to be. The center of the bell curve may have shifted just a couple of degrees, but the area of the curve now in the “extreme” zone has increased significantly.

Within the next week, researchers expect to publish a “rapid attribution” study that determines how climate change made the Northwest heat wave more likely. Yet precisely quantifying the role of climate change in the event has been difficult because the heat was just so extreme, said Michael Wehner, a climate scientist at Lawrence Berkeley National Laboratory in California who is contributing to the attribution effort.

“It’s well beyond what straightforward statistical analysis would suggest. It’s well beyond what climate models suggest,” he continued. “But it happened.”

Studies show the chance of a given tropical storm becoming a hurricane that is Category 3 or greater has grown 8 percent every decade. The acreage of the West burned by wildfire is twice what it would otherwise be. The heat wave that struck the Northwest this week brought temperatures that were as much as 11 degrees above the previous all-time high.

Underpaid firefighters, overstretched budgets: The U.S. isn’t prepared for fires fueled by climate change

That increase in intensity is partly due to the fact that meteorological phenomena are occurring in a hotter world. Summers in the Northwest are about 3 degrees Fahrenheit hotter than they were a century ago.

“But there are other, nonlinear, things going on,” Wehner, adds.

For example, heat causes water to evaporate from vegetation and soil, which uses up energy and helps bring temperatures down — a phenomenon called evaporative cooling. But climate change has made the West both hotter and dryer. As the mercury ticks upward, the landscape becomes even more parched, which allows it to heat up even faster. Now, more than 93 percent of the American West is in moderate to severe drought, according to the U.S. drought monitor.

Another physical phenomenon, called the Clausius-Clapeyron equation, shows that for every 1 degree Celsius (1.8 degrees Fahrenheit) of warming, the atmosphere can hold 7 percent more moisture. This means that warm conditions make storms much wetter, leading to record-breaking rainfall events like Hurricane Harvey in 2017.

Scientists have been aware of these phenomena for decades, and have long warned about the potential for even moderate amounts of global warming to trigger catastrophic weather extremes.

The heat being so devastating should be a warning sign for all of us. The 2015 Paris Climate Agreement calls for humanity to limit global warming to “well below” 2 degrees Celsius. A subsequent report from United Nations scientists found that warming beyond 1.5 degrees Celsius would trigger catastrophic sea level rise, near-total loss of coral reefs and a calamitous increase in the frequency and intensity of natural disasters.

But the world is unlikely to meet either of those goals. Most countries have not reduced greenhouse gas emissions nearly enough to meet targets set in the Paris agreement. Even if they meet their existing pledges, researchers say the world has just a 5 percent chance of keeping warming “well below” 2 degrees.

If we continue to burn fossil fuels at the current rate, studies suggest, the Earth could be 3 to 4 degrees Celsius hotter by the end of the century. The Arctic will be free of ice in summertime. Hundreds of millions of people will suffer from food shortages and extreme drought. Huge numbers of species will be driven to extinction. Some regions will become so hot and disaster-prone they are uninhabitable.

“It’s a very different planet at those levels,” Wehner said. “This is really serious. As a society, as a species, we’re going to have to learn to adapt to this. And some things are not going to be adaptable.”

Extreme heat is likely to be one of those things. Studies of heat waves suggest that a half a degree Celsius increase in summertime temperatures can lead to a 150 percent increase in the number of heat waves that kill 100 people or more. Research published last year in the journal Science found that the human body can’t tolerate temperatures higher than 95 degrees when combined with 100 percent humidity.

The scene in emergency departments across the Northwest this week underscores that science. Wait times at the OHSU emergency department were 5 to 7 hours, Tanski said. At Swedish Health Services — Cherry Hill in Seattle, doctors were seeing patients in hallways because all the rooms were full.

“I’ve never seen anything like this,” said David Markel, an emergency physician at the Seattle hospital. During an overnight shift on Monday, he treated 12 patients for heat illness. Some were so sick their kidneys and livers were failing, their muscles starting to break down.

“I don’t claim to be an expert in climate change or environmental science,” Markel said. “But I definitely care for people who are impacted by the extremes of climate. … And it’s like, the more crises we face the more clear it is.”

Jeff Duchin, Seattle and King County’s chief public health officer, put it more bluntly: “Climate change is a health emergency,” he said in a statement this weekend. “And reducing greenhouse gas emissions is literally a matter of life and death.”

The intensity of recent weather extremes — and the certainty of still worse events to come — weighs on scientists.

Speaking over the phone, Wehner’s tone was somber as he discussed the wildfire smoke that choked California last summer, people whose homes burned down, a friend whose 90-year-old mother was killed when the town of Paradise was consumed by flames. Haltingly, he recalled watching a newscaster interview a Pakistani man whose two children had died in a 2015 heat wave. When Wehner later investigated the event, he found that climate change had made the event 1,000 times more likely.

“It did not have to be this way,” he said. “We have known enough to take action for 20 years. And if we had taken action 20 years ago, it would be a lot easier.”

“But there’s no ‘I told you so,’” he continued. “I just feel bad. Just bad. I really wish we had been wrong. But we weren’t.”

The only comfort, said Hayhoe, is in knowing that action can still be taken. Though the world could exceed 1.5 degrees of warming within this decade, scientists say we can avoid crossing that threshold if we cut global greenhouse gas emissions by about 7.6 percent per year.

Such cuts would require an unprecedented transformation of human society. But look at the alternative, Hayhoe said.

“We have choices to make, she said. “And the quicker we make those choices, the better off we will all be. The future is in our hands.”

https://www.washingtonpost.com/climate-environment/2021/07/03/climate-change-heat-dome-death/

Earth is now trapping an ‘unprecedented’ amount of heat, NASA says

New research shows that the amount of heat the planet traps has roughly doubled since 2005, contributing to more rapidly warming oceans, air and land

By Tik Root, The Washington Post, June 16, 2021

The amount of heat Earth traps has roughly doubled since 2005, contributing to more rapidly warming oceans, air and land, according to new research from NASA and the National Oceanic and Atmospheric Administration.

“The magnitude of the increase is unprecedented,” said Norman Loeb, a NASA scientist and lead author of the study, which was published this week in the journal Geophysical Research Letters. “The Earth is warming faster than expected.”

Using satellite data, researchers measured what is known as Earth’s energy imbalance — the difference between how much energy the planet absorbs from the sun, and how much it’s able to shed, or radiate back out into space.

When there is a positive imbalance — Earth absorbing more heat than it is losing — it is a first step toward global warming, said Stuart Evans, a climate scientist at the University at Buffalo. “It’s a sign the Earth is gaining energy.”

That imbalance roughly doubled between 2005 and 2019, the study found. “It is a massive amount of energy,” said Gregory Johnson, an oceanographer for NOAA’s Pacific Marine Environmental Laboratory and co-author of the study. Johnson said the energy increase is equivalent to four detonations per second of the atomic bomb dropped on Hiroshima, or every person on Earth using 20 electric tea kettles at once. “It’s such a hard number to get your mind around.”

The Earth takes in about 240 watts per square meter of energy from the sun. At the beginning of the study period, in 2005, it was radiating back out about 239.5 of those watts — creating a positive imbalance of about half a watt. By the end, in 2019, that gap had nearly doubled to about 1 full watt per square meter.

Oceans absorb most of that heat, about 90 percent. When researchers compared satellite data to temperature readings from a system of ocean sensors, they found a similar pattern. The agreement between the data sets surpassed expectations, Loeb said, calling it the “nail in the coffin” for the imbalance results.

“The fact that they used two different observational approaches and came up with the same trends is pretty remarkable,” said Elizabeth Maroon, a climatologist at the University of Wisconsin at Madison unaffiliated with the study. “It lends a lot of confidence to the findings.”

The biggest outstanding question is what is driving the acceleration.

The study points to decreases in cloud cover and sea ice, which reflect solar energy back into space, and an increase in greenhouse gases emitted by humans, such as methane and carbon dioxide, as well as water vapor, which trap more heat in the Earth, as factors in the imbalance. But it is difficult to discern human-induced changes from cyclical variations in the climate, the researches said.

“They are all kind of blended together,” said Loeb, who added that further research is needed to determine the factors.

The period studied overlapped with fluctuations in the climate that may have played a significant role in the acceleration, including a strong El Niño event from 2014 to 2016, which led to unusually warm waters. The Pacific Decadal Oscillation is a longer-term, El Niño-like fluctuation, and around 2014 that also switched from a “cool” phase to a “warm” phase.

But, Johnson says, that doesn’t let humans off the hook. “We’re responsible for some of it,” he said. It’s just unclear how much.

Kevin Trenberth, a distinguished scholar at the National Center of Atmospheric Research, said the results of the study aren’t particularly surprising given these climactic variations. But 15 years is not enough time to establish a trend, he said.

“Certainly you’d like to see another 10 years or something like that to see how this behaves,” he said. “The question is: Will this continue?”

That too is unclear, Johnson said. The imbalance could shrink in some years compared to others, he said, but the general trajectory appears to be upward, especially if the Pacific Decadal Oscillation stays in a warm phase.

“The longer we observe it,” he said, “the more certain we become of the trend.”

Tracking Earth’s energy imbalance will also help scientists better understand climate change, Johnson said. Other common metrics, such as air temperature, only catch a fraction of the effect of the sun’s heat. The imbalance, he said, measures “the full amount of heat that goes into the climate system.”

Regardless of the magnitude or reasons for the accelerated imbalance, the fact that it is positive is crucial, said Trenberth. “It’s the sign that matters here,” he said. “The fact that it’s positive means that global heating is happening.”

That extra heat, especially in the oceans, will mean more intense hurricanes and marine heat waves.

“I hope the heating doesn’t keep going at this clip,” Loeb said. “It’s not good news.”

https://www.washingtonpost.com/climate-environment/2021/06/16/earth-heat-imbalance-warming/

Biden should impose a carbon fee immediately

Under the Independent Offices Appropriations Act, the president retains authority to direct the Environmental Protection Agency to impose a fee on greenhouse gas emissions.

Op-ed by James E. Hansen & Daniel M. Galpern, The Boston Globe, June 1, 2021

President Biden has inherited a welter of urgent challenges, which he and his team are confronting with alacrity and skilled professionalism. In this moment, he has an exceptional opportunity to address, as he so aptly put it, the “existential climate crisis.”

Prior presidents, even those who recognized the climate threat, did not exercise their full statutory authority to restrict greenhouse gas emissions that cause global warming. As the public experiences an increased frequency of extreme climate events, as young people worldwide cry out against the threat to their future, and as the United Nations approaches a major climate conference in November in Glasgow, Biden has the opportunity to lay the groundwork for a rapid phasedown of United States and global emissions.

Under the Independent Offices Appropriations Act, the president retains authority to direct a relevant federal agency (here, the Environmental Protection Agency) to impose a fee on GHG emissions. The fee can be collected efficiently from the about 200 oil, gas, and coal companies that produce, refine, and distribute fossil fuels in the United States.

This is a crucial clarification to executive authority, because EPA has labored for decades under a presumption that it lacked authority to impose such fees. That assumption derived in part from an aside in a legal memorandum by then-EPA General Counsel E. Donald Elliott. Elliott had reviewed economic incentives available to the agency to restrict pollution but, by his own later admission, Elliott at that time was “woefully ignorant of the IOAA and related jurisprudence.” Writing in 2019, Elliott sought to “set the record straight that EPA does have existing authority to impose a reasonable user fee on releases of carbon dioxide and other GHGs . . . any time that it has the political will to do so.”

All nations are committed under the United Nations Framework Convention on Climate Change to stabilize GHG concentrations at a level that prevents “dangerous anthropogenic interference with the climate system.” However, UN efforts to limit emissions with voluntary goals, including the 1997 Kyoto Protocol and 2015 Paris Agreement, simply have not sufficed. The principal GHG — carbon dioxide — will continue to increase rapidly as long as the price of fossil fuels does not even begin to include their ultimate costs to society.

Economists agree that a rising carbon price covering all fossil fuel uses is essential for rapid phasedown of emissions. More than 3,500 economists — including 28 Nobel Prize laureates, all four living former chairs of the Federal Reserve, and 15 former chairs of the President’s Council of Economic Advisers — issued a statement endorsing a carbon fee and dividend. More than 400 student body presidents, representing more than 4 million college students across all 50 states, support a carbon fee and dividend as well.

The collected fee could be returned equally to all adult legal residents of the nation, with a half-share for each child, up to two children per family. People without a bank account would receive a debit card. Seventy percent of the public would receive more in their carbon dividend than they pay in increased prices. True, wealthy people tend to have a larger carbon footprint and would lose money, but they can afford it. Fee and dividend thus will help address wealth disparity.

Carbon fees and dividends support all other actions to phase down carbon emissions. They spur economically efficient energy investments, and provide essential economic guidance if we are to “build back better.”

The International Monetary Fund advises that the carbon price must rise to at least $75 per ton of CO2 emissions. That is a reasonable estimate, though the fee can be raised further if emission reduction targets are not timely achieved.

The United States is the nation most responsible for historic emissions and thus for global climate change, but China is most responsible for current emissions. Both nations have much to lose from growing climate change, and their cooperation is essential for success in stemming the threat of irreversible impacts such as devastating sea level rise. If China and the United States agree on meaningful carbon fees, they can readily make it near-global via border duties on products from countries without carbon fees; that would encourage most nations to adopt the policy, so as to retain such revenue for their own people. And that would help to further Biden’s goal of addressing the “existential climate crisis.”

James E. Hansen is director of Climate Science, Awareness and Solutions at the Earth Institute at Columbia University. Daniel M. Galpern is general counsel of Climate Protection and Restoration Initiative. 

https://www.bostonglobe.com/2021/06/01/opinion/biden-should-impose-carbon-fee-immediately/?et_rid=1745350245&s_campaign=todaysheadlines:newsletter

Big Setbacks Propel Oil Giants Toward a ‘Tipping Point’

A surprising mix of environmentalists, pension fund managers and big money investors have scored startling victories against oil and coal, opening new battle fronts in the climate fight.

By Somini Sengupta, The New York Times, May 29, 2021

A nun, an environmental lawyer, pension fund executives, and the world’s largest asset manager. These were among the unusual collection of rebels who claimed a series of startling victories this week against some of the world’s biggest and most influential fossil fuel companies.

From Houston to The Hague, they fought their battles in shareholder meetings and courtrooms, opening surprising fronts in an accelerating effort to force the world’s coal, oil and gas companies to address their central role in the climate crisis. And even as they came with strikingly disparate points of view — corporate shareholders, children’s rights advocates, environmentalists, thousands of Dutch citizens — they delivered a common underlying message: The time to start retreating from the fossil fuel business is no longer in the future, but now.

“These companies are facing pressure from regulators, investors, and now the courts to up their game,” said Will Nichols, head of environmental research at Maplecroft, a risk analysis firm. “That’s a big chunk of society, and it’s not a great look to be pushing back against all of that.”

The most dramatic turning point came in the Netherlands, where a court instructed Royal Dutch Shell, the largest private oil trader in the world and by far the largest company in the Netherlands itself, that it must sharply cut greenhouse gas emissions from all its global operations this decade. It was the first time a court ordered a private company to, in effect, change its business practice on climate grounds.

The symbolism was inescapable: The Netherlands, famously built on land reclaimed from the sea, faces the immediate threat from a warming climate caused by the burning of Shell’s own products — oil and gas.

In another example this week, at the annual shareholder meeting of Exxon Mobil, the biggest American oil company, the message was framed sharply in terms of profits: A tiny new hedge fund led an investor rebellion to diversify away from oil and gas — or risk hurting investors and the bottom line.

Chevron’s shareholders voted to tell the company to reduce not only its own emissions, but also, remarkably, the emissions produced by customers who burn its oil and gasoline. And in Australia, a judge warned the government that a proposed coal mine expansion, a project challenged by eight teenagers and an 86-year-old nun, would need to ensure that it wouldn’t harm the health of the country’s children.

The timing was significant. This week scientists also concluded that, in the next five years, the average global temperature will at least temporarily spike beyond a dangerous threshold, climbing more than 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, warmer than in pre-industrial times. Avoiding that threshold is the main objective of the Paris Accord, the landmark global climate agreement among the nations of the world to fight climate change.

Of course, none of these actions represents an immediate threat to the fossil fuel industry. For a century and a half, the global economy has been fueled by oil and coal, and that won’t change immediately.

Nevertheless, rulings like the one in the Netherlands could be a harbinger for similar legal attacks against other fossil fuel companies and their investors, experts said. Kate Raworth, an economist at Oxford University, called Shell’s loss in court “a social tipping point for a fossil-fuel-free future.”

Shell said it found the ruling, by a district court in The Hague, “disappointing” and intended to appeal. That process could take years to reach the country’s supreme court, delaying action but also drawing continued public attention.

If the ruling of the lower court stands, though, analysts said, Shell would most certainly have to reorient its business to reduce oil in its portfolio and halt its growth in liquefied natural gas, in which Shell is an industry leader. That is a matter of concern for the investors who have their money in the oil and gas reserves of companies like Shell, said Patrick Parenteau, a professor at Vermont Law School. “A decision telling a company, ‘You’ve got to get out of the oil business.’ For cautious individuals within the financial community, that’s got to cause them serious concerns.”

Dangerously for Shell, the national judiciary of the Netherlands in the past has shown itself to be among the most out-front on climate litigation. In 2019, the Supreme Court of the Netherlands ordered the government to cut greenhouse gas emissions because of a lawsuit filed by Urgenda, an environmental group. It was the first case in the world to force a national government to address climate change in order to uphold its human rights commitments.

That case, too, began in a district court in The Hague, before making its way up the judicial ladder. The lawsuit against Shell marked an escalation in that strategy.

Having sued the government and won, environmental advocates decided to take on one the country’s most influential companies. The case was brought in 2019 by Milieudefensie, the Dutch branch of Friends of the Earth, as well as Greenpeace and 17,000 residents of the Netherlands. The complainants argued that the company has a legal duty to protect Dutch citizens from looming climate risks. The district court agreed.

“The consequences of this case for the fossil fuel industry will be systemic and immediate,” Tessa Khan, the lawyer who had sued the government on behalf of Urgenda, said on Twitter. She predicted that it would spur other cases and “escalate the perception of risk among investors.”

Shell had already begun to see the writing on the wall. It said earlier this year that global oil demand had likely reached a peak in 2019 and would slowly wane in the coming years.

And at least compared to some of its American peers, Shell had set relatively more ambitious climate targets. It had already promised to reduce the carbon intensity of its operations, which means that it could still continue to expand oil and production, but with lower emissions for every barrel it produced.

The district court on Wednesday instructed the company to cut its absolute emissions by 45 percent by 2030, relative to its 2019 levels. The ruling applies to Shell’s global operations. But, that said, even if it is upheld on appeal, enforcing it, say, in Nigeria, where Shell is the biggest oil producer, could prove to be “impractical,” said Biraj Borkhataria, an analyst at RBC Capital Markets, an investment bank.

“However,” he said separately, in a note to clients on Thursday, “it is another example of society asking more from oil companies.”

The Shell ruling is particularly notable because private companies have been targets of climate litigation in the United States and elsewhere, but courts have rarely ruled against them.

The Dutch case opens a potentially new front, emboldening climate advocates to pursue more cases in a wider variety of countries, particularly where national laws enshrine the right to a clean environment. Several European and Latin American courts, including in the Netherlands, have interpreted their national laws in this way.

A farmer in Peru is suing a German energy giant over the effects of global warming on a glacier in his country. About 20 American cities, counties and states have sued the fossil fuel industry since 2017, seeking damages for the local costs of climate change.

Governments are also on the hook.

Germany’s highest court recently told the government to tighten its climate targets because they did not go far enough to ensure that future generations would be protected.

In the Australian case, eight teenagers, joined by Brigid Arthur, the nun, went to court to stop the government from expanding an enormous coal mine called Whitehaven. The court on Thursday stopped short of issuing an injunction against the mine, as the plaintiffs had sought.

But in ordering the government to take “reasonable care to avoid personal injury to the children,” it recognized climate change as an “intergenerational crime,” said Michael Burger, executive director of the Sabin Center for Climate Change Law at Columbia University and a lawyer who represents several U.S. cities and states suing fossil fuel companies.

“The actions we take today with respect to climate change can consign our children, our children’s children, and other future generations to a world that is fundamentally livable or a world that is not,” he said. “Courts recognize that.”

The most closely watched case in the United States, filed on behalf of young people against the United States government, seeks to establish a constitutional right to a sound environment. After recent setbacks in the federal courts, a federal judge has ordered the parties to enter settlement discussions.

The actions against Chevron and Exxon are notable because they reveal the extent to which shareholders are quickly awakening to the risk that their investments if energy companies don’t dramatically start changing their business models.

A significant chunk of shareholders demonstrated that they were increasingly distrustful that the companies could deliver the financial performance they expected without diversifying away from oil and gas.

Exxon this week lost a battle against a small new hedge fund, Engine No. 1, which rallied big investors like Blackrock and the New York state pension fund to force the company to change course. The hedge fund won at least two seats on Exxon’s 12-member board.

Tensie Whelan, director of the New York University Stern Center for Sustainable Business, called it “a pivotal moment for board accountability.” Activist shareholders have traditionally taken on company executives over financial issues, not social issues like climate change, she said. “Shareholders are deeply concerned about the financial risks posed by climate change and increasingly willing to hold the board to account,” Ms. Whelan said.

Stanley Reed and John Schwartz contributed reporting.

https://www.nytimes.com/2021/05/29/climate/fossil-fuel-courts-exxon-shell-chevron.html?action=click&module=Spotlight&pgtype=Homepage