Findings from a new report examining insurance companies’ responses to climate change were released at the International Association of Insurance Supervisors last week. The study found that an increasing number of companies are implementing initiatives to reduce the risk of climate change’s impacts and reduce the emissions that cause the problem.

"From Risk to Opportunity 2007: Insurer Responses to Climate Change" was commissioned by Ceres, a U.S. group of investors and clean energy supporters that also directs the Investor Network on Climate Risk, which manages more than $4 trillion in assets. Mindy S. Lubber, President of Ceres, explained the report’s findings:

Insurers are beginning to respond to global warming – and not just by withdrawing from coastal markets with high financial exposure. We’re seeing a rapid proliferation of products that will reduce climate-related financial losses, as well as the pollution causing global warming. Yet, insurer responses to date are not nearly sufficient given the scale of the challenge. We need more insurers, especially U.S. insurers, to step up.

Indeed, Europe’s largest insurer, Allianz, said that climate change may increase insured losses from extreme events in an average year by 37 percent within a decade. Karolinska medical university in Sweden predicts cardiovascular health problems to rise along with global temperatures.

Some specific initiatives offered by companies around the globe include:

• Green building credits
• Drought protection
• Incentives for investing in renewable energy (London-based Willis Holdings will cover potential underproduction of wind power)
• Clean transportation (The Japanese company Sompo gives premium discounts to policyholders who drive low-emitting cars)

All in all, the report found 422 examples from 190 insurers, reinsurers, brokers, and insurance organizations from 26 nations. That’s more than double the number of products found in a similar report barely over a year ago. I was surprised to learn that forty percent of the initiatives are from U.S. companies, although not surprisingly only a small minority of companies overall are exploring how climate change may affect business or are offering products to mitigate it.

With billions of dollars lost this year from unprecedented flooding and windstorms in Europe and wildfires in the U.S., some are nervous that climate change threatens the entire industry’s long-term viability. While the products from a handful of companies certainly won’t slow the consequences on their own, they must multiply to be part of the global solution that includes private sector involvement, government leadership, and consumer response.

Sunrise Powerlink is a transmission project proposed by San Diego Gas & Electric (SDG&E). According to a SDG&E map, the 150-mile line would wind its way from Imperial County east of San Diego, through Anza-Borrego State Park, and down into San Diego. It would be the first new transmission line connecting the San Diego area to the state’s energy grid in 25 years. SDG&E says the line is needed to transport wind and solar energy from projects in Imperial County to San Diego, and to meet California’s requirements to get 20 percent of its energy from renewables by 2010.

Simple, right? Hardly. This project has been hugely controversial. SDG&E’s cost savings numbers have been largely inflated, opponents argue that renewable energy projects in Imperial County don’t depend on the construction of Sunrise Powerlink, and SDG&D has admitted that it doesn’t need the line to meet the state’s renewable energy requirement as previously stated. Rather, opponents argue, the line will be a huge windfall for SDG&E and other contractors while hanging the ratepayers out to dry in the process. A recent article from the Voice of San Diego noted:

"The power line’s $447 million annual savings was cut to $142 million a year after erroneous calculations were uncovered. A solar energy project whose fate was once tied to the line has failed to demonstrate that it works on a commercial scale. SDG&E has equivocated about how much renewable energy can be found in Imperial County, where the line will begin. The company has waffled about whether the line is necessary to spark renewable energy development in Imperial County."

But SDG&E points to government reports that say San Diego will need more transmission capacity to meet a growing population. A coalition called Californians for Clean and Reliable Energy (Cal-CARE) has organized to support the project. It’s made up of a long list of businesses, unions, and government officials – but no green groups that I could find. Cal-CARE’s Co-Chair and former chairman of the California Energy Commission Bill Keese said in a statement earlier this summer: "By linking the state to abundant supplies of solar, wind and geothermal power in the Imperial Valley, the Sunrise Powerlink will battle climate change by helping meet California’s environmental mandates of reducing greenhouse gas emissions and increasing the use of renewable energy."

Hearings at the California Public Utilities Commissions (CPUC) were delayed when Commissioner Dian Grueneich ruled that more analysis was needed. Hearings resumed in San Francisco this week and may run through the end of September. The CPUC and the U.S. Bureau of Land Management are expected to release an environmental impact statement in January, with a decision about whether to approve the line happening in mid-2008 at the earliest.

Cal-CARE
Energy and Nature
Rancho Penasquitos Concerned Citizens
Voice of San Diego

The big news this week was that the U.S. House passed an energy bill that for the first time included a federal renewable energy standard (RES). This RES – an amendment to the energy bill sponsored by Representatives Tom Udall (D-NM) and Todd Platts (R-PA) – requires utilities to get 15 percent of their power from renewables by the year 2020. Other components of the House energy bill include:

• Moving $16 billion in tax incentives away from oil companies and putting it towards renewable energy.
• New energy efficiency standards for appliances and building codes.
• The creation of a Solar Energy Industries Research and Promotion Board to raise national awareness of solar energy options. The program would be funded completely by a portion of solar industry revenues, with no appropriations authorized.
• A modified 4-year extension of the wind power Production Tax Credit (PTC) that limits the credit to 35 percent of wind project costs.

Not in the bill is an increase in the Corporate Average Fuel Economy (CAFÉ) standards (a.k.a. “fuel efficiency”) that was a hot topic as the session came to a close. By avoiding a vote on CAFE standards, Democrats avoid public in-fighting with fellow Dems from auto industry states, notably Commerce Committee Chairman John Dingell (D-MI).

The Senate already approved an increase in fuel efficiency back in June, which will be just another piece of the Senate bill to be reconciled with the House version in conference committee this fall. In addition, the White House has threatened to veto any legislation containing a renewable energy standard.

Renewable Energy Access
The Sietch Blog
Yahoo News

Finance ministers from the Asia-Pacific Economic Cooperation forum (APEC) met last week in Australia to discuss how to meet the region’s energy needs and combat global warming. Key to this effort, they concluded, is to establish a framework to take the place of the Kyoto Protocol when it expires in 2012.

Market-based strategies, like a cap-and-trade policy used in Europe, were discussed. A cap-and-trade policy sets an overall limit on emissions, and then grants entities (factories, for example) permits that allow them to emit a particular amount of pollution. If they emit less than what is allowed, they can sell the surplus permits to a business that can not or will not meet their emissions requirements. This puts a price on emissions and creates an incentive to lower them. The value of global emissions-permit trading was over $30 billion in 2006, with 81 percent of that in the European Union.

APEC economies represent half of the world’s trade and include the world’s largest emitters, the U.S. and China. Neither country is bound by the Kyoto Protocol: China because it is a developing nation, and the U.S. because it didn’t ratify it. Another APEC member and large emitter, Australia, also didn’t ratify Kyoto but seems to making some progress with the announcement last week that it will start a national CO2 emissions trading system by 2012 and set a global warming emissions reduction target by next year.

China plans to cut energy consumption by 20 percent over the next five years. However, Finance Minister Jin Renqing told APEC members that developed countries have the responsibility to help developing ones with the technology to achieve this. China is the world’s largest user and producer of coal, and just passed the U.S. as the world’s largest emitter of CO2.

Australian Treasurer Peter Costello was encouraged by China’s talk of using market mechanisms to cut pollution. He foresees his country playing a larger role as energy demand increases in the region but traditional supplies dwindle or are unusable because of their global warming impact. He assured China that its development will not be interrupted by energy scarcity and that Australia has “a lot to offer” it in terms of energy security.

Bloomberg News

Photo credit: NREL

A new study by the American Wind Energy Association (AWEA) found that U.S. manufacturers dominate the world’s market share of small wind turbine sales. Comparatively, global sales of larger, utility-scale turbines are led by companies like Denmark’s Vestas, Spain’s Gamesa and India’s Suzlon, who are also hungrily eying the U.S. market.

The 2007 Small Wind Turbine Global Market Study reports that about half of U.S. manufacturers’ sales are made overseas, and the other half satisfies about 98 percent of the small wind demand here at home. Small wind systems are defined as those with 100 kilowatts (kW) of capacity or less, and in 2006 nearly 7,000 Americans purchased them for their homes, farms, or businesses.

The key to building up the market for small wind, according to AWEA and other wind power advocates, is to provide stable federal tax credits and incentives. Ron Stimmel, AWEA’s small-wind advocate, pointed out that “small wind is the only renewable energy technology without a federal-level tax credit.” At $10,000 - $55,000 each, small wind turbines aren’t cheap.

It’s good news that, for once, the U.S. is leading the way in something small, clean, and local. Whether it’s for a community school, a farm, or a home, small wind allows people to reduce their reliance on dirty energy and create their own clean source. American wind power of any size, however, suffers from unreliable federal policies, like the production tax credit (PTC) for large wind that has to be renewed every few years. Wind farm construction increases quickly when the PTC is renewed and dies off as it nears expiration. This boom-and-bust cycle is bad for the wind power economy and our energy system. We need consistent incentives for a versitile energy source that can power a utility or a farm down the road.

Alternative Energy Retailer
AWEA Small Wind Turbine Global Market Study
State Energy Conservation Office
Union of Concerned Scientists

Besides the Udall-Platts amendment to the House energy bill that calls for a federal renewable energy standard (requiring 20 percent of our energy to come from renewables by 2020), another progressive energy bill may up for a vote this week.

It’s far reaching – both in terms of what it would do for the country, and that actually passing it may be a bit of a reach.

Representative Edward Markey (D-MA) has authored a bill that increases the Corporate Average Fuel Economy (CAFÉ) standards (a.k.a. “fuel efficiency”) to 35 miles per gallon (mpg) by 2018. Currently the requirement is 27.5 mpg – and that number has hardly changed in more than 10 years.

Unlike the current requirement, however, Markey’s proposed standard does not have a lower mpg rate for most pickups and SUVs. The Senate’s 35 mpg version that passed earlier this summer also didn’t distinguish between cars and pickups/SUVs. The Senate bill was strongly opposed by the auto industry and lawmakers from states with auto factories.

On the other hand, Reps. Baron Hill (D-IN) and Lee Terry (R-NE) have a bill requiring cars to have a 35 mpg standard and trucks to reach 32 mpg by 2022. This version is supported by automakers.

CNN reports that speculation is swirling over what will happen in the House. If neither of these fuel efficiency proposals makes it to the House floor, then the House will work off the Senate’s version – which is stronger than the Hill-Terry proposal. So in the end, the House may not vote on fuel efficiency standards at all, thus avoiding the gamble that the Hill-Terry bill passes and guaranteeing that the Senate version heads to conference committee.

Or, is a perfect bill the enemy of a good bill in this case? If there’s a piece of legislation, supported by automakers, that gets us to 35 mpg for cars and 32 mpg for trucks by 2022, should we pass it in 2007 in lieu of waiting for perhaps another bill and another vote in 2008? Or, are we setting the bar too low altogether?

CNN
National Public Radio

Today the U.S. House is likely to vote on the Udall-Platts Amendment to the energy bill. This legislation would require 15 percent of our nation’s electricity to come from renewable sources by the year 2020. It’s high time the federal government catch up to so many states that already have implemented 21st century policies like this one.

But in addition to broad state and federal programs, consumers can also do some renewable energy good for themselves, even if they don’t own a wind turbine or live in a sunny area. They can buy green power.

“Green power” is a term for clean, renewable energy. More than 600 utilities in 36 states give their customers the option to buy their power from renewable energy sources (depending on the state, they normally include solar power, wind, biomass, hydropower, or geothermal) rather than traditional ones (likely to be coal). Although the transmission system can’t guarantee that particular energy from a wind farm makes it to your refrigerator, the total amount of green electricity that travels over the entire system is increased because (ideally) the utility is taking all of the extra revenue and investing in more renewable energy sources.

My fellow blogger Philip Proefrock just covered a green power program he is considering in his homestate of Michigan. Green power programs do vary, whether it’s the location from which the renewable energy is coming (in state or out of state) or the source (I know of one municipal provider that promotes destructive Canadian hydropower as an eco-friendly option, so make sure you know where the energy is coming from).

Here in Minnesota, I purchase wind power through Xcel Energy’s Windsource program. The initial cost is a little more than $3.50 per 100 kWh block, but I also get a credit on my bill for the avoided fuel costs of conventional (i.e. coal) power. The credit varies each month, but my cost last month was less than $11. Windsource was also audited by the Green-e program to ensure that ratepayers’ money is going to build new renewable energy sources, and it passed with flying colors: Windsource funds the costs associated with Xcel purchasing wind power from private owners of wind turbines and new wind generation facilities across the state, so I feel good about my investment.

Find out whether you can buy green power in your state at the U.S. Department of Energy. If you can’t buy green power locally, consider investing in renewable energy credits (RECs) to offset your emissions.

Sierra Club, North Star Chapter
Union of Concerned Scientists
Xcel Energy

When the National Association of Governors met last weekend in Traverse City, MI, global warming policy was on the agenda. In the absence of a federal commitment to renewable energy or cutting global warming emissions, they stressed the importance of states to keep leading the way.

The Chairman of the governors association, Tim Pawlenty (R-MN), began his one-year term this week. He noted that the Republican Party has some “catching up to do” on global warming policy, although he pointed out that some of the most outspoken governors on the issue are Republicans, like Governor Schwarzenegger of California and Governor Crist of Florida. Pawlenty told the Associated Press that states should redouble their efforts to limit climate change emissions and develop renewable sources of energy: "The false premise of some of the critics is that you’ll wreck the economy. I suggest if you do this correctly, it will be a boost to the economy."

Several governors pointed out that the federal government will eventually follow if enough states take the lead and prove the clean energy technologies increase energy security, create jobs, and slow global warming. Governor Ed Rendell (D-PA) explained “With the states taking action, even if you don’t have 100 percent of America, you can have 40 or 50 percent or more, and that’s a good start. We can’t just wait around for the federal government."

Several governors were more cautious in their assessment of how global warming policy would play out in their state’s economy. Governor Jennifer Granholm (D-MI, home to automakers that are battling congressional efforts to toughen fuel efficiency) said success would only come when all nations, like China, are committed to the same goals and are playing by the same rules. Governor Joe Manchin III (D-WV) said that the U.S. couldn’t afford to stop using his state’s coal, even though it’s a leading source of global warming emissions.

Associated Press, via International Herald Tribune
Forbes

A large, old, rich, and impressive group of businesses leaders has called for more action to slow global warming.

The Business Roundtable is an association of CEOs of 160 U.S. companies with $4.5 trillion in annual revenues, more than 10 million employees, and makes up nearly one-third of the total value of the U.S. stock market. They lobby lawmakers on issues like jobs, healthcare, and trade. And last week they released a statement on one of the hottest of issues: global warming.

The Business Rountable’s Climate Change Statement acknowledges that although its members – such as ExxonMobil, General Electric, DuPont, and State Farm Insurance – have varying views on how exactly to address global warming, they do agree on some essential elements:

• More companies should make cutting emissions a priority and report publicly on their progress.
• Energy efficiency should be increased 25 percent.
• Any legislative or regulatory framework must stimulate private sector innovation and investment, as well as consumer awareness of new technologies.
• Increase research and development in new low-emissions technologies.
• Investment in climate science must continue at a high level “so that we can better understand and predict the magnitude and timing of future warming of the planet."
• Policies should be flexible enough to realign timelines with the development of new technologies, price spikes, or economic competitive imbalance.
• Consider different policy tools, including cap-and-trade, carbon taxes, or energy standards.
• Any policy solution should be economy-wide and not impact a particular industry sector, technology, or geographic region.
• Maximize access to limited feedstock and energy supplies (for example, figure out carbon capture and sequestration so coal could be burned with less emissions).
• Adopt a global framework where all major emitting countries (specifically including China, Brazil, and India) are committed to reduction goals.

I’m a bit wary of parts of this list. It reminds me of the discussion I and other bloggers had with Exxon’s Vice President of External Affairs back in January, where it seemed like a perfect global warming solution was the enemy of a good global warming solution. I wonder, if a solution doesn’t include a commitment by China, India, and Brazil, is the U.S. still supposed to stand still and do nothing? It sounds like it…

The fact that so many businesses – to varying degrees of seriousness – are talking about global warming solutions is encouraging. The Sierra Club dismissed the Rountable’s statement as an atempt to appear sensitive while seeking to ensure that new regulations accomodate its members. Well, of course they want new regulations to accomodate them. That shouldn’t surprise anyone. But where can we find common ground? All of us should be open to ideas and reasonable compromise, but also make sure we’re not fiddling while the clock is ticking.

Business Roundtable

Reuters

The New Solar Homes Partnership (NSHP) is a 10-year, $400 million program of the California Energy Commission to encourage energy efficiency and solar power in new home construction. Specifically, the NSHP works with builders and developers to install 400 megawatts (MW) of solar energy on energy-efficient CA homes in the next ten years. The Partnership focuses on new single family homes, multi-family homes, and affordable housing construction.

The NSHP officially began on January 2 of this year, and it just crossed a milestone with its first approval of a new home community. The subdivision of Wisteria in Rocklin, California is made up of 60 homes, 35 of which will all have solar power systems that come standard, totaling 82 KW of renewable energy. Christopherson Homes is building the community.

Solar power may be exciting, but California energy policy puts greater emphasis on efficiency because it is the most cost effective way of cutting emissions. By combining efficiency with solar, the NSHP can help ensure that the projects are as affordable as possible.

The Partnership’s incentives encourage homes to be 35-50 percent above current efficiency standards.
The NSHP hopes that the Wisteria project will be the beginning of a self-sustaining market and that 50 percent of all new homes by 2017 will be super energy-efficient and solar powered.

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