Feb. 26, 2021 — LONDON: ICE Futures Europe said it would start auctioning new U.K. emissions allowances on May 19.
On the same day, it will begin offering futures contracts and two days later a prompt contract, UKA Daily Futures, subject to regulatory approval, ICE said in an e-mailed statement. The first of fortnightly auctions would include 6.05 million tons of allowances.
Britain was forced out of the EU carbon market, the world’s biggest by traded volume, following its vote in the middle of 2016 to leave the union.
“Today’s publication will give businesses and operators clarity over this year’s supply of emissions allowances, enabling them to plan ahead, build back greener and better prepare for the transition to a low-carbon economy,” said U.K. Energy Minister Anne-Marie Trevelyan, in the statement.
The U.K. ETS will be pivotal in supporting the climate ambition of the four governments of the U.K., said Gordon Bennett, Managing Director of Utility Markets at ICE.
“U.K. emissions have fallen 41% since 1990, more than any other major developed country and this has been driven by the U.K.’s leadership in promoting market-based mechanisms to support climate goals. There is an enormous opportunity for cap and trade programs to take an even greater role in supporting the goals of the Paris Agreement, whether it is increasing their sector coverage or encouraging international linking,” Bennett said.
Feb. 24, 2021: LONDON — As utilities with U.K. coal and natural gas generation switch to new British carbon allowances during the next few months, the value of those permits and the European Union ones are set to fluctuate wildly, according to traders.
The U.K. carbon price seems likely to be higher than that in the EU following Brexit, based on current indications.
The expected implementation of the post-Brexit U.K. market by June will be complicated by the country’s floor support. Adding the U.K. floor of 18 pounds a ton to the U.K’s upgraded auction reserve of 22 pounds gives an indicated minimum level of 40 pounds a ton.
That’s about 46 euros a ton, or 7.40 euros, 19%, more than current prices for EU carbon futures on the ICE Futures Europe exchange.
According to my survey of traders, some are expecting prices for the traded U.K. allowances near the 22 pound a ton level, yet demand in the secondary market could be strong initially if supplies in the first few auctions — the primary market — are not high.
EU carbon allowances have surged through 40 euros a ton during the past few weeks after breaking through 30 euros for the first time only back in December.
Debate about how Brexit will roil the EU’s carbon market has caused fluctuation in prices ever since the British vote to leave in the middle of 2016.
Since the end of the transition period in December, some coal and gas generators in Britain have used EU allowances as a proxy for U.K. carbon because the new British contracts are not yet available.
A 19% price difference is certainly wide enough to boost demand in Britain for EU-generated power, which could be a boon for mainland Europe generators, according to a trader at a big bank.
British fossil-fuel generators have had a great start to 2021, because the winter cold snap and low levels of wind generation caused demand for power and gas to surge.
When these utilities switch into U.K. allowances by selling the EU permits they have built up, that will probably still shift prices.
Utility EDF was paid more in 3 days than in all of Q3 by National Grid to balance the system, energy trader Hartree says in emailed market insight covering January.
National Grid forced to buy power at £4,000/MWh, some 70 times greater than the average price paid over 2020
EPH achieved the highest average sales price for any day in the Balancing Mechanism of over £3,600/MWh
A perfect storm of peak winter demand, low wind generation and delays to supplies from the continent saw record prices for UK power last month, Hartree Solutions says.
European Union carbon permits have jumped to a record near 40 euros; some U.K. utilities are reportedly using EU permits to hedge risks because ICE hasn’t started offering UK carbon futures yet: analyst at bank
“Generators were quick to cash in on this tightness with National Grid forced to pay EDF nine times more than the previous year for their flexibility in January, averaging sales1 of £473/MWh compared to £53/MWh. Meanwhile, EPH and Drax settled for £387/MWh and £303/MWh.”
Hartree said it was coal-focussed utility group EPH that on Jan. 13 “achieved the highest average sales price1 for any day in the Balancing Mechanism2 (BM) of over £3,600/MWh during the second week of tightness. However, we can observe that EDF was quickest to react to the supply scarcity, achieving the highest average sales prices1 in the BM for the three initial tight days. On the last of these, the EDF owned West Burton B recorded the highest ever price paid in the BM contributed to an average sales price1 of over £3,200 /MWh that day.“
Feb. 10, 2021 — US Chamber of Commerce names Suzanne Clark as new CEO, replacing Thomas Donohue, who led the organisation for more than two decades, WSJ reported.
Days before Mr. Biden was sworn into office, the Chamber took its strongest position yet in favor of climate-change legislation: WSJ
Another fascinating two sentences:
In 2019, the Chamber said Mr. Donahue would step down in 2022—an announcement that came moments after The Wall Street Journal published a story reporting that Mr. Donohue regularly used the Chamber’s corporate jet service to travel on business and personal trips, including a weeklong trip to the Greek Islands in 2019 with his girlfriend.
At the time, the Chamber said it would conduct an extensive search for a successor.
Feb. 9-13, 2021 – LONDON: The European Union’s carbon price is seen needing to triple to force changes in corporate behavior because climate disclosure and governance measures haven’t worked quickly enough.
The CO2 allowance price “needs to be three times where it is today, even though it’s at record levels,” said Steve Waygood, chief responsible investment officer at Aviva, the funds manager. Disclosing climate risks and requiring board members to focus on other stakeholders such as society have not protected the climate and nature adequately and they probably won’t do alone, he said.
That’s why politicians need to put in place stronger climate protections such as higher carbon prices.
Waygood was speaking at seminar about how to improve corporate governance to spur companies to broaden their objectives beyond money and short-term profit toward sustainability objectives such as cutting emissions.
The EU’s Non-Financial Reporting Directive needs strengthening because behavior changes are not happening quickly enough, said EU commissioner for justice Didier Reynders.
“We’ve seen that reporting obligations have not made the breakthrough,” he said. Short-termism is still dominating corporate decision making.
“We are facing a sustainability crisis of unprecedented scale.”
EU carbon prices have more than doubled since the beginning of the pandemic, closing the week above 40 euros a ton. Economists have said levels above 100 euros imposed soon might give the world a fighting chance of meeting emission cuts implied in the Paris climate deal.
Science-based emission-reduction targets are seen as an effective way for companies and countries to align their plans with the objective of the Paris agreement, which is to keep temperatures from rising more than 1.5C. Temperatures have already risen about 1C above pre-industrial levels.
To make the economy work more sustainably, governments need to deliver tax reform to ensure living wages for workers while narrowing the gap between senior executives and workface employees to ensure social cohesion, said Caroline Avan, advocacy officer at charity Oxfam in France. Measures to ensure compliance with human rights guidelines should also be implemented.
Countries can use money generated from selling carbon allowances to help compensate poorer people for higher costs in the economy created by stronger climate policy.
“Many corporate directors have told me that already now they are expected to be responsible and sustainable, but in the future these expectations will become legal obligations,” said Heidi Hautala, EU Parliament vice president and chair of its responsible business conduct working group. “The board and its audit committees can show if the companies’ ESG actions are effective, or mere greenwashing,” she said at the event.
The EU is considering widespread legislation that will require better corporate behavior and curb damaging executive greed.
“I believe that the EU non-financial reporting standards could become the globally recognized best practice – the lingua franca, the common language, of sustainability,” Hautala said
Yet wider pressures need to be brought to bear across the economy, warned Aviva’s Waygood. I added some emphasis.
“I don’t think we can rely on corporate governance alone to create sustainable markets. The case may have been slightly overstated … It isn’t the job of the board to correct market failures. It isn’t the job of the board to (in the economic jargon) internalize externalities. That is the role of government and regulators and policymakers.
I’m missing the systemic vision of how the financial disclosure requirements all fit together.”
In the real economy, companies need to pay the cost of cleaning up the damage they cause; “therefore the full cost of capital reflects the full cost of carbon on society — the full cost of emissions. That cannot be done through corporate governance,” Waygood said.
The financial supply chain is crucial, those who advise families how to manage their investments and pension pot need to be better joined up with funds managers advocating for better board stewardship. Chemical companies, oil companies and automakers all need to be accountable via the prices they pay and that are paid for their goods and services.
“It’s time for a new vision; of how the emissions trading scheme, the common agricultural policy, the common fishing policy; the extended producer responsibility” and other measures all “come together in the real economy to shape prices so that the cash flows of the businesses that are being valued properlyreflect their full cost to society and the environment,” Waygood said.
— The climate transition is set to be better managed — Climate activist Greta Thunberg will be pleased
By Mathew Carr
OPINION, Feb. 9-13, 2021 — LONDON: Not before time, the right things are becoming desirable in the previously cut-throat world of financial markets.
The push-pull for climate-friendly products has become so strong, pension funds are starting to ignore profits made from burning coal, crude oil or even natural gas.
Instead of black gold, examples of emissions-cutting market innovation are gushing thick and fast.
Green is the new black in the commodity world.
A few days ago research and rating provider S&P Global joined dairy group Danone to become one of the first companies to introduce a carbon-adjusted-earnings-per-share metric into its financial reporting.
The metric – based on a theoretical cost per share of the company’s emitted carbon dioxide subtracted from regular earnings per share – provides transparency into how far down the climate transition curve a company is.
The world’s biggest investor Blackrock, belatedly on board with the climate transition itself, said a couple of weeks ago that the global coronavirus pandemic “presented such an existential crisis – such a stark reminder of our fragility – that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives.”
Carbon-adjusted EPS is another way of progressing toward net-zero targets, favored by more than 2,000 businesses, cities, states, universities and investors around the world, according to UN data. ESG standards and climate disclosure is increasingly becoming mandatory rather than optional.
So, a compelling stage has been set, because these measures imply demand for carbon allowances and renewable-energy credits will rise, as corporates and governments seek to hit targets in 2025, 2030, 2035, 2040, 2045 and 2050.
Stockmarket darling Tesla made $1.6 billion from selling regulatory carbon credits it received last year, far outweighing its net income of $721 million — meaning it would have otherwise posted a net loss, according to CNN.
A carbon credit boom isn’t quite set in stone. Remember, they were going to be huge 10 years ago, but politics got in the way and demand never showed up.
Trading in the voluntary carbon market could merge with compliance buying and selling under the Paris climate deal, according to some enthusiasts. That climate deal is meant to be biting from this year, but the pandemic has also slowed the number of possible negotiation meetings.
Further, not all emerging nations are on board with a surging voluntary carbon market. They prefer a UN system. Rich countries and companies say the failure of politicians to set carbon trading rules is a key reason why the climate crisis is now so acute.
If demand does show up this time, it could stir prices a lot. EU carbon allowances have more than doubled since the start of the pandemic to about 38 euros a ton. Voluntary carbon allowances are mostly more like 6 euros.
Perhaps soon, commodity indexes such as Bloomberg’s BCOM will include EU allowances or voluntary emission credits for the first time. At the moment, the energy element of the index is made up largely of fossil fuels, even though carbon has reached about half the cost of Europe’s wholesale electricity price. And electricity is where it’s at.
The past few years has seen a lot of climate brinkmanship. Mr Donald Trump expanded oil and natural gas, China and India are planning coal-power expansion, Brazil’s Amazon is burning at a rapid pace.
So the shift to greener markets is sorely needed.
Carbon credits could for instance reward striking Indian farmers should they agree to pivot toward more climate-friendly agriculture. They could make the Amazon worth more alive than dead.
To be sure, the pandemic has placed the global airline industry in severe doldrums, drying up a key area of previously expected offset demand.
Demand Recovers Scenario
Assuming demand does recover, one useful thing that’s happened over the past five years is testing of a cool mechanism for efficiently buying and selling emission credits.
The Pilot Auction Facility for Methane and Climate Change Mitigation handled by the World Bank employs auctions to maximize the use of public resources. Private corporations could use the same system.
Emissions-project investors bid for tradable put options that give the right to sell emission reduction credits, in this case to the World-Bank overseen fund. The projects willing to sell for the lowest price, win the options.
That injects price tension into the mix, reducing the chance of overblown profits for sellers and helping buying companies push up their adjusted carbon earnings per share.
A fund buying like this for corporates would lower the cost of meeting their net-zero targets. All this assumes emission-credit markets are well managed and not oversupplied. It’s going to be tough to make that happen in the next few weeks or months.
The World-Bank-overseen facility was created five years ago to keep projects running because carbon-credit prices plunged amid the flagging demand I mentioned earlier. Rich countries put in the cash.
The first sales result back in 2015 showed the program was “extremely efficient and scalable,” providing sorely needed finance to projects and making capturing methane worth the cost, the bank said at the time. Methane is a potent greenhouse gas with a global-warming potential 25 times that of carbon dioxide.
The facility hosted three successful auctions between 2015 and 2017, allocating nearly $54 million in climate finance, with the potential to abate about 21 million metric tons of CO2 equivalent, according to its website. The Pilot Auction Facility also addressed nitrous oxide through 2020. The volume is about a day and one half of U.S. energy emissions. It’s a start, at least.
Such structures should prevent profiteering in the next batch of carbon markets, something the first batch was criticised for.
They could also boost transparency and increase the incentive to install strict oversight of the green projects, including in countries with a history of corruption. Auction rules can insist on high standards and stipulate which projects can buy the put options.
That means countries would want to make sure their projects are attractive and so they would make sure they are managed properly. Projects looking to sell into the fund (buy the put options) would also need to make sure they meet standards, or they won’t be able to use this as a revenue-generating route.
No one wants to be seen buying bad credits, whether they’re bad because of their environmental credibility, bad because of the behavior of the people running the project, or bad because of the national oversight.
Feb. 4, 2021 — LONDON: EU carbon allowances surged for a third day in a row, after the Times of London newspaper said putting a price on climate pollution “made sense” even though it was politically risky.
The allowances rose above 38 euros a ton before falling back. See this chart from the IG website:
New taxes to combat carbon emissions may seem politically perilous but they make economic sense and can help achieve the net-zero target by 2050
Thursday February 04 2021, 12.01am, The Times
No one relishes paying more taxes. Introducing new ones is fraught with political peril. Even so, Boris Johnson has instructed government departments to draw up proposals to put a financial price on carbon, to help Britain achieve the legally mandated target of net-zero emissions by 2050. This implies higher consumer prices and bills for carbon-intensive goods and services, which is not an obviously vote-winning strategy.
Despite this, it is the right approach and it may be possible to compensate households for these higher costs. Though new measures will need to be devised and implemented with an awareness of unanticipated costs, they ought to receive cross-party backing and gain sufficient public support…
It might seem strange to conflate a post-Brexit London-based newspaper with the Brussels-based market – and I’m not saying it’s even a major reason for the upward market move.
Yet a lot of the trading in the EU system – world’s biggest emissions market by traded volume – still takes place in London.
After leaving the EU and its carbon market, the U.K. is setting up its own system.
Murdoch’s Wall Street Journal also wrote a story saying U.S. President Biden will probably struggle to “compartmentalize” global climate action, since it’s tied up closely with worldwide trade.
Murdoch’s press has previously displayed skepticism toward climate action and even raised doubts that the devastating 2019-2020 bushfires in Australia were stoked by climate change. It was the arsonists, right, mate?!
Rupert Murdoch’s son James has criticized the family empire’s stance on misinformation, including on climate change:
–Taskforce comes up with voluntary-carbon-market blueprint –While far from ideal, net-zero companies from Google to Shell see a way forward and want its risk-management potential –RWE case shows how EU’s decent market helps polluters shift
By Mathew Carr
Jan. 28, 2021 — LONDON: Companies from Royal Dutch Shell to Google who want to lead the pack on climate action realise they need a way of reducing the risk of doing so.
While they may have flirted with carbon markets, companies buying and selling emissions credits have had a patchy time for much of the last decade.
The main problem is the lack of a decent-sized global market, which would be much-more efficient and would better guarantee aggressive emission cuts and climate justice.
Since the system isn’t rational, many steelmakers, tech firms, bigoil and cement producers are thinking again as they plot out clean business plans covering the next 10 or 30 years.
As a fall back, they think voluntary carbon markets will reduce the chance of a costly mistake — there’s less chance of missing an emissions target through no fault of their own and suffering reputational damage as a result.
Scaling it won’t be easy, the Taskforce on Scaling Voluntary Carbon Markets concluded Jan. 27. It needs to be turning over about $100 billion a year instead of $320 million, it said.
Companies want to be seen as green, but they’re also being forced to reduce emissions quickly because pension fund groups such as Climate Action 100+ are insisting they don’t want to indefinitely hold investments that might suddenly plunge in value.
Spurred by the global pandemic, some customers want nothing to do with dirty companies.
Giant global corporations and state-owned emitters, who are most responsible for climate change, are now wanting the world to install a system to help them navigate their treacherous downward decline in emissions during the next three decades.
It’s a staggering challenge. About 30 billion tons needs to be cut within 10 years, to halve global emissions. That’s 3 billion tons a year. See this:
The taskforce published its blueprint (see link in the chart below) on how to make the voluntary market large and transparent.
How that market might mesh in with compliance markets under the Paris climate deal over the next decades was beyond its scope, it said.
Business, policy makers and environmental lobby groups have failed for 30 years to make carbon markets work. The poor standard of public debate means the world is now in dire trouble.
Improving the energy efficiency of factories, switching to cleaner fuels or even renewables and rethinking supply chains can get a company a long way down its emissions curve.
Being able to use emission credits would allow it to boost ambition even more. A company’s willingness to take on a tighter 2025 target is enhanced if it’s given flexibility on how to meet that limit.
Carbon markets can offer flexibility across time periods and geographies. That’s OK because the emissions problem is global. Every time someone pays a lot to cut one ton, they missed an opportunity to cut many tons of carbon for the same price. Urgency matters.
It’s a good thing if a steelmaker, oil company or cement producer can fall back on carbon credits if one of their physical emissions projects faces a delay. It will encourage those projects. It’s not greenwash if done well.
The key is getting a strong regulator, to keep supply low and quality high, the taskforce said.
That’s not the situation right now, where there’s little shortage of carbon credits to buy. Supply has tracked above demand, even as demand is rising, the taskforce found.
Chaired by Standard Chartered CEO Bill Winters and supported by UN special climate envoy Market Carney, the project came up with a blueprint to boost demand for credits and protect the environmental integrity of claims being made by the emitters.
Getting industries to agree standards could rapidly scale demand for voluntary credits, was one idea. This includes both business-to-consumer sales and business-to-business transactions (for instance, carbon-neutral milk for B2C, and a carbon-neutral liquefied natural gas cargo for B2B).
Creating benchmark contracts and futures markets are other challenges. IHS Markit favors forestry-related credits as the benchmark because that’s where the volume is at the moment. Other contract types can be priced as a premium (or discount).
Here’s an outline of the taskforce’s blueprint (warning — it’s not for the faint of heart):
One of the many key challenges is deciding who will have the right to sell an emissions credit.
The declining line in the first chart above to keep temperatures from rising 1.5C is already steep. The theory of carbon trading is you only get to create a sellable emission credit if your reduction is over and above what’s required in the base-case scenario: it’s got to be “additional.”
Because the steepness of the cuts has become so acute due to the decades of inaction, finding an additional cut will be that much more difficult.
The taskforce created this chart, with the help of McKinsey:
I’ve butchered it slightly (forgive me, taskforce) by adding the large red arrow, which signifies the approximate area where companies (and countries) have to cut emissions to before they start selling to companies and countries struggling to meet the trajectory, represented by the red square.
If there are too many buyers or too much for sale, the market will surge or plunge respectively.
The challenge for standard setters and policy makers seeking to establish the market is to ensure there’s balance.
The use of price floors, ceilings and reserves may help, or hinder, depending how they’re deployed. Environmental lobby groups worry the program will be well oversupplied and so it could effectively become a greenwashing system.
The taskforce says this of additionality, without going into a lot of detail about how it should be determined: It’s the determination of whether projects genuinely yield emission abatement that would not otherwise occur.
If companies wanted the taskforce to indicate which credits to buy, they’ll be disappointed, according to one developer.
A large portion of emission credits have been criticized for being created too easily — for example, because they stem from forests that were really not likely to be cut down or from an overincentivized chemical plant.
“Integrity of voluntary carbon markets should be further improved. Today the market lacks a strong governance body to decide on participant eligibility, strengthen validation and verification processes, and combat fraud or money laundering,” the taskforce said.
Participants, of course, disagree, saying perfection should not be the enemy of the good. More than 2,000 businesses, cities, universities and investors are striving for net zero, according to UN data, so a compelling stage is already set because those targets imply demand:
“We now have a system that allows us to meet a common environmental goal at the lowest possible price. The demand that has already been pledged publicly is multiples of the supply that’s available in the market. Multiples. It might not be 2021. It might not be 2022. But I can guarantee you with 100% certainty that the size of the voluntary carbon market is going to have to increase in order for us to meet those targets that have already been pledged. To say the system is broken — I think that’s crazy,” said one trader, who wanted to speak anonymously.
Adding to the challenge, global companies have a sort of free will that’s partly beyond the reach of a single country’s environmental regulator. That’s why countries including China and Brazil are pushing for a global system overseen by the UN.
As country and corporate markets collide, accounting will probably become a “nightmare,” according to long-term carbon watcher Alessandro Vitelli.
Compliance and voluntary markets are not formally linked, but linkage seems inevitable.
That level is currently less than one sixth of the price of an EU allowance, which is the equivalent of about $40 a ton.
Having an aversion to the politics and technicalities of a forest-based credit may push some companies to pay the higher price for an EU allowance, said the report commissioned by Germany.
Buying EU allowances is problematic also for reasons other than their higher price. Europe will probably cancel more than 2.2 billion of allowances in 2023 after they languish too long in a reserve — that’s about a year and a half of supply.
This planned move would mean voluntarily buying an allowance today and holding/cancelling it (when it would be cancelled anyway in three years’ time) also might not feel quite right.
The circumstances of the traded markets or the buyer might change its mind so that it’s “tempted to sell the allowance instead of cancelling it if the prices are sufficiently high in the future,” the report’s authors said. The EU’s slso grappling with this accounting.
Optimists in the carbon market say these accounting debates can be thrashed out in the coming weeks, months, years and/or decades.
Making 2025-2030 targets tighter — both corporate ones and country ones under the Paris climate deal — will help create scarcity.
But it still will probably be hard to avoid oversupply, even if voluntary carbon trading is only a temporary thing — covering the next 20 years or so.
The world has failed to solve these political and accounting issues the past 30 years, but this time around cheaper solar, wind and batteries are on investors’ side and allowing for more speed to focus on hard-to-cut emissions.
If regulators can work the voluntary market out, companies will be more comfortable making ambitious multi-decade plans. The markets will effectively provide an insurance policy should technology or circumstances move against a company or country.
Europe’s biggest emitter has for now shown how buying forward can be very lucrative, albeit in a different setting. Here’s a slide from the website of RWE AG, which burns coal for power (but not for that much longer). It’s already hedged its carbon exposure through 2030.
And its shareholders appreciate that. See this share price chart:
RWE’s surging valuation is in stark contrast to Exxon Mobil Corp.’s, which has dropped by almost half inside two years.
Regulators and voluntary market standard bearers will need to think ahead too, as the task force says. If they’re not miserly in handing out credits and allowances during the next two or three decades, the carbon markets will again fall into oversupply and disrepute.
Better, countries will decide to install EU-like carbon markets that feature science-based, declining, transparent, and enforceable caps to guarantee results, a trading element that encourages over-and-accelerated-compliance, as well as high-quality offsets.
Jan. 27, 2021 — LONDON: U.S. President Joe Biden and Vice President Kamala Harris issued a slew of executive orders to help protect the climate at home and across the world.
They ordered federal agencies to eliminate fossil fuel subsidies “as consistent with applicable law and identify new opportunities to spur innovation, commercialization, and deployment of clean energy technologies and infrastructure.”
The orders direct the Director of National Intelligence to prepare a “National Intelligence Estimate on the security implications of climate change,” according to a statement from the White House.
The U.S., China and the EU are seen cooperating on climate action if only they can resolve their differences about trade and protectionism.
The U.S. reaffirmed that the President will host a Leaders’ Climate Summit on Earth Day, April 22, 2021.
The U.S. would reconvene the Major Economies Forum, to tackle emissions from the world’s biggest countries. China’s President Xi is seeking to boost the G20 effort on climate action, according to a speech this week to the World Economic Forum..
“It will be a U.S. priority to press for enhanced climate ambition and integration of climate considerations across a wide range of international fora,” the Biden-Harris statement said.
They asked the State Department to prepare a “transmittal package to the Senate for the Kigali Amendment to the Montreal Protocol, and all agencies to develop strategies for integrating climate considerations into their international work.”
That protocol, which protects the ozone layer, also tackles some of the world’s most heat-trapping gases.
The U.S. is seeking to mend climate injustice in many of its proposed measures.
Biden-Harris Administration Commits on Climate Change – Creating Jobs, Building Infrastructure, and Delivering Environmental Justice
Today, President Biden will take executive action to tackle the climate crisis at home and abroad while creating good-paying union jobs and equitable clean energy future, building modern and sustainable infrastructure, restoring scientific integrity and evidence-based policymaking across the federal government, and re-establishing the President’s Council of Advisors on Science and Technology.
These Executive Orders follow through on President Biden’s promise to take aggressive action to tackle climate change and build on the executive actions that the President took on his first day in office, including rejoining the Paris Agreement and immediate review of harmful rollbacks of standards that protect our air, water, and communities.
President Biden set ambitious goals that will ensure America and the world can meet the urgent demands of the climate crisis, while empowering American workers and businesses to lead a clean energy revolution that achieves a carbon pollution-free power sector by 2035 and puts the United States on an irreversible path to a net-zero economy by 2050. Today’s actions advance those goals and ensure that we are tapping into the talent, grit, and innovation of American workers, revitalizing the U.S. energy sector, conserving our natural resources and leveraging them to help drive our nation toward a clean energy future, creating well-paying jobs with the opportunity to join a union, and delivering justice for communities who have been subjected to environmental harm.
President Biden will also sign an important Presidential Memorandum on scientific integrity to send a clear message that the Biden-Harris Administration will protect scientists from political interference and ensure they can think, research, and speak freely to provide valuable information and insights to the American people. Additionally, and in line with the scientific-integrity memorandum’s charge to reestablish scientific advisory committees, President Biden will sign an Executive Order re-establishing the President’s Council of Advisors on Science and Technology.
TACKLING THE CLIMATE CRISIS AT HOME AND ABROAD EXECUTIVE ORDER
Today’s Executive Order takes bold steps to combat the climate crisis both at home and throughout the world. In signing this Executive Order, President Biden has directed his Administration to:
Center the Climate Crisis in U.S. Foreign Policy and National Security Considerations
The order clearly establishes climate considerations as an essential element of U.S. foreign policy and national security.
The order affirms that, in implementing – and building on – the Paris Agreement’s objectives, the United States will exercise its leadership to promote a significant increase in global ambition. It makes clear that both significant short-term global emission reductions and net zero global emissions by mid-century – or before – are required to avoid setting the world on a dangerous, potentially catastrophic, climate trajectory.
The order reaffirms that the President will host a Leaders’ Climate Summit on Earth Day, April 22, 2021; that the United States will reconvene the Major Economies Forum; that, to underscore the administration’s commitment to elevating climate in U.S. foreign policy, the President has created a new position, the Special Presidential Envoy for Climate, which will have a seat on the National Security Council, and that it will be a U.S. priority to press for enhanced climate ambition and integration of climate considerations across a wide range of international fora.
The order also kicks off the process of developing the United States’ “nationally determined contribution” – our emission reduction target – under the Paris Agreement, as well as a climate finance plan.
Among numerous other steps aimed at prioritizing climate in U.S. foreign policy and national security, the order directs the Director of National Intelligence to prepare a National Intelligence Estimate on the security implications of climate change, the State Department to prepare a transmittal package to the Senate for the Kigali Amendment to the Montreal Protocol, and all agencies to develop strategies for integrating climate considerations into their international work.
Take a Whole-of-Government Approach to the Climate Crisis
The order formally establishes the White House Office of Domestic Climate Policy – led by the first-ever National Climate Advisor and Deputy National Climate Advisor – creating a central office in the White House that is charged with coordinating and implementing the President’s domestic climate agenda.
The order establishes the National Climate Task Force, assembling leaders from across 21 federal agencies and departments to enable a whole-of-government approach to combatting the climate crisis.
Leverage the Federal Government’s Footprint and Buying Power to Lead by Example
Consistent with the goals of the President’s Build Back Better jobs and economic recovery plan, of which his clean energy jobs plan is a central pillar, the order directs the federal agencies to procure carbon pollution-free electricity and clean, zero-emission vehicles to create good-paying, union jobs and stimulate clean energy industries.
In addition, the order requires those purchases be Made in America, following President Biden’s Buy American executive order. The order also directs agencies to apply and strictly enforce the prevailing wage and benefit guidelines of the Davis Bacon and other acts and encourage Project Labor Agreements. These actions reaffirm that agencies should work to ensure that any jobs created with funds to address the climate crisis are good jobs with a choice to join a union.
The order directs each federal agency to develop a plan to increase the resilience of its facilities and operations to the impacts of climate change and directs relevant agencies to report on ways to expand and improve climate forecast capabilities – helping facilitate public access to climate related information and assisting governments, communities, and businesses in preparing for and adapting to the impacts of climate change.
The order directs the Secretary of the Interior to pause on entering into new oil and natural gas leases on public lands or offshore waters to the extent possible, launch a rigorous review of all existing leasing and permitting practices related to fossil fuel development on public lands and waters, and identify steps that can be taken to double renewable energy production from offshore wind by 2030. The order does not restrict energy activities on lands that the United States holds in trust for Tribes. The Secretary of the Interior will continue to consult with Tribes regarding the development and management of renewable and conventional energy resources, in conformance with the U.S. government’s trust responsibilities.
The order directs federal agencies to eliminate fossil fuel subsidies as consistent with applicable law and identify new opportunities to spur innovation, commercialization, and deployment of clean energy technologies and infrastructure.
Rebuild Our Infrastructure for a Sustainable Economy
The order catalyzes the creation of jobs in construction, manufacturing, engineering and the skilled-trades by directing steps to ensure that every federal infrastructure investment reduces climate pollution and that steps are taken to accelerate clean energy and transmission projects under federal siting and permitting processes in an environmentally sustainable manner.
Advance Conservation, Agriculture, and Reforestation
The order commits to the goal of conserving at least 30 percent of our lands and oceans by 2030 and launches a process for stakeholder engagement from agricultural and forest landowners, fishermen, Tribes, States, Territories, local officials, and others to identify strategies that will result in broad participation.
The order also calls for the establishment of a Civilian Climate Corps Initiative to put a new generation of Americans to work conserving and restoring public lands and waters, increasing reforestation, increasing carbon sequestration in the agricultural sector, protecting biodiversity, improving access to recreation, and addressing the changing climate.
The order directs the Secretary of Agriculture to collect input from farmers, ranchers, and other stakeholders on how to use federal programs to encourage adoption of climate-smart agricultural practices that produce verifiable carbon reductions and sequestrations and create new sources of income and jobs for rural Americans.
Revitalize Energy Communities
The order establishes an Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization, to be co-chaired by the National Climate Advisor and the Director of the National Economic Council, and directs federal agencies to coordinate investments and other efforts to assist coal, oil and natural gas, and power plant communities.
The order tasks the new Interagency Working Group to advance projects that reduce emissions of toxic substances and greenhouse gases from existing and abandoned infrastructure and that prevent environmental damage that harms communities and poses a risk to public health and safety – such as projects to reduce methane emissions, oil and brine leaks, and other environmental harms from tens of thousands of former mining and well sites.
In addition, the new Interagency Working Group is also directed to explore efforts to turn properties idled in these communities, like brownfields, into new hubs for the growth of our economy.
Secure Environmental Justice and Spur Economic Opportunity
The order formalizes President Biden’s commitment to make environmental justice a part of the mission of every agency by directing federal agencies to develop programs, policies, and activities to address the disproportionate health, environmental, economic, and climate impacts on disadvantaged communities.
The order establishes a White House Environmental Justice Interagency Council and a White House Environmental Justice Advisory Council to prioritize environmental justice and ensure a whole-of-government approach to addressing current and historical environmental injustices, including strengthening environmental justice monitoring and enforcement through new or strengthened offices at the Environmental Protection Agency, Department of Justice, and Department of Health and Human Services. The new bodies are also tasked with advising on ways to update Executive Order 12898 of February 11, 1994.
The order creates a government-wide Justice40 Initiative with the goal of delivering 40 percent of the overall benefits of relevant federal investments to disadvantaged communities and tracks performance toward that goal through the establishment of an Environmental Justice Scorecard.
The order initiates the development of a Climate and Environmental Justice Screening Tool, building off EPA’s EJSCREEN, to identify disadvantaged communities, support the Justice40 Initiative, and inform equitable decision making across the federal government
SCIENTIFIC INTEGRITY PRESIDENTIAL MEMORANDUM The Presidential Memorandum on Scientific Integrity and Evidence-Based Policymaking directs agencies to make evidence-based decisions guided by the best available science and data. Scientific and technological information, data, and evidence are central to the development and iterative improvement of sound policies, and to the delivery of effective and equitable programs. Improper political interference in the scientific process, with the work of scientists, and in the communication of scientific facts undermines the welfare of the nation, contributes to systemic inequities and injustices, and violates the public trust.
The memorandum charges the Director of the Office of Science and Technology Policy (OSTP) with the responsibility for ensuring scientific integrity across federal agencies. The OSTP Director is directed to review the effectiveness of agency scientific-integrity policies and assess agency scientific-integrity policies and practices going forward.
In addition, agencies that oversee, direct, or fund research are tasked with designating a senior agency employee as Chief Science Officer to ensure agency research programs are scientifically and technologically well founded and conducted with integrity. Because science, facts, and evidence are vital to addressing policy and programmatic issues across the Federal Government, all agencies – not just those that fund, conduct, or oversee scientific research –must designate a senior career employee as the agency’s Scientific Integrity Official to oversee implementation and iterative improvement of scientific-integrity policies and processes.
EXECUTIVE ORDER ESTABLISHING THE PRESIDENT’S COUNCIL OF ADVISORS ON SCIENCE AND TECHNOLOGY
Leaders across the Biden-Harris Administration, including the President himself and his senior advisors in the Executive Office of the President, will seek input, advice, and the best-available science, data, and scientific and technological information from scientists, engineers, and other experts in science, technology, and innovation.
To that end, and in alignment with the scientific-integrity memorandum’s charge to reestablish scientific and technological advisory committees, this order re-establishes the President’s Council of Advisors on Science and Technology (PCAST). The PCAST– co-chaired by the President’s Science Advisor – will advise the President on policy that affects science, technology, and innovation. The Council will also advise the President on scientific and technical information that is needed to inform public policy relating to the economy, worker empowerment, education, energy, environment, public health, national and homeland security, racial equity, and other topics.