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The Business of Risk – Insuring Against Climate Change

When it comes to assessing risk, the insurance industry is one of the leaders in the field. Whether it is health insurance, car insurance, or homeowner’s insurance, the industry is forced to analyze every possible scenario for a given person or structure, and impose a fee based on the likelihood of events for the situation. So when an entire industry that bases their profitability on reducing risk starts factoring climate change into their equations, it's probably a good idea to pay attention.

Earlier this month, insurance commissioners in three separate U.S. states began mandating that insurance providers include the risk of climate change disasters in their risk equations, and develop and disclose their plans to deal with climate-related catastrophes. These plans will be laid out in surveys that insurance companies will provide to insurance commissioners in their respective states.

The three states that have made these new rules are California, New York, and Washington State. Previously, many states had only required the largest insurance companies to have climate plans, but the new rules, which could spread across the United States to climate change-vulnerable places like Florida and Texas, require all insurers to adjust for climate change disasters.

The New York Times lays out why the industry is taking on climate change issues:

China Looks To Stephen Harper For Lessons In Dirty Energy Exploitation

Canadian Prime Minister Stephen Harper is in China this week to meet with Chinese leaders about how both countries can profit big by exploiting China’s shale gas reserves, as well as by importing Canadian tar sands oil. Harper is scheduled to meet with both Chinese officials, as well as heads of oil and gas companies during his four-day visit to the country.

More on the specifics of who will be attending these meetings, from Reuters Canada:

During his trip Harper will meet President Hu Jintao and Premier Wen Jiabao as well as two important regional players - Chongqing Communist Party chief Bo Xilai and Wang Yang, the chief of Guangdong province.

The Canadian mission, which will arrive in Beijing on Tuesday, is the largest of its kind since 1998. Guests include top executives from Shell Canada, Enbridge and Canadian Oil Sands as well as uranium producer Cameco Corp and mining firm Teck Resources Ltd.

Other firms include plane and train maker Bombardier Inc, Air Canada, Eldorado Gold Corp, SNC-Lavalin Group Inc, Canfor Corp and West Fraser Timber Co Ltd.

After the United States’ rejection last month of the Keystone XL pipeline, Canadian officials are hoping to reap a profit in the world’s largest emerging market. But any energy trade deals would certainly benefit both sides, as just last week PetroChina, parent of China’s largest oil producer, purchased a 20% stake in a Canadian shale gas project being run by Royal Dutch Shell.

Chinese oil companies are hoping that their cooperation with Shell and the Canadian government will help them use these valuable resources to teach officials more about the process of extracting shale gas, mostly through fracking.

Just last year, with some financing through other Chinese oil companies, Shell invested more than $400 million in Chinese shale gas projects, which included the drilling of at least 15 different shale extraction wells.

Here We Go Again – Republican Attacks On EPA Kick Off 2012 Agenda

With the U.S. Environmental Protection Agency (EPA) set to finally enact stricter air pollution standards in accordance with the Clean Air Act and two subsequent U.S. Supreme Court decisions requiring them to do so, powerful Republicans in the U.S. House of Representatives are working to make sure that the new standards never see the light of day. The specific measures being targeted are the EPA’s new standards for carbon emissions from power plant smoke stacks.

Fred Upton (R-MI), chairman of the House Energy and Commerce Committee, along with Republicans Joe Barton (TX) and Ed Whitfield (KY) sent a letter last week to the White House, demanding that the Obama administration take action to stop the EPA from regulating carbon emissions from power plants.

From their letter:

Waterkeeper Groups Sue Over Gulf Oil Leak Gushing For Seven Years And Counting

Like many Gulf Coast residents, I was highly skeptical when both the media and the Coast Guard told us that the tar balls we were seeing wash up on our shores in the months following the Deepwater Horizon oil disaster were not from BP’s oil geyser at the bottom of the Gulf of Mexico. If they weren’t from the massive leak caused by BP, Halliburton, and TransOcean, then where were these tar balls coming from? While we might not know the clear answer to that question, we do have a new suspect.

According to a lawsuit filed this week by the Waterkeeper Alliance and their Gulf Coast affiliates, there is a smaller oil leak in the Gulf of Mexico off the Louisiana coast that has been flowing nonstop for almost seven and a half years. While nowhere near as large as the oil leak from the Deepwater Horizon disaster – the lawsuit estimates the current leak to be releasing a few hundred gallons of oil per day – the fact that it has been flowing for more than seven years allows plenty of time for hundred of thousands, if not low millions, of gallons of oil to be released into the waters of the Gulf of Mexico.

However, the energy company responsible for the leak – Taylor Energy – says that only about 14 gallons of oil are leaking per day. The Waterkeeper Alliance is basing their analysis on the size and scope of visible oil sheens, similar to how the flow rate was determined for the Deepwater Horizon disaster.

The lawsuit alleges that Taylor Energy is responsible for allowing oil to flow into the Gulf, a direct violation of the Clean Water Act. They are seeking civil penalties in the amount of $37,500 per day that the oil has been leaking, the maximum possible penalty for such violations under the Act.

So how has an oil leak managed to go undetected, or at least unreported, for the better part of a decade? That’s one of the questions the lawsuit is hoping to answer.

Exporting Emissions: Coal Supplies Heading Overseas, But Pollution Will Hurt Everyone

The coal industry in the United States has found a way to increase their profits, while at the same time avoiding the cumbersome environmental standards in place to protect American citizens from coal emissions – they can just ship their filthy products overseas where regulations are scarce. As coal consumption in the U.S. has fallen in recent years, the dirty energy industry has hardly noticed, thanks to the increased demand from foreign buyers.

While the fact that the U.S. is burning less and less coal is a good thing, shipping the excess coal to foreign countries could more than negate the emissions reductions in the U.S. As Ezra Klein from The Washington Post points out:

The U.S. is burning less and less coal each year, thanks to cheap natural gas and new pollution rules. From a climate perspective, that’s a huge deal — less coal means less carbon. But here’s the catch: if the U.S. just exports its unused coal abroad, the end result could actually be more carbon…

So here’s one possible future: If we’re not going to burn our coal, someone else will. One Tokyo shipping company, Daiichi Chuo Kisen Kaisha, says that U.S. coal exports could double in the next three or four years. In Washington state, coal companies are proposing two large export terminals that would help ship tens of millions of tons of coal from the Powder River Basin to countries like China. That, in turn, could make coal even cheaper in places like China — which might spur the country to build even more coal power plants than its current, already hectic pace. And, since carbon-dioxide heats up the planet no matter where it’s burned, this outcome could cancel out many of the global-warming benefits of the U.S. coal decline. (emphasis added.)

Media Matters Analysis Shows Keystone XL Proponents Dominated Media

A compelling new study from Media Matters for America reveals that proponents of the Keystone XL pipeline were granted far more time in the media than those who opposed it. As their study reveals, the majority of the coverage of the proposed pipeline regarded the creation of jobs, which was overwhelmingly discussed in a positive light, with most news outlets reporting only the industry’s own analysis of the jobs that would be created, even as reports repeatedly showed the industry’s job numbers to be false.

In general, the report shows that the pipeline issue was often covered in a positive light, with industry “experts” being quoted or hosted on TV news programs, as well as in print. The only two print outlets that the study found to have reported more negatively about the pipeline were The Los Angeles Times and USA Today. However, they note that the USA Today editorial board did come out in favor of the pipeline.

Here is a chart detailing coverage by type of media outlet:


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