Tackling the Climate Emergency:Economic and judicial instruments

Discussions about serious topics, for serious people
User avatar
Woodchopper
Stummy Beige
Posts: 3371
Joined: Sat Oct 12, 2019 9:05 am

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Woodchopper » Wed May 26, 2021 1:49 pm

IvanV wrote:
Wed May 19, 2021 11:50 am
To large extent, we here in Britain are doing what they are saying - we are just abating. But so far just the easy stuff. But we can't get very much farther without getting into some harder stuff. We have made a lot of efficiencies - gas consumption is falling. We have pretty much closed down coal, and it will go completely before long. And have implemented large quantities of low carbon generation, without getting to the point of causing balancing difficulties. That's the easy stuff.
Monbiot agrees:
We did the easy things first. Coal-burning power stations were replaced with gas, and some of the gas with renewables. This makes no difference to most people: when we flick the switch, the lights still come on. But almost all the other reductions must involve us directly. They won’t happen unless the government mobilises the nation: encouraging us to drive less and use our feet, bicycles and public transport more; taxing frequent flyers; refitting our homes; reducing the amount of meat we eat; reducing the emissions embedded in the stuff we buy. On these issues, the government’s commitment to action amounts to zero. Not net zero. Absolute zero.
https://www.theguardian.com/commentisfr ... tal-issues

More at the link.

plodder
Dorkwood
Posts: 1369
Joined: Mon Nov 11, 2019 1:50 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by plodder » Wed May 26, 2021 2:18 pm

Bird on a Fire wrote:
Mon May 24, 2021 9:05 am
"They" certainly are thinking beyond used cooking oil. :roll:
:roll: indeed.

Even *I* was thinking beyond used cooking oil when I was selling biodiesel made from used cooking oil 20 years ago.

There was also a growing market in Germany of converting diesel cars to run on locally-grown and pressed rapeseed oil (which I was involved in trying to get established in the UK).

"They" were looking at the complexities of extracting oil from marine algae at the time and the process requirements of continuous production plants from various feedstocks (we were also all aware of the issues with palm oil / deforestation / land use at the time).

There's never been a shortage of bright ideas and effort and people giving stuff a go.

User avatar
discovolante
Stummy Beige
Posts: 2631
Joined: Fri Oct 11, 2019 5:10 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by discovolante » Wed May 26, 2021 6:04 pm

This seems significant, but I ain't got the energy to read it right now so I'm just going to dump it here: https://twitter.com/KetanJ0/status/1397 ... 36846?s=19
socialism is when the government does stuff

User avatar
bjn
Dorkwood
Posts: 1240
Joined: Wed Sep 25, 2019 4:58 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by bjn » Wed May 26, 2021 6:18 pm

discovolante wrote:
Wed May 26, 2021 6:04 pm
This seems significant, but I ain't got the energy to read it right now so I'm just going to dump it here: https://twitter.com/KetanJ0/status/1397 ... 36846?s=19
Just came to post a link to the write up on Ars Technica. Shell has been ordered to cut emissions by 45% by 2030, instead of their planned 20%. Shell are going to appeal.

From the article....
Ars Technica wrote:The location for the suit was propitious given past legal rulings in the Netherlands. In 2019, the country's Supreme Court became the first to order the national government to enact emissions cuts, a verdict based on the concept of "duty of care"—the idea that the government has a responsibility to avoid damaging the lives of current and future generations.

In this case, a lower court has determined that corporations are bound by the same standard. Specifically, the suit cited the Paris Agreement goals of limiting warming to 1.5º C or less and argued that Shell's planned pace of emissions reductions was incompatible with reaching that goal. (Bloomberg published a good background on some of the details of the case.)

User avatar
bjn
Dorkwood
Posts: 1240
Joined: Wed Sep 25, 2019 4:58 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by bjn » Wed May 26, 2021 6:21 pm

Google translating this dutch article has...
nos.nl wrote:Shell must do its part to contribute to the fight against dangerous climate change," said the judge. "The oil company is obliged through its group policy to strictly reduce the CO2 emissions of the Shell group, its suppliers and customers by 45 percent net compared to the level of 2019 by the end of 2030.
That is pretty huge, it would put a massive dent in their fossil fuel sales (a good thing).

User avatar
Sciolus
Catbabel
Posts: 626
Joined: Mon Nov 11, 2019 6:42 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Sciolus » Wed May 26, 2021 6:28 pm

bjn wrote:
Wed May 26, 2021 6:21 pm
Google translating this dutch article has...
nos.nl wrote:Shell must do its part to contribute to the fight against dangerous climate change," said the judge. "The oil company is obliged through its group policy to strictly reduce the CO2 emissions of the Shell group, its suppliers and customers by 45 percent net compared to the level of 2019 by the end of 2030.
That is pretty huge, it would put a massive dent in their fossil fuel sales (a good thing).
Yeah, the "and customers" is a huge deal -- not just Scopes 1 and 2.

User avatar
Woodchopper
Stummy Beige
Posts: 3371
Joined: Sat Oct 12, 2019 9:05 am

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Woodchopper » Wed May 26, 2021 6:49 pm

Good news, but we'd better wait for the outcome of the appeal before celebrating. (Assuming there is to be an appeal, there was talk of one in the commentary).

User avatar
bolo
Catbabel
Posts: 759
Joined: Mon Nov 11, 2019 1:17 pm
Location: Washington DC

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by bolo » Wed May 26, 2021 8:52 pm

ExxonMobil rebel shareholders win board seats
ExxonMobil shareholders voted Wednesday to install at least two new independent directors to the company’s board, a resounding defeat for chief executive Darren Woods and a ratification of shareholders’ unhappiness with the way the company had been addressing climate change and its lagging financial performance. . . .

The vote at the storied oil giant ExxonMobil “sends an unmistakable signal that climate action is a financial imperative and leading investors know it and are demanding change,” Fred Krupp, president of the Environmental Defense Fund, said. “This is a watershed moment for the oil and gas industry. It’s no longer tenable for companies like ExxonMobil to defy calls to align their businesses with decarbonizing the economy.” . . .

The proxy campaign that rocked the 130-year-old oil behemoth was led by a young, relatively small hedge fund called Engine No. 1. But it quickly won the backing of at least one of the three biggest U.S. pension funds, the two biggest advisory services, and the three biggest fund managers. The three fund managers — BlackRock, Vanguard and State Street — hold more than 20 percent of the ExxonMobil’s shares. . . .

“Investors are waking up,” Anne Simpson, managing investment director for board governance and sustainability at the California Public Employees’ Retirement System, said in the run-up to the vote. “The sleeping giant maybe is stirring.” . . .

IvanV
Stargoon
Posts: 101
Joined: Mon May 17, 2021 11:12 am

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by IvanV » Wed May 26, 2021 9:53 pm

Sciolus wrote:
Wed May 26, 2021 6:28 pm
bjn wrote:
Wed May 26, 2021 6:21 pm
Google translating this dutch article has...
nos.nl wrote:Shell must do its part to contribute to the fight against dangerous climate change," said the judge. "The oil company is obliged through its group policy to strictly reduce the CO2 emissions of the Shell group, its suppliers and customers by 45 percent net compared to the level of 2019 by the end of 2030.
That is pretty huge, it would put a massive dent in their fossil fuel sales (a good thing).
Yeah, the "and customers" is a huge deal -- not just Scopes 1 and 2.
But what is the scope of this ruling? Dutch customers? Shell's internal CO2 emissions in the Netherlands, or elsewhere too? Emissions elsewhere to the extent that they are attributable to supplies to Dutch customers, or to worldwide customers?

How does this relate to the total Dutch market for fossil fuels in 2030? What about other suppliers into that market? Is the court in effect interfering in competition to supply that market by putting limits on how much individual suppliers can supply into that market? Will the court in effect limiting the total supply into the market, and effectively reduce the supply and hence enforce a particular level of decarbonisation by that date? I can imagine a lot of arguments at appeal along these lines, and it will be interesting to see what the court can actually assert control of.

My immediate reaction to this is whether the letter of it can be satisfied by a variety of divestment, demerger and/or relocation strategies. If that is the case, does it achieve very much? Plainly if the court can assert control over the total supply of fossil fuels in the Netherlands, it will achieve a lot locally, and with very substantial effects for Dutch people. But I suspect Shell's worldwide activities will continue in one way or another, rebadged if required. And if the court succeeds only in controlling Shell, and not the total market, then someone else will supply the market.

Here in Britain we recently had the Appeal Court making a judgment that appeared to enforce the Paris Agreement on the government's planning arrangements for Heathrow. As a non-lawyer, the judgment looked pretty water-tight to me, as well as being very logical. But Heathrow appealed it and the Supreme Court overruled it. The lesson here in Britain is that it is for government to work out how the country complies with Paris, not for courts to enforce it, entertaining as it was to see the Appeal Court demonstrating the poverty of the government's approach. But law in continental countries is rather different from here. Maybe they can enforce it.We'll see.

User avatar
Bird on a Fire
Light of Blast
Posts: 5955
Joined: Fri Oct 11, 2019 5:05 pm
Location: nadir of brie

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Bird on a Fire » Thu May 27, 2021 2:06 pm

The ruling only applies in the Netherlands (where Shell has its HQ, but is incorporated in the UK fwiw). Nevertheless, it's a pretty powerful precedent, if it sticks, to say that companies are bound by global climate policy as well as (universally inadequate) national gestures to align with that policy.

Note that 8 years ago the Netherlands also had the Urgenda case, which was upheld by its Supreme Court:
State of the Netherlands v. Urgenda Foundation (Dutch: De Staat Der Nederlanden v. Stichting Urgenda) was a court case heard by the Supreme Court of the Netherlands in 2019 related to government efforts to curtail carbon dioxide emissions. The case was brought against the Dutch government in 2013, arguing the government, by not meeting a minimum carbon dioxide emission-reduction goal established by scientists to avert harmful climate change, was endangering the human rights of Dutch citizens as set by national and European Union laws.

The initial ruling in 2015, requiring the government to meet an emissions goal of 25% reduction from 1990 levels by 2020, was upheld through the Supreme Court on appeals, affirming that reduction in emissions was necessary for the Dutch government to protect human rights. It is the first such tort case taken against a government challenging climate change aspects based on a human rights foundation, and the first such successful climate justice case.
https://en.wikipedia.org/wiki/State_of_ ... Foundation
He has the grace of a swan, the wisdom of an owl, and the eye of an eagle—ladies and gentlemen, this man is for the birds!


User avatar
Sciolus
Catbabel
Posts: 626
Joined: Mon Nov 11, 2019 6:42 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Sciolus » Thu May 27, 2021 7:45 pm

I'm rather surprised by the verdict that companies are bound, not just by prescribed law, but by rather broader obligations;in other words, that Paris applies to individuals and companies, not just governments. That may just be one of the differences between the English and continental styles of law (where's our Dutch correspondent?). But that's fairly clearly what they are saying:
4.4.1. RDS’ reduction obligation ensues from the unwritten standard of care laid down in Book 6 Section 162 Dutch Civil Code, which means that acting in conflict with what is generally accepted according to unwritten law is unlawful. From this standard of care ensues that when determining the Shell group’s corporate policy, RDS must observe the due care exercised in society...

4.4.12. The UNGP distinguishes between the responsibility of states and that of businesses... 4.4.13... The responsibility of business enterprises to respect human rights, as formulated in the UNGP, is a global standard of expected conduct for all business enterprises wherever they operate. It exists independently of States’ abilities and/or willingness to fulfil their own human rights obligations, and does not diminish those obligations. And it exists over and above compliance with national laws and regulations protecting human rights.49 Therefore, it is not enough for companies to monitor developments and follow the measures states take; they have an individual responsibility.
4.4.14. It can be deduced from the UNGP and other soft law instruments that it is universally endorsed that companies must respect human rights.
There are a lot of "should"s rather than "must"s in there.
Last edited by Sciolus on Thu May 27, 2021 7:50 pm, edited 1 time in total.

User avatar
Sciolus
Catbabel
Posts: 626
Joined: Mon Nov 11, 2019 6:42 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Sciolus » Thu May 27, 2021 7:50 pm

IvanV wrote:
Wed May 26, 2021 9:53 pm
But what is the scope of this ruling? Dutch customers? Shell's internal CO2 emissions in the Netherlands, or elsewhere too? Emissions elsewhere to the extent that they are attributable to supplies to Dutch customers, or to worldwide customers?
I haven't read every word, but (contrary to boaf) it's very clear that it is including Scope 3 (i.e. customers') emissions, and the discussion of the ETS (4.4.44 et seq) strongly suggests to me that they mean worldwide emissions from the whole of RDS.

User avatar
bjn
Dorkwood
Posts: 1240
Joined: Wed Sep 25, 2019 4:58 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by bjn » Thu May 27, 2021 8:31 pm

Sciolus wrote:
Thu May 27, 2021 7:50 pm
IvanV wrote:
Wed May 26, 2021 9:53 pm
But what is the scope of this ruling? Dutch customers? Shell's internal CO2 emissions in the Netherlands, or elsewhere too? Emissions elsewhere to the extent that they are attributable to supplies to Dutch customers, or to worldwide customers?
I haven't read every word, but (contrary to boaf) it's very clear that it is including Scope 3 (i.e. customers') emissions, and the discussion of the ETS (4.4.44 et seq) strongly suggests to me that they mean worldwide emissions from the whole of RDS.
That was my understanding as well.

User avatar
Bird on a Fire
Light of Blast
Posts: 5955
Joined: Fri Oct 11, 2019 5:05 pm
Location: nadir of brie

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Bird on a Fire » Thu May 27, 2021 8:34 pm

Sciolus wrote:
Thu May 27, 2021 7:50 pm
IvanV wrote:
Wed May 26, 2021 9:53 pm
But what is the scope of this ruling? Dutch customers? Shell's internal CO2 emissions in the Netherlands, or elsewhere too? Emissions elsewhere to the extent that they are attributable to supplies to Dutch customers, or to worldwide customers?
I haven't read every word, but (contrary to boaf) it's very clear that it is including Scope 3 (i.e. customers') emissions, and the discussion of the ETS (4.4.44 et seq) strongly suggests to me that they mean worldwide emissions from the whole of RDS.
You've read more than me (been in class all day). I've had to rely on media coverage, e.g. this from the BBC:
Though the decision only applies in the Netherlands, it could have wider effects elsewhere. BBC Netherlands correspondent Anna Holligan tweeted that it was a "precedent-setting judgement".
https://www.bbc.com/news/world-europe-57257982

I'm not sure quite what that means - the decision only applies in the Netherlands, so only relates to emissions from customers in the Netherlands? Or it only applies in the Netherlands, so Shell could move their HQ to avoid its implications? Or what?
(ETA I could well be misunderstanding, but haven't seen a clear explanation of what it means and Shell's options for wriggling out of it yet.)

As for the shoulds rather than musts, I suspect that the fact climate change has been established as a human rights issue is relevant: companies are not, generally, allowed to infringe people's human rights even if they do so via legal loopholes.
He has the grace of a swan, the wisdom of an owl, and the eye of an eagle—ladies and gentlemen, this man is for the birds!

User avatar
Bird on a Fire
Light of Blast
Posts: 5955
Joined: Fri Oct 11, 2019 5:05 pm
Location: nadir of brie

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Bird on a Fire » Wed Jun 02, 2021 9:56 am

I did indeed misunderstand - it's Shell's global emissions. Decent write-up in the Graun by a human rights lawyer explaining the legal arguments:
The court found that Shell’s policy is inadequate to meet the requisite standard of care under Dutch law, and ordered that the carbon emissions of the Shell group’s global activities be reduced by 45% by 2030 relative to 2019. Further, it held that this obligation relates to Shell’s entire energy portfolio and required that it cuts its operational emissions while making best efforts to reduce the emissions of its suppliers and emissions of its end users or customers by 45%.
Furthermore
The decision marks several legal firsts with global implications. It is the first time that a court has found that a company has a legal duty to reduce its greenhouse gas emissions in line with the goals of the Paris climate agreement. It is also the first time that international human rights standards have been used to inform a binding emissions-reduction obligation for a company.
https://www.theguardian.com/commentisfr ... ht-big-oil
He has the grace of a swan, the wisdom of an owl, and the eye of an eagle—ladies and gentlemen, this man is for the birds!

User avatar
Bird on a Fire
Light of Blast
Posts: 5955
Joined: Fri Oct 11, 2019 5:05 pm
Location: nadir of brie

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Bird on a Fire » Wed Jun 02, 2021 10:38 am

Meanwhile, governments are doing their best to give fossil fuels a stay of execution:
The nations that make up the G7 have pumped billions of dollars more into fossil fuels than they have into clean energy since the Covid-19 pandemic, despite their promises of a green recovery.

As the UK prepares to host the G7 summit, new analysis reveals that the countries attending committed $189bn to support oil, coal and gas between January 2020 and March 2021. In comparison, the same countries – the UK, US, Canada, Italy, France, Germany and Japan – spent $147bn on clean forms of energy.

The support for fossil fuels from seven of the world’s richest nations included measures to remove or downgrade environmental regulations as well as direct funding of oil, gas and coal.
https://www.theguardian.com/world/2021/ ... een-energy?
He has the grace of a swan, the wisdom of an owl, and the eye of an eagle—ladies and gentlemen, this man is for the birds!

User avatar
Bird on a Fire
Light of Blast
Posts: 5955
Joined: Fri Oct 11, 2019 5:05 pm
Location: nadir of brie

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Bird on a Fire » Wed Jun 02, 2021 8:44 pm

Some progress being made on forcing the financial sector to disclose its climate risks:

Deal near on forcing companies to disclose climate risks, says central bank chief
A global agreement is within reach that would require all listed companies to disclose the risks they face from climate change in a standardised way, the governor of France’s central bank has said.

François Villeroy de Galhau told the Financial Times that talks between government and central bank officials on new climate risk disclosure rules had progressed faster than expected and that an international framework could be agreed at November’s UN COP26 climate conference in the Scottish city of Glasgow.

“Proper disclosure should become mandatory — I would expect this as a first step,” said Villeroy. “Nobody expected six months ago for us to go as quickly as we did and to say perhaps we could have a positive conclusion on mandatory disclosure at the COP26.”

French banks and insurers have been required to disclose their exposure to climate change for several years, while the UK plans to make such disclosure mandatory for all its listed companies from 2025 and the EU is reviewing its rules on non-financial disclosure.

US president Joe Biden issued an executive order in May instructing Treasury secretary Janet Yellen to work with regulators on devising a plan to “reduce risks to financial stability” from climate change.

John Kerry, Biden’s climate envoy, said recently the US would probably “join with Europe” to require climate risk disclosure by companies. Separately, Yi Gang, governor of the People’s Bank of China recently indicated his support for the EU’s so-called green taxonomy and is expected to indicate support for other disclosure measures later this week.

“We should make progress on these two legs, mandatory and standardised [disclosure] rules,” said Villeroy, who on Wednesday gave the opening speech at the three-day Green Swan conference on the financial risks of climate change. “We should start with mandatory, but standardised would be the following step.”

The list of speakers at the event — organised by the Bank for International Settlements, Banque de France, IMF and 90 central banks and supervisors comprising the Network for Greening the Financial System — reflects the growing importance of the issue. It features the first public joint appearance by China’s Yi, Jay Powell at the US Federal Reserve and Christine Lagarde at the ECB. Andrew Bailey at the Bank of England and others also gave presentations.

Speaking at the conference Jens Weidmann, head of Germany’s central bank, said for the first time that he would support a “decarbonising” of ECB monetary policy. The Bundesbank boss’s comments mark a shift; he had been regarded by analysts as one of the main opponents to Lagarde’s push to make the ECB’s monetary policy greener as part of its strategy review.

Weidmann repeated his call that the ECB “should only purchase securities or accept them as collateral if their issuers meet certain climate-related reporting obligations”.

But he added that if this was unworkable or took too long, the central bank may need to “adopt alternative measures to properly incorporate climate-related financial risks into its risk management”. He cited the example of “limiting the maturities or the amount of corporate bonds of certain sectors and issuers in the Eurosystem’s monetary policy portfolio”.

Villeroy told the FT that more non-financial companies were reporting on their climate risks but this was “not yet harmonised”. Pressure from investors would force them to disclose more information in a standardised way, he added.

Global regulators launched the Task Force on Climate-related Financial Disclosures (TCFD) in 2017, specifying the annual emissions data and climate risk analysis to be included in annual reports. Last year the TFCD said more than 1,500 organisations had expressed support for its standards but many had only adopted them partially if at all.

Villeroy described the push to tackle climate change risks as “the most dramatic change I have seen in my professional career”.

The French central bank this year published the results of its debut stress test of climate risks at the country’s largest banks and insurers, measuring how they would fare under different scenarios over the next 30 years.

The development of credible stress tests on climate risks would be a “game changer” in ensuring the financial system was prepared for global warming, Villeroy said. He added that transition risks — such as the potential for energy and industrial companies to be left stranded by rising carbon taxes — could increase the cost of risk at French banks by between a quarter and a third.
Climate Capital

Villeroy repeated his call for the ECB, where he is a governing council member, to decarbonise the vast portfolio of corporate bonds and loans it has bought and accepted as collateral by shifting away from the heaviest polluters. He dismissed claims the potential move represented “mission creep” by the central bank.

“It is an imperative for us, consistent with our mandate of financial stability and price stability,” he said. “If, as a financial institution, you don’t manage your climate related risks, and if, as a supervisor, you don’t look at them [then] you miss your first duty — a duty to financial stability.”
It's worth noting that the EU taxonomy is being widely criticised by environmentalists for "greenwashing" (I've not delved into the details yet, but amongst the critics are many generally sensible folks).

But still, there is perhaps a small amount of momentum building, to translate the aspirations of the Paris Agreement into something workable with mechanisms to adjust the way the economy functions.
He has the grace of a swan, the wisdom of an owl, and the eye of an eagle—ladies and gentlemen, this man is for the birds!

User avatar
Woodchopper
Stummy Beige
Posts: 3371
Joined: Sat Oct 12, 2019 9:05 am

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Woodchopper » Thu Jun 03, 2021 9:41 am

The European Union is planning to slap an import levy on steel, cement and aluminum produced in countries with lower environmental standards, as it seeks to become a world leader on climate without harming domestic producers.

In a move no other country in the world has taken, the European Commission wants to introduce a system imposing a penalty for bringing into the bloc emissions embedded in goods, according to a person familiar with the proposals due to be unveiled next month. The levy will be based on carbon costs domestic producers already face, and will also affect fertilizers and electricity.

Importers will have to buy special certificates at a price linked to the EU Emissions Trading System, the person said, asking not to be named commenting on private discussions. Carbon prices in that market have soared to records this year.

The planned measure is part of a broader package to be put forward on July 14, in a bid to align the EU economy with stricter emissions-reduction targets for 2030. The 27-nation bloc is tightening its environmental rules in an overhaul that will affect all areas from transport to energy production and trade. The overarching goal of the Green Deal is for Europe to become the world’s first climate-neutral continent by the middle of the century.

[...]

The EU wants to hit two birds with one stone: provide a level playing field for its businesses and encourage more climate action from countries outside the bloc. But its plans are already causing diplomatic unease in countries from Ukraine to China and India. The planned levy will be proposed just five months before a crucial climate summit hosted by the U.K., where coalition-building will be key to ensuring major emitters step up their efforts.

If the proposal escalates trade tensions, the CBAM may wind up being a tool the EU wields rather than a full-blown penalty for imported pollution that eventually gets extended to cover more sectors. The EU has already learned a trade and climate lesson when it included flights to and from Europe in its carbon market last decade, putting a price on every ton of CO2 discharged by planes. Following an uproar and threats of retaliation from Brazil to the U.S., Russia and China, the EU backtracked, scaling down its program.

In the most optimistic scenario painted by some analysts and EU diplomats, Europe’s plans would lead to the creation of a “climate club” across continents. That would need endorsement from the U.S. administration, which hasn’t decided yet what regulatory approach to follow to reduce greenhouse gases.

The commission is considering a transition period of up to three years before full entry into force of the mechanism in January 2026, according to a draft proposal. Between 2023 and 2026 it could use a simplified system “with the objective of reducing the risk of disruptive impacts on trade flows and alleviating the initial administrative burden,” the proposal said. Revenues would go into the EU budget.

The energy industry has also called for the introduction of CBAM but many companies want the tool to be an addition than alternative to free allowances that they now get as a shield against carbon leakage. That’s another sticking point that policy makers will need to tackle.

Given all the sensitivities, the draft regulation may still change even before it’s adopted by the commission in July. Once it’s been put forward, it will have to be approved by the European Parliament and by member states to become law. That process involves negotiations that can take as long as two years.

Under the draft, importers in the affected sectors will be required to buy electronic emission certificates at prices corresponding to those in the EU ETS, the world’s biggest cap-and-trade program for greenhouse gases. Each CBAM certificate will correspond to one metric ton of emissions embedded in the imported goods.
https://www.bloomberg.com/news/articles ... bon-market

More at the link.

User avatar
Bird on a Fire
Light of Blast
Posts: 5955
Joined: Fri Oct 11, 2019 5:05 pm
Location: nadir of brie

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Bird on a Fire » Thu Jun 03, 2021 10:45 am

Thanks Chops. We really need a carbon market, and the Brussels effect has been quite powerful in other areas. Good to hear that they're this far along with proposals.

I'm expecting a lot of places are going to pull stuff out of the bag at the COP.

I'd like to see more of the proceeds hypothecated for re-skilling workers and funding ecological restoration projects, rather than going into the general EU budget.
He has the grace of a swan, the wisdom of an owl, and the eye of an eagle—ladies and gentlemen, this man is for the birds!

User avatar
Sciolus
Catbabel
Posts: 626
Joined: Mon Nov 11, 2019 6:42 pm

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Sciolus » Thu Jun 03, 2021 11:11 am

There was an article in ENDS last week (paywalled) saying that the UK is considering something similar, partly in reflection of the EU deliberations. Interestingly, they quote Liam Fox approving of the proposals:
In a speech for the Centre for Policy Studies think tank yesterday, Fox spoke in favour of the idea, “perhaps best seen as a carbon border tariff”. This is despite the right-winger’s long-term support for free trade.

“There’s no point in damaging the competitiveness of an economy such as the UK while other countries maintain their competitive edge at a cost to the global climate,” he said.

“I believe, unsurprisingly, that using market mechanisms offer the best hope, and a carbon border adjustment mechanism of some sort is already being considered in several parts of the world,” including the US. President Biden is “particularly interested” in the idea, Fox added, as it would allow the US to be “simultaneously tough on countries like China , while emphasising their environmental credentials”.
It seems self-evident that countries that are progressive on carbon, such as UK and EU, need to both prevent carbon leakage and maintain an economic level playing field, and CBAM seems to be a mechanism for that.

IvanV
Stargoon
Posts: 101
Joined: Mon May 17, 2021 11:12 am

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by IvanV » Thu Jun 03, 2021 4:32 pm

It seems that Fantastic Dr Fox can occasionally say something sensible among his usual emissions.

A step in the right direction is doubtless better than nothing. I think designing a fair and effective carbon border tax is not easy, and some compromises will have to be made. Sadly I suspect after the usual powerful vested interests within Europe have howled and got some compromises in their direction, and the Eurocrats have come up with a Marvellous Mechanism that's quite unnecessarily difficult and messy and prone to corruption, and the Chinese and other powerful external interests have howled threateningly about it being a fit-up and managed to get some compromises in their direction too, it will be at best a step in the right direction. I shall be happy to be proved wrong.

User avatar
Woodchopper
Stummy Beige
Posts: 3371
Joined: Sat Oct 12, 2019 9:05 am

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Woodchopper » Thu Jun 03, 2021 8:22 pm

Bird on a Fire wrote:
Thu Jun 03, 2021 10:45 am
Thanks Chops. We really need a carbon market, and the Brussels effect has been quite powerful in other areas. Good to hear that they're this far along with proposals.

I'm expecting a lot of places are going to pull stuff out of the bag at the COP.

I'd like to see more of the proceeds hypothecated for re-skilling workers and funding ecological restoration projects, rather than going into the general EU budget.
Yes, its a sign that they are actually taking it seriously. A drawback from carbon pricing is obviously that businesses will import cheaper products from abroad that aren't paying for the carbon pricing. So there has to be a way to make that unattractive. It'll also be a major incentive for China etc to start realistically including carbon pricing in its products which would lead to greater efficiency.

I hope that the EU and US can cooperate. Obviously much greater chance of that under Biden rather than Trump.

But as IvanV writes, the temptation to meddle for short term narrow advantage may be too great.

User avatar
Bird on a Fire
Light of Blast
Posts: 5955
Joined: Fri Oct 11, 2019 5:05 pm
Location: nadir of brie

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Bird on a Fire » Mon Jun 07, 2021 9:28 pm

Just to go back to the Shell case, ClientEarth's lawyers have done a short article explaining the case's legal impact:
1. ‘Net Zero means Net Zero’

For the first time in history, a court has issued an order for a company to reduce its emissions – an order which draws on climate science, including carbon budget assessments from the Intergovernmental Panel on Climate Change, analysis from the International Energy Association and UN Environment Programme.

Judges found that the climate ‘ambitions’ and strategy previously set out by Shell disregarded its legal responsibilities because they fell way short of the broad international consensus on what is needed to limit climate impacts on human rights.

By grounding its decision on the science underpinning net zero goals, the Dutch court has set a new corporate climate action benchmark.

Litigation risk – and the market, reputational and strategic risks relating to net zero transition – has now become very present for companies that purport to be addressing climate change, while failing to align with a 1.5°C future.

2. ‘Risk to you, impact on me’

Ultimately, the court found that Shell’s inadequate climate policy constituted a breach of its legal duty of care towards Dutch citizens.

While Shell does not have a government’s direct human rights legal obligations, its human rights responsibilities under international law – most prominently the UN Guiding Principles on Business and Human Rights – shaped this interpretation.

These global standards require companies to identify, prevent, and address human rights impacts linked to their businesses, and apply to all corporations worldwide.

What the Shell decision made clear is that management of financial and business risks alone is not sufficient. Failure to act on the real-world environmental and social impacts of a business, irrespective of the bottom line, could also result in significant legal consequences.

3. ‘Whole business approach’

It wasn’t just Shell’s Dutch operations that the court examined, but the entire Shell business.

That means the judgment extends to all the jurisdictions in which the fossil fuel conglomerate operates, with the order covering all direct and indirect emissions throughout its value chain – including those from its energy products.

For the coal, oil and gas companies that have typically tried to shirk responsibility for the massive emissions from their products, the decision was stark: polluters cannot simply place the onus on the end-users to change their behaviour.

As a matter of Dutch law – itself informed by international standards and laws – fossil fuel producers and sellers have a legal obligation to set adequate targets for emissions reduction, which includes ultimately changing their product offerings to reduce end-use emissions.

4. ‘Companies and investors lagging behind’

Investors also have some reflecting to do. Just weeks before the ruling that found Shell’s climate plan – coined the “Energy Transition Strategy” – was inadequate, the company’s shareholders voted in favour of its implementation.

High-profile investor engagement has been one of the driving forces behind companies increasing their climate ambition, but strategies and action still lag behind social expectations and scientific developments.

The court’s decision has forced Shell to catch up, to move faster than its existing commitments and those of its competitors. Investors need to move rapidly to keep pace, or risk not only their clients’ capital, but also their engagement efforts becoming obsolete.

5. ‘Costs of inaction’

Under a 1.5°C pathway, many high-emissions assets including coal and gas power plants must retire early.

This presents existential stranded asset risks to fossil fuel companies unless they fundamentally transform their energy offerings.

The costs of delayed action are evident in the forced, abrupt change Shell now contemplates. Others cannot ignore the consequences of deferring transition to a later decade.

6. ‘Shrinking room for manoeuvre’

The court made clear that rapid emission reductions must happen by 2030 in order to reach net zero by 2050, albeit with an allowance for risky carbon capture and storage, carbon offsets, and other negative emissions projects.

As time goes by, and further pressure mounts in light of the dwindling carbon budget, the room for companies to delay adequate policy adoption and implementation will become progressively more restricted.

Even if Shell appeals the case all the way to the Supreme Court, the fossil fuel major will still have to cut its emissions in line with the order in the meantime. A decision could take several years, drawing ever closer to the 2030 deadline.

There is also a risk that judgments from higher courts may confirm or strengthen The Hague District Court’s decision – as occurred in the landmark Urgenda litigation against the Dutch government – including in view of worsening climate change and narrowing carbon budgets.

Summing up

This judgment is the first to require a company to reduce their emissions in line with the Paris Agreement and the imperatives of climate science.

It has implications for the requirements of corporate and financial law, for example the fiduciary obligations of directors and asset managers. It makes clear that compliance with legislation and weak, hedged voluntary ‘ambitions’ cannot absolve a company of the risk of liability.

It shows that companies may be held responsible for all emissions across their value chain, including those from the products they sell.

What’s more, it’s not difficult to imagine that further litigation will be brought against other companies that fail to align with a net zero future on similar grounds.

The court’s reasoning and framework could in principle be readily replicated in countries all over the world.

For high-emitting firms and investors, taking action now would be considerably cheaper, and less disruptive to business, than being forced to do so in a short time frame by investor action, by rapid regulatory developments or by a court order.

That means incorporating meaningful short-term targets and plans for the next five to 10 years to align with a global pathway to net zero by the end of the decade.
From here: https://www.clientearth.org/latest/late ... litigation

There's also a more detailed 'investor briefing' which elaborates in finer detail on the points made above.
He has the grace of a swan, the wisdom of an owl, and the eye of an eagle—ladies and gentlemen, this man is for the birds!

User avatar
Bird on a Fire
Light of Blast
Posts: 5955
Joined: Fri Oct 11, 2019 5:05 pm
Location: nadir of brie

Re: Tackling the Climate Emergency:Economic and judicial instruments

Post by Bird on a Fire » Mon Jun 07, 2021 11:36 pm

Picking through the investor briefing now. A few choice points:
This judgment serves as a stark warning–apart from the reputational and strategic risks,there is litigation risk for companies (and follow-on stranded asset/re-valuation risk for investors) that do not adjust their strategies and policies to align with a net zero by 2050 pathway.Even more litigation will be brought using similar arguments to this case, or in respect of greenwashing if company claims are misleading about their compatibility with a net zero future.
Markets and regulators are increasingly waking up to climate risks from a purely financial/fiduciary perspective - see also NZ's plans for climate declarations, for instance. The risk of big lawsuits like this, especially for countries based in the EU (and we'll see what kind of stance the UK and USA are taking towards businesses soon enough), is another source of that risk that will erode the attractiveness of investments in fossil fuels.

Ultimately, the Court found that Shell’s inadequate climate policy constituted a breach of its legal duty of care towards Dutch citizens. While Shell does not have a government’s direct human rights legal obligations, its human rights responsibilities shaped the court’s interpretation of the company’s duty of care. In particular, the court referred to the UN Guiding Principles on Business and Human Rights, a global standard consolidating existing international human rights law, which requires companies to identify, prevent, and address human rights impacts linked to their businesses.

According to the judgment, management of financial and business risks alone is not sufficient. As such, failure to act on the real-world environmental and social impacts of a company’s business, irrespective of the bottom line, increases litigation risk. If courts or governments in the Netherlands and elsewhere look to international business and human rights standards, this principle would require a significant shift of mentality in many boardrooms in their climate planning.
And not just climate planning. I can't help but notice that in this case it's the human rights of Dutch citizens being defended. But there are loads of huge businesses, doubtless including many Dutch ones, whose supply chain routinely and directly infringe the human rights of poorer, browner humans - mining, textiles, electronics, logging, even a lot of agriculture.

I absolutely welcome the consideration of businesses human rights abuses, and would love businesses to be expected, encouraged and cajoled not to infringe human rights across the world, and not only on trendy issues like climate change.

The Court was clear that Shell’s Board and ultimate parent company is responsible for setting climate policy across the whole group. As such, the court order extends to Shell’s entire business, in all of the jurisdictions in which it operates.

The Court order applies to all of Shell’s direct and indirect emissions throughout its value chain (the latter known as Scope 3emissions). The Court found that Shell controls and influences the Scope 3 emissions of end-users by the products that it sells. It is therefore responsible for these emissions, and can reduce them through changes to its business. The Court emphasised that scope 3emissionsarea particularly key consideration for companies that produce and sell fossil fuels, as it comprises the majority of their emissions.
So there we have it. Somebody is responsible, and it isn't individual consumers, who are mostly locked into systems beyond their control. And it isn't (exclusively) governments, of whom I could cynically say the same thing. If you produce something and sell it for a particular purpose, you have responsibility when the purchaser uses it as intended. No sh.t: the law is catching up with ethics.

The IEA confirmed in its Net Zero by 2050 report that there can be no new oil and gas fields approved for development and no new coalmines or mine extensions in a pathway to 1.5°C. Renewable energies will need to expand at an unprecedented pace to become the largest source of energy supply by 2050, while fossil fuel use sees a “huge decline”.
None. Zero. Presumably governments have already updated their policies on approving such developments, to align with the science they claim to be led by, and the commitments they've made under international law.
Under a 1.5°C pathway, many high emissions assets including coal and gas power plants must be retired early. Fossil fuel companies face an existential stranded asset risks under this pathway unless they fundamentally transform their energy offerings and align their business strategies to meet climate goals.
Really this is for their own good, long-term.
Companies should also consider how their auditing and financial accounts and the underlying assumptions need to change to reflect and disclose transition-related material risks to investors –including litigation risk.
Activist lawyers are badass.
The costs of delayed action are evident in the abrupt change Shell is now required to undertake. Other high-emitting businesses must consider why they are delaying change, including in light of the associated litigation risks. Action now would be considerably cheaper,and less disruptive to business, than being forced to do so in a short time frame by a court order, by rapid regulatory developments or due to delayed decision-making.
They've f.cked around long enough, and now they're finding out.

It would be easy to feel perhaps a twinge of sympathy for Shell, if they (inter alia) hadn't been fighting climate science and legislative responses to it for decades. They've known this risk existed for my whole lifetime, played dirty to delay the final whistle, and somehow still messed their sums up and the gamble hasn't paid off. Losers.
Additional risks now arise for Shell’s Directors, who must comply with the judgment and also discharge their duties of care to the company itself. This decision clearly shows that a failure to adequately manage the transition exposes Directors of all high emitting companies to personal liability risks. Properly discharging those duties means aligning business plans fully with Paris, and mitigating stranded asset and related losses.
I read this paragraph in a stereotypical Mafia accent, tbh.

The court made clear that, based on international consensus, rapid emissions reductions must happen by 2030 in order to reach net zero by 2050. However, the court left Shell some flexibility by setting a “net”target.This means that Shell will be able to use so-called ‘negative emissions’,carbon capture and storage (CCS) and/or carbon offsets, although the Court noted the scientific warnings over the risks in relying on large-scale negative emissions technologies and their deployment by 2030 is highly doubtful.


The carbon budget is dwindling rapidly.As time goes by, the room for companies to avoid adequate policy adoption and implementation will become progressively more restricted.
Really this is the key issue with CCS, and it's there in the judgement which is nice. Nothing against it in principle, but it isn't ready, and "nature-based solutions" are cheap, work at scale, and have positive externalities. It would be super dumb to put too many eggs in the CCS basket.

If Shell appeals the case all the way to the Supreme Court, a decision may not be issued for several years. Even if an appeal judgment is in Shell’s favour, Shell will have had to implement the target in the meantime, by which time it may be only a few years until 2030. In addition, there is also a risk that judgments from higher courts may confirm or strengthen the Hague District Court’s decision,as occurred in the landmark Urgenda litigation against the Dutch government,including in view of worsening climate change and narrowing carbon budgets.
Yeah, I'm not sure what Shell can think they're going to get out of the appeal - compensation because they had to adapt to the future economy too quickly? Their best option is surely to get their sh.t together in the meantime, and once they've started that work I can't imagine it'll be cheaper or desirable to backtrack in a few years.


TLDR here are the conclusions. Just soak this in:
This judgment is the first to require a company to reduce their emissions in line with the Paris Agreement and climate science.It has implications for the requirements of corporate and financial law, for example the fiduciary obligations of directors and asset managers.It makes clear that compliance with legislation and weak, hedged voluntary commitments cannot absolve a company of the risk of liability. Companies may be held responsible for scope 3 emissions across their value chain. As with the spread of climate litigation against governments following the Urgenda judgment, a similar growth globally in cases against companies is likely.The Hague District Court has set out reasoning and a framework for analysing the minimum standard of corporate climate responsibility,which can in principle be readily transferred to other jurisdictions and systems of law. To manage litigation risks, business risks and financial risks–if not simply as a matter of good business –-companies should act now to ensure that their businesses are aligned with a global pathway for net zero by 2050, incorporating meaningful short-term (5-10 year)targets and plans.
And you know ClientEarth are already poring over the documents looking for ways to bring cases against other polluters.

If you'd have told me 10 years ago that some of the biggest climate wins would come from lawyers, I'd have been most surprised. But now I'm delighted. Activist lawyers ftw.
Last edited by Bird on a Fire on Mon Jun 07, 2021 11:40 pm, edited 1 time in total.
Reason: fixed pfd formatting
He has the grace of a swan, the wisdom of an owl, and the eye of an eagle—ladies and gentlemen, this man is for the birds!

Post Reply