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The Insider

Lawmakers, stakeholders and environmental policy leaders say the COVID-19 pandemic along with adverse climate change impacts like the ongoing Pacific Coast wildfires are potential turning points for advancing stricter environmental protection efforts both from EPA and private companies.

Inside EPA’s Environment Next features exclusive coverage of how recent crises are boosting the profile of novel approaches to environmental protection, and how those paradigms could affect EPA’s operations down the line. We also report daily on how increasing consumer pressure is leading many major companies to pursue new voluntary efforts to promote sustainability.

Environment Next is a free service to our subscribers featuring wide-ranging looks at coming developments for environmental protection and policy -- including interviews, in-depth reporting, and profiles of key figures, companies and other groups that are reshaping regulation and private governance on air, water, waste and climate change. The features offer a new way of reporting about the shift from command-and-control regulation to innovative, market-based measures and other efforts, including voluntary programs and government action outside EPA’s purview.

This week, we covered a discussion by two former EPA administrators on how the agency could respond to both climate change and the Trump administration’s operational changes, which George H.W. Bush-era EPA chief William Reilly said have combined to create “an era that has no precedent”:

Former EPA Chiefs Urge Quick Adaptation To ‘Era That Has No Precedent’
Former EPA Administrators William Reilly and Lisa Jackson are urging policymakers to look to novel technologies such as artificial intelligence as they plan their response to what Reilly calls “an era that has no precedent,” including both the acceleration of climate change and the Trump administration’s regulatory rollbacks.

During a Sept. 11 panel discussion hosted by Washington State University’s William D. Ruckelshaus Center, the two former agency chiefs predicted that future EPA officials will have to be creative in their approaches to climate change and reasserting federal regulatory authority, and that advanced technologies could be vital for both tasks. The center is named after Ruckelshaus, the first EPA chief under President Richard Nixon.

“Artificial intelligence, the ability to use facial recognition to eliminate leaks . . . this is not fantasy, this really exists,” said Reilly, who headed the agency during the George H.W. Bush administration. “I think those are going to create a lot of new opportunities for the next EPA administrator.”

Reilly and Jackson, who was agency administrator during President Barack Obama’s first term, were among the six former EPA administrators who signed an Aug. 12 letter urging a “reset” at the agency in order to position it to tackle looming environmental crises like climate change along with the rise of new approaches to environmental protection.

During the Ruckelshaus Center event, both former EPA chiefs offered some details of how they see those tasks taking shape, including discussions of environmental justice as a factor in both climate change and the COVID-19 pandemic, legal authorities a future administration could use to reverse Trump-era rollbacks and the agency’s potential role in responding to climate-fueled coastal flooding.

We also interviewed Danielle Fugere, president and chief counsel at As You Sow, which represents small corporate shareholders seeking to force the companies they invest in to take new steps on environmental and social sustainability, on how the COVID-19 pandemic is shaping and accelerating those calls:

Interview: Investor Advocacy Groups Renew Sustainability Focus Amid Pandemic
As the COVID-19 pandemic forces companies to adapt their business plans and sharpens investors’ focus on long-term sustainability, groups that represent corporate shareholders pushing firms toward environmental and social sustainability see the crisis as a chance to solidify growing movement in that direction.

In an exclusive interview with Environment Next, Fugere said the pandemic has deepened investors’ focus on whether companies are prepared for further disasters like climate change.

“I think this is an issue that is increasingly on people’s minds, and I think for many people that raises red flags about whether they’re spending the money necessary to avoid these disasters. . . . If COVID taught us anything, it’s that you have to follow the science, and that when you fail to prepare the consequences are devastating."

Not only individual shareholders but large institutions -- most prominently the asset-management giant BlackRock -- have recently made sustainability a key priority for their own decisions and called on firms they invest in to similarly elevate the issue.

Fugere says those demands are paying dividends, with many companies that previously paid little attention to sustainability promising new environmental and social initiatives -- a trend bolstered by the economic success of firms that score well on sustainability metrics amid the pandemic.

Stakeholders in the financial sector are also showing that same trend, most recently in a report from an expert panel organized by the Commodity Futures Trading Commission (CTFC) that regulates domestic financial derivatives markets that backs a regulatory price on carbon as well as other climate policies:

CFTC Panel Urges CO2 Price To Tackle Financial System Climate Risks
An expert panel convened by the Commodity Futures Trading Commission (CFTC) is calling for the United States to implement an economy-wide carbon price and other measures to tackle what panelists see as “major” risks to the financial system as a result of climate change.

The panel, including financial, business, and officials from non-profits and think tanks, issued a Sept. 9 consensus report, “Managing Climate Risk in the U.S. Financial System,” which recognizes that the CFTC cannot by itself address climate risk and therefore also addresses its findings “to the wider financial community and Congress,” possibly setting the stage for congressional hearings and legislative proposals.

The CFTC is an independent federal agency that regulates the multi-trillion-dollar U.S. derivatives markets whose financial instruments are used to manage risks, but the report addresses the financial system as a whole.

Bob Litterman, the chairman of the Climate-Related Market Risk Subcommittee (CRMRS) that wrote the report, in a foreword notes that CFTC Commissioner Rostin Benham -- who was nominated by President Donald Trump and sponsored the effort -- asked for a group of expert market participants “to initiate the critical process of moving toward a climate-resilient U.S. financial system.” Subcommittee members included major banks, an insurance company, energy and agricultural market participants, investors, asset owners, universities, think tanks and non-governmental organizations.

But the recommendation has drawn criticism from the GOP, including Rep. Garret Graves (R-LA) on a recent panel discussion of carbon pricing:

CFTC Panel’s Call For Carbon Price Draws Mixed Response From Hill
The call by a Commodity Futures Trading Commission (CFTC) advisory group for implementing a carbon price to tackle climate change is drawing a mixed response from Congress, with a top Democrat and Republican disagreeing over the merits of the panel’s suggestion.

During a Sept. 10 webinar hosted by the Bipartisan Policy Center (BPC), a Washington, D.C.-based think tank that seeks to combine Democratic and GOP proposals, Senate environment panel member Sheldon Whitehouse (D-RI) backed the call for a carbon price while House Select Committee on the Climate Crisis ranking member Garret Graves (R-LA) spoke against it.

The webinar was the first public discussion of the report, “Managing Climate Risk in the U.S. Financial System,” which is expected to receive wide attention in Congress and among financial regulatory agencies and private investment companies. It was released Sept. 9 and recommends an economy-wide carbon price along with 50 other detailed financial system regulatory and other measures to promote climate risk disclosure and management.

However, if the discussion is about financial consequences from climate change, it should be about “the actual science and what solutions look like,” Graves said. Although long-term solutions are needed, short-term resiliency efforts are necessary because continued sea level rise for the next 50 years is “already in the system.” Huge progress has been made on resiliency over the past two years, with more money spent on making communities, businesses and economies more resilient than ever before, though there remains a long way to go, he said.

On emission reductions, Graves emphasized that the U.S. has cut more greenhouse gas emissions than the next 12 countries combined and has beaten the Obama administration’s power plant emission reduction targets 10 years early without government regulation and intervention. But for every ton the U.S. reduces, China increases emissions by four tons. The United States cannot solve a global problem but needs a multilateral format to avoid “seeing our reductions offset over and over” by other countries, he said, adding that a global carbon price is unlikely. In addition to resiliency measures, the United States needs to continue developing clean energy technologies, carbon capture, and other approaches, he added.