What Does "100% Renewable" Really Mean?
Sofia O'Connor - Environmental Law Institute
James McElfish - Environmental Law Institute
Environmental Law Institute
Environmental Law Institute
Current Issue
What Does "100% Renewable" Really Mean?

There is a movement among business to use less power obtained from fossil fuels, which in many cases means more renewable energy. Some companies are even pledging to go “100 percent renewable,” with firms joining such groups as RE100 and the Renewable Energy Buyers’ Alliance, signing on to the Corporate Renewable Energy Buyers’ Principles, and undertaking other initiatives. At least 150 large companies, including the tech Big Three, Apple, Facebook, and Google, have set goals to rely exclusively on renewable energy by a certain date. Many others have targets of relying on substantial percentages, in portions of their operations, or in certain locations. There are many strategies that can be used in setting and fulfilling such goals, with differing effects on the energy environment and resulting emissions of greenhouse gases and other pollutants.

In this ELI Policy Brief, we will refrain from using the term carbon free in referring to renewable energy. Greenhouse gas goals are often linked to use of renewables, but accounting systems differ. Wind, solar, hydropower, geothermal, and in some instances biomass typify renewable claims recognized by RE100.

Despite the lack of a federal mandate, many companies already tell how much renewable energy they use. This information is conveyed in annually published sustainability reports or in public statements and news releases. Given that there is also no federal requirement for businesses to use renewables, let alone standards for reporting on them, and that firms set their own goals, how should the public understand such statements of progress? Intriguingly, can differences in companies’ renewable strategies make a difference in the development of new energy facilities? How can we tease out the role of investments by utilities to comply with state mandates or customer demand? Finally, what are the market effects of price and availability of renewables?

There may be no requirements at the national level, but states are imposing their own mandates, while many utilities are helping them lead the charge. Currently, according to the National Conference of State Legislatures, 29 states plus Washington, D.C., and three territories have adopted renewable portfolio standards, which require power companies to produce a certain percentage or amount of electricity from renewable sources by a certain year. In addition, eight other states and one territory have set substantive renewable energy targets.

Utilities can reach their goals by generating or purchasing renewable energy certificates. EPA notes that states define “the project types and geographic locations from which utilities must source RECs to use toward compliance.” The NCSL notes that approximately “half of the growth in U.S. renewable energy generation since 2000 can be attributed to state renewable energy requirements.”

As the price decreases, utilities have begun to offer more renewable electricity to large clients, the focus of our inquiry. Utilities in 15 states can supply power through green tariffs. Several additional states offer one-on-one renewable energy arrangements between companies and utilities, but no formal green tariff programs.

Many companies have now joined the group RE100, which requires them to commit to sourcing all of their electricity from renewable sources throughout their entire operations globally. All companies joining RE100 must already obtain 100 percent of their electricity from renewable sources, or have a clear strategy with a timetable for doing so, or at the least within 12 months of joining develop “a clear road map for going 100 percent renewable.” Member companies must credibly plan to reach 100 percent no later than 2050, with specific minimum interim milestones.

Currently, there are 155 members in the RE100. These companies come from a variety of sectors and in addition to the Big Three tech firms mentioned earlier include Adobe, BMW Group, GM, HP, Johnson & Johnson, Microsoft, and Walmart. Other businesses that are not members of the RE100 have similarly committed to relying solely on renewable electricity in certain circumstances, often in their operations in certain countries. These include Intel, Samsung, and Amazon Web Services.

Some companies have not committed to rely exclusively on renewable sources, but have nonetheless set numeric goals for themselves, including CISCO (85 percent of global electricity by 2022), Dell (50 percent by 2020), and IBM (55 percent by 2025). Not all companies state renewable energy goals in percentages. Lenovo, for example, has a “renewable energy goal of achieving 30 MW of Lenovo owned or leased renewable generation capacity globally by FY 2019/20.”

Many companies report on geographic goals. For example, Apple, Google, HP, Intel, and Microsoft state that within the United States they are already using 100 percent renewable electricity or are matching their consumption with RECs. CISCO reports that 80 percent of its global power consumption in 2017 came from renewable sources. Microsoft says that in 2017 it relied on 96 percent renewable electricity globally.

Some companies explain why they set goals other than 100 percent. For example, IBM noted in its 2017 environmental report that differences in the size and location of its data centers and their relatively low demand “make it economically difficult to match renewable generation sources to consumption.” IBM also notes that many of its facilities are leased. Some companies also have difficulties obtaining attributes of renewable energy in certain geographic areas where they have their operations. For example, Samsung states that in South Korea, “where 65 percent of our electricity consumption happens, there are currently no available RECs trading systems or PPAs,” which are power purchase agreements, and adds that the physical environment “does not lend itself to the development of large scale wind or solar facilities.”

A company can obtain renewable energy by producing it or by purchasing it, but in either case the firm would need to keep the RECs associated with that energy to claim credit. According to EPA, a REC is issued when “one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource.” An entity owning the REC “has exclusive rights to make claims about ‘using’ or ‘being powered with’ the renewable electricity associated with that REC.” A REC can be “bundled” — acquired together with the associated electricity — or “unbundled” and acquired separately.

Where a company generates the power it uses, it can claim the RECs, or it can sell the energy and keep the associated RECs. A company can also purchase renewable power from utilities, from generators, and from third parties (sometimes called energy retailers). Green tariffs — optional programs approved by some state public utility commissions — allow customers to buy bundled renewable electricity from a specific project through a special fee; these are currently available in 15 states.

A company can also enter into a PPA or a virtual power purchase agreement, or VPPA, with a renewable power generator. Under the former, a consumer contracts to receive the power generated from renewable sources. The power generating facility and the company’s operational facility need to be located in the same grid region. Under VPPAs, the company agrees to purchase the electricity and the RECs at a contract price, but does not receive the electricity. Instead the generating facility sells it into the grid; the electricity may be generated outside of the grid region of the company’s operations. If the sale price received by the generator is below the contract price, the company makes up the difference. Companies who enter PPAs and VPPAs can structure them so that they keep the associated RECs.

Lastly, companies can purchase unbundled RECs from third parties, without entering into agreements to buy electricity. In the United States, there are ways to register RECs. Electronic tracking systems register information about each generated megawatt-hour, issue RECs to the generating entities, and assign a unique serial number. These tracking systems allow RECs to be easily transferred from one entity to another.

When an entity wants to claim RECs it has in its possession, it needs to “retire” them, so that the same RECs cannot be claimed by two different entities. A company cannot claim the use of renewables, even if it actually used renewable energy in its operations, if it does not have the RECs. Given that the voluntary market where companies purchase RECs has little regulatory oversight, EPA recommends that companies “buy green power products that are third-party certified and verified.”

The price of a REC differs in different parts of the country, depending on supply and demand. RECs that meet state RPS compliance requirements are often more expensive than the RECs that do not. EPA notes that state RPS policies often create markets for eligible RECs with “established procurement levels, timetables, [and] geographic boundaries, and [that] penalize non-compliance.” This can result in a scarcity of compliant RECs, driving higher prices in some locations. Meanwhile, RECs used to meet voluntary goals do not have these requirements and tend to be less expensive. The price of voluntary RECs can depend on geographic location, certification, technology, generation date, and competition with compliance-eligible RECs. Unbundled RECs tend to have a low price, are easy to buy, and can be chosen based on particular qualities, such as geography, resource, and time period. Because of price and availability, unbundled RECs dominate the voluntary market, most coming from wind projects, primarily from Kansas, Oklahoma, and Texas.

While a purchase of RECs that will be generated by future projects helps encourage new generation of renewable energy, purchase of RECs generated a long time ago does little to encourage investments in the renewables market. Thus, in order for a sale to be Green-e Energy Certified, it needs to occur within 21 months of the generation of the REC. Some states even require that RECs counted towards RPSs be generated the same year they are claimed.

Given that there are no mandatory standards for renewables use by the private sector, it should not be surprising that different companies utilize different terminology when they describe their progress. For example, when making a claim of 30 percent renewable energy use, one company might mean that it self-generated that much renewable energy or that it helped bring new renewable energy projects to fruition via PPAs, while another company may simply have bought unbundled RECs from long-established wind farms.

Companies also use different terminology to describe their practices. For example, RE100 and member companies use the term match to refer to a substitution “of the electricity used across [their] global operations with electricity produced from renewable sources.” For example, Apple states that its Bonnybrooke solar array project produces “over 147 million kilowatt-hours of clean, renewable energy a year, which more than fully matches the energy used by the [near-by] data center” in Mesa, Arizona. GM, another RE100 member, states that “100 percent of the electricity used at Flint Metal Center and Flint Engine operations is matched with wind power, which helps defray the cost of renewable energy for other consumers.” Yet, when IBM talks about matched consumption, it limits this term to renewable energy that is produced in the same grid region as the electricity-using facilities.

Companies provide different types of information with regard to their progress toward their renewable energy goals. We examined corporate reports and other publicly available data for major international companies in the technology and data sectors, as well as some large manufacturers and retailers, in order to understand the variations in approach. Our research revealed great differences in the information companies provide. Many reports do not show percentages of each method used to obtain renewable energy. This can obscure companies’ effect on the development of new energy sources.

While disclosure of an overall percentage of renewables use is helpful, it is not very informative. A company could state that it used 50 percent renewable energy, but it may have had little impact on investment if it bought old unbundled RECs from existing renewable energy facilities in distant markets at a very low price. Contrast that with investments in renewable energy that displaces fossil fuels in markets where the company operates.

RE100 currently allows member companies to count unbundled RECs toward their 100 percent goal. Meanwhile, the Corporate Renewable Energy Buyers’ Principles, which some of the members of RE100 have signed, proclaim that signatories “are increasingly interested in access to bundled energy and REC products,” stating that “unbundled RECs do not deliver the same value and impact as directly procured renewable energy from a specific project or facility.” The principles are an initiative of REBA, an alliance of clean energy buyers, energy developers, and service providers that helps energy buyers procure more renewable energy. According to REBA’s Corporate Renewable Deals Tracker, its members entered into 75 renewable energy contracts in 2018 alone, including PPAs, green tariff and other green power purchases, and project ownership. This was an increase from 31 contracts in the previous year.

Companies’ energy reports also show that some are seeking to invest in new renewable projects and/or bundled RECs, instead of purchasing unbundled RECs. Adobe, Google, and IBM, among others, have explicitly announced and explained their decisions not to use unbundled RECs. Others, including Microsoft and HP, and especially companies with operations in China, continue to rely substantially on unbundled RECs. According to RE100’s annual reports for 2016 and 2017, member companies are now acquiring more renewable electricity through PPAs, green tariffs or green products, and self-generation, while unbundled RECs represent less than half of RE100 firms’ renewable energy sourcing. Specifically, while the percentage of unbundled RECs decreased from 59.6 percent in 2015 to 46 percent in 2017, the percentage of PPAs increased from 3.3 percent in 2015 to 16 percent in 2017, and since 2016, the sum of PPAs and green electricity tariffs and products has been over 50 percent.

There are both benefits and drawbacks from counting unbundled RECs toward a company’s voluntary renewable energy goal. There is benefit in that doing so allows firms that are unable to build new renewable projects or purchase power from them to show support for renewables. Another is that unbundled RECs can be much cheaper. The drawbacks include the fact that purchases of unbundled RECs may not have the same impact on the renewables market as self-generation of renewable electricity or investment in renewable projects that otherwise would not be built.

If all the methods of obtaining renewable energy are treated equally in reporting, this sends an ambiguous message to customers and investors about the extent of the benefits actually achieved. A better approach is to state the amount of renewable energy a company generates; acquires through PPAs, green tariffs, and VPPAs; actually uses during its operations; and claims by applying bundled or unbundled RECs to match its use of non-renewable electricity. Percentage goals alone are not sufficient as a marker of progress and transformation of the global energy mix.

Unfortunately, even if a company wants to create more renewable energy projects in grids where it operates, it is not always possible to do so. A firm can face a number of challenges, including limited ability to generate substantial amounts of renewable energy in a geographic area, high prices of RECs in certain markets, and difficulties integrating new renewable energy projects into the grid.

Given that prices of renewables can be high in certain areas, and that not every company is planning to open new locations where renewable energy is cheaper, some businesses are at a disadvantage in progressing toward high renewable goals. For example, if a company is located in an RPS state, surrounded by other big companies with high demand for renewable electricity, and there is limited capacity to develop new energy projects, there is not much flexibility.

This situation is exacerbated by the fact that REC prices in RPS states are higher because there is demand from utilities. Right now, utilities need the RECs to prove that they produced a certain amount or percentage of renewable energy, and companies need the RECs to prove that they used the renewable energy. Purposes are different in production versus use, but both need the RECs. If there were different types of instruments to prove generation and use of renewable power, such as if there were a production REC and a use REC for each megawatt-hour of generated electricity, the problem of high prices of RECs might be helped.

This problem of high REC prices is also connected to the fact that renewable energy is more easily generated in some regions than others, and it is not currently possible to physically transmit the electricity from some areas — some grids are too far away, and some are simply not connected to each other. Better grid interconnections are clearly needed. For companies that are unable to purchase expensive local RECs, cheaper unbundled RECs from far away might be the only way to show progress in meeting voluntary goals or standards such as RE100.

Given the current state of our electricity infrastructure, grid managers may be constrained in their ability to quickly accommodate some renewable energy goals companies are creating for themselves. Corporate demands have risen significantly, and the infrastructure has had little time to adjust.

According to the Wind Energy Foundation’s report “Transmission Upgrades & Expansion: Keys to Meeting Large Customer Demand for Renewable Energy,” businesses are buying so much wind and solar power that the increased demand may exceed the capacity of existing and planned transmission lines. Companies are “acting on their publicly announced renewable energy goals as new utility-scale wind and solar energy projects are now often the lowest cost power available.” According to the report, “Existing and planned transmission facilities may not be sufficient to deliver the amount of renewable energy companies have already committed to buying.”

WEF estimates that “planned transmission build-outs would meet only 42 percent of corporate renewable energy demand in a high-procurement scenario, or 78 percent of the demand in a low-procurement scenario.” WEF recommends that corporate buyers “participate in regional and inter-regional transmission planning conversations to ensure future transmission infrastructure meets customer demand for renewable energy.” It goes on to “encourage transmission planners and state Public Service Commissions to increase access to affordable, renewable energy by approving upgrades and expansion to transmission lines.” Finally, it seeks to “urge the Federal Energy Regulatory Commission to continue to work to improve the interregional planning process.”

Wind and solar generating assets deliver energy when the wind is blowing or the sun is shining, with existing wind facilities having an average annual capacity factor of 35 percent and solar an average of 25 percent. The capacity factors are rising with newer technology, and improving storage technologies will likely increase these numbers further. In order to ensure availability of reliable power on the grid, however, sufficient generation capacity must be available to fill in any remaining gaps. This necessitates the maintenance and financing of sufficient generation capacity and grid interconnections, as well as appropriate capacity planning and dispatching to support the reliability of the system across the full range of operating scenarios.

Grid storage technologies could be particularly useful to capture generated renewable energy during times of low demand and to disperse it during times of high demand, so as to even out variability in supply. Best results from utilization of such techniques, however, would require proper planning and reliance on rules that address grid storage issues. This is likely to involve both the federal government (FERC is already involved) and states.

Although corporate reports vary with regard to the types of information they convey about strategies to reach their renewable energy goals, several voluntary guides offer advice on how to make claims about renewable use.

RE100’s “Guide on Making Credible Renewable Electricity Usage Claims” states that assertions about renewable electricity “should be specific enough to ensure reasonable understanding of the materiality of the [renewable energy] purchase.” It emphasizes that “lack of specificity can lead to confusion” and that when a company makes a public claim, it should take into account, among other aspects, the purchasing option it employed, the geographic boundary of the consumption, the amount or percentage of renewable energy purchased, the length of the company’s commitment, and any certifications used. If all the RE100 members conveyed information about their renewable energy purchases using these categories, with the addition of a clear delineation of the number of unbundled and bundled RECs, such conformity could substantially improve public understanding of renewable energy claims.

Last year, the World Resources Institute produced a helpful guide called “Describing Purchaser Impact in U.S. Voluntary Renewable Energy Markets.” This report identifies two key elements of clear communications about renewable energy claims: “what you did” and “how you did it.” These elements address the scale, scope, term, and impact of the purchase and the role of the procurement in the energy outcome, meaning financial and risk positions, policy changes, or other aspects of the market transformation. The guide explains that the “multitude of ways that consumers buy and use [renewable energy] have very different impacts on transforming the electricity grid.” The report then provides a number of examples about ways a company can describe how it obtained renewable energy and what impact it had on the green power market.

As many companies commit to relying exclusively or substantially on renewables, the public should examine what a company means by its goal as well as by its stated progress. The current record of claims and reports reflects differences among companies, the voluntary nature of the drivers of demand, and the fact that firms are learning as they go. The changes made by businesses in their energy use and renewable energy purchase methods present a profound reason for optimism, but also an equally important need for clarity.

Bold numbers play an important role — and they are easy for the public, policymakers, and employees to remember. But attention to the specifics is also important. An achievable goal that stimulates real investment in renewable energy and displaces fossil fuel demand may be far more important than a high goal that reflects only a company’s available cash and the ready availability of unbundled RECs. As businesses move forward, competing for who sets higher standards when it comes to renewable energy, perhaps, the real competition should be for the level of green impact they create in the grid. TEF

ELI POLICY BRIEF NO. 15 ❧ There is reason for optimism in changes made by businesses in how they use energy and how they purchase that power. But as firms commit to using greener electricity, the public should examine corporate progress reports and what such voluntary goals actually mean.

Climate Justice
Josephine Balzac - Rollins College
Rollins College
Current Issue
Climate Justice

People of conscience need to break their ties . . . it makes no sense to invest in companies that undermine our future.

—Desmond Tutu

The perpetuation of business as usual in the climate change era endangers the future of human existence and, consequently, imperils the realization of human rights.1 The recent signing and adoption of the Paris Agreement signifies a global consensus that climate change is an urgent threat and common concern of humankind that needs ambitious mitigation and adaptation efforts to solve the problem.2 The Agreement requires holding the increase in global temperature to well below 2°C while pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.3 The Paris Agreement is undergirded by principles of equity, common but differentiated responsibilities, sustainable development, and poverty eradication.4

Protecting the environment and eradicating poverty are an “indispensable requirement and integral part of achieving sustainable development.”5 Sustainable development incorporates three components: environmental protection, social development, and economic development. On January 1, 2016, the 17 Sustainable Development Goals of the 2030 Agenda for Sustainable Development officially became effective.6 The goals include women’s rights, eradicating poverty, climate action, food security, environmental protection, health, education, equality, and job opportunities.7 The Sustainable Development Goals promote equitable economic growth, equitable social development, and integrated and sustainable management of natural resources and ecosystems.8

Sustainable development is rooted in equitably meeting the developmental and environmental needs of present and future generations.9 This concept of intergenerational equity was first emphasized in the Stockholm Declaration preamble, stating that “[t]o defend and improve the human environment for present and future generations has become an imperative goal of humankind.”10 Furthermore, the United Nations Framework Convention on Climate Change (UNFCCC) requires countries to protect the climate system for the benefit of present and future generations of humankind on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities.11

Viewing the scientific evidence and impacts of climate change through a human rights lens, climate change impacts endanger the effective enjoyment of a range of human rights. The connection between human rights and climate change has been recognized by the United Nations in a variety of documents by the Human Rights Council and the Office of the High Commissioner for Human Rights.12 In 2000, at the UNFCCC Sixth Conference of the Parties (COP6), the summit’s mission stated: “We affirm that climate change is a rights issue. It affects our livelihoods, our health, our children and our natural resources.”

The Mary Robinson Foundation is a leading climate justice organization that seeks to put justice and equity at the heart of climate change responses and identifies the strong connection between human rights and climate change.13 In its Principles of Climate Justice, the Foundation observed that “[c]limate justice links human rights and development to achieve a human-centered approach safeguarding the rights of the most vulnerable and sharing the burdens and benefits of climate change and its resolution equitably and fairly.”14 The climate “injustice” is that the people most vulnerable and marginalized are the ones that have had little to do with generating the greenhouse gas (GHG) emissions that cause climate change. Climate justice affirms the need to significantly reduce the emission of GHGs and associated local pollutants.15 The Bali Principles identified the 27 principles of climate justice.16

The business community is now recognizing this connection between human rights and climate change.17 Businesses play a role in addressing climate change impacts on human rights.18 Until recently, businesses addressed these two subjects independently of the other. Due to the growing awareness and recognition of the nexus between the two, however, businesses are now addressing climate change and human rights concerns holistically.19 Recent actions in the business and investment sectors reflect a new focus on protecting human rights in the face of climate change impacts.

This heightened awareness of climate change has inspired various institutional investors to divest from fossil fuels.20 Investors have embraced the same thinking by pushing for a new sustainable energy economy with socially and environmentally responsible investments.21 This fossil fuel divestment and investment in sustainable and socially responsible businesses will become a powerful driver of change.22 This transition will promote climate justice by taking a human-centered approach to climate change and safeguarding the rights of present and future generations in the investment decisionmaking process.

This chapter examines the ethical motivations behind the movement to divest from dirty energy in order to protect our planet and present and future generations. Part I of this chapter discusses the moral origins of the fossil fuel divestment movement, the litigation that has ensued, and the movement’s reach beyond its college campus origins. Part II identifies the sustainable business model through a corporate social responsibility (CSR) framework and discusses how CSR voluntary initiatives undertaken by companies can help promote climate justice. It addresses how climate change impacts are driving responsible investments and prompting investors to consider environmental, social, and governance criteria in the investment decisionmaking process.

The Fossil Fuel Divestment Movement

Movements seeking ecological equity for future generations and rights of nature have been gaining momentum in the 21st century.23 Divestment is a social responsibility campaign in which owners can decide to withhold their capital by selling investments in reprehensible activity.24 It is the process of removing investments that are unethical or morally ambiguous.25 Divesting is a form of social investing, defined as “the systematic incorporation of ethical values and objectives in the investment decision-making process.”26 The objective of divestment is to promote a certain behavior or policy.27

In the 20th century, reprehensible activity subject to divestment campaigns included tobacco, munitions, corporations in apartheid South Africa, adult services, and gaming.28 These divestment campaigns have been successful, but the largest and most impactful was the South African apartheid context.29 Divesting in multinationals doing business in South Africa helped break the back of the apartheid government and usher in a new era of democracy and equality.30 The success of this campaign is the inspiration for the current fossil fuel divestment movement.31

The fossil fuel divestment movement has quickly become the fastest growing divestment corporate campaign in history, surpassing the South Africa apartheid divestment movement.32 The spark began in August 2012 when Rolling Stone Magazine published an article by Bill McKibben, founder of the organization 350.org, which detailed the risk of increasing the global temperatures above 2°C.33 A tour called Do the Math was launched by 350.org explaining the need to limit the release of fossil fuels and keep the fossil fuels in the ground.34 The tour led to the 350.org Fossil Free Divesture Movement, “a network of independent campaigns petitioning institutions and investors to divest from fossil fuels.”35

The first major victory was in May 2014 when Stanford University agreed to divest its $18.7 billion endowment from coal companies.36 By December 2015, 500 institutions representing $3.4 trillion in assets committed to divesting.37

Moral Dimensions of the Fossil Fuel Divestment Movement

The fossil fuel divestment campaign focuses on the moral dimensions of climate change by spotlighting the immoral actions and impacts of the polluting fossil fuel industry.38 It is a climate justice initiative that seeks to stand in solidarity with vulnerable frontline communities and those already experiencing the impacts of climate change.39 The students of the campaign make a further plea that their futures are at stake because they are inheriting the consequences of global warming beyond 2°C.40 They emphasize the injustice in this reality because they did not create the crisis but have a responsibility to fix it.41 This intergenerational equity focus of the campaign seeks to ensure that future generations are not worse off by our choices.42 It requires utilizing resources sustainably to avoid irreversible damage to the environment.43

The movement focuses on “living up to our values, changing the business as usual mentality, and redefining our future.”44 Our values as humans are what determine how we will behave in certain situations.45 In order to have integrity, there must be consistency in what we say we value and what our actions say we value.46 Ethical decisions involve self-restraint: (1) not doing what you have the power to do and (2) not doing what you have the right to do.47

The goal of divesting from fossil fuels is to “diminish the influence and power of the fossil fuel industry in the market, our political system, and in the social conscience overall.”48 Fossil fuel divestment has three aims:

(i) “force the hand” of the fossil fuel companies and pressure government to leave the fossil fuels “down there”; (ii) pressure fossil fuel companies to undergo “transformative change” that can cause a drastic reduction in carbon emissions; [and] (iii) pressure governments to enact legislation such as a ban on further drilling or a carbon tax.49

It demands institutions and investors to eradicate the environmental and social injustices created by “dirty energy” by adopting sustainable investment policies.50

The Bali Principles on Climate Justice intended to shift “the discursive framework of climate change from a scientific-technical debate to one about ethics focused on human rights and justice.”51 “Divesting is a form of social investing . . . incorporating ethical values and objectives in the investment decision making process.”52 The campaign is not just to fight climate change “but to fight the racism, classism, and imperialism that the fossil fuel industries perpetuate.”53 This future generation is shifting the way of thinking “business as usual” and propelling change. This shift is necessary to change these social and political realities and have a meaningful response to climate change impacts on the environment and human rights.54

College Campus Future Generations Lead Divestment Campaigns

The Fossil Free Divestment Movement mobilized and trained thousands of students and young people to organize against the threats of climate change.55 Social movements use confrontational strategies, including media protests, to emphasize the negative social and environmental practices of highly visible corporations.56 With social media commanding the public’s attention, these corporations realize they are not immune to “naming and shaming” strategies when their valuable brands and reputation are linked to objectionable and social practices.57 Social movements have emerged as key forces in mobilizing political consumers to address their concerns through the market.58

The students are demanding full divestment of fossil fuels and are doing it in the name of “climate justice.” Students and graduates are making campaign pledges such as: “[M]illennials, we must rise to our historic moment and lead the call for climate justice. This is truly the fight of our lives.”; “[W]e will not stop until we confront, dismantle and ultimately transform oppressive structures that perpetuate climate injustice, gender violence, and economic equality”; and “[B]ecause I want a more just and sustainable world that protects humanity over profits, environment over exploitation.”59 The “fossil fuel divestment [movement] is a moral campaign at its core.”60 In an open publication, Divest Harvard students criticized the Harvard Management Company (HMC) for betraying its moral obligations to its students by investing new capital in oil and gas exploration and refusing to divest.61

Most of the divestments to which colleges, universities, or schools have committed are only partial, such as only divesting in coal or tar sands, and are mostly from smaller private colleges.62 Students are being advocates by writing and signing petitions, scheduling meetings, and conducting protests, week-long blockades, and sit-ins.63

Recently, this type of social activism generated real change on a university campus. On May 25, 2016, the University of Massachusetts became the first major public university to fully divest its endowment from fossil fuels.64 Divestment of coal at UMass first began last year in response to a petition from the Student Fossil Fuel Divestment Campaign at UMass.65 In April 2016, in efforts to call for full divestment of fossil fuels, the Campaign staged a series of protests that led to student arrests at UMass Amherst.66 This student activism resulted in a unanimous decision by the board of directors of the UMass Foundation to fully divest from fossil fuels.67 The board of trustees chairman stated that he will endorse the Foundation’s decision, “because members of the UMass community have urged us to consider divestment in moral terms . . . and we acknowledge the moral imperative.”68 The UMass Amherst chancellor stated in regards to the decision to divest, “[T]he Foundation’s action today . . . speaks volumes about our students’ passionate commitment to social justice and the environment. It is largely due to their advocacy that this important issue has received the attention that it deserves.”69

Although the divestment movement started on university campuses, it has spread beyond campuses and reached diverse institutions and cities throughout the world.70 Of the more than 500 institutions divesting, only 13% are universities, colleges, and schools.71 Other institutions divesting include faith-based organizations (26%), foundations (24%), governmental agencies (14%), pension funds (13%), nongovernmental organizations (6%), and for-profit corporations (3%).72

More than 70 cities worldwide have divested from fossil fuels, including Oslo, Norway; Paris, France; Newcastle, Australia; Muenster, Germany; Copenhagen, Denmark; San Francisco, California; Boulder, Colorado; and Minneapolis, Minnesota.73 In addition, Stockholm, Sweden, and Berlin, Germany, are reviewing their fossil fuel investments.74 Copenhagen’s mayor stated in his proposal to divest that it would be wrong to continue investing in fossil fuels when Copenhagen is leading the world in the transition to a green economy.75 Similarly, in deciding to divest from fossil fuels, the UMass board of trustees chairman shared a similar vision in stating, “[D]ivestment from fossil fuel companies is in keeping with our status as a national leader in environmental sustainability with cutting-edge programs in alternative energy research, sustainable agriculture, and sustainable built environment.”76 The decisionmakers deciding to divest are recognizing that their investments must align with their values to convey the proper message and uphold integrity in promoting their goals.

Fossil Fuel Divestment Litigation

Social activism in the fossil fuel divestment movement has been taken to the courts, as students demand climate justice.77 The litigation arose out of Harvard students’ frustration with the university’s refusal to divest from fossil fuels after demanding divestment from the university endowment through their campaigns and petitions.78 The students decided to take their advocacy to another level.

On November 19, 2014, the Harvard Climate Justice Coalition filed a complaint against the Harvard president and fellows of Harvard College, the HMC, and the attorney general of Massachusetts.79 The plaintiffs are a group of seven students, consisting of law, graduate, and undergraduate students.80 The students are bringing this suit seeking climate justice on behalf of future generations.81 The complaint names “individuals not yet born or too young to assert their rights but whose future health, safety, and welfare depend on slowing the pace of climate change.”82

The innovative causes of action listed in the complaint are twofold: (1) mismanagement of charitable funds and (2) intentional investment in abnormally dangerous activity.83 The statement of facts describes the vesting of responsibility in the “President and Fellows” by the charter of the Harvard Corporation to further the goals of “the advancement and education of youth.”84 They are suing the attorney general of Massachusetts by citing the duty of Massachusetts “‘legislatures and magistrates’ to ensure the charitable operation of schools . . . [by] acting in the public interest, furthering the education and welfare of the students, and refraining from actions known to cause harm to the public and students.”85

The lawsuit identified $79 million in direct holdings in publicly traded fossil fuel companies in Harvard’s endowment.86 The endowment also contains additional indirect holdings in fossil fuels, but the amount is not listed.87 The plaintiffs connect investing in fossil fuels with creating environmental and social harms because the universities are helping finance the fossil fuel industry’s business activities.88 The complaint identifies the catastrophic consequences that endanger the health, safety, and welfare of present and future generations if businesses continue to burn fossil fuels and emit GHGs.89The complaint is supported by significant evidence labeled as exhibits, including reports from scientists (James Hansen) and international organizations (the Intergovernmental Panel on Climate Change), federal agencies (U.S. Environmental Protection Agency), Harvard’s U.S. Securities and Exchange Commission (SEC) filing, Harvard’s charter, the Massachusetts Constitution, news articles, and academic studies.90

The mismanagement of charitable funds cause of action stems from Harvard Corporation’s breach of fiduciary and charitable duties as a public charity and nonprofit.91 The complaint asserts that investing in fossil fuels damages Harvard’s reputation, and the students’ and graduates’ reputations.92 The students are unable to be free of the threats of climate change, and the future damage to the university’s physical campus as a result of sea-level rise.93 The second count—intentional investment in abnormally dangerous activities—identifies the fossil fuel industries’ business activities as abnormally dangerous “because they inevitably contribute to climate change, causing serious harm to Plaintiff’s Future Generations’ persons and property.”94 The argument continues that there is no amount of reasonable care that can be taken by a fossil fuel company to substantially reduce the risk of harm.95 The complaint alleges that Harvard has knowledge or should have known that fossil fuel companies contribute to climate change and cause harm, and that these harms are well understood among institutions of higher education.96

The Harvard Climate Justice Coalition complaint requests “an injunction ordering Defendants to immediately withdraw Defendant Harvard Corporation’s direct holdings in fossil fuel companies and an injunction for Defendants to take immediate steps to begin withdrawing indirect holdings and to complete withdrawal within a reasonable period of time.”97 The plaintiffs also request a declaration that Harvard breached its obligations contained in its charter.98

The plaintiffs acknowledged the difficulty of meeting the “special interest” requirement to have standing to sue.99 The lawsuit was ultimately dismissed on the ground that the plaintiffs lacked standing because they claimed the threat was to “future generations.”100 The court reasoned that the plaintiffs’ status as Harvard students did not give them personal rights enough to have standing to charge Harvard with the mismanagement of its charitable assets.101

The Harvard students appealed the dismissal of the divestment lawsuit.102 The appellate brief was supported by amicus curiae briefs by Dr. James E. Hansen and the Animal Legal Defense Fund.103 The brief from the Animal Legal Defense Fund supported the moral obligation for the protection of future generations, as a recognized principle in international and domestic law.104 The city of Cambridge, Massachusetts, also supported the lawsuit.105 Dr. Hansen’s amicus brief also cites the moral obligation to protect future generations by phasing out fossil fuels.106 The appeal focuses on the same arguments that Harvard mismanaged its endowment by investing in “abnormally dangerous activities.”107 On June 7, 2016, the Harvard Climate Justice Coalition appeared for oral arguments in the Massachusetts Appeals Court and the appeal is pending as of this writing.108

Even in the face of this social activism and litigation, the HMC still decided not to divest but instead became the first university endowment in the United States to join the Principles for Responsible Investment (PRI) and the Carbon Disclosure Project (CDP).109 The HMC has dedicated a web page to their sustainable investments, reporting their focus on investments based on environmental, social, and governance (ESG) factors.110 The HMC assesses and manages ESG risks, and documents and considers risk before making a decision on the investment.111 The faculty members in support of divestment responded by saying that the PRI and CDP are “utterly ineffective.”112 These voluntary measures are not as effective in mitigating climate change as mandatory legal standards or full divestment; however, in lieu of full divestment, these initiatives can be seen as steps in the right direction toward a more sustainable future within businesses. If the intent behind the initiative is purely for public relations reasons, however, it would be deemed to be merely “greenwashing.”113 A sustainable business model “should not be a discretionary preference, to follow only if corporate leaders perceive an economic benefit.”114 What is necessary is the acceptance of an ethical responsibility to do what is right and act for environmental and social well-being, regardless of financial gain.115

Corporate Social Responsibility and Responsible Investment

Divestment of fossil fuels is promoting climate justice by bringing awareness to the moral obligation of corporations, wealth owners, and investors, and to the duty to protect the interest of society, future generations, and the environment. The campaign creates stigma and advocates for more socially responsible investment practices. Divestment of fossil fuels is the “people demanding institutions and corporations to adopt comprehensive sustainable investment policies that eliminate the environmental and social injustices that the fossil fuel industry is creating.”116 Climate justice will be achieved not just by divesting from fossil fuels, but also by businesses incorporating sustainable policies, practices, and standards into everyday business activities. Since divestment is the opposite of investment, sustainable and socially responsible investments are also needed to promote climate justice.

Achieving a sustainable future does not occur in a vacuum, however. Although often the primary source of environmental pollution, business must be part of the long-term solution.117 Compared to government, business has greater capital, research, development capacity, and influence in the market to push towards sustainable development and climate justice.118 The United Nations acknowledged the significant role of business in mitigating and adapting to climate change.119 Caring for Climate is a joint initiative convened by the United Nations Global Compact, the United Nations Environment Programme (UNEP), and UNFCCC and recognizes that “only through a critical mass of engaged companies can the private sector be an effective part of the climate solution.”120 The initiative calls on all companies to commit to corporate responsibility policies on climate action.121

Since the Earth Summit in 1992, the field of CSR has evolved to become part of mainstream thinking in corporate compliance with environmental and human rights principles.122 CSR is premised on the idea that businesses have a responsibility to society and all its stakeholders, not just to their shareholders or their bottom line profits.123 The World Business Council for Sustainable Development defines CSR as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”124 CSR encompasses the sustainability agenda by thinking in terms of the “triple bottom line,” focusing on economic prosperity, environmental quality, and social justice.125 John Elkington wrote, “[t]o refuse the challenge implied by the triple bottom line is to risk extinction.”126 This shift in thinking for business priorities stems from a reshaping of society’s expectations.127

The severe financial crisis and climate change risks have underscored the need for businesses to incorporate ESG factors into their financial statements, policies, and disclosures.128 Businesses feel pressure from all stakeholders, customers, investors, financial institutions, and shareholders.129 Lenders and investors, of course, want the best return on their investments with the least amount of risks.130 Moreover, investors today understand that financial success and good corporate citizenship are connected.131

Therefore, investing in fossil fuels is a risky business not only because of the financial risks, but also because of the environmental and social risks. Al Gore made a comparison of the risks of investing in fossil fuels to the meltdown in the market for subprime mortgages: “The assumption that you can safely invest in assets that come from business models that assume carbon is free is an assumption that is about to go splat. Many companies have lots of assets in your portfolios that are chock full of ‘subprime’ carbon assets.”132

ESG issues have a material impact on those risks and fulfill fiduciary duties.133 These ESG practices and considerations are evident across the spectrum of business entities including financial institutions, institutional investors, individual investors, corporations engaging in CSR practices, and consumers. CSR and ESG performance, monitoring, and improvement provide the greater transparency that all sectors are demanding.134 After the financial crisis and the looming threat of climate change, consumers, investors, stakeholders, and suppliers are demanding greater transparency.135 This pressure caused an increase in CSR reporting to publicize companies’ ESG data.136

Corporate Social Responsibility Reporting and Disclosures

It is becoming the norm in corporate practice to submit sustainability reports or CSR reports using at least one voluntary initiative.137 CSR disclosure focuses on the paradigm of sustainability reporting, with the information reported being relative to the triple bottom line of social, environmental, and economic impacts of a corporation’s activities.138 Executives are now considering the environmental issues, such as climate change, to be among the most important issues affecting business.139 The Governance and Accountability Institute reported that in 2015, 75% of the Standard & Poor’s 500 Index produced sustainability reports, an increase from 20% in 2011.140

There are many voluntary initiatives and providers of CSR reporting, but the major providers offering sustainability reporting include: the Global Reporting Initiative (GRI) (GRI’s Sustainability Reporting Standards), the Organisation for Economic Co-operation and Development (OECD) (OECD Guidelines for Multinational Enterprises), the United Nations Global Compact (the Communication on Progress), the International Organization for Standardization (ISO) (ISO 26000, International Standard for social responsibility), and the Carbon Disclosure Project.141 The GRI is the best example of the CSR reporting trends.142 It was launched in 1997 by the Coalition for Environmentally Responsible Economies (CERES)143 and it included the participation of organizations such as CEP, UNEP, and the World Business Council for Sustainable Development.144 The GRI’s mission is “to elevate the comparability and credibility of sustainability reporting practices worldwide.”145 Currently, 92% of the 250 largest corporations in the world report on their sustainability performance utilizing the GRI.146 The GRI’s goal is to make sustainability reporting as commonplace as financial reporting.147

True sustainability reporting allows for greater transparency into corporate practices that either achieve CSR or impede its achievement. Sustainability reporting is valuable because it ensures that the organizations reporting consider their impacts on environmental and social issues and allows them to be transparent about the risks and opportunities that they encounter.148 A trusting relationship amongst stakeholders is necessary to receive good support.149 Transparency builds and maintains trust and credibility150 in businesses because it shows honesty, openness, and self-criticism.151 CSR reporting on ESG issues promotes better decisionmaking because it informs the decisions of investors, consumers, local communities, and civil society.152 Reporting in a transparent manner is an essential part of committing to sustainability.153

Businesses need to make sure that they report the good, the bad, and the ugly of their companies. Voluntary self-reporting can tempt companies to only reveal the greatest achievements and omit negative information.154 This type of reporting is seen as greenwashing and is only concerned with image and not with accurate reporting.155 This practice causes distrust in stakeholders because they fear a cover up and, therefore, are unable to be fully informed of the risks and benefits of the company.156 To avoid creating suspicion, companies should report achievements and weaknesses and identify the steps to fix the problems.157

International Voluntary ESG and CSR Initiatives

The growing public awareness of environmental performance is driving companies to adopt voluntary or self-imposed standards, guidelines, and codes.158Those supporting ESG and CSR considerations in any sector must rely on international voluntary corporate standards because transnational corporate activities are minimally governed by international law.159 These voluntary standards or initiatives usually do not have any verification methods or enforcement measures.160 The only enforcement mechanism available is to “name and shame” the companies that fail to meet these standards.161 These standards also lack explicit performance benchmarks.162 Some companies become signatories to these third-party initiatives committing to standards and codes of conducts to improve their public image.163 Others view these initiatives as attempts to prevent more stringent regulations through preemptive measures by the market.164 Others do it out of a commitment to true sustainability. Although there is no substitute for legally binding standards, these voluntary initiatives signify a change of consciousness, a change in values, a change in priorities, and a commitment across the globe to create a more sustainable and just future for our present and future generations in the face of climate change. The “business as usual” model is no longer mainstream, it is no longer popular, and the market has responded.

CSR voluntary corporate codes of conduct are becoming the norm as companies want to convey their core values and ethical business practices to all stakeholders. This shift in thinking to employ CSR has caused an increase in the majority of corporations dedicated to addressing larger social problems.165 The United Nations Global Compact is the world’s largest voluntary corporate sustainability initiative.166 More than 8,000 companies and 4,000 non-businesses have become signatories to the compact.167 The mission of the compact is for businesses to be responsible by aligning their strategies and operations with principles on human rights, labor, environment, and anti-corruption.168 The United Nations Global Compact’s General Assembly mandate is to “promote responsible business practices and UN values among the global business community and the UN System.”169

The 10 principles of the United Nations Global Compact are derived from the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption.170 The Compact principles have been endorsed by the Human Rights Council, which has confirmed the interconnectedness between climate change and human rights.171 The Global Compact institutes these principles as the core values to be shared among businesses, trade unions, and civil society.172 The United Nations Guiding Principles on Human Rights have been incorporated into the Compact commitments for the past four years.173 The Compact requires businesses to make a policy commitment to respect human rights and take proactive steps to prevent violations and remediate any adverse human rights impacts.174

Commitments to the Compact also include taking action to advance societal goals, such as the United Nations Sustainable Development Goals 2030.175 Through the Global Compact, businesses have played an important role in the process of shaping the Sustainable Development Goals and helping companies implement them.176 The efforts through partnerships created by the Compact include the Post-2015 Business Engagement Architecture, Rio+20 Corporate Sustainability Forum, Global Compact Local Networks, SDG Industry Matrix, Caring for Climate, and Global Compact LEAD.177

Opportunities for Responsible Investment

While CSR reporting has been on the rise within corporations, investors have been able to use this information to determine in which sectors of the stock market they want to invest. Socially responsible investing (SRI) is “an investment discipline that considers environmental, social, and governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.”178 The motivations for SRI investing include personal goals, institutional missions, and the demands of clients and stakeholders.179 Investors also are seeking strong financial performance in their investments to contribute to advancement in ESG practices.180 SRI allows investors to match financial investments with ethical and moral values.181 These SRI investments focus on considering ESG criteria.182 SRI investments were more than $6.57 trillion in 2014, a 76% increase compared to 2012 figures.183

The SRI practice used to focus on weeding out companies from specific industries that investors did not want to support, such as natural resource extraction and nuclear energy.184 This approach is a negative screen; positive screens focus on promoting positive change and rewarding good behavior by investing in companies that promote positive social and environmental impacts.185 This section discusses three important SRI opportunities to promote climate justice.

United Nations Principles for Responsible Investment: The United Nations Principles for Responsible Investment (PRI) is a voluntary set of guidelines for investors that seek to combine financial return with a moral and ethical obligation by giving consideration to the ESG issues of companies in which parties choose to invest.186 Ethical values are the essence of climate justice and instilling these principles into investment decisions allows for greater protection of the rights of vulnerable communities. The goal was to incorporate “ESG issues into mainstream investment decision-making and ownership practices.”187 This momentum is driven by recognizing that ESG factors play a material role in determining risk and return within the financial community.188 Investors understand that part of their fiduciary duty is incorporating ESG factors and that beneficiaries are demanding more transparency.189 Responsible investment is also grounded in the fact that companies could face serious reputational risk by destroying value on environmental (climate change and pollution), social (employee diversity and working conditions), and economic issues (aggressive tax strategies).190 The PRI has nearly 1,500 signatories that represent $60 trillion from more than 50 countries.191

Shareholder Resolutions; An important aspect of SRI is shareholder advocacy. Through shareholder resolutions, investors are given the opportunity to file resolutions to raise ESG issues.192 These resolutions involve human rights, working conditions, and climate change issues.193 In 2007, only 43 climate shareholder resolutions were filed with U.S. companies.194 That number increased in 2009, with 68 shareholder proposals on climate change.195 In the 2015 proxy season, a record-breaking 433 social and environmental shareholder resolutions were filed with climate change as one of the leading drivers of the uptick in activity.196 By filing shareholder resolutions, active shareholders are able to bring important issues to the attention of company management.197 Filing these resolutions gains media attention and educates the public.198 The mere process of filing resolutions prompts productive discussions and agreements, and the receipt of the shareholders’ majority vote further pressures action by the corporation’s management.199

Recently, an Exxon climate justice shareholder resolution, “Acknowledge Moral Imperative to Limit Global Warming to 2° Celsius,” was filed.200 It stated that the poor and most vulnerable are the first to suffer, while future generations, holding no responsibility, will live with greater impacts of global warming.201 Shareholders called on the board of directors to act by adopting a policy acknowledging the imperative to limit global average temperature increases to 2°C above pre-industrial levels.202 Exxon challenged the proposal as “vague” to exclude the climate justice proposal from this year’s proxy ballot so that the shareholders would not be allowed to vote, fearing a majority in favor of the resolution.203 The SEC reviewed the resolution and denied Exxon’s challenge.204 This outcome is a significant victory, as shareholders will have the opportunity to vote on Exxon’s moral responsibilities regarding climate change.205 These moral and ESG considerations are continuing to take center stage in the investment decisionmaking process in seeking to promote climate justice.

Equator Principles ESG Guidelines for Financial Institutions: This framework sets out minimum standards for institutions to implement to ensure due diligence in determining, assessing, and managing environmental and social risks when determining whether to finance projects.206 Financing of the project is conditioned on complying with the Equator Principles (EP). If companies will not or are unable to comply with the EP, then no project finance or project-related corporate loans will be provided.207 Borrowers must categorize and fully disclose environmental and social risks and provide a mitigation plan to manage the risks to obtain loans from these Equator Principles Financial Institutions (EPFIs).208

Currently, 83 EPFIs209 in 36 countries have adopted the EP.210 This number of institutions covers more than 70% of international project finance debt in emerging markets.211 The EPs incorporate principles of climate justice by including comprehensive standards for indigenous peoples and consultation with locally affected communities within the project.212 Borrowers must also disclose to affected communities “a mechanism for addressing grievances, and third-party verified review, monitoring, and annual public reporting.”213 Studies show that after the financial crisis of 2008, only four of the largest financial institutions—Bank of America, Wells Fargo, JP Morgan Chase, and Citibank—survived and they were all signatories to the EPs.214 This outcome is further proof that incorporating ESG principles into lending practices helps manage and identify risks and opportunities.


The impacts of climate change are the biggest threat of our time, imperiling both natural resources and human rights. This connection between climate change and human rights has significantly impacted decisionmaking in financial markets from divesting to investing. Companies, consumers, and investors are prioritizing ESG considerations and responsible business practices. The detrimental impacts of climate change have prompted the recognition that there is an ethical and moral obligation to invest responsibly by choosing to divest from morally reprehensible activities such as fossil fuel extraction.

These actions promote climate justice via the financial investment markets. Investors are recognizing not only the financial incentives of considering ESG factors, but most importantly the ethical need to invest in sustainable and socially responsible companies to protect the needs of present and future generations. Investors now understand and recognize climate change risks and social injustices and do not want to invest in or support companies that are not concerned with their moral duty to be good citizens of the world. The businesses that survive are the ones that have a genuine interest in caring about the people and the planet while also making a profit.

Divesting from fossil fuels and SRI reduces GHG emissions, helps eradicate poverty, promotes sustainability, and protects future generations. Although the actions undertaken are voluntary in nature, they represent an important shift in thinking necessary for a sustainable future. Therefore, these actions promote the goal of climate justice for the most vulnerable communities of the world. TEF

1. Webinar: Business and Climate Justice: What Role Can Business Play in Tackling the Human Rights of Impacts of Climate Change? (U.N. Global Compact and Mary Robinson Foundation 2015), https://www.unglobalcompact.org/library/1231.

2. Adoption of the Paris Agreement, UNFCCC Conference of the Parties, 21st Sess., U.N. Doc. FCCC/CP/2015/10/Add.1 (Dec. 12, 2015), http://unfccc.int/files/home/application/pdf/paris_agreement.pdf.

3. Id.

4. Id.

5. Rio Declaration on Environment and Development, U.N. Conference on Environment and Development, Rio de Janeiro, Brazil, June 3–14, 1992, Annex 1, U.N. Doc. A/CONF.151/26 (Vol. I) (1992), http://www.un.org/documents/ga/conf151/aconf15126-1annex1.htm [hereinafter Rio Declaration].

6. United Nations, The Sustainable Development Agenda, http://www.un.org/sustainabledevelopment/development-agenda/ (last visited Aug. 21, 2016).

7. Id.

8. Id.

9. Rio Declaration, supra note 5, at Annex I, Princ. 3 (noting that the “right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations”).

10. Declaration of the United Nations Conference on the Human Environment, U.N. Conference on the Human Environment, Stockholm, Sweden, June 5–16, 1972, U.N. Doc. A/CONF.48/14 (1972), revised by U.N. Doc. A/CONF.48/14/Corr.1 (1972), reprinted in 11 I.L.M. 1416 (1972); see also David Hunter et al., International Environmental Law and Policy 492 (3d ed. 2007).

11. United Nations Framework Convention on Climate Change, May 9, 1992, 1771 U.N.T.S. 107 (entered into force Mar. 21, 1994).

12. Webinar, supra note 1; see also John H. Knox, U.N. Special Rapporteur, Mapping Report on Climate Change and Human Rights (2014), http://srenvironment.org/wp-content/uploads/2014/08/Climate-Change-mapping-report-15-August-final.docx; United Nations Human Rights Office of the High Commissioner, Key Messages on Human Rights and Climate Change 2 (2015), http://www.ohchr.org/Documents/Issues/ClimateChange/KeyMessages_on_HR_CC.pdf.

13. Mary Robinson Foundation-Climate Justice, Mission and Vision, http://www.mrfcj.org/about/mission-and-vision/ (last visited Aug. 21, 2016).

14. Mary Robinson Foundation-Climate Justice, Principles of Climate Justice (n.d.), http://www.mrfcj.org/pdf/Principles-of-Climate-Justice.pdf.

15. Bali Principles of Climate Justice (2002), http://www.ejnet.org/ej/bali.pdf.

16. Id.

17. Webinar, supra note 1.

18. Id.

19. Id.

20. Divestor.org, Reinvest: Your Home, https://divestor.org/YHreinvesting.html (last visited Aug. 21, 2016).

21. Id.

22. Id.

23. Judith E. Koons, At the Tipping Point: Defining an Earth Jurisprudence for Social and Ecological Justice, 58 Loy. L. Rev. 349, 349 (2012).

24. Atif Ansar et al., Stranded Assets and the Fossil Fuel Divestment Campaign: What Does Divestment Mean for the Valuation of Fossil Fuel Assets? (Smith School of Enterprise and the Environment 2013), http://www.smithschool.ox.ac.uk/research-programmes/stranded-assets/SAP-divestment-report-final.pdf.

25. Fossil Free, What Is Fossil Fuel Divestment?, http://gofossilfree.org/what-is-fossil-fuel-divestment/ (last visited Aug. 21, 2016).

26. Surbhi Sarang, Note, Combating Climate Change Through a Duty to Divest, 49 Colum. J.L. & Soc. Probs. 295, 300 (2016).

27. What Is Fossil Fuel Divestment?, supra note 25.

28. Ansar et al., supra note 24, at 9 (noting that the private wealth owners making the decision to divest typically are university endowments, public pension funds, or their appointed asset managers).

29. What Is Fossil Fuel Divestment?, supra note 25.

30. Id.

31. Ansar et al., supra note 24.

32. Marc Gunther, Why the Fossil Fuel Divestment Movement May Ultimately Win, Yale Env’t 360, July 26, 2015, http://e360.yale.edu/feature/why_the_fossil_fuel_divestment_movement_may_ultimately_win/2898; Desmond Tutu, We Need an Apartheid-Style Boycott to Save the Planet, The Guardian, Apr. 10, 2014, http://www.theguardian.com/commentisfree/2014/apr/10/divest-fossil-fuels-climate-change-keystone-xl.

33. Sarang, supra note 26, at 298.

34. Id.

35. Id. at 299.

36. Id.

37. Fossil Free, Divestment Commitments, http://gofossilfree.org/commitments/ (last visited Aug. 21, 2016).

38. Brett Fleishman, The Decarbonizer and the Moral Case for Divestment, 350, Feb. 5, 2016, https://350.org/the-decarbonizer-and-the-moral-case-for-divestment/.

39. We Are Power Shift, Fossil Fuel Divestment, http://www.wearepowershift.org/campaigns/divest (last visited Aug. 21, 2016).

40. Id.

41. Id.

42. Hunter et al., supra note 10, at 491.

43. Id.

44. Fleishman, supra note 38.

45. Michael Josephson, Making Ethical Decisions 5–6 (Josephson Inst. of Ethics n.d.), http://www.sfjohnson.com/acad/ethics/making_ethical_decisions.pdf.

46. Id.

47. Id. (explaining that an act is not proper simply because it is permissible or you can get away with it. There is a big difference between what you have the right to do and what is right to do.).

48. Fossil Fuel Divestment, supra note 39.

49. Ansar et al., supra note 24.

50. What Is Fossil Fuel Divestment?, supra note 25.

51. Bali Principles of Climate Justice, supra note 15; Robert Cox, Environmental Communication and the Public Sphere 121 (3d. ed. 2013) (citing J. Agyeman et al., The Climate-Justice Link: Communicating Risk With Low-Income and Minority Audiences, in Communicating a Climate for Change: Communicating Climate Change and Facilitating Social Change (S.C. Moser & L. Dillings eds., 2007).

52. Sarang, supra note 26, at 300–01.

53. Fossil Fuel Divestment, supra note 39.

54. Koons, supra note 23, at 351.

55. Fossil Fuel Divestment Student Network, Organizing Pledge Project, http://www.studentsdivest.org/organizing_pledge (last visited Aug. 21, 2016).

56. Carmen Bain & Tamera Dandachi, Governing GMOs: The (Counter) Movement for Mandatory and Voluntary Non-GMO Labels, 6 Sustainability 9456, 9459 (2014).

57. Id.

58. Id.

59. Organizing Pledge Project, supra note 55.

60. 350, In the Space of Just 10 Weeks . . . , https://350.org/in-the-space-of-just-10-weeks/ (last visited Aug. 21, 2016).

61. Open Publication: Divest Harvard Requests Meeting With Stephen Blyth, Divest Harv., Mar. 9, 2016 (stating that “[a]bsent strong action, those of us who are young will likely see some of the world’s great cities begin to be submerged underwater and millions of people displaced or killed by droughts, floods and famines. In our view, this crisis calls for new intergenerational accountability entailing drastic reductions in fossil fuel investment, production, and use.” In order to reach the goal of 2°C, Divest Harvard states that “at least half of current reserves must remain in the ground, and investments in fossil fuel production must decrease considerably”), http://divestharvard.com/updates/.

62. Divestment Commitments, supra note 37.

63. Mariel A. Klein, Student Protesters Appeal Dismissal of Divestment Lawsuit, Harv. Crimson, Oct. 13, 2015, http://www.thecrimson.com/article/2015/10/13/divestment-appeal-lawsuit-dismiss/.

64. Robert P. Connolly, UMass Becomes First Major Public University to Divest From Direct Fossil Fuel Holdings, UMass Amherst, May 25, 2016, http://www.umass.edu/newsoffice/article/umass-becomes-first-major-public.

65. Id.

66. Id.

67. Id.

68. Id.

69. Id.

70. Fossil Fuel Divestment, supra note 39.

71. Divestment Commitments, supra note 37.

72. Id.

73. Fossil Fuel Divestment, supra note 39.

74. Melanie Mattauch, Mayor Wants to Rid Copenhagen of “Totally Wrong” Investments in Coal, Oil, and Gas, Fossil Free, Feb. 3, 2016, http://gofossilfree.org/mayor-wants-to-rid-copenhagen-of-totally-wrong-investments-in-coal-oil-and-gas/; In the Space of Just 10 Weeks, supra note 60.

75. Mattauch, supra note 74.

76. Connolly, supra note 64 (quoting Kumble Subbaswamy, UMass Amherst chancellor).

77. John Schwartz, Harvard Students Move Fossil Fuel Stock Fight to Court, N.Y. Times, Nov. 19, 2014, http://www.nytimes.com/2014/11/20/us/harvard-students-move-fossil-fuel-divestment-fight-to-court.html?ref=us&_r=1.

78. Id.

79. Harvard Complaint (Nov. 19, 2014), http://www.divestproject.org/wp-content/uploads/2014/10/Read-the-Complaint.pdf.

80. Harvard Climate Justice Coalition v. President and Fellows of Harvard College, About The Plaintiffs, http://www.divestproject.org/about-the-plaintiffs/ (last visited Aug. 21, 2016).

81. See Harvard Complaint, supra note 79.

82. Id. para. 2.

83. See id. paras. 41, 63.

84. Id. para. 29.

85. Id. paras. 29–31.

86. Id. para. 32.

87. Id.

88. Id. para. 33.

89. Id. paras. 21–28.

90. Harvard Climate Justice Coalition v. President and Fellows of Harvard College, The Evidence, http://www.divestproject.org/the-evidence/ (last visited Aug. 21 2016).

91. Harvard Complaint, supra note 79, para. 47.

92. Id.

93. Id.

94. Id. para. 66.

95. Id.

96. Id. para. 67.

97. Id.

98. Id.

99. Schwartz, supra note 77.

100. Theodore R. Delwiche & Mariel A Klein, Judge Dismisses Divestment Lawsuit, Harv. Crimson, Mar. 24, 2015, http://www.thecrimson.com/article/2015/3/24/judge-dismisses-divestment-lawsuit/.

101. Id.

102. Klein, supra note 63; Brief for Petitioner-Appellant Harvard Climate Justice Coalition v. President & Fellows of Harvard Coll., No. 2015-P-0905 (Nov. 19 2014), http://www.divestproject.org/wp-content/uploads/2015/10/HCJC-Appellants-Brief.pdf.

103. Klein, supra note 63; Harvard Climate Justice Coalition v. President and Fellows of Harvard College, Court Documents, http://www.divestproject.org/documents-2/ (last visited Aug. 21, 2016).

104. Animal Legal Defense Fund Amicus Brief, 36-9, http://www.divestproject.org/wp-content/uploads/2015/10/ALDF-Amicus.pdf.

105. Klein, supra note 63.

106. Dr. James Hansen Amicus Brief, 2015-P-0905 (Oct. 23, 2015), http://www.divestproject.org/wp-content/uploads/2015/10/Hansen-Amicus.pdf.

107. Klein, supra note 63.

108. Appellant Harvard Climate Justice Coalition v. President & Fellows of Harvard Coll., No. 2015-p-0905, Appeals Court, Full Case Panel Court Docket http://www.ma-appellatecourts.org/search_number.php?dno=2015-P-0905&get=Search (last visited Sept. 20, 2016).

109. Press Release, Harvard, Harvard to Sign on to United Nations-Supported Principles for Responsible Investment (Apr. 7, 2014), http://news.harvard.edu/gazette/story/2014/04/harvard-to-sign-

110. Harvard Management Co., Investing for the Long-Term: Integrating ESG Factors, http://www.hmc.harvard.edu/investment-management/sustainable_investment.html (last visited Aug. 21, 2016).

111. Id.

112. The Divestment Debate, Harv. Mag., July–Aug. 2014, http://harvardmagazine.com/2014/07/the-divestment-debate.

113. Thomas P. Lyon & John W. Maxwell, Greenwash: Corporate Environmental Disclosure Under Threat of Audit, 20 J. Econ. Mgmt. Strategy 3, 4 (2011) (defining greenwashing as “the selective disclosure of positive information about a company’s environmental or social performance, while withholding negative information on these dimensions”).

114. Beate Sjafjell & Benjamin J. Richardson, Company Law and Sustainability: Legal Barriers and Sustainability 2 (2015).

115. Id. at 2.

116. What Is Fossil Fuel Divestment?, supra note 25; Fleishman, supra note 38.

117. Sjafjell & Richardson, supra note 114, at 35–36.

118. Id.

119. Caring for Climate, Homepage, http://caringforclimate.org/ (last visited Aug. 21, 2016).

120. Id.

121. Caring for Climate, Responsible Corporate Engagement in Climate Policy, http://caringforclimate.org/workstreams/climate-policy-engagement/ (last visited Aug. 21, 2016).

122. Hunter et al., supra note 10, at 1489.

123. Donal Crilly et al., The Grammar of Decoupling: A Cognitive-linguistic Perspective on Firms’ Sustainability Claims and Stakeholders’ Interpretation, 59 Acad. Mgmt. J. 705 (2016).

124. Sjafjell & Richardson, supra note 114, at 3.

125. John Elkington, Cannibals With Forks: The Triple Bottom Line of 21st Century Business 22 (1998).

126. Id.

127. Id.

128. Kevin Wilhelm, Return on Sustainability: How Business Can Increase Profitability and Address Climate Change in an Uncertain Economy 105 (2013).

129. Id.

130. Id.

131. Id.

132. Id.

133. US SIF: The Forum for Sustainable and Responsible Investment, SRI Basics, http://www.ussif.org/sribasics (last visited Aug. 21, 2016).

134. Wilhelm, supra note 128, at 166.

135. Id.

136. Hunter et al., supra note 10, at 1490.

137. David W. Case, Corporate Environmental Reporting as Informational Regulation: A Law and Economics Perspective, 76 U. Colo. L. Rev. 379, 389 (2005).

138. Id.

139. Wilhelm, supra note 128, at 166.

140. Emily Chasan, Investors Want More From Sustainability Reporting, Says Former SEC Head, Wall St. J., Nov. 12, 2015 (citing Governance & Accountability Institute, Flash Report—Seventy-Five Percent (75%) of the S&P 500 Index Published Corporate Sustainability Reports in 2014, http://www.ga-institute.com/nc/issue-master-system/news-details/article/flash-report-seventy-five-percent-75-of-the-sp-index-published-corporate-sustainability-rep.html), http://blogs.wsj.com/cfo/2015/11/12/investors-want-more-from-sustainability-reporting-says-former-sec-head/.

141. Wilhelm, supra note 128, at 161; Carbon Disclosure Project, Homepage, https://www.cdp.net/en-US/Pages/HomePage.aspx (last visited Aug. 21, 2016).

142. Case, supra note 137, at 389; see also GRI, Homepage, https://www.globalreporting.org/Pages/default.aspx (last visited Aug. 21, 2016).

143. The organization describes itself as follows: “CERES is a non-profit organization advocating for sustainability leadership. We mobilize a powerful network of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy.” http://www.ceres.org/ (last visited Aug. 31, 2016). CERES established a 10-point code of conduct that companies voluntarily commit to reporting on corporate environmental activities. Id.

144. Case, supra note 137, at 389; see also GRI, supra note 142.

145. Hunter et al., supra note 10, at 1491; see also GRI, Homepage, https://www.globalreporting.org/Pages/default.aspx (last visited Aug. 21, 2016).

146. GRI, Homepage, supra note 145.

147. Hunter et al., supra note 10, at 1491.

148. GRI, About Sustainability Reporting, https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx (last visited Aug. 21, 2016).

149. William R. Blackburn, The Sustainability Handbook: The Complete Management Guide to Achieving Social, Economic, and Environmental Responsibility 285 (2d ed. 2015).

150. Id.

151. Id.; About Sustainability Reporting, supra note 148.

152. United Nations Global Impact, Participation, https://www.unglobalcompact.org/participation/report (last visited Aug. 21, 2016).

153. Id.

154. Case, supra note 137, at 389.

155. Id.

156. Blackburn, supra note 149, at 285.

157. Id. at 285–86.

158. Hunter et al., supra note 10, at 1488.

159. Id. at 1493.

160. Id. at 1501.

161. Id. at 1488.

162. Sjafjell & Richardson, supra note 114, at 4.

163. Hunter et al., supra note 10, at 1501.

164. Sjafjell & Richardson, supra note 114, at 18.

165. Crilly et al., supra note 123.

166. United Nations Global Impact, What Is U.N. Global Impact?, https://www.unglobalcompact.org/what-is-gc (last visited Aug. 21, 2016).

167. Id.

168. United Nations Global Impact, Our Mission, https://www.unglobalcompact.org/what-is-gc/mission (last visited Aug. 21, 2016).

169. United Nations Global Impact, Our Governance, https://www.unglobalcompact.org/about/governance (last visited Aug. 21, 2016); G.A. Res. 70/224, U.N. GAOR, 70th Sess., at 2, U.N. Doc. A/RES/70/224 (2016).

170. United Nations Global Impact, The Ten Principles of the UN Global Compact, https://www.unglobalcompact.org/what-is-gc/mission/principles (last visited Aug. 21, 2016).

171. See E. Cameron et al., Business in a Climate-Constrained World: Catalyzing a Climate-Resilient Future Through the Power of the Private Sector 6 (2014), http://www.bsr.org/reports/BSR_Business_in_a_Climate_Constrained_World_Report.pdf.

172. United Nations Global Impact, Global Compact +15: General Assembly Session, https://www.unglobalcompact.org/library/3861 (last visited Aug. 21, 2016); Video: GC + 15: General Assembly Session (U.N. Global Compact 2016), https://www.youtube.com/watch?v=DFMaTKadtfs.

173. Id.

174. Id.

175. United Nations Global Impact, Our Mission, supra note 168.

176. United Nations Global Impact, UN Global Compact and the Sustainable Development Goals, https://www.unglobalcompact.org/what-is-gc/our-work/sustainable-development/background (last visited Aug. 21, 2016).

177. Id.

178. US SIF, supra note 133.

179. Id.

180. Id.

181. Wilhelm, supra note 128, at 166.

182. US SIF, supra note 133.

183. Id.

184. Id.

185. Wilhelm, supra note 128, at 115.

186. Principles for Responsible Investment, About the PRI, https://www.unpri.org/about (last visited Aug. 21, 2016); Wilhelm, supra note 128, at 161 (The six principles are: (1) Incorporate ESG issues into investment analysis and decisionmaking process;
(2) Incorporate ESG issues into ownership policies and practices;
(3) Seek appropriate disclosure on ESG issues by the entities invested; (4) Promote acceptance and implementation of the Principles within the investment industry; (5) Work together to enhance effectiveness in implementing the Principles; and (6) Report on activities and progress toward implementing the Principles).

187. Wilhelm, supra note 128, at 107.

188. Principles for Responsible Investment, What Is Responsible Investment?, https://www.unpri.org/about/what-is-responsible-investment (last visited Aug. 21, 2016).

189. Id.

190. Id.

191. Principles for Responsible Investment, About the PRI, supra note 186.

192. US SIF, supra note 133.

193. Id.

194. Wilhelm, supra note 128, at 116.

195. Lawrence P. Schanpf, Environmental Issues in Business Transactions 461 (2014).

196. Caitlin Kauffman, Proxy Preview 2015 Examines Record-Breaking Number of Sustainability-Related Shareholder Resolutions, Sustainable Brands, Mar. 11, 2015, http://www.sustainablebrands.com/news_and_views/marketing_comms/caitlin_kauffman/proxy_preview_2015_examines_record-breaking_

197. US SIF: The Forum for Sustainable and Responsible Investment, SRI Basics, http://www.ussif.org/sribasics (last visited Aug. 21, 2016).

198. Id.

199. Id.

200. Acknowledge Moral Imperative to Limit Global Warming to 2°C, 2016—Exxon Mobil Corporation (Feb. 1, 2016), http://www.iccr.org/sites/default/files/resources_attachments/exxonreso.pdf.

201. Id.

202. Id.

203. Id.

204. Press Release, Interfaith Center on Corporate Responsibility, ExxonMobil Seeks to Deny Shareholders a Vote on Climate Justice Proposal (Feb. 1, 2015), http://www.iccr.org/sites/default/files/blog_attachments/pr_exxon_-_moral_reso_1-31-15_final_3.pdf.

205. See Press Release, Interfaith Center on Corporate Responsibility, ExxonMobil Fails to Block Climate Justice Proposal at the SEC (Mar. 24, 2016), http://www.iccr.org/sites/default/files/blog_attachments/exxon_pr_sec-moral_reso_3-24-16final.pdf.

206. Wilhelm, supra note 128, at 106.

207. The Equator Principles Association, About the Equator Principles, http://www.equator-principles.com/index.php/about-ep (last visited Aug. 21, 2016).

208. Wilhelm, supra note 128, at 106.

209. The Equator Principles Association, Equator Principles Association Members & Reporting, http://www.equator-principles.com/index.php/members-reporting (last visited Aug. 21, 2016).

210. The Equator Principles Association, Homepage, http://www.equator-principles.com/ (last visited Aug. 21, 2016).

211. Id.

212. The Equator Principles Association, About the Equator Principles, supra note 207.

213. Wilhelm, supra 128, at 106.

214. Id.

This chapter appears in Climate Justice: Case Studies in Global and Regional Governance Challenges, Randal S. Abate, editor. 700 pages. $79.95. The collection is published by ELI Press, the book publishing arm of the Environmental Law Institute.

Josephine Balzac is an assistant professor in the Department of Social Entrepreneurship at Rollins College.

ELI PRESS ❧ Promoting corporate responsibility through the divestment of fossil fuels and socially conscious investment.

Clean Energy Progress Is Trumping Trump’s Fossil Fuels Promo Agenda
David P. Clark
Current Issue
David P. Clark

As the Trump administration persists in its agenda of shrinking federal clean energy commitments and boosting fossil fuels, the leading U.S. electricity industry trade group and a national environmental organization have some not-fake news for the president: “A clean energy transition is underway and accelerating.”

That conclusion stands despite Trump’s many actions aimed at tilting the United States toward more coal and other fossil fuel use and less renewable energy. Under the president’s proposed 2019 budget proposal, the Department of Energy’s Office of Energy Efficiency and Renewable Energy would be cut by $1.3 billion to $696 million. The Advanced Research Projects Agency-Energy would be zeroed out. At the same time, fossil energy research and development would receive $502 million, an $81 million increase over 2017. Astonishingly, DOE even delayed four energy-efficiency standards, leading a federal court to rule the delay was illegal.

What these and similar actions demonstrate is that the Trump administration doesn’t understand that “a clean energy transition is irrevocably underway and making extraordinary progress,” says Ralph Cavanagh, co-director of the Natural Resources Defense Council’s energy program. It is gratifying to see the electricity sector’s leadership “taking ownership of that transition” and “doubling down” on clean energy, he adds.

Recently, the doubling down took the form of an NRDC and Edison Electric Institute joint statement released at the meeting of the National Association of Regulatory Utility Commissioners. The statement sets forth 21 policy recommendations that will “continue to accelerate the clean energy transition” and that EEI and NRDC will work together on implementing.

Philip D. Moeller, an EEI executive vice president, also underscores that “the trend lines are pretty clear” as to the direction of the U.S. electricity system, which by 2050 will be far different from today, as coal plants expire after normal years of service and clean energy builds out. Moeller says clean energy progress will continue without disruption despite the budget cuts.

For EEI, the priority issues are electricity infrastructure siting and permitting, not funding. If the right policy signals were adopted to eliminate some of the uncertainties, “the capital is out there” for transmission lines and clean energy, Moeller adds. For example, if a potential project crosses federal lands, it is unclear who is in charge as different resources agencies weigh in, sometimes without distinct timelines and a resulting lack of accountability for making decisions. States use the Clean Water Act to deny permits, mainly for pipelines but also for transmission lines.

The joint statement notes that opportunities exist to reduce the cost and contentiousness of permitting and NRDC agrees with that, says Cavanagh. “We’re not agreeing on some kind of wholesale evasion or removal of federal environmental standards,” he says. But environmentalists are realizing that “we can do a better job in permitting essential infrastructure,” and NRDC is prepared to work with EEI to do that, he adds.

As an example, Cavanagh cites the Desert Renewable Energy Conservation Plan. The DRECP is a 22.5 million acre zone of public and private lands in California, including 10.8 million federal acres, on which streamlined renewable energy permitting can occur while conserving desert ecosystems. In February, the Department of the Interior announced that it was exploring significant changes to DRECP federal acreage, which Cavanagh says is worrisome. But, he adds, neither DOI nor any other federal agency can stop the momentum described in the joint statement, the fourth NRDC and EEI have issued starting in 2003 but “by far the most comprehensive and ambitious.”

Accelerating progress notwithstanding, barriers remain that EEI and NRDC address with recommendations on how states can improve utilities’ clean energy incentives. Moeller notes that there is uncertainty about ensuring adequate returns for long-term transmission investments, an issue the Federal Energy Regulatory Commission by court order must act on and whose resolution will impact clean energy.

For Cavanagh, a critical issue is that too many states continue regulating electricity companies as a commodity business where kilowatt-hour sales dominate all other considerations. As the joint statement makes clear, electricity should be seen as a service industry whose companies need earning opportunities associated with energy efficiency, renewable energy integration, and maintaining a reliable grid.

Don’t look to the Trump infrastructure plan for any help. The words renewable, solar, and wind are not in the plan, unlike oil and gas. But, as Cavanagh sees it, while the federal government can do damage, or be a partner, the most important partner is the electricity sector’s leadership itself and NARUC, trumping even Trump.

Clean energy progress is trumping Trump’s fossil fuels promo agenda.

Recent Cold Weather Shows Grid’s Reliance on Oil, Upping Emissions
Kathleen Barrón - Exelon Corporation
Exelon Corporation
Current Issue
Kathleen Barrón

The extreme cold weather in the Northeast and Mid-Atlantic this winter severely tested the performance of the power grid, which has come to increasingly rely on natural gas for generation in a way that may have unforeseen consequences on air emissions.

The electric system relies on natural gas to fuel both baseload and peaking power plants. Baseload refers to the minimum level of everyday demand for electricity. Peaking refers to rapid, short-term demand such as that which occurs in the early evening as people return home at sunset.

Baseload plants powered by natural gas are generally highly fuel-efficient combined-cycle plants that emit a fraction of the pollutants of coal. To the extent that combined-cycle natural gas units operate instead of coal-fired units, there is an environmental benefit due to reduced emissions and waste. This shift has occurred intentionally, to reduce emissions, as well as naturally, due to the rapid and sustained drop in natural gas prices over the last decade. The use of natural gas for electricity production in the United States has grown since 2001 from approximately 10 percent to over one-third of total generation.

Natural gas has long been valued as a cleaner peaking fuel for turbines, which provide the ability to ramp up electricity output within minutes. But because natural gas supply can sometimes be constrained or otherwise restricted, many gas units have the ability to operate in dual-fuel mode: they can burn either natural gas or fuel oil. Fuel oil releases more pollution and is generally more expensive than natural gas, and therefore is not used for normal operations. However, it is stored much more easily and serves as a hedge against natural gas delivery interruptions or price challenges.

Since many operators of natural gas plants maintain an ability to burn fuel oil, in some areas, such as New York City, there are requirements that operators burn oil under certain grid or weather conditions to preserve natural gas supply and affordability, particularly for residential customers who may rely on gas for heating. In other instances, an operator may be forced to burn oil because natural gas has been diverted to residential heating or supply was otherwise disrupted, including due to weather-related malfunction.

During cold weather such as we saw in January, natural gas prices may in fact spike high enough that oil becomes the more economical fuel. Indeed, the Energy Information Administration reports that average peak power prices in the Northeast and Mid-Atlantic for January 5 reached over $250 per megawatt-hour, compared with an average between $30-50/MWh in the previous six weeks.

As a result, the eastern grid burned a substantial amount of oil. In fact, preliminary data suggest New England burned more oil during this year’s two-week cold snap than the previous two years combined. During the cold weather, 35 percent of power generation in New England was from oil. In the Mid-Atlantic, oil-fired generation hit 10 percent. On a typical winter day, four percent of power generation is oil-fired.

This reliance on fuel oil to fill gaps in natural gas supply brings a staggering environmental cost. With regard to greenhouse gases, fuel oil has approximately 75 to 80 percent of the CO2 emissions of coal, as compared to roughly half for natural gas. Fuel oils also emit toxic metals and other hazardous pollutants. Finally, oil units emit sulfur dioxide at the same rate as coal and nitrogen oxides at three times the rate.

According to Massachusetts Energy and Environment Secretary Matthew Beaton, in January’s 15 days of cold weather, what New England “used in oil is the equivalent of approximately five percent of the total emissions reduction we need between 2014 and 2020,” referring to the requirement that the state achieve greenhouse gas emissions reductions of 25 percent below 1990 emissions levels by 2020. “Economically, this is a disaster for us in New England. Equally as important, environmentally the emissions and the profiles of what occurred in this timeframe are nothing but a disaster.”

To address these environmental impacts, many jurisdictions have imposed emission-rate limits, annual run-time limits, or are engaged in phasing out the use of these fuels altogether. Following the extreme cold this year, grid operators have become worried about units needed for reliability reaching emissions limits and thus being unavailable if there is another cold snap.

As Senator Lisa Murkowski (R-AK) put it, this experience will serve as an important stress test of the evolving grid. Important vulnerabilities were identified and their potential solutions have a range of implications that we cannot ignore.

The author is grateful for the assistance of Kathy Robertson in developing this column.

Recent cold weather shows grid’s reliance on oil, upping emissions.

The Debate: How Can the U.S. Lead in Paris to Achieve a Climate Agreement We Can Live With?
Need Transparency and Review Mechanism
Avoid Falling Into Another Kyoto Trap
A Balanced, International Approach
A New Language for Diplomacy in Paris (and U.S.)
Senate Should Favor Accord This Time
A New Tag Line: "It's Global an It Will Work"
Joseph E. Aldy - Harvard Kenny School
John D. Graham - Indiana University School of Public and Environmental Affairs
Gary S. Guzy - Covington & Burling LLP
Bob Inglis - republicEn.org
Jennifer Morgan - World Resources Institute
Jake Schmidt - Natural Resources Defense Council
Harvard Kenny School
Indiana University School of Public and Environmental Affairs
Covington & Burling LLP
World Resources Institute
Natural Resources Defense Council
Current Issue

In a few weeks, the 21st Conference of the Parties of the UN Framework Convention on Climate Change will convene in Paris to hammer out for the first time an accord that will have binding targets for almost all nations, industrialized and developing alike. We polled some of the leading thinkers and activists involved in the climate change negotiations, asking them what the United States needs to do to realize an agreement that we can live with — one that protects the environment and also wins favor in the Senate and among the American public.

Growing the Grid
Peter Behr - EnergyWire
Current Issue

The Clean Power Plan’s success hinges on reformation of the transmission lines that link generators and consumers of electrical energy. Congress has the responsibility for creating a durable policy framework for the 21st century’s power infrastructure.