New York, California Could be Fastest Growing States for Renewables
U.S. environmental policies will drive long-term demand for renewable energy, Moody’s Investors Service said in a new report.
The report depicts a “a credit positive for renewable energy developers” in the U.S. despite a downturn in demand for electricity during these economic doldrums caused by the pandemic.
The report shows that growth in renewable energy over the next decade is set to benefit renewable energy developers like NextEra Energy, Clearway Energy Inc. and Pattern Energy Operations LP.
California and New York are expected to be the most attractive states for developers due to the size of the markets and their government mandates to attain 100% clean energy.
“Solar power developers are most likely to benefit in California, while firms such as Orsted SA and Avangrid, Inc. should benefit from New York’s drive to become the largest US market for offshore wind power,” the report states.
Declining solar and wind costs should also enable the industry to grow according to state mandates and avoid triggering customer price protections against rising costs. The U.S. doesn’t have a national renewable energy portfolio, regulations that require more energy from renewables, numerous other nations.
The 26 states and the District of Columbia that do have renewable energy portfolio standards will drive future U.S. renewable energy policy goals, which likely will see renewable energy account for about 28% of the U.S. power supply by 2030, against about 17% in 2019, according to the report.
Sompo Holdings CO., LTD. has become what appears to be the first Japanese insurance company to adopt a position on coal.
The insurer said this week that it will “strengthen it sustainability promotion, further advance the Group’s efforts to address global environmental issues such as climate change and biodiversity, as well as respect for human rights, and contribute to the realization of a sustainable society together with its stakeholders.”
Sompo will not insure and invest in new construction of coal-fired power plants in Japan, except for projects for which underwriting, investment and financing has already been expressed.
The activist group Insure Our Future applauded their efforts, but called out some loopholes in Sompo’s new position: in cases of high power efficiency, the insurer “might consider to insure or invest with a careful thought confirming measures to reduce environmental impact, such as reduction of greenhouse gas emissions and alternative means.”
Japanese insurance companies as a group are still lagging far behind the international trend on coal insurance and the benchmark for responsible insurers, according to Insure Our Future.
The group says that while 19 other companies have adopted policies ending or reducing underwriting for coal, none of the leading Japanese insurance companies – Tokio Marine, MS&AD and Sompo – have so far adopted policies to phase out coal insurance across the board.
Sompo said its efforts look to the future.
“Our group aims to create a resilient and sustainable society in which all people can live in safety, security and health by actively engaging with stakeholders through dialogue for the future and actively incorporating consideration for various social issues into business processes,” the statement reads.
New York, New York
New York State Department of Financial Services Superintendent Linda Lacewell this week launched new initiatives to address climate-related financial risks, and called on insurers to begin integrating these practices into their risk management and business strategies.
This move came during the annual New York Climate Week summit and the approaching one-year anniversary next month of the U.S. formally beginning its withdrawal process from the historic 2015 Paris Climate accord, Insurance Journal’s Elizabeth Blosfield reported.
“Mitigating the financial risks from climate change is a critical component of creating a stronger industry and a healthier and safer world for ourselves, our families, and future generations,” Lacewell said in a statement. “There is no more time to wait.”
The move is in keeping with what New York Gov. Andrew Cuomo has been pushing for. Cuomo is a co-chair of the United States Climate Alliance, a coalition of 25 governors formed after the U.S. withdrew from the Paris climate agreement. He also signed the Climate Leadership and Community Protection Act, including an ambitious greenhouse gas reduction target with aims for New York reaching a carbon neutral economy by 2050.
“DFS expects all New York insurers to start integrating the consideration of the financial risks from climate change into their governance frameworks, risk management processes, and business strategies,” according to a press release from the department issued on Tuesday. “Insurers are encouraged to analyze and describe how climate change affects their investments, liquidity, operations, reputation, and business strategy.”
DFS said it expects New York insurers to begin developing their financial disclosures and consider engaging with the Task Force for Climate-related Financial Disclosures. TCFD is a framework adopted by international regulators and financial institutions.
DFS plans to incorporate questions on insurers’ approach and activities related to climate change during the Department’s examination process starting in 2021.
Great Lake State
Michigan Gov. Gretchen Whitmer on Wednesday signed an executive order that aims to make the state’s economy carbon-neutral by 2050.
Whitmer in signing the order cited a rising threat to public health and the environment.
“The science is clear – climate change is directly impacting our public health, environment, our economy, and our families,” Whitmer said in a statement. “This dangerous reality is already causing harm throughout Michigan, with communities of color and low-income Michiganders suffering disproportionately, which is why I’m taking immediate action to protect our state. We owe it to our children and grandchildren to leave them a cleaner, safer and healthier world.”
The order sets the goal of economic decarbonization in Michigan by 2050, and states the aim to achieve a 28% reduction below 1990 levels in greenhouse gas emissions by 2025.
“Through comprehensive and aggressive steps, we will combat the climate crisis by formally setting and relentlessly pursuing a goal of statewide decarbonization by 2050,” Whitmer said. “These bold actions will provide critical protections for our environment, economy, and public health, now and for years to come. It will also position Michigan to attract a new generation of clean energy and energy efficiency jobs.”
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