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Three ambitious climate bills to watch in California

Analysis by

with research by Vanessa Montalbano

February 6, 2023 at 6:47 a.m. EST
The Climate 202

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In today’s edition, we’ll cover the departure of a top White House science official and a D.C. bill that would offer incentives to switch from gas stoves to electric. But first:

California lawmakers unveil bills on emissions disclosure, fossil fuel divestment

Democratic lawmakers in California have introduced an ambitious package of bills aimed at holding businesses accountable for their pollution.

One of the bills would require large corporations to disclose their annual greenhouse gas emissions, while another would bar the state’s pension funds from investing in major fossil fuel firms. 

While similar measures failed to advance last year, the sponsors say they’re hopeful about passage this year. And with California poised to become the world’s fourth-largest economy, the climate legislation could reverberate far beyond the state’s borders.

Under a measure introduced by state Sen. Scott Wiener, companies that bring in at least $1 billion in revenue and do business in California would have to annually report their greenhouse gas emissions to the public. The bill passed the state Senate last year but fell one vote short of clearing the Assembly.

“I’m optimistic that we have a real shot at getting this passed this year,” Wiener said in a phone interview Sunday. “Last year, we had a much smaller coalition than we do now, and we had a wall of corporate lobbyists fighting us every step of the way.”

Wiener said he worked with the California Chamber of Commerce, which opposed the bill last year, to make some improvements to the measure. The chamber did not immediately respond to a request for comment.

The measure comes as the Securities and Exchange Commission prepares to finalize a landmark rule that would force all publicly traded companies to disclose their greenhouse gas emissions and the risks they face from climate change.

  • The SEC is considering softening the financial reporting requirements in the rule, according to people close to the agency, Jean Eaglesham and Paul Kiernan report for the Wall Street Journal.
  • The commission is also not expected to require companies to disclose their “scope 3” emissions, or those generated by suppliers and customers, such as drivers filling up their cars with gasoline.
  • By contrast, Wiener’s bill would mandate the disclosure of scope 3 emissions, which account for more than 90 percent of the oil giant Shell’s overall emissions.

If passed, the bill would serve as a “backstop” to weaker federal rules, Wiener said, since many companies that do business in California are also active nationwide.

“Ideally, we would love things to be handled federally,” he said. “But California is so large and so impactful economically that we have the ability to set what is effectively a national standard.”

Pension funds and climate risks

Under another bill introduced by state Sen. Lena Gonzalez, California’s pension funds would need to divest from the 200 largest oil, gas and coal companies by 2030.

The measure seeks to prevent the retirement savings of the state’s teachers, firefighters and other public employees from being used to finance fossil fuels at a time when California faces a climate-change-fueled drought and a relentless wildfire season.

  • The California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) are the two biggest public pension funds in the country.
  • CalPERS spokesman John Myers said the bill would force the fund to sell fossil fuel investments currently worth at least $9.3 billion.

Last year, the bill passed the state Senate but failed to clear the Assembly’s Committee on Public Employment and Retirement, where Chair Jim Cooper (D) refused to schedule a hearing.

This year, the bill appears to have brighter prospects after Cooper left the Assembly to become Sacramento County sheriff, supporters say.

“We feel so much more confident about moving the bill this year,” said Miriam Eide, coordinating director at Fossil Free California, an environmental group. “Jim Cooper felt like an immovable wall.”

While the CalPERS Board of Administration voted to oppose the bill last year, it has not yet taken a position on the measure this year. But CalPERS CEO Marcie Frost said in a statement that divestment would be an ineffective way to combat global warming.

“Divestment of these holdings would do nothing to stop climate change,” Frost said. “The companies in question can easily replace CalPERS with new investors, ones who are unlikely to speak up as loudly or as consistently as we have about the urgent need to move toward a low-carbon economy.” 

Wiener pushed back on this argument.

“If these were tiny pension funds, obviously this wouldn’t have a huge impact,” he said. “But when you have two of the largest investors on the planet divest from an industry, that sends extremely powerful shock waves across the world.”

Meanwhile, state Sen. Henry Stern introduced a third bill that would create a group to review climate-related financial risks facing companies.

Legislation to help California confront climate risks is increasingly important as the state endures a string of extreme weather events, including last month’s atmospheric rivers, said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets.

“The awareness of climate risk is growing every day across the country,” he said, “but particularly in California because of the challenges we face.”

On the Hill

House Republicans target climate-conscious investing

Rep. Patrick T. McHenry (R-N.C.), who chairs the House Financial Services Committee, on Friday announced the creation of a working group to fight the spread of climate-conscious investing.

The working group, chaired by Rep. Bill Huizenga (R-Mich.), will seek to “combat the threat to our capital markets posed by those on the far-left pushing environmental, social, and governance (ESG) proposals,” McHenry said in a statement.

GOP lawmakers have pledged to investigate what they see as “woke capitalism,” a reference to Wall Street firms that treat climate change as an economic risk. Meanwhile, Republican attorneys general have vowed to sue over the Securities and Exchange Commission’s climate disclosure rule, calling it an example of regulatory overreach.

The members of the working group are Republican Reps. Ann Wagner (Mo.), Barry Loudermilk (Ga.), Bryan Steil (Wis.), Andrew R. Garbarino (N.Y.), Byron Donalds (Fla.), Monica De La Cruz (Tex.), Erin Houchin (Ind.) and Andrew Ogles (Tenn.).

Pressure points

White House science official to step down

Social scientist Alondra Nelson will step down from her post as a deputy director in the White House Office of Science and Technology Policy, Ashley Gold reports for Axios. 

Last year, Nelson became the first woman of color to lead OSTP after Eric Lander, President Biden’s former top science adviser, resigned following an internal review that indicated he bullied and demeaned staffers. 

Nelson, who currently serves as deputy director for science and society at OSTP, is set to return to the Institute for Advanced Study. Her last day in the White House is Friday.

OSTP, which is charged with advising the president on innovations in science and technology, has recently homed in on the climate crisis. Last February, during Nelson’s time as acting director, the office held a first-of-its-kind roundtable with some of the nation’s leading scientists to discuss the urgent need to combat climate change and to counter arguments for delaying climate action.

D.C. bill would offer incentives to switch from gas stoves to electric

A D.C. Council bill introduced Friday would incentivize people to switch from gas stoves and heating appliances to electric versions by offering generous rebates, The Washington Post’s Fredrick Kunkle and Laura Vozzella report.

The measure adds to a simmering debate playing out along partisan lines across America, with several blue states moving to phase out gas appliances and several red states acting to protect them.

The legislation would use “hundreds of millions of dollars” in federal funds, including tax credits, to encourage people to go electric, said D.C. Council member Charles Allen (D-Ward 6), one of the bill’s co-sponsors.

The bill would target moderate- and low-income households, allowing those making less than $80,000 a year to replace their gas stoves and heating appliances without any out-of-pocket costs, including installation. The measure includes an additional permitting fee for people who install new fossil-fuel-burning appliances in renovations.

On the Hill this week

Here’s what we have on tap this week:

On Tuesday: The House Energy and Commerce Committee will hold a markup to consider several Republican energy bills, including the Protecting American Energy Production Act, which would bar a national moratorium on hydraulic fracturing, or fracking.

On Wednesday: The House Natural Resources Committee will hold a hearing titled “Unleashing America’s Energy and Mineral Potential.”

  • The House Transportation and Infrastructure Subcommittee on Water Resources and Environment will also hold a hearing on the effects of the Biden administration’s rule expanding the definition of waterways that the Environmental Protection Agency has authority to regulate.

On Thursday: The House Natural Resources Subcommittee on Oversight and Investigations will hold another hearing on critical minerals, this time with an emphasis on America’s dependence on foreign adversaries for minerals used in green technologies.

  • The Senate Energy and Natural Resources Committee will also meet to discuss the state of the U.S. territories.

In the atmosphere

Viral

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