Sen. Joe Manchin (D-WV) and Democratic Senate leadership reached a side deal on federal energy permitting this week, separate from the larger reconciliation bill agreement addressing climate, taxes, and drug pricing reform. (PoliticoPro, One-page summary of agreement and Washington Post, Aug. 1)
Energy Permitting Provisions
- An outline of the energy permitting agreement shows that an eventual bill would direct the President to designate and periodically update a list of at least 25 high-priority energy infrastructure projects and prioritize their approvals by federal agencies.
- The agreement could lead to policies that accelerate federal approvals for long-distance transmission lines needed to help “clean the grid” and deliver renewable energy generated in rural areas to cities.
- The agreement would also limit National Environmental Policy Act (NEPA) reviews for major federal projects to two years, and one year for lower-impact projects. NEPA requires federal agencies to assess alternatives to their proposed actions that have lesser environmental impacts. (EPA fact sheet)
- The Democratic senators agreed with House Speaker Nancy Pelosi (D-CA) that the permitting agreement could be added to a stopgap spending measure to fund the government after Sept. 30. (BGov, Aug. 3)
- In May, the Biden administration released a Permitting Action Plan to strengthen and accelerate Federal permitting and environmental reviews. Another package of White House changes to permitting rules is expected later this year. (Roundtable Weekly, April 22 | White House news release, May 11 | BGov, Aug. 4).
Climate Financial Risk Tool
- The Treasury Department launched its Climate Data and Analytics Hub pilot, which aims to provide regulators with data, software and tools to gauge climate change risk to the financial system. (Treasury Department Fact Sheet)
Initial access to the pilot will be limited to the Federal Reserve Board of Governors (FRB) and the Federal Reserve Bank of New York (FRBNY), with the goal of expanding access to all of the Financial Stability Oversight Council (FSOC) member agencies.
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The Securities and Exchange Commission (SEC) issued non-binding guidance on Sept. 22 on how companies within its jurisdiction should disclose risks related to climate change under current standards. The guidance comes as the SEC is preparing proposed regulations – expected by early next year – on anticipated climate reporting mandates that will likely impact all issuers of securities, including real estate companies.
Why It Matters
- The Sept. 22 guidance amplifies the Commission’s 2010 Climate Change Guidance. It explains that companies should include in their formal SEC filings the same kinds of climate and ESG-related disclosures that they provide in their annual corporate social responsibility reports.
- The latest guidance advises companies to disclose information (deemed to be “material”) on topics such as:
- Whether climate-related local, state, or federal laws or regulations – or international accords – impact the company’s finances or operations;
- Past or future capital expenditures for “climate-related projects”;
- Increased demands for renewable energy generation and transmission;
- Reputational risks from corporate operations that produce greenhouse gas emissions;
- Whether floods, fires, hurricanes, and other “extreme weather events” affect thye company; and
- Purchases or sales of carbon offsets or credits.
Guidance Portends New Rule
- The Sept. 22 guidance portends a proposed rule from the Commission that will likely lead to mandated climate change disclosures.
- SEC Chair Gary Gensler, above, remarked on Sept. 22 that its proposed rule on climate disclosures will be released by early 2022. A proposed rule would then kick-off a process for public comments from industry stakeholders.
- Earlier this year, the Commission inquired about what kinds of updated climate and ESG-related information may be “material” to investors – and whether such information should be included in annual reports, proxy statements, and other SEC filings. (SEC’s March 15, 2021 “Public Statement” welcoming input on climate change disclosures.)
- The Real Estate Roundtable responded in June to the SEC’s “pre-rulemaking” statement. The Roundtable developed its comments in close coordination with Nareit, and recommends a “principles-based” approach to corporate climate risk disclosures as opposed to a prescriptive “one size fits all” reporting mandate. (Roundtable Weekly, June 11, 2021)
A final rule from the SEC on climate risk reporting could be issued by the end of 2022, after conclusion of the public comment process on any forthcoming proposal.
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As part of the roll-out for its American Jobs Plan to invest in the nation’s “physical” infrastructure assets, the Biden Administration is asking real estate companies to make voluntary “commitments” to help reduce the built environment’s carbon footprint. (Climate Commitment Fact Sheet)
- The White House seeks three categories of voluntary “commitments” from real estate companies. A fact sheet prepared by The Roundtable provides more details:
(1) EV Charging Stations: Commitments to install a significant number of EV charging infrastructure in parking lots, garages, gas stations, and other areas.
(2) Clean Power Purchases: Commitments to purchase clean power in amounts that “offset” or “credit” the electricity consumed by an entire or majority of a real estate portfolio.
(3) Data Sharing: Commitments for a real estate company to share data on building energy consumption with federal agencies and US-DOE’s national laboratories.
- Mark Chambers, Senior Director for Building Emissions with the White House Council on Environmental Quality (CEQ), outlined these commitments with The Real Estate Roundtable’s Board of Directors on April 20 timed with the Spring 2021 Roundtable meeting. (Roundtable Weekly, April 23).
White House Recognition
- Participating companies stepping up to the challenge will be recognized by the Biden Administration. A small number of commitments, deemed “significant” by the White House and reached within the next 7-10 days, may be showcased on May 17 with Cabinet-level participation at the virtual Better Buildings Summit sponsored by the U.S. Department of Energy.
- The Administration’s outreach to CRE is part of a multi-industry push to also enlist the manufacturing, technology, transportation, power generation, and utility sectors as “partners” in tackling the climate crisis. (Forbes, April 29; Reuters, Feb. 3)
- Over 400+ businesses and investors recently signed an open letter urging the Biden Administration to cut U.S. GHG emissions in half by 2030 (relative to a 2005 baseline).
Any real estate company interested in exploring a commitment and earning recognition from the White House should contact Mark Chambers directly at Mark.C.Chambers@ceq.eop.gov. The Roundtable can also facilitate connections to the Administration through Duane Desiderio, Senior VP for energy and infrastructure policy (firstname.lastname@example.org).
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The Biden Administration continued to work this week on an aggressive goal to slash U.S. carbon emissions in half by 2030, as the Fed announced plans to monitor climate change threats to the financial system. (Bloomberg, March 23 and E&E News, March 24)
A National Effort
- White House Climate Advisor Gina McCarthy is leading a National Climate Task Force that will finalize U.S. goals and commitments before participating in an April 22 virtual global climate summit on Earth Day. (White House Readout of the Second National Climate Task Force Meeting, March 18)
- The government-wide effort includes input from 21 federal agencies and industrial sectors, ranging from car manufacturers to aviation to the oil industry. (The Hill, March 22 and E&E News, March 23)
- The prospects for both chambers of Congress to pass legislation that puts a price on carbon are still remote, even though key business groups such as the U.S. Chamber of Commerce and the American Petroleum Institute have now come out in favor of “market-based” climate policy. (Axios Generate, March 26)
Climate Change and Real Estate
- Federal Reserve Governor Lael Brainard this week emphasized the impact climate change could have on real estate markets. She stated during a March 23 speech, “… the usability of real estate in many areas will be directly affected by the increased risks of floods, wildfires, severe storms, and sea-level rise associated with climate change.”
- She added, “Sudden realizations of climate-related risks could cause rapid shifts in investor sentiment and shocks to asset prices.” (Financial Stability Implications of Climate Change speech by Gov. Brainard, March 23)
- Brainard announced the Fed has established new oversight committees “to identify, assess, and address climate-related risks to financial stability.”
- Fed Chairman Jerome Powell and Treasury Secretary Yellen also commented on their increased attention to the risks posed by climate change during a March 23 hearing before the House Financial Services Committee and a March 24 Senate Banking, Housing and Urban Affairs Committee hearing.
- Secretary Yellen will lead the first meeting of the Financial Stability Oversight Council under the Biden administration on March 30 to discuss climate-related financial risks. (The Hill, March 24)
The administration’s climate policy plans and their impact on CRE will be a focus of discussion during The Roundtable’s Spring Meeting on April 20 (held remotely).
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An Oct. 17 hearing before the House Select Committee on the Climate Crisis, “Solving the Climate Crisis: Cleaner, Stronger Buildings,” focused on reducing carbon pollution and improving resilience in residential and commercial buildings across the nation as a method of countering the effects of climate change. (Hearing video and witness statements)
- The Select Committee is chartered to study and make recommendations to reduce greenhouse gas emissions and develop solutions to combat climate change. It lacks authority to introduce legislation, but is scheduled to publish a set of recommendations for bill-writers by March 31, 2020.
- Committee Chair Kathy Castor (D-FL), above, stated at the hearing that “[a]n ambitious national plan for cleaner, stronger buildings requires national leadership. And Congress needs to offer smart incentives, to set a direction for the numerous federal, state, and local officials involved in the buildings sector.”
- Committee Ranking Member Garret Graves (R-LA) emphasized that reauthorization of the flood insurance program and other Committee recommendations must “advance[ ] the goal of resiliency, [housing] affordability, and energy efficiency conservation. [W]e can achieve multiple goals.”
- The Real Estate Roundtable has long been a leading advocate for energy efficiency in buildings, spearheading significant policy developments in this arena. For example, the Sustainability Policy Advisory Committee (SPAC) was critical to the creation of EPA’s ENERGY STAR for buildings program in 1998, and its evolution to ENERGY STAR for Tenants in 2015.
- Recently, SPAC’s assistance to EPA resulted in improved and updated models for federal ratings regarding building energy efficiency performance. (Roundtable Weekly, July 19). Current SPAC initiatives include efforts to refine the next version of ENERGY STAR for Tenants (to be unveiled in 2020 and cover retail as well as office leased spaces), and coordinate with the agency on key data it collects regarding the carbon footprint of the nation’s electricity grid.
- On the legislative front, The Roundtable has long supported the Energy Savings and Industrial Competitiveness (ESIC) Act (S. 2137), co-sponsored by Sens. Rob Portman (R-OH) and Jeanne Shaheen (D-NH). (Roundtable support letter for S. 2137) The Senate Energy Committee advanced the ESIC Act last month. (Roundtable Weekly, Sept. 27).
- The ESIC Act “is exactly the kind of smart, forward-looking policy that will help building owners respond to our modern, evolving economy” Roundtable President and CEO Jeffrey DeBoer stated in a Senate news release upon the bill’s introduction this summer. (Roundtable Weekly, July 19) (Video of DeBoer’s statement)
- Also in the Senate, Delaware Democrat Chris Coons and Indiana Republican Mike Braun have formed a climate caucus aimed at creating bipartisan consensus on ways to reduce carbon dioxide emissions. The purpose of the Senate Climate Solutions Caucus is outlined by the two Senators in an Oct. 23 opinion piece in The Hill.
The Roundtable will provide comments to the House Select Committee on the Climate Crisis, summarizing our energy efficiency advocacy agenda. The committee’s questions for stakeholders are posted at https://climatecrisis.house.gov/inforequest, with submissions due by November 22.
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