Insurance and Climate Change column

New York Governor Lays out Aggressive Climate Change Plan

By | January 9, 2020

New York Gov. Andrew Cuomo is proposing an aggressive climate change-fighting campaign for his state that includes a $3-billion bond act that would be put on the ballot this November.

Cuomo, who says that money would go to transforming the state’s energy and environment programs, on Wednesday gave his State of the State Address outlining his vision for 2020 and beyond, framed by his administration as a “bold agenda to continue New York’s role as progressive capital of the nation.”

Cuomo’s is also eyeing a domestic terrorism law, legalized cannabis and “historic infrastructure and economic development investments,” as well as an expanded free college tuition program, protections for gig economy workers, paid sick leave and tax cuts for middle class New Yorkers and small businesses.

His climate change agenda includes:

  • Legislation to prohibit the distribution and use of expanded polystyrene (Styrofoam), single-use food containers and packaging materials by Jan. 1, 2022.
  • An electric vehicle initiative, and a plan to reduce emissions from residences and commercial buildings and a workforce development initiative.
  • Electrifying upstate transit systems by requiring five of the largest upstate and suburban transit authorities to electrify 25% of their fleets by 2025 and 100% by 2035.
  • Building a network of electric vehicle chargers throughout the state. The New York Power Authority will ensure that 10 or more fast-charging locations are available in every Regional Economic Development Council region by the end of 2022, that every travel plaza on the New York State Thruway has charging stations by the end of 2024 and that at least 800 new chargers are installed statewide over the next five years.
  • Investing $100 million in green bank financing to attract EV-sector manufacturers and other related businesses.
  • Retrofitting homes and businesses to lower carbon emissions. In 2020, the state will undertake an initiative to curb fossil fuel consumption in buildings. New York State Energy Research (NYSERDA) and Development will launch a $30 million challenge to demonstrate scalable and solutions for high-profile commercial and multi-family buildings across the state.
  • In 2020, NYSERDA will issue its second solicitation for offshore wind facilities, expected to yield at least an additional 1,000 megawatts of clean power.
  • An additional $9.4 million in grants to upgrade the Lake George wastewater treatment plant.
  • NYSERDA will make competitive awards to 21 large-scale solar, wind and energy storage projects across upstate totaling over 1,000 megawatts of renewable capacity and 40 megawatts of energy storage capacity.
  • The state will put together a plan for authorizing and building new transmission capacity to bring clean and renewable power to areas that need additional electricity capacity, prioritizing using existing rights of way.

Munich Re

Munich Re in a report out this week that shows overall natural catastrophes losses of US$150 billion, including insured losses of about US$52 billion, globally in 2019, also took a good look at the issue and effects of climate change, Insurance Journal’s Lisa Howard reported.

Munich Re’s catastrophe update shows the cat loss figures match the average of the past 30 years, but noted that events like cyclones are becoming more frequently associated with extreme precipitation, as with Hagibis in Japan in 2019 and Hurricane Harvey in 2017 in the U.S., and that recognizing these changes can form the basis for more preventive measures to reduce losses.

“The severe cyclones in 2019 have highlighted the importance of knowledge about changes in risk,” Torsten Jeworrek, member of the board of management at Munich Re, said in the report. “Natural climate variations influence weather catastrophes from year to year. Longer-term climate change effects can already be felt and seen.”

He said buildings and infrastructure must be made more resistant in order to reverse the increasing trend in losses.

“This will enable insurance to be more effective and support the remaining financial losses,” he stated.

The report also discusses California’s wildfire trends, noting that while losses were lower in 2019 than the record losses seen in prior years, there is still a “sharply rising long-term trend for forest area burned and wildfire losses in the U.S.”

A wet winter helped ameliorate summer drought conditions, with fires burning a much smaller area than the five-year average, bringing overall losses of US$1.1 billion, of which about US$800 million were insured, according to the Munich Re report.

The report also calls out climate change as a factor in the growing losses from hailstorms across the globe.

“Recent scientific studies have shown that we can expect hailstorms to increase in many regions as a consequence of climate change,” Ernst Rauch, chief climate and geoscientist at Munich Re, said in a statement in the report. “It is also clear in this case: Measures such as better early-warning systems and more resistant building materials are important in order to mitigate against long-term increases in losses.”

South Florida Commercial Real Estate

Climate change has sprung up on the list of concerns for commercial real estate industry professionals and developers in South Florida, whereas climate was an issue that was around the bottom of the list of concerns over the past six years, a new report shows.

The law firm of Berger Singerman in its sixth annual South Florida Real Estate Survey shows roughly 35% of the 2,000 respondents said that climate change would be the most pressing issue facing the South Florida commercial real estate market in 2020.

It was the first time that the majority of respondents listed climate change as a top concern in the annual report, according to the report’s authors.

In previous surveys, “climate change was not a concern and now its jumped to mind,” Barry Lapides, a partner in Berger Singerman, told the Miami Herald for an article on Wednesday.

“Developers are now looking at [whether] their project is in a flood zone, what the flood insurance is, what access is there in and out when there is flooding,” he said.

Flood zones are already impacting the local real estate market, according to Flood iQ, a nonprofit that studied Miami-Dade County property records and found that some homeowners lost at least $100,000 in value due to sea level rise.

Still, 58% of respondents in the Berger Singerman report said they believe climate change will have no impact on their investments and development strategies in 2020.

“Climate change is a reality but that’s not going to stop developers from developing and buyers from buying, as long as insurance companies are insuring the buildings,” Lapides was quoted as saying in the Miami Herald article.

Trump, NEPA and Climate

The Trump administration on Thursday unveiled a plan to quicken permitting for large infrastructure projects like oil pipelines by dropping consideration of their potential impact on climate change.

The plan, released by the White House Council on Environmental Quality, would help the administration advance big energy projects like the Keystone XL oil pipeline that had been tied up over concerns about their effect on global warming, according to a Reuters article that ran today on Insurance Journal.

“The proposal, if enacted, would mark the first overhaul in four decades of the National Environmental Policy Act (NEPA), a bedrock environmental regulation,” the Reuters article states. “It is part of U.S. President Donald Trump’s broader effort to cut regulatory red tape to boost industry.”

A fact sheet about the proposed change seen by Reuters says the proposed rule seeks to reduce unnecessary paperwork and delays, and promote better decision-making consistent with NEPA’s statutory requirements.

The rule says federal agencies would not need to factor in the climate impact on a project, making it easier for major fossil fuel projects to get easily through the approval process and avoid legal challenges.

Federal courts over the past few years have ruled that NEPA requires the federal government to consider a project’s carbon footprint in decisions related to leasing public lands for drilling or building pipelines, according to the article.

The proposed change also would broaden the categories of projects that can be excluded from NEPA. If a type of project got a “categorical exclusion” from one agency in the past, for example, it would automatically be excluded from review by other agencies, according to the plan.

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