Donald-Climate Change, Uncovering Risk in a Warming World 2013-10

455 views

Published on

J. Wylie Donald, Esq. of McCarter & English LLP Presented - “Climate Change- Uncovering Risk in a Warming World” at the October 2013 67th Annual F. Addison Fowler Seminar held by The Insurance Roundtable of Baltimore in Hunt Valley, MD

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
455
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Donald-Climate Change, Uncovering Risk in a Warming World 2013-10

  1. 1. January 17, 2013 Chesapeake RIMS Climate Change: Uncovering Risk in a Warming World by J. Wylie Donald McCarter & English LLP
  2. 2. C LI M AT E C H AN G E Background Insurance Coverage The New York Times December 6, 2012, 3:25 pm Comment Gas Tanker Completes Arctic Sea Journey By Clifford Krauss http://www.youtube.com/watch?v=jr_SqvitTzk play this 2
  3. 3. C LI M AT E C H AN G E Background Insurance Coverage
  4. 4. C LI M AT E C H AN G E Background Insurance Coverage • Climate Change and the Wine Industry – Prediction: by 2100 viable grape growing regions will shrink by 80% – Growing seasons in France moved up 3 weeks over the last 60 years – Vineyards opening in Finland, Denmark and Sweden – Vintners buying up higher altitude properties, northfacing vineyards 4
  5. 5. C LI M AT E C H AN G E Insurance Coverage • INSURANCE • Coverage for CO2 - CGL - D&O - E&O
  6. 6. C LI M AT E C H AN G E Insurance Coverage American Electric Power v. Connecticut (S. Ct.) - DISMISSED Comer v. Murphy Oil USA (5th Cir.) – PENDING California v. General Motors (9th Cir.) WITHDRAWN Native Village of Kivalina v. ExxonMobil (9th Cir.) - DISMISSED 6
  7. 7. C LI M AT E C H AN G E Insurance Coverage Kivalina Coverage Chronology February 26, 2008 Class action lawsuit, Native Village of Kivalina v. ExxonMobil Corp. July 9, 2008 Declaratory Judgment action, Steadfast Ins. Co. v. AES Corp. (Arlington Cty., Va.) October 2009 Steadfast motion for summary judgment denied (pollution exclusion doesn’t prevail) November 2009 AES motion for summary judgment, crossmotion for reconsideration by Steadfast February 5, 2010 Cross-motion for summary judgment granted (no occurrence) April 20, 2012 Virginia Supreme Court affirms 7
  8. 8. C LI M AT E C H AN G E Insurance Coverage 20 Questions Is it naturally in the atmosphere in billions of tons? YES. YES. Is it essential to life? Is it exhaled in every breath? YES. Is it non-toxic? YES. Is it an unavoidable product of combustion? YES. YES. Is it the most common greenhouse gas? Is it carbon dioxide? NO, IT IS WATER VAPOR. 8
  9. 9. C LI M AT E C H AN G E Insurance Coverage COVERAGE FOR “POLLUTION” 1966 – occurrence form 1970 – “sudden & accidental” pollution exclusion added 1986 – “total” or “absolute” pollution exclusion added Late 80s, 90s and 00s – “environmental impairment liability” and “pollution legal liability” products 9
  10. 10. C LI M AT E C H AN G E Insurance Coverage SUDDEN AND ACCIDENTAL POLLUTION EXCLUSION This policy does not apply to … property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water, but this exclusion does not apply if such discharge …, is sudden and accidental. 10
  11. 11. C LI M AT E C H AN G E Insurance Coverage ABSOLUTE POLLUTION EXCLUSION f. (1) “Bodily injury or “property damage” arising out of the actual, alleged, or threatened discharge, dispersal, release or escape of pollutants: Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. 11
  12. 12. C LI M AT E C H AN G E Insurance Coverage SO, WHY DO WE CARE? 12
  13. 13. C LI M AT E C H AN G E Insurance Coverage CGL Coverage Map 1961-1985 Pollution Exclusions Ineffective 13
  14. 14. C LI M AT E C H AN G E Insurance Coverage CGL Coverage Map 1961-2013 Effective Absolute P.E. 14
  15. 15. C LI M AT E C H AN G E Insurance Coverage CGL Coverage Map 1961-2013 Effective Absolute P.E. Eroded pre-85 15
  16. 16. C LI M AT E C H AN G E Insurance Coverage CGL Coverage Map 1961-2013 with Ineffective Pollution Exclusions 16
  17. 17. C LI M AT E C H AN G E Insurance Coverage CGL Coverage Map 1961-2013 with Erosion and Ineffective Pollution Exclusions 17
  18. 18. C LI M AT E C H AN G E Insurance Coverage PREPARING A CARBON COVERAGE MAP • Primary (including captives), umbrella and excess policies from inception of corporate existence • All subsidiaries from inception of the subsidiary • Thus, all corporate entities through all changes in corporate form (mergers, divestitures) • Erosion by settlements and claims payments • Type of “pollution” exclusion • Claims made or occurrence 18
  19. 19. C LI M AT E C H AN G E Insurance Coverage Issues: Pollution exclusion Occurrence Choice of Law Notice Allocation Etc. 19
  20. 20. C LI M AT E C H AN G E Insurance Coverage ERRORS & OMISSIONS COVERAGE TRUE OR FALSE GIVING ADVICE ABOUT HOW TO MAKE YOUR CLIENT’S BUSINESS “CARBON NEUTRAL” IMPLICATES THE POLLUTION EXCLUSION 20
  21. 21. C LI M AT E C H AN G E Insurance Coverage DIRECTORS AND OFFICERS COVERAGE Issue: Alleged Misleading Disclosures Wrongful Act: “any breach of duty, neglect, error, misstatement, misleading statement, omission or other act wrongfully done or attempted by the Insured” Cases concerning pollution exclusion: National Union Fire Ins. Co. of Pittsburgh, Pa. v. U.S. Liquids, Inc. (5th Cir. 2004) Owens Corning v. National Union Fire Ins. Co. of Pittsburgh, Pa. (6th Cir. 1998) Sealed Air Corp. v. Royal Indemnity Co. (N.J. App. Div. 2008) Boliden Ltd. v. Liberty Mut. Ins. Co. (Ont. Super. Ct. 2007) 21
  22. 22. C LI M AT E Contracts C H AN G E Insurance Coverage CONTRACTS • Force majeure • Definition of hazardous substance • REC ownership
  23. 23. C LI M AT E Contracts C H AN G E Insurance Coverage Uniform Commercial Code “(a) Delay in delivery or non-delivery in whole or in part by a seller who complies with [this section] is not in breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was the basic assumption on which the contract was made …. U.C.C. § 2-615.
  24. 24. C LI M AT E Contracts C H AN G E Insurance Coverage 6.1 Definition of Force Majeure. (a) The term “Force Majeure”, as used in this Agreement, means causes or events that delays or prevents a Party from timely performing all or a portion of its obligations under this Agreement or from complying with all or a portion of the conditions under this Agreement if such act or event, despite the exercise of reasonable efforts, cannot be avoided by and is beyond the reasonable control of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance, or noncompliance.
  25. 25. C LI M AT E Contracts • C H AN G E Insurance Coverage Climate Changed Force Majeure Clause (b) Without limiting the generality of the foregoing, so long as the following events, despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the reasonable control of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance or noncompliance, Force Majeure events may include: acts of God, sudden actions of the elements such as heavy rains, floods, earthquakes, hurricanes, ice storms, landslides or tornadoes; high winds of sufficient strength or duration to materially damage the Project or significantly impair its operation for a period of time longer than normally encountered in similar businesses under comparable circumstances; long-term material changes in Energy potential across the Project caused by climactic change; lightning; fire; volcanic activity; sabotage; vandalism beyond that could reasonably be prevented by Seller; terrorism; war; riots; explosion; blockades; insurrection; strike; slow down or labor disruptions (even if such difficulties could be resolved by conceding to the demands of a labor group); directives from a Transmission Provider causing Seller to divert Energy to address reliability concerns; forced facility outages affecting the Project; system emergency; and actions or inactions by any Governmental Authority taken after the date hereof (including the adoption or change in any rule or regulation or environmental constraints lawfully imposed by such Governmental Authority .
  26. 26. C LI M AT E Contracts C H AN G E Insurance Coverage CONSIDERATIONS – “FDIC” – Foreseeability – DIfficulties in performance sufficient to invoke the clause – “Cause” of the non-performance “As the [defendant] points out, force majeure clauses have traditionally applied to unforeseen circumstances -- typhoons, citizens run amok, Hannibal and his elephants at the gates -with the result that the Court will extend the [force majeure clause] only to those situations that were demonstrably unforeseeable at the time of contracting.” URI Cogeneration Partners, L.P. v. Board of Governors, 915 F. Supp. 1267, 1288 (D.R.I. 1996).
  27. 27. C LI M AT E Contracts C H AN G E Insurance Coverage “Environmental Pollution” shall mean the actual, threatened or impending disposal, discharge, dispersal, presence, release, escape, emission, or seepage of smoke, vapor, soot, fumes, particles, acids, alkalis, toxic chemicals, liquids, gases, waste materials, irritants, or any other pollutant, contaminant, or substance alleged to be injurious, hazardous, toxic, or contaminating, including without limitation any “hazardous waste” as that term is defined in 42 U.S.C. § 9601 or any other environmental law or regulation presently existing or ever existing, in, into, on or under any land, soil, air, water course, body of water and/or atmosphere or other tangible things.
  28. 28. C LI M AT E Contracts C H AN G E Insurance Coverage RENEWABLE ENERGY CERTIFICATES What is a REC? A REC (pronounced: rěk) represents the property rights to the environmental, social, and other nonpower qualities of renewable electricity generation. A REC, and its associated attributes and benefits, can be sold separately from the underlying physical electricity associated with a renewable-based generation source. USEPA, Renewable Energy Certificates, http://www.epa.gov/greenpower/gpmarket/rec.htm
  29. 29. C LI M AT E Location C H AN G E Insurance Coverage LOCATION • Flood Plain mapping • Storm Surge • Water resources
  30. 30. C LI M AT E Location C H AN G E Insurance Coverage REQUIREMENTS FOR FLOOD INSURANCE • A) Borrower shall at all times provide, maintain and keep in force or cause to be provided, maintained and kept in force, at no expense to Lender, the following policies of insurance with respect to the Property and Borrower, as applicable: • …(ii) flood insurance if the Improvements are located in a special flood hazard area as designated by the Director of the Federal Emergency Management Agency, in sufficient amounts as determined by Lender.
  31. 31. C LI M AT E Location C H AN G E Insurance Coverage Problems with Flood Plain Mapping • “… the impacts of climate change are not taken into account during the development of FEMA flood hazard area mapping.” Recommendations of the DRBC Flood Advisory Committee for More Effective Floodplain Regulations in the Delaware River Basin 9 (Oct. 2009) • Uncertainty in flood stage measurements can be approximately one foot, which translates to a horizontal uncertainty of approximately 40 feet in the coastal flood plain. “This uncertainty has a significant impact on the delineation of inundated areas on flood maps.” National Research Council of the National Academies, Mapping the Zone: Improving Flood Map Accuracy (2009).
  32. 32. C LI M AT E Location C H AN G E Insurance Coverage Riparian Flood Map (new) • http://www.personal.psu.edu/rul135/geog482/project_3/FM4102380364D.jpg
  33. 33. C LI M AT E Location C H AN G E Insurance Coverage Moving Ahead for Progress in the 21st Century Act, aka "MAP-21 (2012) (House: 373-52; Senate: 74-19) 100215(d) Future Conditions Risk Assessment and Modeling Report(1) IN GENERAL- The Council shall consult with scientists and technical experts, other Federal agencies, States, and local communities to-(A) develop recommendations on how to-(i) ensure that flood insurance rate maps incorporate the best available climate science to assess flood risks; and (ii) ensure that the Federal Emergency Management Agency uses the best available methodology to consider the impact of-(I) the rise in the sea level; and (II) future development on flood risk; ...
  34. 34. C LI M AT E Location C H AN G E Insurance Coverage Rising Sea Levels – Historical Fact James Titus, Rising Seas, Coastal Erosion and the Takings Clause: How to Save Wetlands and Beaches without Hurting Property Owners, 57 Md. L.R. 1279, 1299 (1998)
  35. 35. C LI M AT E Location C H AN G E Insurance Coverage Rising Sea Levels – The Future Estimates for twenty-first century sea level rise from semiempirical models as compared to the IPCC Fourth Assessment Report (AR4). Source: A new view on sea level rise, Stefan Rahmstorf, Nature Reports Climate Change , 44 - 45 (2010) Published online: 6 April 2010 doi:10.1038/climate.2010.29
  36. 36. C LI M AT E Location C H AN G E Insurance Coverage http://www2.ucar.edu/atmosnews/opinion/8585/dissecting-sandys-surge
  37. 37. C LI M AT E Location Maryland. The Barrier Islands. Ocean City. Do the math. C H AN G E Insurance Coverage
  38. 38. C LI M AT E Location C H AN G E Insurance Coverage Ocean City, Maryland Post Sandy
  39. 39. C LI M AT E Location C H AN G E Insurance Coverage Mantoloking on March 18, 2007 (Source: NOAA via NASA) Mantoloking on October 31, 2012 (Source: NOAA via NASA)
  40. 40. C LI M AT E Location C H AN G E Insurance Coverage Ownership of the Littoral – The Rule Part 1 • “It is well established that the title of land below the highwater mark, as well as rivers or streams within the ebb and flow of the tide, belong to the public.” Board of Public Works v. Larmar Corp., 277 A.2d 427, 262 Md. 24 , 47 (1971) (citations omitted) • Rivers or streams within the ebb and flow of tide, to high water mark, belong to the public, and in that sense are navigable waters; all the land below high water mark, being as much a part of the jus publicum, as the stream itself. Id. at 537. Day v. Day, 22 Md. 530, 537 (1865)
  41. 41. C LI M AT E Location C H AN G E Insurance Coverage • Maryland Rule - Section 720 of the Wetlands Act of 1970 (Art. 66C) (now Env. Code 16-201): • 'The owner of land bounding on navigable waters shall be entitled to all natural accretions to said land and to make improvements into the waters in front of said land for the purposes of preserving his access to navigable water or for protecting his shore against erosion. After an improvement has been constructed, it shall become the property of the owner of the land to which it is attached.
  42. 42. C LI M AT E Location C H AN G E Insurance Coverage Ownership of the Littoral – The Rule Part 2 • First, where lands are bounded by water, it may well be regarded as the expectancy of the riparian owners that they should continue to be so bounded. Second, the quality of being riparian, especially to navigable water, may be the land's 'most valuable feature' and is part and parcel of the ownership of the land itself.... Riparianness also encompasses the vested right to future alluvion, which is an 'essential attribute of the original property. By requiring that the upland owner suffer the burden of erosion and by giving him the benefit of accretions, riparianness is maintained. • Bonelli Cattle. Co. v. Ariz., 414 U.S. 313, 326 (1973).
  43. 43. C LI M AT E Location C H AN G E Insurance Coverage Maryland’s Rule “Land inundated by mean high water reverts to State ownership” Dep’t of Natural Resources v. Mayor & Council of Ocean City, 274 Md. 1, 15 (1975)
  44. 44. C LI M AT E Location C H AN G E Insurance Coverage Ownership of the Littoral – The Rule Part 2 • “The proprietor of lands having a boundary on the sea is obliged to accept the alteration of his boundary by the changes to which the shore is subject. He is subject to loss by the same means that may add to his territory, and, as he is without remedy for his loss, so he is entitled to the gain which may arise from alluvial formations.” Ocean City Ass'n v. Shriver, 64 N.J.L. 550 (E. & A. 1900) AVULSION ACCRETION EROSION
  45. 45. C LI M AT E Location C H AN G E Insurance Coverage Shriver - The Lay of the Land (Water) in 1882 Howell/ Shriver
  46. 46. C LI M AT E Location C H AN G E Insurance Coverage Shriver - The Lay of the Land (Water) in 1895 Howell/ Shriver
  47. 47. C LI M AT E Location C H AN G E Insurance Coverage Shriver - The Lay of the Land (Water) in 1897 N Howell / Shriver Ocean Avenue Ninth Street Riparian Grant Atlantic Ocean Tenth Street MHW 1897
  48. 48. C LI M AT E Location C H AN G E Insurance Coverage Stop The Beach Renourishment, Inc. v. Florida Dept. of Environmental Protection 130 S.Ct. 2592 (2010) • Ruling: The State is the rightful owner of the disputed stretch of sand • Avulsion, Not Accretion "if an avulsion exposes land seaward of littoral property that had previously been submerged, that land belongs to the State even if it interrupts the littoral owner’s contact with the water." Opinion at 26.
  49. 49. C LI M AT E Location C H AN G E Insurance Coverage Ownership of the Littoral – Problems • Landowner loses uplands. • Landowner loses uplands, that subsequently accrete. • Landowner in bad faith fills tidelands. • Landowner in good faith fills tidelands. • Landowner develops accreted areas. • Landowner develops uplands. • Landowner bulkheads uplands. • Landowners fills uplands.
  50. 50. C LI M AT E Location C H AN G E Insurance Coverage Example http://blog.foreignpolicy.com/files/images/080613_iowa.jpg
  51. 51. C LI M AT E Location C H AN G E Insurance Coverage Mapping Mean High Tide – Past Disputes • Dickinson v. Fund for Support of Free Public Schools, 95 N.J. 65 (1983) – 1. L. 1968, c. 404 - N.J.S.A. 13:1B‑13.1 et seq. – 2. Constitutional Amendment - 1981 – 3. Supreme Court - 1983 15 Years for an Answer!
  52. 52. C LI M AT E Location C H AN G E Insurance Coverage Rolling Easements • Adopted in Texas, South Carolina • Allows migration of shoreline inland by prohibiting armoring • Vests upon the rise in Mean High Tide • Risk of shoreline retreat transferred to owner • Avoids “taking” issue because cost of easement can be insubstantial in discounted dollars
  53. 53. C LI M AT E Location C H AN G E Insurance Coverage Example of Rolling Easement Tex. Nat. Res. Code Ann,. § 61.011 (c) The commissioner shall strictly and vigorously enforce the prohibition against encroachments on and interferences with the public beach easement. (d) The commissioner shall promulgate rules, consistent with the policies established in this section, on the following matters only: (1) acquisition by local governments … of access ways sufficient to provide adequate public ingress and egress to and from the beach within the area described in Subdivision (6); (6) construction on land adjacent to and landward of public beaches and lying in the area either up to the first public road generally parallel to the beach or to any closer public road not parallel to the beach, or to within 1,000 feet of mean high tide, whichever is greater, that affects or may affect public access to and use of public beaches;
  54. 54. C LI M AT E Location C H AN G E Insurance Coverage The Nitty-Gritty • PLANNING FOR RISING SEA LEVELS – Map Changes – Land Transfer Mechanism (lease, fee simple) – Electricity Supply – Insurance – Zoning – Water Supply – Opportunities
  55. 55. C LI M AT E Location C H AN G E Insurance Coverage Water scarcity is the new global warming Commentary: Management is key to prosperity and survival April 02, 2012|Thomas Kostigen NEW YORK (MarketWatch) — The global director of water stewardship for Coca-Cola Co. says that water risk isn’t imminent; it’s already manifest. Greg Koch, who spoke at the Financial Times sustainability conference in New York City on Thursday, issued dire warnings and a call to arms for investors and corporations around the world along with governments. And he wasn’t alone. Robert Hormats, Undersecretary of State for Economics, Energy and the Environment says disputes or outright water wars are imminent in the near future.
  56. 56. C LI M AT E Location C H AN G E Insurance Coverage
  57. 57. C LI M AT E Location C H AN G E Insurance Coverage GEORGIA DROUGHT Georgians have gotten a swift education: Since 1999, the state has spent more years in drought than in normal conditions. Federal maps show that more than half of Georgia is now in extreme or exceptional drought, at a time when 70% of the country is experiencing abnormal aridity. http://articles.latimes.com/2012/sep/16/nation/la-na-georgia-drought-20120916
  58. 58. C LI M AT E Location Condition C H AN G E Insurance Coverage Potential Impacts Increased Flooding Infrastructure damage Increased contamination from waste sites (e.g., animal waste) Increased turbidity – higher treatment levels/costs Increased potential of wells flooding – bacteriological contamination. Increased Air/Water Temperature Increased evaporation rates – less water availability Algal blooms – toxins and increased disinfection byproducts Increased raw and finished water temperatures – treatment changes Increased water demand for irrigation and energy production Changes in Precipitation and Increased Runoff Changes in the seasonality of precipitation – lower stream flow and water availability during peak demand Increased runoff – results in higher pollutant loads in source waters, increased turbidity of surface waters, and stream bed degradation Longer Dry Periods and Droughts Decreased surface water and groundwater levels Higher water demand – irrigation, energy, and outdoor water use Sea Level Rise Low lands will experience inundation and flooding Salt water intrusion in coastal aquifers Low lying wells more vulnerable to flooding More Frequent and Intense Tropical Storms Damage to utility treatment plants and infrastructure from wind, flooding, and power outages Post-event water quality impacts – higher sediment and pathogen loads
  59. 59. C LI M AT E C H AN G E Insurance Coverage Increased Flooding Infrastructure damage Increased contamination from waste sites (e.g., animal waste) Increased turbidity – higher treatment levels/costs Increased potential of wells flooding – bacteriological contamination. Increased Air/Water Temperature Increased evaporation rates – less water availability Algal blooms – toxins and increased disinfection byproducts Increased raw and finished water temperatures – treatment changes Increased water demand for irrigation and energy production Changes in Precipitation Changes in the seasonality of precipitation – lower stream flow and water and Increased Runoff availability during peak demand Increased runoff – results in higher pollutant loads in source waters, increased turbidity of surface waters, and stream bed degradation Longer Dry Periods and Droughts Decreased surface water and groundwater levels Higher water demand – irrigation, energy, and outdoor water use Sea Level Rise Low lands will experience inundation and flooding Salt water intrusion in coastal aquifers Low lying wells more vulnerable to flooding More Frequent and Intense Tropical Storms Damage to utility, treatment plants and infrastructure from wind, flooding, and power outages Post-event water quality impacts – higher sediment and pathogen loads http://www.mde.state.md.us/programs/Water/Water_Supply/Documents/120516_CCbrochure_Web.pdf
  60. 60. C LI M AT E C H AN G E Regulations Insurance Coverage REGULATION SEC Guidance EPA Greenhouse Gas Reporting Rules
  61. 61. C LI M AT E C H AN G E Regulations Insurance Coverage SEC Issues Interpretive Guidance on Disclosure Related to Business or Legal Developments Regarding Climate Change FOR IMMEDIATE RELEASE 2010-15 Washington, D.C., Jan. 27, 2010 — The Securities and Exchange Commission today voted to provide public companies with interpretive guidance on existing SEC disclosure requirements as they apply to business or legal developments relating to the issue of climate change.
  62. 62. C LI M AT E C H AN G E Regulations Insurance Coverage TITLE 40--Protection of Environment CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY SUBCHAPTER C--AIR PROGRAMS PART 98--MANDATORY GREENHOUSE GAS R
  63. 63. C LI M AT E C H AN G E Regulations Insurance Coverage general stationary fuel combustion  iron and steel production  zinc production  lead production   electric generation  lime manufacturing municipal solid waste landfills  adipic acid production    aluminum production miscellaneous uses of carbonate suppliers of coal-based liquid fuels  ammonia manufacturing  nitric acid production   cement production  petrochemical production suppliers of petroleum products  ferroalloy production  phosphoric acid production  suppliers of natural gas and natural gas liquids  glass production    HCFC-22 production and HCFC-23 destruction pulp and paper manufacturing  silicon carbide production suppliers of industrial greenhouse gases and suppliers of CO2 hydrogen production  titanium dioxide production  
  64. 64. C LI M AT E C H AN G E Regulations Insurance Coverage The energy used to heat and power buildings in the U.S. currently makes up about 38 percent of the nation’s total CO2 emissions. U.S. Department of Energy, 2008 Buildings Energy Data Book ch. 1, p. 20 (Nov. 2008). Building emissions are projected to increase and are expected to contribute approximately 43 percent of the U.S. total of CO2 emissions by 2030. Id. U.S. building emissions nearly equal the aggregate carbon emissions from the countries of Japan, France, and the United Kingdom. Id. Residential and commercial buildings in the United States use more energy and emit more GHGs than the U.S. transportation sector. Energy Information Administration, U.S. Department of Energy, Energy Consumption by Section Overview (2008). William McInerney & Elizabeth Mattern, “Greenhouse Gases And Commercial Real Estate,” The Practical Real Estate Lawyer (May 2009)
  65. 65. C LI M AT E C H AN G E Technology Insurance Coverage TECHNOLOGY Electric or CNG Cars Solar Installation
  66. 66. C LI M AT E C H AN G E Technology Insurance Coverage ELECTRIC CARS The Toyota Prius, the first mass-produced hybrid gasoline-electric car, was introduced worldwide in 2001. As of February 2012, a total of 2.5 million Prius cars have been sold worldwide and it is the world's best selling hybrid.[12] As of July 2012[update], series production all-electric cars available in some countries include the Tesla Roadster, REVAi, Buddy, Mitsubishi i MiEV, Tazzari Zero, Nissan Leaf, Smart ED, Wheego Whip LiFe, Mia electric, BYD e6, Bolloré Bluecar, Renault Fluence Z.E., Ford Focus Electric, BMW ActiveE, Coda, and Tesla Model S. The Leaf, with more than 32,000 units sold worldwide by early July 2012, is the world's top-selling highway-capable all-electric car. [13] As of July 2012[update], production plug-in hybrids available include the BYD F3DM, Chevrolet Volt/Opel Ampera, Fisker Karma, and Toyota Prius Plugin Hybrid. The Chevrolet Volt family, with more than 20,000 units sold through June 2012 in the U.S., Canada, the Netherlands, Germany, and Switzerland, is the world’s best-selling plug-in hybrid.[14][15][16][17][18][19] [20] http://en.wikipedia.org/wiki/Electric_vehicle
  67. 67. C LI M AT E C H AN G E Technology Insurance Coverage Advantages and disadvantages of electric vehicles •More efficient - net CO2 production from an electric car is typically one-half to one-third of that from a comparable combustion vehicle. •Far less pollution – no emissions at point of operation, far less noise pollution too •Simple – no gearboxes, regenerative braking, very efficient, less wear •Energy efficiency - “tank to wheels” efficiency is a factor of 3 higher than internal combustion engines •Range – low because low energy density and long recharge time, also few charging stations
  68. 68. C LI M AT E C H AN G E Technology Insurance Coverage • • • • • • Electrical capacity Payment for electricity, improvements Efficiency planning Zoning ADA compliance Building code
  69. 69. C LI M AT E C H AN G E Technology Insurance Coverage
  70. 70. C LI M AT E C H AN G E Insurance Coverage EV v. CNGV ADVANTAGE ELECTRIC CAR Efficiency √ Filling Stations √ Fuel Cost COMPRESSED NATURAL GAS √ Vehicle Cost Range √ Charge Time √ Compatibility with Gasoline √
  71. 71. C LI M AT E C H AN G E Technology Insurance Coverage PV Solar is HOT • Annual Solar Installations in the U.S. are expected to explode from under 3,000 MW in 2012 to 8,000MW in 2016. U.S.SOLAR MARKET INSIGHT REPORT | Q2 2012 | FULL REPORT GTM Research & SEIA 71
  72. 72. C LI M AT E C H AN G E Technology Insurance Coverage Why? vs. Why not? • Drivers: – To “Go Green”. – To reduce, or better predict, spending on energy. – Energy diversification and reliability. – Incentives can create an alternative revenue stream. • Barriers: – Cost of Systems. – Uncertainty surrounding incentives and subsidies creates apprehension as it relates to the support of long term capital investments. 72
  73. 73. C LI M AT E C H AN G E Technology Insurance Coverage What is driving the market expansion? Overview of incentives. 73
  74. 74. C LI M AT E C H AN G E Technology Insurance Coverage • • What is driving the market expansion? Additional incentives. Net-Metering – Projects in service territories that meet eligibility criteria may receive credit at close to the retail rate for excess generation. Certain states have established Solar Renewable Energy Credits (“SREC’s”) – 1 SREC = 1MWh of solar electricity produced – 10kW solar capacity ≅ 12 SREC’s per year – SREC’s have monetary value established at monthly auctions on a state-by-state basis with some SREC’s being transferable between states. • SREC values can greatly enhance financial returns. • As more States establish SREC’s and auctions become more liquid they will become a large incentive for solar installs. • SREC’s are currently trading anywhere from $40 (Delaware) to $540 (Massachusetts) (Source: SRECTrade.com). 74
  75. 75. C LI M AT E C H AN G E Technology Insurance Coverage Can I do this? What makes a good site? • Rooftop › Flat or south facing pitched. › Minimal to no shading or obstacles. › < 10 years old and in good condition. › Structurally sound – can hold 4-7 lbs/ ft2 of additional load. › 10,000 ft2 or more uninterrupted area. • Ground Mount › Flat or south facing. › 3 acres minimum; 10-12 acres ideal › Near interconnection point or location requiring load. › Zoning and environmental conditions may restrict project. 75
  76. 76. C LI M AT E C H AN G E Technology Insurance Coverage • • • • • • • Success Story – Rutgers University, Livingston Campus, 2008 project 1.4 megawatt (MW) solar array 7,700 panels on a 7-acre site. The system produces enough energy to account for 10% of Rutgers’ energy consumption for the campus and will reduce carbon dioxide emissions over 1,200 tons on an annual basis. Project Cost: $10 million – $5.1 million – financed by Rutgers. – Remainder funded via the NJ BPU’s Clean Energy Program. The program is aimed at public agencies and institutions to help them defer the cost of implementing solar projects. Project will save Rutgers more than $200,000 in its first year of operation, rising to more than $300,000 in annual savings by the end of the 15-year program. Besides receiving rebates, Rutgers also receives SRECs which can be sold to electric suppliers to provide a source of revenue that helps the university offset the costs of installing the solar farm. Value of SRECs will enable Rutgers to pay off the full cost of the system in 6-years, enabling the University to receive an alternative revenue stream from the project for years to come. 76
  77. 77. C LI M AT E C H AN G E Technology Insurance Coverage Solar Photovoltaic Installation @ Mount St. Mary's University Back to Solar Installations | Update this Information Installed in 2012 at Mount St. Mary's University in Emmitsburg, MD Developer/Installer Constellation Energy PV System Owner Constellation Energy Installed Cost (USD) $60,000,000 Ownership Type Solar Lease Ownership SREC Not Institution-owned Estimated Annual Utility Savings Data Not Provided Technical Details Capacity 17400 kilowatts Annual Production 20,000,000 kWh Installation Type Ground mount
  78. 78. C LI M AT E C H AN G E Conclusion Insurance Coverage THANK YOU. J. Wylie Donald (302) 984-6361 jdonald@mccarter.com climatelawyers.com
  79. 79. C LI M AT E C H AN G E Conclusion Insurance Coverage Climate Change Legal Articles by J.W. Donald • • • • • • Getting Ahead of Storm Surge, Especially in the Era of Climate Change, BNA Environment Reporter (June 20, 2012) Force Placed Insurance: A Coverage Lifeboat?, Law360 (May 22, 2012) Coverage for Carbon Dioxide Claims: Considering the Evolution of “Absolute” Exclusions, The Brief (Summer 2011) Underwater? What Climate Change Means for a Loan Portfolio Near the Flood Plain, Massachusetts Banker (1st Quarter 2011) Covering the Green Roof - With Insurance, LexisNexis Emerging Issues 4168 (Aug. 2009) (co-author) Carbon Dioxide: Harmless, Ubiquitous and Certainly not a “Pollutant” under a Liability Policy’s Absolute Pollution Exclusion, 39 Seton Hall L. Rev. 107 (2009) (co-author)

×