Our last entry discussed the concept of “Black Swan” events, a term created by noted author Nassim Nicholas Taleb to describe an event that is (a) so low in probablility that it is unforeseeable and (b) so catastrophic in impact that it changes history. Certainly, risk assessments are predictive in nature and no one can predict the future with complete certainty. But in our view, one of the best tools available for risk assessments is an open mind. This can be a challenge in the EHSS world as we generally have engineering and other technical backgrounds. We have been trained to seek absolutes and eliminate uncertainties. At Elm, we believe that involving external support helps to identify and explore events (and their related exposures) that are relevant but get “technically rationalized” by internal staff. With the BP oil spill and the December 2008 Kingston, Tennessee coal ash pond failure, we began thinking about some of the Black Swan events discussed with clients in the past. Below are a handful of EHSS Black Swan risk events that we have discussed with clients over the past years – and some that are currently on our mind. Radical change in EPA’s regulation of coal
Read more →Reuters has reported that the US Senate anticipates bringing the latest carbon emission bill to the floor next week. Although details are currently sketchy, there are some interesting facets revealed in that article: - The bill’s greenhouse gas (GHG) reduction target is 17% by the year 2020; - The baseline year for this reduction is 2005; - Regional and state-specific GHG cap-and-trade programs would be eliminated and replaced by a federal program. - Cap-and-trade for electric power generators would begin in 2012; for manufacturing, the program would begin in 2016; - Domestic and international off-sets would be allowable - Transportation emissions reductions would be achieved through a motor fuel fee that would hopefully spur various forms of innovation, efficiency and reductions One glaring aspect of these few details is whether/how companies will get “early action credit” for their GHG reduction efforts achieved prior to this bill’s 2005 baseline year. Corporations that made major strides in GHG reductions between 2000 and 2005 may find themselves on the wrong end of the “80/20 rule”. Those who chose to wait for more certainty could be in an improved competitive situation by spending less money to harvest the “low hanging fruit” to hit the
Read more →Environmental Leader has reported that the Hungarian government sold 2 million previously used CERs, the market became tepid. Then when prices fell from more than 12 euro per credit to less than one euro, trading was suspended on two exchanges, Bluenext and Nord Pool. The NYT provided more details of the transaction, stating The credits appear to be part of massive blocks of CERs awarded to Eastern European states and Russia after the collapse of Soviet-era industry. This created a loophole used by Hungary to reintroduce used CERs back into the market… Carbon traders said countries like Hungary were exploiting the loophole to earn more money from the carbon trading system than they could by selling the credits that they had previously earned under the Kyoto system… The traders said at least one other E.U. member state had acted similarly earlier this year. The EU said they were “surprised and concerned” about the situation. BusinessWeek quoted others who expressed more urgency about the matter: “The supply and demand dynamics have been changed,” said Paul Kelly, chief executive officer of JPMorgan’s EcoSecurities unit. While the scope of the problem has yet to be determined, buyers are “questioning the authenticity” of what
Read more →The environmental newsletter of the Association of General Contractors (AGC) sheds some light on the status of EPA’s developing regulation of coal ash or coal combustion products (CCP). The newsletter indicated that the agency expects to release a rulemaking on coal combustion residuals (or waste) in April 2010, with a hazardous designation reported likely. CCP has been exempted from regulation as a hazardous waste through an interpretation of existing hazardous waste law. Under that interpretation, coal ash was “pardoned” as part of the “Bevill Amendment” – a 1980 amendment to the federal waste management legistration that excluded from regulation certain mining and mineral processing waste. The amendment also mandated that EPA conduct a study to determine how to manage CCP. The study was completed and the findings were presented to Congress in 1988 and again in 1999 – both times, EPA recommended that CCP not be regulated as hazardous waste. Two regulatory determinations were subsequently published – one in 1993 and one in 2000, both again affirming that regulation of CCP as hazardous waste was not warranted. Although EPA has not yet released its proposed regulation, AGC’s article stated that sources indicate that EPA is strongly favoring a hazardous waste
Read more →In 2009, there was a general sense in the US that some regulatory and economic certainty would finally be established relative to greenhouse gases, and CO2 in particular. The current administration made highly public moves and statements to that effect, which were mirrored by action in Congress and the Senate. EPA issued its finding of endangerment. And there was significant optimism that the COP15 Copenhagen meeting would bear fruit. Fast forward to February 2010. There has been quite a shift in direction and now there is arguably more business risk related to CO2/GHG than there was going into 2009. Among recent highlights: Nike formally announced that they are abandoning the use of carbon offsets and Renewable Energy Certificates (RECs), citing, among other concerns: there is substantial scrutiny of the use of RECs, in particular related to whether they in fact help create new renewable power, or whether they are simply payment to a project that would have existed anyway. … Moving forward, however, our preference is to achieve climate neutrality through a combination of energy efficiency and the purchase of more direct forms of renewable energy, through on-site applications and other means. The German Emissions Trading Authority (DEHSt) computer system
Read more →EPA announced two more major Clean Air Act enforcement settlements today that stemmed from the Agency’s long-standing industry New Source Review (NSR) enforcement initiatives. Saint-Gobain Containers, Inc. of Muncie, Ind. agreed to install pollution control equipment at an estimated cost of $112 million to reduce emissions of NOx, SO2, and PM by approximately 6,000 tons each year. The settlement covers 15 plants in 13 states. This is the federal government’s first nationwide Clean Air Act settlement with a glass manufacturer that covers all of a company’s plants. In addition, as part of the settlement, Saint-Gobain has agreed to pay a $2.25 million civil penalty. Lafarge North America, Inc., based in Herndon, Va., and two of its subsidiaries agreed to install and implement control technologies at an expected cost of up to $170 million to reduce emissions of NOx by more than 9,000 tons each year and SO2 by more than 26,000 tons per year at their cement plants. In addition, as part of the settlement, Lafarge has agreed to pay a $5 million civil penalty. Companies potentially on EPA’s NSR radar screen should review their environmental audit programs to evaluate how critically the programs evaluate plant changes that could trigger
Read more →EPA published an Advanced Notice of Proposed Rulemaking (ANPRM) to expand the universe of industries, operations and sites subject to federal financial responsibility requirements. EPA has identified the following industry sectors, and one group of facilities because they comprise 1,073 sites, or approximately 70 percent of all non- Federal, proposed, finalized, and deleted sites on the NPL. - the Chemical Manufacturing industry (NAICS 325), - the Petroleum and Coal Products Manufacturing industry (NAICS 324), - the Electric Power Generation, Transmission, and Distribution industry (NAICS 2211), - the Waste Management and Remediation Services industry (NAICS 562) (including municipal and industrial landfills), - the Chemical Manufacturing industry (NAICS 325), - the Wood Product Manufacturing industry (NAICS 321), - the Fabricated Metal Product Manufacturing industry (NAICS 332), - the Electronics and Electrical Equipment Manufacturing industry (NAICS 334 and 335), - the Petroleum and Coal Products Manufacturing industry (NAICS 324), and - facilities engaged in the recycling of materials containing CERCLA hazardous substances. EPA is requesting comments on a wide range of information, including critical environmental risk-oriented information. Some of this requested data may not be formalized – or even exist – within all companies potentially subject to the future rule. For instance, the
Read more →In case you haven’t yet seen it, EPA wrapped up the year with three significant announcements. First, the Agency published its 2009 compliance enforcement results. The summary statistics are here. A few points from their website In fiscal year (FY) 2009, the Environmental Protection Agency’s enforcement and compliance program concluded civil and criminal enforcement actions requiring polluters to invest an estimated $5.4 billion to reduce pollution, clean up contaminated land and water, achieve compliance and fund environmentally beneficial projects. Civil and criminal defendants committed to reduce pollution by approximately 570 million pounds annually once all required controls are fully implemented. Approximately 57% of pollution reductions and 71% of pollution control investments obtained through the Agency’s FY 2009 enforcement actions focused on water and air pollution priority problems. In FY 2009, EPA opened 387 new environmental crime cases, the largest number of criminal case initiations in five years. Second, EPA announced it has settled with Duke Energy to resolve violations of the Clean Air Act’s new source review requirements found at the company’s Gallagher coal-fired power plant in New Albany, Ind., located directly across the Ohio River from Louisville, Ky. The lawsuit was filed in 1999. Under the settlement, Duke will
Read more →Today, EPA announced a final regulation that amends certain requirements for facilities subject to the Oil Spill Prevention, Control and Countermeasure (SPCC) rule. The amendments clarify regulatory requirements, tailor requirements to particular industry sectors, and streamline certain requirements for a facility owner or operator subject to the rule. This rulemaking marks the completion of the SPCC action, which was proposed on October 15, 2007, finalized on December 5, 2008, and for which the agency requested public comments again on February 3, 2009. In general, this final rule retains most of the December 5, 2008 provisions, with 3 major differences. EPA has eliminated the exemptions for: certain produced water containers; the alternative criteria for oil production facilities to be eligible for self-certification of their SPCC plan; and the exclusion of oil production and farm facilities from the “loading rack” requirements. The amendments do not remove any regulatory requirement for owners or operators of facilities in operation before August 16, 2002, to develop, implement and maintain an SPCC plan in accordance with the SPCC regulations then in effect. Such facilities continue to be required to maintain their plans during the interim until the applicable date for revising and implementing their plans under the new amendments.
Read more →The U.S. Environmental Protection Agency Administrator Lisa P. Jackson announced that the agency is stepping up its efforts on Clean Water Act enforcement. The plan announced outlines how the agency will strengthen the way it addresses the water pollution challenges of this century. These challenges include pollution caused by numerous, dispersed sources, such as concentrated animal feeding operations, sewer overflows, contaminated water that flows from industrial facilities, construction sites, and runoff from urban streets. The goals of the plan are to target enforcement to the most significant pollution problems, improve transparency and accountability by providing the public with access to better data on the water quality in their communities, and strengthen enforcement performance at the state and federal levels. Elements of the plan include the following: Develop more comprehensive approaches to ensure enforcement is targeted to the most serious violations and the most significant sources of pollution. Work with states to ensure greater consistency throughout the country with respect to compliance and water quality. Ensure that states are issuing protective permits and taking enforcement to achieve compliance and remove economic incentives to violate the law. Use 21st century information technology to collect, analyze and use information in new, more efficient
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