Tracing the Climate Culprits

We know that industries which produce fossil fuels or make heavy use of them in their production processes are major contributors to greenhouse gas emissions. A new tool identifies which of their operations are the biggest culprits.

Climate TRACE, a coalition of  researchers and NGOs, has just released a website that contains estimates of emissions by more than 70,000 individual facilities around the world. It has accomplished this amazing feat by amassing extensive data from remote sensing satellites and combining that with a variety of other public and commercial information. The process includes the use of artificial intelligence and machine learning.

The result is a resource that allows us to see, for example, which chemical and steel plants account for the most emissions. Users can also zoom into a specific geographic area and see how much individual power plants, mines, and oil fields are contributing to the climate crisis. The information can be broken down by the type of greenhouse gas, and it extends back to 2015.

Climate TRACE is not the only facility-level inventory of greenhouse gas emissions, but it appears to be the most detailed. Its great strength is that does not rely on company-reported data, which can too easily be manipulated.

By using satellites flying high above the earth, Climate TRACE is capturing unfiltered data directly from the facilities. It is, in effect, getting the power plants, refineries and the rest to confess the true impact they are having on the planet. A press release announcing the database claims that the use of AI will create increasingly accurate analyses of the satellite imagery.

What makes the tool even more powerful is that it incorporates ownership information about the facilities. It includes data on more than 4,000 companies, including state-owned enterprises, in 234 countries and administrative regions. A methodology document indicates that automated methods were used in compiling the data but few details are provided.

The website would be even more valuable if it added a feature allowing searches by facility and parent name and if it followed the lead of the Greenhouse Gas 100 and displayed emissions totals for large corporations.  These types of tabulations put more pressure on the companies with the worst results and help climate campaigners identify the most urgent targets.  

The extensive geographic scope of the data in Climate Trace will serve many purposes. For example, it reveals the extent to which emissions in Global South countries are caused by facilities owned by foreign investors. It also allows more accurate estimates of greenhouse gases being generated at various points in global supply chains.

The database arrives at a crucial time. One of the key questions being asked at the COP27 climate conference in Egypt is who will pay for the damage global warming is already creating as well as the cost of the adjustments needed to limit future damage. A substantial portion of that cost should fall on large corporations. Climate TRACE helps us determine which companies should get the biggest bills.

Getting Corporations to Own Up to Their Climate Impact

The Securities and Exchange Commission, according to various media reports, is getting ready to issue a rule requiring publicly traded companies to disclose their greenhouse gas emissions in a standardized way for the first time. The rule, which the Commission has been working on since last year, would also oblige firms to detail the financial risks associated with those emissions.

Some business advocacy groups are already raising concerns about the policy, arguing it would be better to let companies decide on their own whether and how to divulge the information. An official at the U.S. Chamber of Commerce told the Washington Post that putting the data in an SEC filing would open corporations to lawsuits.

This ignores the fact that climate litigation is already happening—and the cases are often based on the failure of companies to inform investors about climate risks. Including the risk disclosures in SEC filings might actually reduce potential liability.

It is true that many firms are voluntarily making data on their greenhouse gas emissions public. The problem is with the voluntary nature of that process. In fact, this is the case for all the disclosures firms produce as part of their ESG initiatives.  

Leaving it up to individual firms to make transparency decisions creates a host of problems. First is the issue of consistency. If each company can choose to release the information in whatever format it chooses, it may be difficult or impossible to make comparisons across corporations.

Whether as part of a deliberate attempt to conceal bad performance or just laziness, companies may publish information with gaps in terms of time periods, types of emissions, locations of emissions, etc.

It is unclear what recourse stakeholders have if they believe a corporation’s voluntary disclosures are incomplete or inaccurate. Such lapses in an SEC filing are a much more serious matter. In that regard, the Chamber official is correct about liability—but only in cases in which the corporation seeks to deceive.

What makes the arguments against the SEC rule even less legitimate is that the federal government is already collecting data on CO2 emissions from companies through the EPA’s Greenhouse Gas Reporting Program. The difference is that the EPA is obtaining the data on individual facilities—some 8,000 of them—rather than for each company as a whole. For the largest emitters, this limitation is rectified by the Greenhouse 100 Polluters Index, produced by the Political Economy Research Institute at the University of Massachusetts, which aggregates the data by parent company.

These resources are valuable, but there is still a need for mandatory corporate-wide reporting by all publicly traded companies—ideally including the amounts contributed by each firm’s different facilities as well as by its supply chain.

There is also a need for such reporting by larger privately held companies, such as Koch Industries, which is number 23 on the Greenhouse 100 list.

Standardized and comprehensive greenhouse gas disclosure is all the more important at a time when fossil fuel advocates are using the war in Ukraine as a pretext for rolling back initiatives to address the climate crisis.

Culpable 26

COP26, the United Nations Climate Change Conference now taking place in Glasgow, is primarily a gathering of governments. The idea is that political leaders from around the world can come together to make commitments that will address one of the most pressing problems confronting the human race.

The ability of nations to make substantial progress is, however, increasingly in question. European countries are reported to be worried that measures resulting in higher energy prices could prompt a populist backlash like the Yellow Vest movement in France. The ability of the U.S. Congress to enact significant climate legislation remains uncertain.

Moreover, the parties which are most responsible for the climate crisis are not governments or the people they represent, but rather the giant corporations whose operations and products account for a large portion of greenhouse gas emissions. Perhaps we should spend more time talking about the Culpable 26, or whatever number of major polluters we deem to be most worthy of castigation.

Identifying the worst climate culprits is complicated by the fact that many of them are claiming to be part of the solution rather than the problem. They tout their efforts to reduce emissions and many even claim to be moving toward net-zero.

There are several problems with these claims. The first is the “net” part. Many companies will end up focusing more on carbon offsets than reducing their emissions substantially.

The second is that the target dates they are setting are well into the future. The Net Zero Tracker lists about 575 large publicly traded corporations as having commitments to net zero or related goals. Of those, more than half set their target date at 2050 or later. They are giving themselves three decades to respond substantively to what amounts to a global emergency.

The third problem is that progress toward these goals will likely be measured by the corporations themselves. Self-reporting is pervasive in the world of corporate social responsibility and ESG, putting into question the entire enterprise.

After all, many of the companies vowing to meet climate goals have abysmal track records when it comes to regulatory compliance. Take the example of Royal Dutch Shell, the largest industrial company with a net zero commitment (by 2050).

As shown in Violation Tracker, Shell has racked up more than $875 million in environmental penalties from federal, state and local regulators in the United States alone. That shows the extent to which the company and its subsidiaries have run roughshod over pollution regulations.

Shell’s Violation Tracker page also shows hundreds of millions of dollars in penalties for other offenses such as accounting fraud (overstating its petroleum reserves) and false claims (underpaying royalties on oil produced under federal leases). In other words, Shell has a history not only of environmental misconduct but also of deceiving shareholders and the federal government.

Shell is far from unique in this regard. Many companies have a track record of deception. Self-reporting is not a reliable basis to determine whether big business is really reducing its damage to the climate.