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A practical guide to using the climate law to get cheaper solar panels, heat pumps, and more.
The new rules are complicated. Here’s how to make sense of them if you’re shopping for an electric vehicle.
It’s flawed, but not worthless. Here’s how you should think about it.
The long-delayed risk disclosure regulation is almost here.
A new era of transparency for corporate sustainability is coming — finally. After two years of deliberation, the Securities and Exchange Commission is expected to issue a final rule requiring public companies to make climate-related disclosures to investors. The decision could come as soon as next week.
The rule considers two categories of climate-related information relevant to investors: greenhouse gas emissions and exposure to climate-related risks like extreme weather or future regulations. While many companies voluntarily disclose this kind of information in other ways, the rules will both require and standardize climate-based reporting as a core part of a company’s fiduciary duty.
From almost the moment it appeared, the proposal has been the center of a lobbying firestorm. Some of the rule’s opponents write it off as part of an activist agenda — an indirect route to economy-wide carbon regulations. “The host of new requirements in this Proposed Rule are motivated by a small number of environmental activists who seek to steer the economy away from fossil fuels,” wrote twelve Republican attorneys general in a letter to the SEC responding to the proposal. The U.S. Chamber of Commerce, meanwhile, vowed to fight back against “unlawful and excessive government overreach.” (At a Chamber-sponsored event last October, SEC Chair Gary Gensler joked, “Wait, are you already suing us? I just walked in.”)
Certainly there are environmentalists who do see the rule as a tool to undermine the oil and gas industry. But proponents primarily make the case that the stakes are less about the atmosphere and more about protecting investors and the entirety of the financial system.
While we’re still waiting on the final rule — which was originally expected in the fall of 2022 and has been repeatedly delayed — here’s a catch-up on what we know so far.
At a basic level, the SEC makes rules saying what companies have to disclose and how so that investors can make well-informed decisions. The two types of information this particular rule covers — climate-related risks and greenhouse gas emissions — are distinct, but related.
The former is pretty straightforward. From the growing number of billion-dollar weather- and climate-related disasters in the United States to the ongoing exodus of insurance companies from fire and flood-prone areas to trade delays in the drought-stricken Panama Canal, it’s clear that climate change poses a substantial financial risk to businesses. It makes sense that investors would want to know how exposed a company’s warehouses or data centers or trucking routes are to wildfires and floods.
But why should investors care about a company’s emissions? Because they are an indicator of another type of risk.
“A shareholder is not necessarily concerned with whether a company is ‘on target’ with any climate commitment,” Boston University law professor Madison Condon writes, “but rather in assessing how exposed an asset may be to changes in global or local climate policy, energy prices, or shifts in consumer and investor sentiments.”
These changes are already in motion around the world, and are generally accelerating. Companies that aren’t preparing could be disadvantaged, or alternatively, could miss lucrative opportunities. Steven Rothstein, a managing director at the nonprofit Ceres, gave the example of the steel industry. If you think that, in the next several years, customers are going to ask for low-emission steel — which some already are doing — or that there might be a regulatory cost put on steel-related emissions, then a company with lower emissions will be better positioned to grow, while a company with higher emissions might have to spend a bunch of money to retrofit its factories.
Part of the SEC’s rationale for the rule is the proliferation of investor-led initiatives calling for government-mandated climate risk disclosure. “These initiatives demonstrate that investors are using information about climate risks now as part of their investment selection process and are seeking more informative disclosures about those risks,” the Commission wrote in its proposal. (Oil giant Exxon filed suit against the sponsors of one such proposal in January, having lost patience with proposals it said were “calculated to diminish the company’s existing business.”)
After the draft rule was released in March 2022, the SEC was bombarded by thousands of comments from investors, academics, NGOs, politicians, trade associations, and companies. One analysis of those comments by legal researchers found that investors were the most supportive group, with more than 80% in favor of the rule.
The most contentious aspect of the proposal invited criticism even from parties that were generally supportive of the rule. The SEC had taken a strong stance on emissions reporting, asking companies to disclose emissions indirectly related to their business, known as“scope 3” emissions. That means a company like Amazon wouldn’t just have to report the emissions from its warehouses and delivery trucks, but also an estimate of the emissions associated with producing and using all the products it sells. A company like Ford wouldn’t just have to report the emissions from its factories, but also from the production of the raw materials it uses, as well as from all the gasoline burned in the cars it sells.
Those in support of scope 3 reporting point to the fact that for many companies, including the two I just named, the number would vastly exceed their direct emissions.
In a legal review of why scope 3 emissions reporting matters, Condon warned that without it, companies could begin outsourcing their most emissions-intensive processes to third parties in order to appear greener than they actually are. She also argued that leaving out scope 3 obscures climate risks. She gave the example of electric vehicles, which can involve higher emissions during production than conventional cars but result in much lower emissions over their lifecycle. “When excluding Scope 3, an EV manufacturer is penalized, even though from the perspective of considering transition risk and climate impact, this makes little sense,” she wrote.
But companies and their trade associations threw every excuse at the idea of a scope 3 requirement: It would cost too much to gather the data; the data on supply chain emissions is unreliable and impossible to verify; since companies don’t directly produce these emissions, they aren’t relevant; etc.
And by all accounts, they won. The SEC is expected to drop requirements to report scope 3 emissions in the final rule.
However, that’s unlikely to satisfy opponents, many of whom, like the Republican attorneys generals who wrote letters to the Commission, say the SEC doesn’t have the legal authority to require climate-related disclosures at all. If there’s one thing that critics and supporters agree on, it’s that the rule, whatever it says, is going to be challenged in court.
A lot of companies are going to have to report their scope 3 emissions anyway. The European Union’s Corporate Sustainability Reporting Directive includes scope 3 and is expected to cover more than 50,000 companies, with some starting to report as soon as this year; U.S.-based businesses on EU-regulated exchanges, or with subsidiaries or parent companies in Europe, will be expected to comply. A similar rule voted into law in California last year also requires scope 3 emissions disclosures and covers any company doing business in the state — whether private or public — giving it broader reach than the SEC. However, Governor Gavin Newsom did not include any funding for the law in his budget proposal this year, creating concern that it will be delayed.
Danny Cullenward, a climate economist and legal expert, said the fate of the California regulations are important in light of the likely Supreme Court challenge to the SEC rule. “It's a lot harder to mount comparably broad challenges to state laws on this front,” he told me.
Despite the SEC’s narrow focus on protecting investors, the mandatory disclosure of corporate emissions and climate risks would have widespread effects — even some that regular people might feel. Suddenly, consumers would have better tools to compare the relative sustainability of different companies and products. Activists would have more documentation to hold companies accountable for greenwashing or failing to live up to their public climate commitments.
The rule is also set to spark an explosion in the businesses of corporate emissions accounting and climate risk analysis. Most companies don’t have the staff or expertise to track their emissions, and thus will have to turn either to specialized climate-specific firms like Watershed or all-purpose corporate accountants like Deloitte to manage the disclosure process for them. Similarly, analytics giants like Moodys and S&P Global will also be called upon to feed company data into climate models and spit out risk reports.
Both exercises come with inherent challenges and uncertainties. Climate risk researchers have warned that rating services keep their methodologies in a black box, making it hard to know whether they are using climate models appropriately. “The misuse of climate models risks a range of issues, including maladaptation and heightened vulnerability of business to climate change, an overconfidence in assessments of risk, material misstatement of risk in financial reports, and the creation of greenwash,” wrote the authors of a 2021 article in the journal Nature Climate Change.
“When you ask, ‘What is my exposure to future climate risks?,’ you're asking for a projection of future climate states and probabilities of different future climate outcomes and extreme weather events. There's an enormous amount of scientific uncertainty and complexity in getting to that,” Cullenward told me.
But while neither emissions accounting nor climate risk assessment may be perfectly up to the task yet, Cullenward argued that’s all the more reason for the SEC to get these rules in place.
“If you don't ask people to disclose what's going on, it's just sticking your head in the sand,” he said. “No one will ever know how to do it perfectly, getting out of the gate. To me that is not a reason to stop or to slow down, that is a reason to get started.”
Here’s what you need to know about the nuclear power comeback — including what’s going on, what’s new this time, and is it safe?
For a while there, nuclear energy looked like it was on its way out. After taking off post-World War II, it lost momentum toward the dawn of the 21st century, when sagging public support and mounting costs led to dozens of cancellations in the U.S. and drove the rate of new proposals off a cliff. Only a few reactors have been built in the U.S. this century; the most recent, Georgia Power’s Plant Vogtle units 3 and 4, were years behind schedule and billions of dollars over budget. Vogtle-3 came online last summer, with Vogtle-4 — which was delayed even further by an equipment malfunction — expected to follow early this year.
It’s funny how time works, though. With demand for reliable zero-carbon energy rising, a new wave of nuclear developers is trying to recapture some of the industry’s long-lost momentum. They’re entering the race to net-zero with big ambitions — and much smaller reactor designs. Whether you’re wondering about the state of the U.S. nuclear power sector, what’s new about new nuclear, where the nuclear waste is going, and of course, whether it’s safe, read on.
Let’s start with the basics.
Nuclear reactors generate electricity using a process called fission. Inside the reactor’s core, a controlled chain reaction splits unstable uranium-235 into smaller elements; that process releases heat — a lot of heat.
The reactors in today’s U.S. nuclear fleet fall into two categories: boiling water reactors and pressurized water reactors. Each circulates water through the reactor core to manage the temperature and prevent meltdowns, and both use the heat produced by fission to create steam that powers turbines and thereby generates electricity. The main difference is in the details: Boiling water reactors use their coolant water to produce electricity directly, by capturing the steam, whereas pressurized water reactors keep their coolant water in a separate system that’s under enough pressure to prevent the water from turning to steam.
Some experimental reactors and newer commercial designs use different cooling systems, but we’ll get into those later. Lastly, while nuclear energy is not considered renewable, in the sense that it relies on a finite resource (enriched uranium) for fuel, it is a zero-emission energy source.
The sector emerged in the late 1950s and expanded rapidly over the next several decades. At its peak, the country’s nuclear fleet included 112 reactors — a number that has declined to about 90 today. Most of the surviving plants were built between 1970 and 1990.
The shrinkage has partly to do with the nuclear disarmament movement, which arose during the Cold War and grew to encompass nuclear power development, as well. (As it happens, much of the present day environmental movement has its roots in anti-nuclear activism.) Then there was the partial nuclear meltdown at Three Mile Island in 1979, which intensified existing public opposition to nuclear energy projects. That growing pushback, combined with reduced growth in electricity demand and the significant up-front investments nuclear plants required, caused some projects to be scrapped and fewer to be proposed. The Chernobyl nuclear disaster in 1986 seemed to confirm everyone’s worst fears.
Interest began to reemerge in the U.S. in the early 2000s as the budding public awareness of climate change cast doubt on the future viability of fossil fuels, but the 2011 Fukushima nuclear accident quashed many of those plans. The last U.S. nuclear plant to start up before Vogtle-3 entered construction in 1973 but was suspended for two decades before its completion in 2016.
As of 2022, 18.2% of U.S. electricity came from the country’s remaining nuclear reactors, according to federal data. That’s less than we’ve seen in decades.
The share of nuclear power on the grid has been slowly dwindling as aging reactors are shut down and other resources — mainly natural gas and renewables — have taken on a greater proportion of the country’s electricity-generating burden. The share of electricity from renewables surpassed energy from nuclear for the first time in 2021; in 2022, renewables contributed 21.3% of U.S. electricity.
Like coal and gas plants (and renewables when paired with sufficient storage), nuclear provides baseload power — meaning it sends electricity onto the grid at a consistent, predictable rate — as opposed to sources like wind and solar on their own, which provide intermittent supply. Electric utilities depend heavily on nuclear plants and other baseload resources to match supply with continuously fluctuating demand, accommodating the variability of wind and solar without sending too much or too little power onto the grid, which would cause power surges or blackouts.
Generating electricity using nuclear fission remains a divisive issue that cuts across partisan lines. In the inaugural Heatmap Climate Poll, nuclear came in a distant last among clean energy sources people feel comfortable having in their communities.
Some major environmental groups like the Sierra Club and Greenpeace maintain that the risk of serious disasters at nuclear power plants poses an unacceptable risk to communities and ecosystems. Others, including the Nature Conservancy, view it as a reliable low-carbon energy resource that’s — crucially — available to us today, while promising but immature options such as long-duration energy storage are still catching up.
Historically, nuclear has caused far fewer fatalities than fossil fuels, which generate all kinds of toxic, potentially deadly pollution — and that’s without factoring in their contribution to climate change and its associated disasters.
The companies now hoping to pioneer a new generation of nuclear reactors in the U.S. say their designs incorporate the lessons learned from the accidents in Chernobyl and Fukushima, putting even more safeguards in place than the fleet of reactors operating across the country today. (There’s still a debate over whether the proposed reactors will actually be safer, though.)
Spent uranium fuel is radioactive, and will remain radioactive for a very long time. As a result, there’s still a lot of disagreement about where that waste should go.
The federal government tried in the early 2000s to create a national repository in Nevada’s Yucca Mountain, but the project was stopped by intense local and regional opposition. The Western Shoshone, a tribe whose members have long faced exposure to radioactive fallout from nearby nuclear tests, sued the federal government in 2005. Harry Reid, a former U.S. Senator from Nevada who served as Majority Leader from 2007 to 2015, also fought against the repository.
In the absence of a central repository, the waste produced by nuclear plants is usually stored in deep water pools, which keep the spent fuel cool, or in steel casks onsite to keep the radiation from escaping into the surrounding environment.
If a repository eventually opens, some existing waste will likely be moved out of temporary storage and relocated there.
In short, the concrete behemoths that have long been the norm in the U.S. are really, really expensive to build. They also — like the two new Vogtle reactors — have a tendency to go way over their deadlines and budgets. That makes the electricity nuclear plants generate particularly expensive.
The vast majority of U.S. coal plants were built during the same few decades as most of the country’s nuclear reactors. But when utilities started to face more pressure to reduce their carbon emissions, toppling coal’s reign over the power sector, utilities wound up preferring to build cheaper — and, at least at the time, less controversial — natural gas power plants over nuclear power plants.
But public opinion is beginning to shift. About 57% of American adults favor building new nuclear power, a Pew Research Center survey found last year, compared with 43% in 2016. Though support is higher among Republicans than Democrats, it’s on the rise within both parties.
Today’s electric grid is a far cry from the 20th-century grid that traditional nuclear reactors were built for, and the new reactor models that are making the most headway reflect those changes. In general, these designs are smaller, cheaper (at least on paper), and more flexible than those already in operation.
Unlike traditional reactors, which generally require a lot of custom fabrication to be completed at the project site, small modular reactors — such as the ones being developed by NuScale Power — have components that are meant to be made in a factory, assembled quickly wherever they’ll operate, and combined with other modules as needed to increase power output. Fast reactors (so-named for their highly energized neutrons), like Bill-Gates-fronted TerraPower’s Natrium design, circulate coolants other than water through the core. (Natrium uses liquid sodium.)
Advocates of next-generation nuclear power are optimistic that the first such reactors will come online before the end of the decade. Several of the leading proposals have run into financial and logistical troubles over the last couple of years, however. In November, NuScale canceled its flagship project at the Idaho National Laboratory. It had been on track to be the first commercial small modular reactor built in the U.S. but was thwarted by rising costs, which caused too many expected buyers of its electricity to pull their support.
Nuclear’s image is recovering globally, too. Some of the companies working on demonstration reactors in the U.S. have been outspoken about wanting to see their designs supplant fossil fuels and provide abundant energy all over the world. Meanwhile, many countries are devoting plenty of their own resources to nuclear power.
Japan, which shuttered its sizable nuclear fleet in the aftermath of the Fukushima accident, is slowly bringing some of its nuclear capacity back online. In December, Japanese regulators lifted an operational ban on the Kashiwazaki-Kariwa Nuclear Power Plant, the largest nuclear plant in the world.
Nuclear power is also enjoying renewed popularity in parts of Europe, including France and the U.K. In France, where the long-dominant technology has faltered in recent years, a half-dozen new nuclear power plants are in the works, and even more small modular reactors could follow. The U.K. is also planning a new wave of nuclear development.
Elsewhere, including in Germany, nuclear hasn’t found the same traction. After delaying the closure of its last three nuclear reactors amid natural gas shortages caused by the war in Ukraine, Germany closed the reactors last spring, eliciting a mixed reaction from environmental groups.
Meanwhile, China has close to 23 gigawatts of nuclear capacity under construction — the “largest nuclear expansion in history,” Jacopo Buongiorno, a professor of nuclear science and engineering at MIT, told CNBC last year.
It’s still early days for most of the world’s next-generation nuclear reactors. With even the most promising designs largely unproven, there’s plenty of uncertainty about where today’s projects will ultimately lead. That makes it tricky to predict what role nuclear power will play in the energy transition over the coming decades.
There’s plenty of interest in building more capacity, however. In December, at COP28, the U.S. and 24 other countries — including Japan, Korea, France and the UK — signed on to a goal of tripling global nuclear energy capacity by 2050 in order to stay on track to reach net-zero emissions by then. Nuclear plants could also be an important source of carbon-free energy for producing green hydrogen, a nascent industry that got a major boost from tax credits under the Inflation Reduction Act.
But the U.S. Energy Information Administration’s most recent capacity forecast projects that the total amount of electricity from the country’s nuclear plants will decline in the coming decades — representing just 13% of net power generation by 2050.
