California’s Climate Bond Package is a “Golden” Alternative to Litigation
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- Jan 14, 2020 11:00 am GMTJan 14, 2020 5:54 pm GMT
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The California legislature is considering a new multi-billion-dollar climate bond to address future climate-change related disasters, according to reporting by ABC News. Far from the frivolous climate litigation schemes and anti-industry rhetoric being pitched by activists, this bond could offer a common sense solution to the Golden State’s climate resiliency concerns, without wasting taxpayers funds or demonizing an industry that employs hundreds of thousands of people, contributes millions to the state’s GDP, and powers the everyday lives of Californians.
According to the Wall Street Journal, climate bonds are “fixed-income securities” that “must get used for projects that benefit the environment. For example, the cash could finance the purchase of solar panels to power office buildings.”
The $4.2 billion-dollar climate bond package being considered by California legislators would provide anticipatory funding for reducing wildfire risk, protecting farmland from climate change, bolstering the state’s scare water sources, and helping coastal communities plan for sea level rise – the key issue at the heart of the two consolidated climate lawsuits pending in the state.
Climate bonds gain momentum across the United States
These bonds are an impactful solution to the damages associated with climate change, and other states have employed them in the past to great avail. Reuters reports that cumulative green bond issuance reached nearly $107 billion in June 2019, with utility companies issuing the largest portion.
Municipalities have also embraced climate bonds as a way to finance climate resiliency infrastructure, without lengthy court battles. In 2017, voters in the city of Miami chose to adopt the Miami Forever general obligation bond to equip their city with flood mitigation infrastructure to prevent new natural disasters. The package provided $192 million for “storm drain upgrades, flood pumps and sea walls to curb flooding that has worsened in recent years and begin to fund an estimated $1 billion in projects needed to brace the city against rising seas.”
San Francisco: A case study in successful climate bonds, and baseless litigation
California is no stranger to climate bonds either. San Francisco’s “H Bonds” were the first global implementation of climate bonds beginning all the way back in 2001 and kicked off the city’s commitment to lower emissions. The program supplemented the city’s “Community Choice Aggregation” of power generation for “the finance, installation, and maintenance of local energy efficiency measures on homes and businesses.”
Meanwhile, the city’sttempt to sue energy producers for the costs of climate change is currently awaiting appeal, after U.S. District Judge William Alsup dismissed the case in 2018. In his dismissal, Judge Alsup called energy producers’ conduct in California “causally insignificant in the context of the worldwide conduct leading to the international problem of global warming,” adding that “the problem [of global warming] deserves a solution on a more vast scale than can be supplied by a district judge or jury in a public nuisance case.” Activist attempts to rehash this case in the Ninth Circuit Court of Appeals will likely only continue to rack up the bill for California’s taxpayers, rather than result in a substantive payout toward addressing climate resilience.
The history and widespread support of green bonds make them one of the most substantive pathways forward to mitigate climate change damages. Despite the proven success of climate bonds, activists, powerful donors, and plaintiffs lawyers continue to throw their resources behind pressuring public officials to pursue discredited climate litigation, in an attempt to make a quick buck and put political points on the board, without any concern for real public benefit.
While voters must approve California’s climate bond should it make its way through the legislature, similar bonds have passed with widespread support. In fact, initiatives in San Francisco and Miami both passed with over 55% approval. This makes the California bond a low political-risk, high impact, golden option for state legislators—one that they would do well to consider in the coming weeks.
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