Thursday, March 31, 2016

On Sea Level Rise, NextEra Energy, and the SEC, it is time to lift massive risk from the fine print in the back pages: my shareholder proposal to NextEra Energy, Inc. ... by gimleteye

At some point, taxpayers are going to realize that sea level rise isn't an abstract problem that randomly hits a few unfortunates.

Yesterday, the Washington Post reported on the results of a analysis in the journal, Nature.

"Sea levels could rise nearly twice as much as previously predicted by the end of this century if carbon dioxide emissions continue unabated, an outcome that could devastate coastal communities around the globe, according to new research published Wednesday. The startling findings, published in the journal Nature, paint a far grimmer picture than current consensus predictions, which have suggested that seas could rise by just under a meter at most by the year 2100."
2013 Greenland glacier falling apart. Photo credit: Alan Farago
So really, now is the time to have a substantive dialogue including the investors and top managers of the industry indispensable to modern civilization: the nation's electric utilities.

In South Florida, one of the regions with the most to lose from sea level rise, there is one corporate interest that has the expertise, resources and skill to begin breaking down what exactly is at stake when sea level rise materializes. That company is Florida Power and Light.

2013: Greenland. Photo credit: Alan Farago
There are compelling reasons for the board of directors and top executives of NextEra Energy (NEE), its parent company, to help investors, shareholders and the public understand the real risks of sea level rise to South Florida.

First and foremost: the liabilities are unlimited. Just because the liabilities are unlimited doesn't mean they are abstract. No, the risks to its markets and infrastructure are quantifiable and given the existential threats ought to be lifted out of the few sentences in fine print, required in SEC filings.

The New York Times writes, today, "Climate Model Predicts West Antarctic Ice Sheet Could Melt Rapidly":

Continued high emissions of heat-trapping gases could launch a disintegration of the ice sheet within decades, according to a study published Wednesday, heaving enough water into the ocean to raise the sea level as much as three feet by the end of this century.

With ice melting in other regions, too, the total rise of the sea could reach five or six feet by 2100, the researchers found. That is roughly twice the increase reported as a plausible worst-case scenario by a United Nations panel just three years ago, and so high it would likely provoke a profound crisis within the lifetimes of children being born today.
Late last year, I proposed a shareholder resolution for the upcoming annual meeting of NextEra Energy, Inc. specific to sea level rise impacts and risk disclosure. NextEra fought the resolution with the Securities and Exchange Commission, writing among other points that it -- essentially -- can't see that far into the future. My shareholder resolution was approved by the SEC and will soon appear in NEE proxy materials for the 2016 annual meeting.

NextEra and FPL could decide to change strategy with respect to risk disclosure of climate change. I understand the point of view of NextEras management that investors expect predictable returns (and executive compensation follows). However, with global warming and sea level rise, the costs to FPL are quantifiable. Its markets in Florida are arguably the most at risk in the nation from sea level rise. Assessing those risks for investors and ratepayers couldn't happen a moment too soon.
The new research, published by the journal Nature, is based on improvements in a computerized model of Antarctica and its complex landscape of rocks and glaciers, meant to capture factors newly recognized as imperiling the stability of the ice. The new version of the model allowed the scientists, for the first time, to reproduce high sea levels of the past, such as a climatic period about 125,000 years ago when the seas rose to levels 20 to 30 feet higher than today.
FPL is spending hundreds of millions of ratepayer dollars to advance plans for two new nuclear reactors at Turkey Point. If those plants are ever built, Turkey Point would be the largest nuclear power generation facility in the U.S. Recent disclosures -- also anticipated decades ago by environmentalists -- demonstrate that its existing reactors, built with 1960's technology, are likely violating federal law through a malfunctioning cooling canal systems. (On existing problems, ratepayers have had no help at all from the Florida legislature or the administration of Gov. Rick Scott or his presumptive successor, Ag. Secretary Adam Putnam. So far as climate change is concerned, Gov. Scott has barred state officials from even using the words.)

While NextEra management indicated its opposition to my shareholder proposal, at the very least a marker has been put out: future generations will judge the actors and the result. Those actors include the electric utility industry's major investors; managers of pension funds, mutual funds, and hedge funds.
“You could think of all sorts of ways that we might duck this one,” said Richard B. Alley, a leading expert on glacial ice at Pennsylvania State University. “I’m hopeful that will happen. But given what we know, I don’t think we can tell people that we’re confident of that.”
That statement, alone, should trigger risk analyses beyond the fine print buried in SEC filings by the nation's electric utilities.

2013 Greenland ice sheet melt. Photo credit: Alan Farago

NextEra Shareholder Proposal
Filer: Alan Farago and Lisa Versaci
Year: 2016
Sector: Energy
Subject(s): Report On Range Of Projected Sea Level Rise/ Climate Change Impacts

Resolved Clause Summary: NextEra Energy Inc.'s (Company/NextEra) operations and markets will be substantially impacted by sea level rise (SLR), a geophysical manifestation of climate change. The Company shall provide investors and shareholders with an assessment of extraordinary risk based on a probable range of sea level rise according to best available science.

WHEREAS: The Securities and Exchange Commission recognized the financial impacts of climate change when it issued Interpretive Guidance on climate disclosure in February 2010, including: “Registrants whose businesses may be vulnerable to severe weather or climate related events should consider disclosing material risks of, or consequences from, such events in their publicly filed disclosure documents.”

The Company’s principal subsidiary, Florida Power & Light Company (FPL), is one of the largest rate-regulated electric utilities in the United States. Its markets are among the most vulnerable in the nation to sea level rise.

SUPPORTING STATEMENT: Sea level rise as a consequence of climate change is an extraordinary risk to the Company’s markets and facilities, leading to diminished energy utilization rates, downtime or closure of facilities due to damage to facilities, danger to employees, disruption in supply chains, disruption of markets and power supply, and unlimited financial liability.

According to NOAA: “In the context of risk-based analysis, some decision makers may wish to use a wider range of (SLR) scenarios, from 8 inches to 6.6 feet by 2100.” In contrast, FPL planning documents for two new nuclear reactors at its Turkey Point facility predict less than one foot SLR by 2100. FPL planning documents omit current federal SLR guidelines and science-based analyses such as provided by the Southeast Florida Regional Climate Compact / Sea Level Rise Work Group assessment. Using the lowest estimate of SLR for the Company’s planning purposes leads to inaccurate information for shareholders.

BE IT RESOLVED: Shareholders request that NextEra Energy Inc. report material risks and costs of sea level rise to company operations, facilities, and markets based on a range of SLR scenarios projecting forward to 2100, according to best available science. The requested report shall be available to shareholders and investors by December 1, 2016, be prepared annually at shoreasonable cost and omit proprietary information.

Energy and Environment
Scientists nearly double sea level rise projections for 2100, because of Antarctica
Washington Post
By Brady Dennis and Chris Mooney March 30 at 1:44 PM

Sea levels could rise nearly twice as much as previously predicted by the end of this century if carbon dioxide emissions continue unabated, an outcome that could devastate coastal communities around the globe, according to new research published Wednesday.

The startling findings, published in the journal Nature, paint a far grimmer picture than current consensus predictions, which have suggested that seas could rise by just under a meter at most by the year 2100. Those estimates relied on the notion that expanding ocean waters and the melting of relatively small glaciers would fuel the majority of sea level rise, rather than the massive ice sheets of Greenland and Antarctica.

The scientists behind Wednesday’s study used sophisticated computer models to decipher a longstanding riddle about Antarctica: how did it surrender so much ice during previous warm periods? They found that similar conditions in the future could lead to monumental and irreversible increases in sea levels. If high levels of greenhouse gas emissions continue, they concluded, oceans could rise by close to two meters in total (more than six feet) by the end of the century. The melting of ice on Antarctica alone could cause seas to rise more than 15 meters (49 feet) by 2500.

[The alarming science behind forecasts of much higher seas in this century]

The projection “nearly doubles” prior estimates of sea level rise, which had relied on a “minimal contribution from Antarctica,” said Rob DeConto of University of Massachusetts, Amherst, who authored the study with David Pollard of Penn State University.

According to a new study, high levels of greenhouse gas emissions could cause oceans to rise by close to two meters in total (over six feet) by the end of the century, and more than 13 meters (42 feet) from Antarctica alone by 2500. (Nature, Rob DeConto, David Pollard)
The research already has created a buzz in the community of scientists studying Antarctica, and experts largely praised the new model as thorough and impressive, while noting its remaining uncertainties.

“People should not look at this as a futuristic scenario of things that may or may not happen. They should look at it as the tragic story we are following right now,” said Eric Rignot, an expert on Antarctica’s ice sheet and an earth sciences professor at the University of California, Irvine, who was not involved in Wednesday’s study. “We are not there yet … [But] with the current rate of emissions, we are heading that way.”

Should the new research prove correct, it could trigger a “tectonic shift” in expectations for the speed and severity of the sea level problem, said Ben Strauss, director of the program on sea level rise at Climate Central, an independent organization of scientists based in New Jersey. He said that while the study’s findings represent potentially grave problems for many coastal areas in the decades ahead, the century beginning in 2100 could see truly catastrophic shifts, unless societies make sharp cuts in greenhouse gas emissions.

“Under the high emissions scenario, the 22nd century would be the century of hell,” Strauss said. “There would really be an unthinkable level of sea rise. It would erase many major cities and some nations from the map … That century would become the century of exodus from the coast.”

[Scientists say Antarctic melting could double sea level rise. Here’s what that looks like]

Places as far flung as South Florida, Bangladesh, Shanghai, Hampton Roads in Virginia and parts of Washington, D.C., could be engulfed by rising waters, Strauss said. Even by 2100, Miami Beach and the Florida Keys could begin to vanish. New Orleans essentially could become an island guarded by levies. Floods that pushed as far inland as the surge from Hurricane Sandy could ravage parts of the East Coast with far greater frequency.

The researchers behind Wednesday’s study make clear that their model has limitations and that human behavior can alter the possible outcomes. For instance, the worst-case scenario — of seas rising nearly 4 feet due to Antarctic ice loss alone by 2100 — assumes that very high emissions continue for carbon dioxide and other greenhouse gases.

In Paris late last year, world leaders forged an historic agreement to begin scaling back such emissions in coming years. They embraced the goal of holding global warming “well below” 2 degrees Celsius above pre-industrial levels, but at the same time, it has been widely noted that current country-level commitments to cut emissions fall far short of this target.

But even under a more moderate emissions scenario, Wednesday’s study found that the Antarctic contribution to sea level rise still could reach about two feet by 2100, and much more by 2500. Only if countries sharply reduce emissions does the model show that it’s possible to preserve Antarctica in roughly its current state.

“This research highlights the importance of doing even much better than the Paris agreement if we’re going to save our coastal cities,” Strauss said.

DeConto and Pollard arrived at their projections about future sea level rise by first turning to the past. Their study is based on an improved understanding of two past warm eras in Earth’s history that featured much higher seas, known as the Pliocene and the Eemian. The Pliocene was a warm period about 3 million years ago, when atmospheric carbon dioxide levels are believed to have been about what they are now — 400 parts per million. Sea levels are believed to have been significantly higher than now — perhaps 30 feet or more. The Eemian period, between 130,000 and 115,000 years ago, also featured sea levels 6 to 9 meters above current levels, with global temperatures not much warmer than our current era.

[Why some Antarctic glaciers are disappearing faster then we thought]

Sea level rise on the scale seen in those eras likely required a loss of ice not just from Greenland, but also from Antarctica. But previous computer models of Antarctica have failed to accurately reproduce such scenarios. Scientists had spent “years of struggling to be able to simulate tens of meters of sea level rise in the Pliocene,” DeConto said. “This has been a longstanding problem for us. And we had known for years that we’re probably missing some important underlying physics.”

Scientists already knew that key parts of Antarctica, and especially West Antarctica, feature a condition called “marine ice sheet instability.” That is, vast glaciers are already rooted below sea level and lie on downward sloping seabeds. Warm water can not only melt them from below, but as the glaciers retreat, more and more ice will be exposed to melting.

The new study factors in not only this process, but two new ice processes that have scientists already have seen destabilize several glaciers in Greenland: “hydrofracture,” in which water formed by the melting of snow and ice atop a glacier’s stabilizing ice shelf causes it to break up; and “cliff collapse,” in which a sheer ice cliff 100 meters or more above sea level becomes unstable and crashes repeatedly into the ocean below. Both phenomena can speed up the pace of ice loss from glaciers and cause sea level rise.

“Build a little sand castle and it is fine; too high and it may break,”said Richard Alley, a glaciologist at Penn State University who has published previously with DeConto and Pollard, describing the revelations regarding ice cliff collapse.

Knut Christianson, a glaciologist at the University of Washington in Seattle, said the new work will spur additional research to determine precisely what happens at glaciers where cliff collapses and so-called “calving” occur. “It’s a more comprehensive analysis than before, and it certainly indicates that we should look more closely to see whether or not the way they treat these processes in the model is accurate in the real world,” he said.

The research further undermines a string of sea level projections from the United Nations’ Intergovernmental Panel on Climate Change, which have been faulted for being too conservative.

In 2013, the body projected that for the same high-end emissions scenario used in the current study, sea level rise by the year 2100 would be between 0.52 and 0.98 meters (1.7 and 3.22 feet), relatively little of which would come from the ice sheets of Greenland and Antarctica. It noted that beyond this likely range, only Antarctica’s marine-based regions could conceivably contribute a lot more, but the panel found that “there is medium confidence that this additional contribution would not exceed several tenths of a meter.”

The new study challenges that reasoning. It also emerges as mounting research has pointed at one region of Antarctica in particular — the Amundsen Sea sector of remote West Antarctica, centered on the enormous, marine-based Thwaites glacier — as particularly vulnerable.

If the projections in Wednesday’s study prove correct, they could present especially bad news for U.S. coasts. The reason is gravity: Antarctica’s enormous mass pulls the ocean toward it, and when it loses significant mass, seas would surge back toward the opposite end of the world.

“Sea level rise is not going to be felt evenly over the surface of the Earth. It’s really bad for New York, Boston. We are sort of in the bullseye,” DeConto said.


Geniusofdespair said...

Typo Alan: next error not next era. readers: guess what is broken on one side of my keyboard.

Marshmaid said...

There is a voting process at the annual meeting. Can we do something to shore up the vote? I love that typo btw!
Are they holding the meeting in Hawaii this year?

Anonymous said...

These reactors, transmission lines and NEE infrastructure be foisted onto ratepayers with the promise that they are 'most cost effective alternative' compared to other alternatives (e.g. solarPV)...when amortized over an anticipated length of their time in service. THIS is the crux of the argument. NEE claims this infrastructure will be in service well beyond both need and feasibility because of sea level rise.

THUS the rule/law/regulation that needs to be part of the mix here is that 'in the event the investment horizon projected by NEE as the basis for its calculations proves to be in error due to sea level rise impacting either the ratepayer demand or infrastructure itself, THEN NEE shall be liable for the overbuilding of infrastructure and subject to a 'claw back' by ratepayers.

Such a law/rule/regulation will cause shareholders to take a wary eye towards new infrastructure that is not movable, as is solar PV.

Suggestion: Contact large shareholders about your proxy petition and explain to them the high risk NEE is taking for short term profits and potential litigation for shareholder derivative suits for 'failure to fully disclose' such as in NY where Attorney Gernreal has suits against petroleum industry for failure to fully disclose climate change risks to stock. Here are your owners in different categories of NEE.

Anonymous said...

Scissors cut paper; Heat melts ice. Russian icebreakers and floating nuclear power plants aren't helping matters.

Marshmaid said...


Anonymous said...

Regarding FPL's Port St. Lucie nuclear power plant and fish kills around Indian River Lagoon: I am forwarding articles on extreme heat and massive fish kills. There are many more articles on this subject.

Of note: FPL's Port St. Lucie nuclear power plant is located fairly near the Indian River Lagoon. Per a Tampa Bay article, the plant has a history of problematic cooling tubes. Is there a connection? I can't say, but overly heated water discharged into the Lagoon could certainly be responsible for massive fish kills.

(I seem to recall reading an article on a massive fish kill in France that was related to a nuclear power plant discharging overly heated water. This was more than 10 years ago.)

The Tampa Bay article:

Heated water can result in massive fish kills.

Diane said...

Re: Massive fish kill at Indian River Lagoon:

Overly heated water can result in massive fish kills. FLPs Port St. Lucie nuclear plant is located in the vicinity of Indian River Lagoon. And per the Tampa Bay article noted below, the plant has a history of problematic cooling tubes.

There are numerous articles on heat waves and fish kills.

Diane said...

Better articles on fish kills and overly heated water from once-through nuke plant cooling systems:

From FPL: Scientific studies conducted at power plant sites across the US — and reviewed by federal and state authorities — demonstrate that "once-through" cooling systems do not adversely impact the aquatic life of the water bodies where they are located.

From Union of Concerned Scientists: Once-through systems take water from nearby sources (e.g., rivers, lakes, aquifers, or the ocean), circulate it through pipes to absorb heat from the steam in systems called condensers, and discharge the now warmer water to the local source. Once-through systems were initially the most popular because of their simplicity, low cost, and the possibility of siting power plants in places with abundant supplies of cooling water. This type of system is currently widespread in the eastern U.S. Very few new power plants use once-through cooling, however, because of the disruptions such systems cause to local ecosystems from the significant water withdrawals involved and because of the increased difficulty in siting power plants near available water sources.

& other sites: