Equilibrium/Sustainability — Presented by Southern Company — Storms a growing danger for East Coast

The Hill
·10 min read


Today is Tuesday. Welcome to Equilibrium, a newsletter that tracks the growing global battle over the future of sustainability. Subscribe here: thehill.com/newsletter-signup.

Expect more storms like Hurricanes Sandy and Harvey - slow, long-lived storms that dump dangerous amounts of rain on coastal regions - to hit the East Coast as the century progresses, according to researchers at the American Geophysical Union

"When you think of a hurricane moving along the East Coast, there are larger scale wind patterns that generally help push them back out to sea," Rowan University climate scientist Andrea Garner said in a statement. "We see those winds slowing down over time."

The failure of those winds mean that there is nothing keeping a hurricane from parking over a city until all its force is expended.

"That prolonged exposure can worsen the impacts," Garner said.

Today we're looking at a groundbreaking trade deal in the Middle East. Then we consider Jerome Powell, the chairman of the Federal Reserve, who was recently re-appointed by President Biden, to the ire of progressives - and at the still-vacant, little-known subordinate role that could be key to getting the banking industry to protect itself and the broader economy from the dangers of climate change.

For Equilibrium, we are Saul Elbein and Sharon Udasin. Please send tips or comments to Saul at selbein@thehill.com or Sharon at sudasin@thehill.com. Follow us on Twitter: @saul_elbein and @sharonudasin.

Let's get to it.

Israel, Jordan, UAE sign energy deal

Israel and Jordan are on track to swap desalinated water for solar energy, after cementing the largest ever partnership between the two nations on Monday - in a ceremony facilitated by the United Arab Emirates and in the presence of U.S. Climate Envoy John Kerry.

Government officials signed a letter of intent at the Dubai Expo, paving the way for the future export of Jordanian solar energy in exchange for Israeli desalinated water. Not only would the move help quench the thirst of a water-starved Jordan, but it would also shift Israel's historic neighborhood status as an energy island and help the country meet its climate targets.

First words: "The Middle East is on the frontline of the climate crisis, and only by working together can countries in the region rise to the challenge," Kerry tweeted following the announcement.

What's in the deal? Jordan would export about 600 megawatts of electricity generated from solar energy, while Israel would evaluate the export of up to 200 million cubic meters of desalinated water to Jordan, a joint news release from the Israeli Energy Ministry and the UAE Foreign Ministry said.

The collaboration was made possible due to the August 2020 Abraham Accords, which the countries described as "opening a new era of cooperation between the United Arab Emirates and Israel."

The agreement includes two programs: "Prosperity Green," the construction of photovoltaic solar facilities in Jordan, and "Prosperity Blue," the establishment of a new desalination plant in Israel. Israel already furnishes about 80 percent of domestic drinking water supplies through desalination.

Common interests: "Israel and Jordan are two countries with different needs and capabilities that can help each other cope with challenges in a greener, cleaner and more efficient way," Israeli Energy Minister Karin Elharrar said in a statement.

UAE Foreign Minister Abdullah bin Zayed expressed his country's pride in facilitating a partnership between Israel and Jordan "that reinforces both countries' climate security and common interests."

When will the projects move forward? Concrete implementation plans will be available by 2022, according to the joint news release.

But a report from Axios said that the solar farm would be built by UAE government-owned firm Masdar. The plans, according to Axios, call for the facility to be operational by 2026 and generate 2 percent of Israel's electricity by 2030, with Israel paying $180 million annually - divided between Jordan and Masdar.

A MESSAGE FROM SOUTHERN COMPANY

At Southern Company, we achieved our interim net zero energy goal ten years early. Today, we continue our work toward a net zero future. Learn more.

'IT'S A WIN-WIN FOR ALL SIDES'

Quenching Jordan's thirst: Jordanian Water Minister Mohammed al Najjar underscored the potential of this additional supply to help boost Jordanian drinking water supplies and relieve a parched agricultural sector.

"The climate crisis and the increase in the number of refugees have exacerbated the water shortage that the Kingdom of Jordan is facing," Najjar said in a statement.

Israel and Jordan are historic partners on water - even amid political tensions. Ever since the 1994 Israel-Jordan Peace Treaty, Israel has been storing some of the Kingdom's Jordan River allocations in the freshwater Sea of Galilee and discharging supplies as needed.

For almost 10 years, the neighbors were planning a Red Sea-Dead Sea Water Conveyance initiative, which would have led to a joint desalination project in Jordan, while funneling residual brine some 200 kilometers to refill a dwindling Dead Sea.

Although that project collapsed, Elharrar and Najjar met last month to sign an agreement to double the amount of water Israel sends to Jordan, The Times of Israel reported.

Monday's deal was long in the making: The vision behind the deal, according to Axios, came from EcoPeace Middle East - a regional environmental organization with offices in Tel Aviv, Amman and Ramallah.

EcoPeace described the agreement as "historic" on Monday, stressing that the organization has been calling for the advancement of a private sector buy-in for a water-energy deal.

Last words: "It's a win-win for all sides and a model for out-of-the-box thinking on climate security," said EcoPeace Israel Director Gidon Bromberg.

To read the full story, please click here.

Progressives look to Powell's subordinates

President Biden has picked Jerome Powell for a second term as chairman of the Federal Reserve - angering both climate activists and a handful of Democratic senators.

Critics decried the Trump appointee's pro-deregulation stance and tardiness in addressing the risks that climate change poses to the broader financial system.

Opening shot: "It's no secret I oppose Chair Jerome Powell's renomination, and I will vote against him," said Sen. Elizabeth Warren (D-Mass.), who had previously called Powell "a dangerous man to head up the Fed," according to Alexander Bolton at The Hill.

Why? Powell largely bowed to moves from his vice chair for supervision, Randal Quarles, to lower banks' capital requirements - the amount of money they hold in cash against catastrophe - and reduce the use of stress testing, which identifies where banks are exposed to potentially dangerous risk.

"So far you've been lucky," Warren told Powell in October, according to CNBC. "But the 2008 crash shows what happens when the luck runs out."

Tardiness on climate: "Most world banking regulators have said that the climate crisis is a serious issue for the financial system, and they have taken action. In contrast - the Fed didn't' say a word about climate until 2020," Yevgeny Shrago of consumer advocacy group Public Citizen told Equilibrium.

Anytime Powell is asked about climate, Shrago said, "he says it's early days, we're studying the issue, and declines to give any sort of timeline."

LOOKING FOR A LEADER ON CLIMATE RISK

A "critically important" position: Attention among progressives is now moving to the still-vacant position of vice chair for supervision (VCS), which Warren called "critically important" in light of "Powell's failures on regulation, climate, and ethics."

This role is "possibly more important even than the chairman," Ilmi Granoff of ClimateWorks told Equilibrium, because the VCS largely sets the agenda on what the board will supervise, and the rest of the members tend to defer to that role - as happened under VCS Quarles.

What does that mean in practice? A large part of the Fed's job is to examine the safety and soundness of both individual banks and the financial system as a whole - and the VCS largely "steers the ship" in determining what will be prioritized and how, Granoff said.

A VCS who is focused on climate risk has broad powers to get banks to carry out stress tests and scenario analyses to see where their portfolios are contaminated with risky fossil fuel assets.

That's a process that's well underway at the European Central Bank and Bank of England. Granoff expects that, once underway, it will expose that banks are exposed to the kind of risks that the larger bureaucracy of the Fed is well-oriented to solve, Granoff said - provided there is someone to lead them.

Who might that someone be? The climate financial activists who spoke with Equilibrium all coalesced on two names: former Deputy Secretary of the Treasury Sarah Bloom Raskin for the VCS, and prominent economist Lisa Cook for one of the other open seats.

Why them? As an attorney outspoken about the risks climate change poses to the financial system, Raskin is well-suited to a role that would allow her to coordinate the nation's banks in finding the risks on their balance sheets and taking meaningful steps to reduce it, Granoff said

Meanwhile, Cook, who sits on the steering committee for the progressive Center for Equitable Growth, would be the first Black woman to serve on the Federal Reserve Board, The Hill reported.

Last words: In the U.S., "nearly all significant regulatory reforms have occurred after the risk has overflowed," Sarah Bloom Raskin said in a speech to the Green Swan conference in June.

There is a chance, she implied, to do it the other way this time. "Climate is both looming larger every day, and with us today, and it presents central banks and financial regulators with an imperative to act in a precautionary manner," she said.

A MESSAGE FROM SOUTHERN COMPANY

At Southern Company, we achieved our interim net zero energy goal ten years early. Today, we continue our work toward a net zero future. Learn more.

Tech Tuesday

Illinois paid $694 million to keep nuclear plants running

  • Illinois lawmakers decided earlier this fall to invest $694 million over the next five years to keep several nuclear plants open, despite the financial toll these facilities take on the state's economy, according to CNBC.

  • While Exelon, the operator of two of the plants at stake, had already filed paperwork with federal regulators to shut down the plants, legislators decided to pay to keep them open so that Illinois could meet its clean energy goals - as nuclear energy generates no greenhouse gas emissions, CNBC reported.

  • Illinois relies on a much larger percentage of nuclear power to fulfill its energy needs than other states, and the state would have needed a massive investment in renewables to meet clean energy targets, according to CNBC.

  • If the nuclear plants shut their doors today, "renewables wouldn't be ready in time to take their place," Jack Darin, director of Sierra Club Illinois, told CNBC.

Samsung chooses Texas town for $17 billion chip factory

  • Samsung Electronics Co. has selected the central Texas town of Taylor to build a $17 billion chip-making plant, according to The Wall Street Journal.

  • The facility plans to create about 1,800 jobs, although chip production will likely only start at the end of 2024, the Journal reported, citing documents Samsung had filed with Texas authorities.

  • Taylor had offered incentives to Samsung -the world's largest semiconductor maker - including property-tax breaks of up to 92.5 percent for the first 10 years, with write-offs declining over the next few decades, according to the Journal.

  • Strengthening American manufacturing of chips remains a priority for the Biden administration, as semiconductor production in the U.S. has fallen behind in recent years - just 12 percent of international capacity in 2020, down from 37 percent in 1990, the Journal reported.

New homes in Britain must have ports to charge electric vehicles

Please visit The Hill's sustainability section online for the web version of this newsletter and more stories. We'll see you on Wednesday.