Climate Risk Uncovered

January 17, 2013
Chesapeake RIMS

Climate Change:
Uncovering Risk in a Warming World
by

J. Wylie Donald
McCarter & English LLP

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C H AN G E

Background
Insurance Coverage

The New York Times
December 6, 2012, 3:25 pm
Comment
Gas Tanker Completes Arctic
Sea Journey
By Clifford Krauss

http://www.youtube.com/watch?v=jr_SqvitTzk play this

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C H AN G E

Background Insurance Coverage

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C H AN G E

Background Insurance Coverage

• Climate Change and the Wine Industry
– Prediction: by 2100 viable grape growing regions will
shrink by 80%
– Growing seasons in France moved up 3 weeks over
the last 60 years
– Vineyards opening in Finland, Denmark and Sweden
– Vintners buying up higher altitude properties, northfacing vineyards

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C LI M AT E

C H AN G E

Insurance Coverage

•

INSURANCE

•

Coverage for CO2
- CGL
- D&O
- E&O

C LI M AT E

C H AN G E

Insurance Coverage

American Electric Power v. Connecticut
(S. Ct.) - DISMISSED
Comer v. Murphy Oil USA (5th Cir.) –
PENDING
California v. General Motors (9th Cir.) WITHDRAWN
Native Village of Kivalina v. ExxonMobil (9th
Cir.) - DISMISSED
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C H AN G E

Insurance Coverage

Kivalina Coverage Chronology
February 26, 2008

Class action lawsuit, Native Village of
Kivalina v. ExxonMobil Corp.

July 9, 2008

Declaratory Judgment action, Steadfast
Ins. Co. v. AES Corp. (Arlington Cty., Va.)

October 2009

Steadfast motion for summary judgment
denied (pollution exclusion doesn’t prevail)

November 2009

AES motion for summary judgment, crossmotion for reconsideration by Steadfast

February 5, 2010

Cross-motion for summary judgment
granted (no occurrence)

April 20, 2012

Virginia Supreme Court affirms
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C H AN G E

Insurance Coverage

20 Questions
Is it naturally in the atmosphere in billions of tons? YES.
YES.
Is it essential to life?
Is it exhaled in every breath? YES.
Is it non-toxic?
YES.
Is it an unavoidable product of combustion? YES.
YES.
Is it the most common greenhouse gas?
Is it carbon dioxide? NO, IT IS WATER VAPOR.

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C LI M AT E

C H AN G E

Insurance Coverage

COVERAGE FOR “POLLUTION”
1966 – occurrence form
1970 – “sudden & accidental” pollution exclusion added
1986 – “total” or “absolute” pollution exclusion added
Late 80s, 90s and 00s – “environmental impairment
liability” and “pollution legal liability” products

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C LI M AT E

C H AN G E

Insurance Coverage

SUDDEN AND ACCIDENTAL POLLUTION EXCLUSION
This policy does not apply to … property damage arising
out of the discharge, dispersal, release or escape of
smoke, vapors, soot, fumes, acids, alkalis, toxic
chemicals, liquids or gases, waste materials or other
irritants, contaminants or pollutants into or upon land,
the atmosphere or any watercourse or body of water,
but this exclusion does not apply if such discharge
…, is sudden and accidental.

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C H AN G E

Insurance Coverage

ABSOLUTE POLLUTION EXCLUSION
f. (1) “Bodily injury or “property damage” arising out of the
actual, alleged, or threatened discharge, dispersal,
release or escape of pollutants:
Pollutants means any solid, liquid, gaseous or thermal
irritant or contaminant, including smoke, vapor, soot,
fumes, acid, alkalis, chemicals and waste. Waste
includes materials to be recycled, reconditioned or
reclaimed.

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C H AN G E

Insurance Coverage

SO, WHY DO WE CARE?

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C H AN G E

Insurance Coverage
CGL Coverage Map
1961-1985
Pollution Exclusions
Ineffective

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C H AN G E

Insurance Coverage
CGL Coverage Map
1961-2013
Effective Absolute P.E.

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C H AN G E

Insurance Coverage
CGL Coverage Map
1961-2013
Effective Absolute P.E.
Eroded pre-85

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C H AN G E

Insurance Coverage
CGL Coverage Map
1961-2013
with Ineffective

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C H AN G E

Insurance Coverage
CGL Coverage Map
1961-2013
with Erosion
and Ineffective

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C H AN G E

Insurance Coverage

PREPARING A CARBON COVERAGE MAP
• Primary (including captives), umbrella and excess
policies from inception of corporate existence
• All subsidiaries from inception of the subsidiary
• Thus, all corporate entities through all changes in
corporate form (mergers, divestitures)
• Erosion by settlements and claims payments
• Type of “pollution” exclusion
• Claims made or occurrence
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C H AN G E

Insurance Coverage

Issues:
Pollution exclusion
Occurrence
Choice of Law
Notice
Allocation
Etc.

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C H AN G E

Insurance Coverage

ERRORS & OMISSIONS COVERAGE
TRUE OR FALSE
GIVING ADVICE ABOUT HOW TO MAKE YOUR
CLIENT’S BUSINESS “CARBON NEUTRAL”
IMPLICATES THE POLLUTION EXCLUSION

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C H AN G E

Insurance Coverage

DIRECTORS AND OFFICERS COVERAGE
Issue: Alleged Misleading Disclosures
Wrongful Act: “any breach of duty, neglect, error,
misstatement, misleading statement, omission or other
act wrongfully done or attempted by the Insured”
Cases concerning pollution exclusion:
National Union Fire Ins. Co. of Pittsburgh, Pa. v. U.S. Liquids, Inc.
(5th Cir. 2004)
Owens Corning v. National Union Fire Ins. Co. of Pittsburgh, Pa.
(6th Cir. 1998)
Sealed Air Corp. v. Royal Indemnity Co. (N.J. App. Div. 2008)
Boliden Ltd. v. Liberty Mut. Ins. Co. (Ont. Super. Ct. 2007)
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Contracts

C H AN G E
Insurance Coverage

CONTRACTS
• Force majeure
• Definition of hazardous substance
• REC ownership

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Contracts

C H AN G E
Insurance Coverage

Uniform Commercial Code
“(a) Delay in delivery or non-delivery in whole or in part by a
seller who complies with [this section] is not in breach of his
duty under a contract for sale if performance as agreed has
been made impracticable by the occurrence of a
contingency the non-occurrence of which was the basic
assumption on which the contract was made …. U.C.C. §
2-615.

C LI M AT E
Contracts

C H AN G E
Insurance Coverage

6.1 Definition of Force Majeure.
(a) The term “Force Majeure”, as used in this
Agreement, means causes or events that delays or
prevents a Party from timely performing all or a
portion of its obligations under this Agreement or
from complying with all or a portion of the conditions
under this Agreement if such act or event, despite
the exercise of reasonable efforts, cannot be
avoided by and is beyond the reasonable control of
and without the fault or negligence of the Party
relying thereon as justification for such delay,
nonperformance, or noncompliance.

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Contracts

•

C H AN G E
Insurance Coverage

Climate Changed Force Majeure
Clause

(b) Without limiting the generality of the foregoing, so long as the following events,
despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the
reasonable control of and without the fault or negligence of the Party relying thereon
as justification for such delay, nonperformance or noncompliance, Force Majeure
events may include: acts of God, sudden actions of the elements such as heavy
rains, floods, earthquakes, hurricanes, ice storms, landslides or tornadoes; high
winds of sufficient strength or duration to materially damage the Project or
significantly impair its operation for a period of time longer than normally encountered
in similar businesses under comparable circumstances; long-term material changes
in Energy potential across the Project caused by climactic change; lightning; fire;
volcanic activity; sabotage; vandalism beyond that could reasonably be prevented by
Seller; terrorism; war; riots; explosion; blockades; insurrection; strike; slow down or
labor disruptions (even if such difficulties could be resolved by conceding to the
demands of a labor group); directives from a Transmission Provider causing Seller to
divert Energy to address reliability concerns; forced facility outages affecting the
Project; system emergency; and actions or inactions by any Governmental Authority
taken after the date hereof (including the adoption or change in any rule or regulation
or environmental constraints lawfully imposed by such Governmental Authority .

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Contracts

C H AN G E
Insurance Coverage

CONSIDERATIONS – “FDIC”
– Foreseeability
– DIfficulties in performance sufficient to invoke the
clause
– “Cause” of the non-performance
“As the [defendant] points out, force majeure clauses have
traditionally applied to unforeseen circumstances -- typhoons,
citizens run amok, Hannibal and his elephants at the gates -with the result that the Court will extend the [force majeure
clause] only to those situations that were demonstrably
unforeseeable at the time of contracting.” URI Cogeneration
Partners, L.P. v. Board of Governors, 915 F. Supp. 1267, 1288
(D.R.I. 1996).

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Contracts

C H AN G E
Insurance Coverage

“Environmental Pollution” shall mean the actual, threatened
or impending disposal, discharge, dispersal, presence,
release, escape, emission, or seepage of smoke, vapor,
soot, fumes, particles, acids, alkalis, toxic chemicals,
liquids, gases, waste materials, irritants, or any other
pollutant, contaminant, or substance alleged to be
injurious, hazardous, toxic, or contaminating, including
without limitation any “hazardous waste” as that term is
defined in 42 U.S.C. § 9601 or any other environmental
law or regulation presently existing or ever existing, in,
into, on or under any land, soil, air, water course, body of
water and/or atmosphere or other tangible things.

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Contracts

C H AN G E
Insurance Coverage

RENEWABLE ENERGY CERTIFICATES
What is a REC?
A REC (pronounced: rěk) represents the property
rights to the environmental, social, and other
nonpower qualities of renewable electricity
generation. A REC, and its associated attributes
and benefits, can be sold separately from the
underlying physical electricity associated with a
renewable-based generation source.
USEPA, Renewable Energy Certificates,
http://www.epa.gov/greenpower/gpmarket/rec.htm

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Location

C H AN G E
Insurance Coverage

LOCATION
• Flood Plain mapping
• Storm Surge
• Water resources

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Location

C H AN G E
Insurance Coverage

REQUIREMENTS FOR FLOOD
INSURANCE
• A) Borrower shall at all times provide, maintain and keep
in force or cause to be provided, maintained and kept in
force, at no expense to Lender, the following policies of
insurance with respect to the Property and Borrower, as
applicable:
• …(ii) flood insurance if the Improvements are located in
a special flood hazard area as designated by the Director
of the Federal Emergency Management Agency, in
sufficient amounts as determined by Lender.

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Location

C H AN G E
Insurance Coverage

Problems with Flood Plain Mapping
•

“… the impacts of climate change are not taken into account during
the development of FEMA flood hazard area mapping.”
Recommendations of the DRBC Flood Advisory Committee for More
Effective Floodplain Regulations in the Delaware River Basin 9
(Oct. 2009)

•

Uncertainty in flood stage measurements can be approximately one
foot, which translates to a horizontal uncertainty of approximately 40
feet in the coastal flood plain. “This uncertainty has a significant
impact on the delineation of inundated areas on flood maps.”
National Research Council of the National Academies, Mapping the Zone: Improving Flood Map Accuracy (2009).

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Location

C H AN G E
Insurance Coverage

Riparian Flood Map (new)
•

http://www.personal.psu.edu/rul135/geog482/project_3/FM4102380364D.jpg

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Location

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Insurance Coverage

Moving Ahead for Progress in the 21st Century Act, aka "MAP-21 (2012)
(House: 373-52; Senate: 74-19)
100215(d) Future Conditions Risk Assessment and Modeling
Report(1) IN GENERAL- The Council shall consult with scientists and
technical experts, other Federal agencies, States, and local
communities to-(A) develop recommendations on how to-(i) ensure that flood insurance rate maps incorporate the best
available climate science to assess flood risks; and
(ii) ensure that the Federal Emergency Management Agency uses
the best available methodology to consider the impact of-(I) the rise in the sea level; and
(II) future development on flood risk; ...

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Location

C H AN G E
Insurance Coverage

Rising Sea Levels – Historical Fact

James Titus, Rising Seas, Coastal Erosion and the Takings Clause: How to Save Wetlands and
Beaches without Hurting Property Owners, 57 Md. L.R. 1279, 1299 (1998)

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Location

C H AN G E
Insurance Coverage

Rising Sea Levels – The Future

Estimates for twenty-first century sea level rise from semiempirical models as compared to the IPCC Fourth
Assessment Report (AR4).
Source: A new view on sea level rise, Stefan Rahmstorf, Nature Reports Climate Change ,
44 - 45 (2010) Published online: 6 April 2010 doi:10.1038/climate.2010.29

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Location

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Insurance Coverage

http://www2.ucar.edu/atmosnews/opinion/8585/dissecting-sandys-surge

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Location

Maryland. The
Barrier Islands.
Ocean City.
Do the math.

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Insurance Coverage

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Location

C H AN G E
Insurance Coverage

Ocean City, Maryland
Post Sandy

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Location

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Insurance Coverage

Mantoloking on March 18,
2007 (Source: NOAA via
NASA)

Mantoloking on October 31,
2012 (Source: NOAA via
NASA)

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Location

C H AN G E
Insurance Coverage

Ownership of the Littoral – The Rule
Part 1

• “It is well established that the title of land below the
highwater mark, as well as rivers or streams within the
ebb and flow of the tide, belong to the public.”
Board of Public Works v. Larmar Corp., 277 A.2d 427, 262 Md. 24 , 47 (1971)
(citations omitted)

• Rivers or streams within the ebb and flow of tide, to high
water mark, belong to the public, and in that sense are
navigable waters; all the land below high water mark,
being as much a part of the jus publicum, as the stream
itself. Id. at 537.
Day v. Day, 22 Md. 530, 537 (1865)

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Location

C H AN G E
Insurance Coverage

• Maryland Rule - Section 720 of the
Wetlands Act of 1970 (Art. 66C) (now Env.
Code 16-201):
• 'The owner of land bounding on navigable waters shall
be entitled to all natural accretions to said land and to
make improvements into the waters in front of said land
for the purposes of preserving his access to navigable
water or for protecting his shore against erosion. After an
improvement has been constructed, it shall become the
property of the owner of the land to which it is attached.

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Location

C H AN G E
Insurance Coverage

Part 2

• First, where lands are bounded by water, it may well be
regarded as the expectancy of the riparian owners that
they should continue to be so bounded. Second, the
quality of being riparian, especially to navigable water,
may be the land's 'most valuable feature' and is part and
parcel of the ownership of the land itself.... Riparianness
also encompasses the vested right to future alluvion,
which is an 'essential attribute of the original property. By
requiring that the upland owner suffer the burden of
erosion and by giving him the benefit of accretions,
riparianness is maintained.
• Bonelli Cattle. Co. v. Ariz., 414 U.S. 313, 326 (1973).

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Location

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Insurance Coverage

Maryland’s Rule
“Land inundated by mean high water reverts to
State ownership”
Dep’t of Natural Resources v. Mayor & Council of Ocean City, 274 Md.
1, 15 (1975)

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Location

C H AN G E
Insurance Coverage

Part 2
• “The proprietor of lands having a boundary on the sea is
obliged to accept the alteration of his boundary by the
changes to which the shore is subject. He is subject to
loss by the same means that may add to his territory,
and, as he is without remedy for his loss, so he is
entitled to the gain which may arise from alluvial
formations.”
Ocean City Ass'n v. Shriver, 64 N.J.L. 550 (E. & A. 1900)

AVULSION
ACCRETION
EROSION

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Location

C H AN G E
Insurance Coverage

Shriver - The Lay of the Land (Water) in 1882

Howell/ Shriver

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Location

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Insurance Coverage


Howell/ Shriver

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Location

C H AN G E
Insurance Coverage

N

Howell / Shriver

Ocean Avenue

Ninth Street

Riparian
Grant

Atlantic
Ocean

Tenth Street

MHW 1897

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Location

C H AN G E
Insurance Coverage

Stop The Beach Renourishment, Inc. v.
Florida Dept. of Environmental Protection
130 S.Ct. 2592 (2010)
• Ruling: The State is the rightful owner of the disputed
stretch of sand
• Avulsion, Not Accretion
"if an avulsion exposes land seaward of littoral property
that had previously been submerged, that land belongs
to the State even if it interrupts the littoral owner’s
contact with the water." Opinion at 26.

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Location

C H AN G E
Insurance Coverage

Ownership of the Littoral – Problems
• Landowner loses uplands.
• Landowner loses uplands, that subsequently accrete.
• Landowner in bad faith fills tidelands.
• Landowner in good faith fills tidelands.
• Landowner develops accreted areas.
• Landowner develops uplands.
• Landowner bulkheads uplands.
• Landowners fills uplands.

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Location

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Insurance Coverage

Example

http://blog.foreignpolicy.com/files/images/080613_iowa.jpg

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Location

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Insurance Coverage

Mapping Mean High Tide – Past Disputes
• Dickinson v. Fund for Support of Free Public Schools, 95
N.J. 65 (1983)
– 1. L. 1968, c. 404 - N.J.S.A. 13:1B‑13.1 et seq.
– 2. Constitutional Amendment - 1981
– 3. Supreme Court - 1983
15 Years for an Answer!

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Location

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Insurance Coverage

Rolling Easements
• Adopted in Texas, South Carolina
• Allows migration of shoreline inland by prohibiting
armoring
• Vests upon the rise in Mean High Tide
• Risk of shoreline retreat transferred to owner
• Avoids “taking” issue because cost of easement can be
insubstantial in discounted dollars

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Location

C H AN G E
Insurance Coverage

Example of Rolling Easement
Tex. Nat. Res. Code Ann,. § 61.011
(c) The commissioner shall strictly and vigorously enforce the prohibition
against encroachments on and interferences with the public beach
easement.
(d) The commissioner shall promulgate rules, consistent with the policies
established in this section, on the following matters only:
(1) acquisition by local governments … of access ways sufficient to provide
adequate public ingress and egress to and from the beach within the
area described in Subdivision (6);
(6) construction on land adjacent to and landward of public beaches and
lying in the area either up to the first public road generally parallel to the
beach or to any closer public road not parallel to the beach, or to within
1,000 feet of mean high tide, whichever is greater, that affects or
may affect public access to
and use of public beaches;

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Location

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Insurance Coverage

The Nitty-Gritty
• PLANNING FOR RISING SEA LEVELS
– Map Changes
– Land Transfer Mechanism (lease, fee simple)
– Electricity Supply
– Insurance
– Zoning
– Water Supply
– Opportunities

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Location

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Insurance Coverage

Water scarcity is the new global warming
Commentary: Management is key to prosperity and survival
April 02, 2012|Thomas Kostigen
NEW YORK (MarketWatch) — The global director of water stewardship
for Coca-Cola Co. says that water risk isn’t imminent; it’s already
manifest.
Greg Koch, who spoke at the Financial Times sustainability conference
in New York City on Thursday, issued dire warnings and a call to arms
for investors and corporations around the world along with
governments.
And he wasn’t alone.
Robert Hormats, Undersecretary of State for Economics, Energy and
the Environment says disputes or outright water wars are imminent in
the near future.

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Location

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Insurance Coverage

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Location

C H AN G E
Insurance Coverage

GEORGIA DROUGHT
Georgians have gotten a swift education: Since 1999, the
state has spent more years in drought than in normal
conditions. Federal maps show that more than half of
Georgia is now in extreme or exceptional drought, at a time
when 70% of the country is experiencing abnormal aridity.
http://articles.latimes.com/2012/sep/16/nation/la-na-georgia-drought-20120916

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Location
Condition

C H AN G E
Insurance Coverage
Potential Impacts

Increased Flooding

Infrastructure damage
Increased contamination from waste sites (e.g., animal waste)
Increased turbidity – higher treatment levels/costs
Increased potential of wells flooding – bacteriological contamination.

Increased Air/Water
Temperature

Increased evaporation rates – less water availability
Algal blooms – toxins and increased disinfection byproducts
Increased raw and finished water temperatures – treatment changes
Increased water demand for irrigation and energy production

Changes in Precipitation
and Increased Runoff

Changes in the seasonality of precipitation – lower stream flow and water
availability during peak demand
Increased runoff – results in higher pollutant loads in source waters,
increased turbidity of surface waters, and stream bed degradation

Longer Dry Periods and
Droughts

Decreased surface water and groundwater levels
Higher water demand – irrigation, energy, and outdoor water use

Sea Level Rise

Low lands will experience inundation and flooding
Salt water intrusion in coastal aquifers
Low lying wells more vulnerable to flooding

More Frequent and
Intense Tropical Storms

Damage to utility treatment plants and infrastructure from wind, flooding, and
power outages
Post-event water quality impacts – higher sediment and pathogen loads

C LI M AT E

C H AN G E
Insurance Coverage

Increased Flooding

Infrastructure damage
Increased contamination from waste sites (e.g., animal waste)
Increased turbidity – higher treatment levels/costs
Increased potential of wells flooding – bacteriological contamination.

Increased Air/Water
Temperature

Increased evaporation rates – less water availability
Algal blooms – toxins and increased disinfection byproducts
Increased raw and finished water temperatures – treatment changes
Increased water demand for irrigation and energy production

Changes in Precipitation Changes in the seasonality of precipitation – lower stream flow and water
and Increased Runoff
availability during peak demand
Increased runoff – results in higher pollutant loads in source waters,
increased turbidity of surface waters, and stream bed degradation
Longer Dry Periods and
Droughts

Decreased surface water and groundwater levels
Higher water demand – irrigation, energy, and outdoor water use

Sea Level Rise

Low lands will experience inundation and flooding
Salt water intrusion in coastal aquifers
Low lying wells more vulnerable to flooding

More Frequent and
Intense Tropical Storms

Damage to utility, treatment plants and infrastructure from wind, flooding,
and power outages
Post-event water quality impacts – higher sediment and pathogen loads

http://www.mde.state.md.us/programs/Water/Water_Supply/Documents/120516_CCbrochure_Web.pdf

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C H AN G E

Regulations Insurance Coverage

REGULATION
SEC Guidance
EPA Greenhouse Gas Reporting Rules

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C H AN G E


SEC Issues Interpretive Guidance on
Disclosure Related to Business or Legal
Developments Regarding Climate Change
FOR IMMEDIATE RELEASE
2010-15
Washington, D.C., Jan. 27, 2010 — The Securities and
Exchange Commission today voted to provide public
companies with interpretive guidance on existing SEC
disclosure requirements as they apply to business or legal
developments relating to the issue of climate change.

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C H AN G E


TITLE 40--Protection of Environment
CHAPTER I--ENVIRONMENTAL
PROTECTION AGENCY
SUBCHAPTER C--AIR PROGRAMS
PART 98--MANDATORY GREENHOUSE GAS R

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C H AN G E


general stationary fuel
combustion



iron and steel production



zinc production



lead production





electric generation



lime manufacturing

municipal solid waste
landfills



adipic acid production







aluminum production

miscellaneous uses of
carbonate

suppliers of coal-based
liquid fuels



ammonia manufacturing



nitric acid production





cement production



petrochemical production

suppliers of petroleum
products



ferroalloy production



phosphoric acid production



suppliers of natural gas
and natural gas liquids



glass production







HCFC-22 production and
HCFC-23 destruction

pulp and paper
manufacturing



silicon carbide production

suppliers of industrial
greenhouse gases and
suppliers of CO2

hydrogen production



titanium dioxide production





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C H AN G E


The energy used to heat and power buildings in the
U.S. currently makes up about 38 percent of the
nation’s total CO2 emissions. U.S. Department of
Energy, 2008 Buildings Energy Data Book ch. 1, p.
20 (Nov. 2008). Building emissions are projected to
increase and are expected to contribute
approximately 43 percent of the U.S. total of CO2
emissions by 2030. Id. U.S. building emissions nearly
equal the aggregate carbon emissions from the
countries of Japan, France, and the United Kingdom.
Id. Residential and commercial buildings in the
United States use more energy and emit more GHGs
than the U.S. transportation sector. Energy
Information Administration, U.S. Department of
Energy, Energy Consumption by Section Overview
(2008). William McInerney & Elizabeth Mattern,
“Greenhouse Gases And Commercial Real Estate,”
The Practical Real Estate Lawyer (May 2009)

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C H AN G E

Technology Insurance Coverage

TECHNOLOGY
Electric or CNG Cars
Solar Installation

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C H AN G E


ELECTRIC CARS
The Toyota Prius, the first mass-produced hybrid gasoline-electric car, was
introduced worldwide in 2001. As of February 2012, a total of 2.5 million Prius
cars have been sold worldwide and it is the world's best selling hybrid.[12] As of
July 2012[update], series production all-electric cars available in some
countries include the Tesla Roadster, REVAi, Buddy, Mitsubishi i MiEV, Tazzari
Zero, Nissan Leaf, Smart ED, Wheego Whip LiFe, Mia electric, BYD e6, Bolloré
Bluecar, Renault Fluence Z.E., Ford Focus Electric, BMW ActiveE, Coda, and
Tesla Model S. The Leaf, with more than 32,000 units sold worldwide by
early July 2012, is the world's top-selling highway-capable all-electric car.
[13] As of July 2012[update], production plug-in hybrids available include the
BYD F3DM, Chevrolet Volt/Opel Ampera, Fisker Karma, and Toyota Prius Plugin Hybrid. The Chevrolet Volt family, with more than 20,000 units sold
through June 2012 in the U.S., Canada, the Netherlands, Germany, and
Switzerland, is the world’s best-selling plug-in hybrid.[14][15][16][17][18][19]
[20]
http://en.wikipedia.org/wiki/Electric_vehicle

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Advantages and disadvantages
of electric vehicles
•More efficient - net CO2 production from an electric car is
typically one-half to one-third of that from a comparable
combustion vehicle.
•Far less pollution – no emissions at point of operation, far less
noise pollution too
•Simple – no gearboxes, regenerative braking, very efficient,
less wear
•Energy efficiency - “tank to wheels” efficiency is a factor of 3
higher than internal combustion engines
•Range – low because low energy density and long recharge
time, also few charging stations

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•
•
•
•
•
•

Electrical capacity
Payment for electricity, improvements
Efficiency planning
Zoning
ADA compliance
Building code

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C H AN G E
Insurance Coverage

EV v. CNGV
ADVANTAGE

ELECTRIC CAR

Efficiency

√

Filling Stations

√

Fuel Cost

COMPRESSED NATURAL GAS

√

Vehicle Cost
Range

√

Charge Time

√

Compatibility with Gasoline

√

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PV Solar is HOT
•

Annual Solar Installations in the U.S. are expected to explode from under 3,000 MW in 2012 to 8,000MW in
2016.

U.S.SOLAR MARKET INSIGHT
REPORT | Q2 2012 | FULL REPORT
GTM Research & SEIA

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Why? vs. Why not?
• Drivers:
– To “Go Green”.
– To reduce, or better predict, spending on energy.
– Energy diversification and reliability.
– Incentives can create an alternative revenue stream.
• Barriers:
– Cost of Systems.
– Uncertainty surrounding incentives and subsidies
creates apprehension as it relates to the support of
long term capital investments.
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What is driving the market expansion?
Overview of incentives.

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•

•

What is driving the market expansion?
Additional incentives.
Net-Metering
– Projects in service territories that meet eligibility criteria may receive
credit at close to the retail rate for excess generation.
Certain states have established Solar Renewable Energy Credits
(“SREC’s”)
– 1 SREC = 1MWh of solar electricity produced
– 10kW solar capacity ≅ 12 SREC’s per year
– SREC’s have monetary value established at monthly auctions on a
state-by-state basis with some SREC’s being transferable between
states.
• SREC values can greatly enhance financial returns.
• As more States establish SREC’s and auctions become more liquid
they will become a large incentive for solar installs.
• SREC’s are currently trading anywhere from $40 (Delaware) to $540
(Massachusetts) (Source: SRECTrade.com).
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Can I do this?
What makes a good site?
•

Rooftop
› Flat or south facing pitched.
› Minimal to no shading or obstacles.
› < 10 years old and in good condition.
› Structurally sound – can hold 4-7 lbs/
ft2 of additional load.
› 10,000 ft2 or more uninterrupted area.

•

Ground Mount
› Flat or south facing.
› 3 acres minimum; 10-12 acres ideal
› Near interconnection point or location
requiring load.
› Zoning and environmental conditions
may restrict project.

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•
•
•

•

•

•

•

Success Story – Rutgers University, Livingston
Campus, 2008 project
1.4 megawatt (MW) solar array
7,700 panels on a 7-acre site.
The system produces enough energy to account for
10% of Rutgers’ energy consumption for the
campus and will reduce carbon dioxide emissions
over 1,200 tons on an annual basis.
Project Cost: $10 million
– $5.1 million – financed by Rutgers.
– Remainder funded via the NJ BPU’s Clean
Energy Program. The program is aimed at
public agencies and institutions to help them
defer the cost of implementing solar projects.
Project will save Rutgers more than $200,000 in its
first year of operation, rising to more than $300,000
in annual savings by the end of the 15-year
program.
Besides receiving rebates, Rutgers also receives
SRECs which can be sold to electric suppliers to
provide a source of revenue that helps the
university offset the costs of installing the solar
farm.
Value of SRECs will enable Rutgers to pay off the
full cost of the system in 6-years, enabling the
University to receive an alternative revenue stream
from the project for years to come.

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Solar Photovoltaic Installation @ Mount St. Mary's University
Back to Solar Installations | Update this Information
Installed in 2012 at Mount St. Mary's University in Emmitsburg, MD
Developer/Installer

Constellation Energy

PV System Owner

Constellation Energy

Installed Cost (USD)

$60,000,000

Ownership Type

Solar Lease

Ownership SREC

Not Institution-owned

Estimated Annual Utility Savings

Data Not Provided

Technical Details
Capacity

17400 kilowatts

Annual Production

20,000,000 kWh

Installation Type

Ground mount

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Conclusion Insurance Coverage

THANK YOU.
J. Wylie Donald
(302) 984-6361
jdonald@mccarter.com
climatelawyers.com

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Conclusion Insurance Coverage

Climate Change Legal Articles
by J.W. Donald
•
•
•
•
•
•

Getting Ahead of Storm Surge, Especially in the Era of Climate Change,
BNA Environment Reporter (June 20, 2012)
Force Placed Insurance: A Coverage Lifeboat?, Law360 (May 22, 2012)
Coverage for Carbon Dioxide Claims: Considering the Evolution of
“Absolute” Exclusions, The Brief (Summer 2011)
Underwater? What Climate Change Means for a Loan Portfolio Near the
Flood Plain, Massachusetts Banker (1st Quarter 2011)
Covering the Green Roof - With Insurance, LexisNexis Emerging Issues
4168 (Aug. 2009) (co-author)
Carbon Dioxide: Harmless, Ubiquitous and Certainly not a “Pollutant” under
a Liability Policy’s Absolute Pollution Exclusion, 39 Seton Hall L. Rev. 107
(2009) (co-author)

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