While cleantech investors are betting that global warming will make their investments perform well, most publicly-traded companies have had their head in the sand when it comes to warning its investors about the financial risks of global warming. That is until now — in an agreement between environmental crusader New York Attorney General Andrew Cuomo and Minnesota-based Xcel Energy (XEL), the utility will disclose to its investors in detail the risks global warming pose to its business. This first of its kind disclosure could be a sign of things to come for the electricity generation industry, the single largest contributor to the nation’s greenhouse gas emissions.
Under the agreement, Xcel will disclose in SEC filings the risks of future climate change regulation and legislation, climate-change related litigation and physical impacts of climate change. Additionally, Xcel will also disclose its current carbon emissions, projected emissions from proposed coal power plants and its plans to reduce emissions.
Xcel already provides such information to the voluntary Carbon Disclosure Project and in its annual “triple-bottom-line” report. Xcel estimates that, at $9 per ton (lower than EU prices, but higher than current prices on RGGI), its carbon emission would have cost the company $603 million last year, according to TwinCities.com.
In 2007, Xcel reported just $577 million in profit. (Numbers like these are why banks have been taking into consideration what carbon regulation could mean for their investments and scaled back their plays in areas like coal.)
Xcel is the first of five utilities subpoenaed by Cuomo. The Attorney General’s office is still negotiating with AES Corp., Dominion, Dynegy and Peabody Energy. In the carbon-constrained economy of the future, just as the SEC likes to keep track of corporations’ financial dealings, they will want to know about companies’ carbon dealings as well.