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Climate Change: Issues for Policyholders

BY Marialuisa S. Gallozzi
April 30, 2007

In a ruling characterized as 'one of its most important environmental decisions in years' and a 'strong rebuke to the Bush Administration,' the U.S. Supreme Court held recently that the U.S. Environmental Protection Agency has authority to regulate emissions of greenhouse gases ('GHG') that contribute to climate change. Linda Greenhouse, Justices Say E.P.A. Has Power to Act on Harmful Gases, New York Times, Apr. 3, 2007 (discussing Massachusetts v. Environmental Protection Agency, No. 05-1120 (U.S. Apr. 2, 2007)). The Supreme Court's ruling in Massachusetts v. EPA could trigger long-anticipated regulation of GHG emissions in the United States, dramatically changing the regulatory environment in which U.S. businesses operate.

The ruling follows a year in which climate change, also referred to as global warming, has figured prominently in the news. In January, 10 major companies called for caps on GHG emissions. Jeffrey Ball, In Climate Controversy, Industry Cedes Ground ' Support Grows for Caps on CO2 Emissions; Big Oil Battles Detroit,' The Wall Street Journal (Jan. 23, 2007), at A1. One month later, former Vice President Al Gore won an Academy Award for his climate change documentary 'An Inconvenient Truth.' According to the The Wall Street Journal, the climate change debate 'is shifting from science to economics,' and '[t]he biggest question going forward no longer is whether fossil-fuel emissions should be curbed. It's who will foot the bill for the cleanup … ' Id.

Insurance products offer some opportunities to mitigate the many types of costs associated with climate change. This article provides an overview of the relationship between insurance coverage and climate change.

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