Abstract
Climate change is an existential crisis that has and will continue to impact every aspect of our daily lives. An overlooked component of life in the United States, except in times of crisis, is our energy grid, which will continuously feel the consequences of climate change. Electricity is a basic necessity for most people in the U.S., but it is underprepared for the realities of climate change. Climate adaptation is a necessary step forward that energy utilities must take to ensure the resilience and reliability of electricity. Failure to adequately adapt will lead to dangerous situations as seen in the Camp Fire of 2018 in California, the Texas cold front that led to massive power outages in 2021, and the 2023 Maui fires in Hawai’i. The adaptation of utilities is no longer optional, but absolutely necessary.
In the U.S., the majority of electricity is distributed through for-profit utilities, leaving these companies with the responsibility to adapt their infrastructure to avoid the most severe consequences of climate change. Without adaptation, the energy infrastructure will suffer, and utilities will face financial peril that will place them, and their consumers, at risk. Climate change will lead to an increasing amount of utilities facing economic harm as a result of underprepared infrastructure or incorrect data. This economic harm will lead to more and more chapter 11 bankruptcies of for-profit utilities.
Bankruptcy plans require debtors to do everything in their power to create a financially viable company post-bankruptcy. Without this, the plan fails its ultimate mission. This Comment argues that for a chapter 11 bankruptcy of a utility to succeed, it must compel climate adaptation in the process. This would ideally take place in the form of a Bankruptcy Code amendment, requiring the consideration of climate adaptation in the bankruptcy process. Additionally, state law and debtor-in-possession (“DIP”) financing are powerful tools to incorporate climate adaptation into the bankruptcy process for utilities. State law has the power to introduce policy objectives compelling the climate adaptation of utilities to ensure fewer climate-induced disasters where there are significant consequences. DIP financing allows for the lender to have control over the restructuring process and compel adequate adaptations throughout.
Without climate adaptation in bankruptcy, utilities emerge incapable of handling the increasing severity of climate change and will find themselves circling back to bankruptcy time and time again.
Recommended Citation
Hayley Roy,
Climate Adaptation and Bankruptcy: Preparing Utilities for What is to Come,
41
Emory Bankr. Dev. J.
305
(2025).
Available at:
https://scholarlycommons.law.emory.edu/ebdj/vol41/iss2/4