Climate Change Policy Update - April 12, 2010

Article by Kyle Danish, Shelley Fidler, Kevin Gallagher, Megan Ceronsky and Tomás Carbonell

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Commentary

EPA is aiming to issue its final version of the Tailoring Rule by the end of April. Assistant Air Administrator Gina McCarthy voiced assurances that carbon capture and sequestration would not be a required technology . . . There will be a meeting of the Major Economies Forum on April 18-19. With a smaller group of just the highest-emitting countries, can the MEF make more progress than the Copenhagen talks, or the more recent session in Bonn? . . . Majority Leader Reid reportedly told Sen. Kerry to have a climate change bill within a couple of weeks or Reid will bring the SENR-passed energy bill to the floor, and, procedurally, the climate bill would then have to be offered as an amendment . . .

Executive Branch

• U.S. Climate Envoy Announces Major Economies Meeting for April 18-19. Todd Stern, the U.S. Special Envoy for Climate Change, announced that delegates of the 17 members of the Major Economies Forum would meet in Washington, DC on April 18-19 for discussions on six major international climate change issues. These six issues include: mitigation, transparency, financing, technology, forests, and adaptation. The Major Economies Forum is an informal diplomatic venue for countries with the world's highest greenhouse gas (GHG) emissions, and is independent of the formal negotiating process held under the United Nations Framework Convention on Climate Change (UNFCCC). In the wake of the near-collapse of the negotiations at the UNFCCC Conference of the Parties in Copenhagen in December 2009, some observers have said that more progress might be made in the Major Economies Forum discussions.
• EPA Aims for Release of Tailoring Rule By End of April. Gina McCarthy, Assistant Administrator for Air and Radiation of the U.S. Environmental Protection Agency (EPA), said that the agency expects to release its long-awaited "Tailoring Rule" by the end of April or shortly thereafter. Proposed in September 2009, the Tailoring Rule would establish a timetable for phasing in the application of the Clean Air Act's Prevention of Significant Deterioration (PSD) and Title V permitting programs for GHG emissions from stationary sources. Title V of the Clean Air Act requires stationary sources to obtain operating permits for emissions of regulated pollutants; the PSD program requires new and modified sources to obtain preconstruction permits and install "best available control technology" for each pollutant that is "subject to regulation" under the Clean Air Act. Under an EPA regulatory interpretation released April 2, both programs will apply to GHG emissions beginning on January 2, 2011, when the agency's new vehicle GHG standards take effect. Although EPA has yet to release guidance on "best available control technology" for GHGs, McCarthy said that the agency would not require carbon capture and sequestration (CCS) technology for every facility subject to PSD. McCarthy said that the agency's regulations will "mov[e] forward already demonstrated technologies, not innovative technologies that have yet to be demonstrated." In September, EPA proposed to apply the Title V and PSD programs initially only to facilities with emissions of 25,000 metric tons CO2e or more. However, in a February 22 letter to Sen. Jay Rockefeller (D-WV), EPA Administrator Lisa Jackson said that the Agency was contemplating a final rule with a threshold "substantially higher" than 25,000 metric tons.
• State Department Issues Draft Report for UNFCCC. The U.S. Department of State publicly released a draft of its fifth report to the UNFCCC Secretariat on national efforts to mitigate GHG emissions. Policies emphasized in the report include President Obama's October 2009 executive order requiring federal agencies to formulate GHG reduction targets and policies; EPA's December 2009 finding that GHG emissions from motor vehicles contribute to a danger to public health and welfare; new fuel economy and vehicle GHG standards for vehicles in model years 2012-2016; EPA's rule requiring mandatory reporting of GHG emissions from major sources across the economy; and various clean energy incentives and programs provided in the American Recovery and Reinvestment Act (the "stimulus bill"). The report projected that national policies in place as of spring 2009 would help reduce GHG emissions slightly below 2005 levels in the short term, but that national GHG emissions would "rise steadily" over the long term. The State Department will take comments on the draft until May 6. The last such report was submitted in 2007. The draft report is available at http://www.state.gov/g/oes/rls/rpts/car5/index.htm .
• Administration Officials Call for Comprehensive Climate Legislation. Obama Administration officials made statements in support of comprehensive climate change legislation at events in Washington. Carol Browner, Director of the White Office of Energy and Climate Change Policy, said that the White House is "encouraged by the work going on on the Hill" and is "keenly focused" on cooperating with Congress to pass climate change legislation. Browner reiterated the Administration's support for comprehensive legislation that would embrace both mandatory GHG controls and clean energy incentives, stating that an energy-only bill "would be unfortunate." Larry Summers, director of the National Economic Council, said at a separate event that climate change legislation represents an "opportunity to move forward" by combining the priorities of both political parties and the various regions of the country.

Congress

• Moran Suggests Using Appropriations to Retain Stringent Coverage in EPA's Tailoring Rule. Rep. James Moran (D-VA), the new Chairman of the House Appropriations Committee panel, which has jurisdiction over EPA's budget, suggested that he would like to use the appropriations process to prevent EPA from raising the threshold at which stationary GHG sources would trigger Clean Air Act requirements under the Title V and PSD programs from 25,000 tons to 75,000 tons of CO2­e/year—if "the politics permit it." As originally proposed, the Tailoring Rule (see above) indicated that EPA would apply GHG emission controls to stationary sources emitting 25,000 tons or more of CO2­e/year, but EPA Administrator Lisa Jackson subsequently suggested that this threshold would be substantially higher in the final version of the rule.
• Senators Weigh in on Transportation Sector Regulation in Climate Bill. Eight Democratic Senators wrote to Senators John Kerry (D-MA), Lindsey Graham (R-SC), and Joseph Lieberman (I-CT) to express their concern that the climate legislation being drafted by the senators would not achieve sufficient emission reductions from the transportation sector and could hinder efforts to pass a surface transportation authorization bill. The letter requests that the climate bill:
• • direct states and Metropolitan Planning Organizations to set goals for transportation emission reductions and establish plans to meet those goals;
  • provide performance-based funding for states and regions to help them establish the plans and build clean transportation projects; and
  • invest revenue raised from the transportation sector into infrastructure strategies that will reduce emissions and oil consumption.

The letter was signed by Senators Tom Carper (DE), Arlen Specter (PA), Frank Lautenberg (NJ), Bill Nelson (FL), Ben Cardin (MD), Jeffrey Merkley (OR), Kirsten Gillibrand (NY), and Michael Bennet (CO). The letter is available here .

• Reid Threatens to Make SENR Bill the Vehicle for Floor Debate. Senate Majority Leader Harry Reid (D-NV) has reportedly told Sen. Kerry that Kerry needs to produce the text of a climate bill within a couple of weeks or Sen. Reid will bring the energy legislation passed in 2009 by the Senate Energy and Natural Resources Committee (SENR) to the floor. If the SENR energy bill is the vehicle for the floor debate, climate legislation being developed by Senators Kerry, Graham, and Lieberman could be offered as an amendment, but SENR Committee Chair Jeff Bingaman (D-NM) could be assigned responsibility as floor manager.

States and Cities

• WCI Committee Releases Draft Market Oversight Recommendations. An advisory committee of the Western Climate Initiative (WCI) released for public comment a set of draft recommendations on carbon market oversight. The report contains 12 recommendations that are intended to provide effective oversight of compliance instrument trading under the WCI's planned emission trading program. A key recommendation would allow participation in the carbon market by non-regulated entities. The draft recommendations are available at http://www.westernclimateinitiative.org/news-and-updates/103-wci-releases-market-oversight-draft-recommendations .
• State Attorneys General Seek to Preserve State, EPA GHG Authority in Climate Bill. Seven state attorneys general sent a letter to Senators Kerry, Graham and Lieberman requesting that the Senators refrain from preempting state and EPA authority to regulate GHG emissions in their soon-to-be-released climate change legislation. The attorneys general, representing California and six northeastern states, argue that the preservation of state authority is essential to allow the states to develop new regulatory initiatives and that EPA authority should be retained at least until new federal regulatory authority is in place. The letter is available here .

Industry and NGOs

• Industry Associations Urge Senators to Consider Role of Natural Gas in Senate Climate Bill. The Interstate Natural Gas Association of America, the Natural Gas Supply Association, and the Independent Petroleum Association of America sent a letter to Senators Kerry, Graham and Lieberman arguing that a Senate climate change bill should ensure that natural gas plays a role in achieving GHG emission reductions. The letter argues that climate change legislation proposed to date provides subsidies to other fuels that will "result in natural gas being 'squeezed out' of the role that it would otherwise play if markets alone selected the most cost-effective methods for reducing GHG emissions." The letter also cites a recent study by the Brattle Group which concluded that GHG emission reductions would be more costly without increased reliance on natural gas. To prevent natural gas from being disadvantaged, the letter recommends that natural gas be included in a Clean Energy Standard that would require utilities to purchase a minimum proportion of electricity from low-carbon sources. In addition, the letter recommended that the bill provide government support for carbon capture and sequestration research at natural gas-fired facilities. The letter is available at http://www.ipaa.org/news/press_releases/2010/2010-04-08_112.php .
• Industry-Environmentalist Coalition Pushes for Disclosure of Energy Consumption to Consumers. Forty-seven companies and organizations – including Google, Itron, GE, Verizon, Intel, the Alliance to Save Energy, the Pew Center on Global Climate Change, and the Natural Resources Defense Council – sent a letter to the White House calling on the Obama Administration to support the goal of allowing energy consumers to have detailed information related to energy consumption. The letter states that consumers should have access to data on electricity rates, the sources of electricity feeding the grid, and the principal drivers of their electricity consumption. Such disclosure, the letter says, would "unleash the forces of innovation" by allowing customers "to monitor and manage their energy consumption, for instance, via their computers, phones or other devices . . . we can harness the power of millions of people to reduce greenhouse gas emissions – and save consumers billions of dollars." The letter recommends that such disclosures be made a standard feature of grants and rulemakings issued by the Department of Energy, the Environmental Protection Agency, and the Federal Energy Regulatory Commission. The letter is available here .

Judicial

• Industry Groups Challenge EPA Reconsideration of "Johnson Memorandum." Various companies and associations – including the Industrial Minerals Association, the National Cattlemen's Beef Association, Great Northern Project Development, and the Coalition for Responsible Regulation – filed a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit challenging EPA's reconsideration of a December 2008 memorandum signed by then-EPA Administrator Stephen Johnson (known as the "Johnson Memorandum"). The reconsideration, which was published in the Federal Register on April 2, concluded that GHGs would become "subject to regulation" for the Clean Air Act PSD and Title V programs on January 2, 2011 – the date that EPA's vehicle GHG standards for model year 2012 become enforceable against automobile manufacturers. According to an attorney representing the petitioners, the petitioners intend to argue that EPA's vehicle GHG standards do not "trigger" PSD and Title V regulation of GHGs for stationary sources.
• Automakers Voluntarily Dismiss Challenge to California Vehicle GHG Standards. Following the release of a joint EPA/National Highway Traffic Safety Administration (NHTSA) rule setting vehicle GHG and Corporate Average Fuel Economy (CAFE) standards for vehicles in model years 2012 through 2016, major automakers have moved to voluntarily dismiss their claims that California's vehicle GHG standards are preempted by federal fuel economy laws. The automakers' motion, filed in the U.S. Court of Appeals for the Ninth Circuit in the case of Central Valley Chrysler-Jeep v. Goldstene, complies with a May 2009 agreement between the Obama Administration, the automakers, and the state of California. In that agreement, the automakers agreed not to challenge the California vehicle GHG standards in exchange for California's commitment to defer to the joint EPA/NHTSA standards signed April 1.

Studies and Reports

• Researchers Suggest Connecting Wind Farms to Stabilize Output. Research published in the Proceedings of the National Academy of Sciences found that connecting wind farms along the U.S. East Coast would stabilize net output, with the system rarely reaching either low or full power, and power levels changing relatively slowly. The researchers recommend placing wind farms strategically to smooth output variability rather than simply locating wind farms in areas with the highest wind speeds. The study, which was based on five years of wind data, is available at www.pnas.org/cgi/doi/10.1073/pnas.0909075107 .

International

• Climate Negotiators Sets Schedule For 2010. Negotiators representing the parties to the UNFCCC held the first meetings of 2010 met in Bonn, Germany. With the schedule for 2010 negotiations the primary purpose of the meetings, the negotiators agreed to add two additional negotiating sessions to the calendar. Negotiators had already agreed to hold a second, mid-year meeting in Bonn and a year-end meeting in Cancun, Mexico. The two additional sessions, whose dates and locations are not set, will occur sometime between the second Bonn and Cancun meetings.

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