Article by Kyle Danish, Shelley Fidler, Kevin Gallagher, Megan Ceronsky and Tomás Carbonell
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Commentary
President Obama characterized the new offshore drilling policy as part of a broader strategy emphasizing comprehensive energy and climate change actions that rely on homegrown fuels . . . EPA and NHTSA finalized the fuel economy and GHG emission standards for motor vehicles . . . EPA also finalized a proceeding that determines the first date that stationary sources will become subject to the Clean Air Act's Prevention of Significant Deterioration Program. Under the Agency's final determination, the PSD program will start to bite in January 2011. Further details on the implementation of the PSD program await EPA's finalization of the "Tailoring Rule" . . . EPA Administrator Lisa Jackson and Senator Lisa Murkowski (R-AK) traded letters on expected economic impacts of PSD regulation . . . The UK government offered a deal to developing countries: We'll sign on to new emission targets under the Kyoto Protocol if you take legally-binding commitments under the same . . . More from the mailbag: some states and sympathetic Senators wrote letters to Sens. Kerry, Graham, and Lieberman asking them not to preempt state climate regulations, or – if they do preempt – provide the states with compensatory allowance revenues . . . Senator Richard Lugar (R-IN) outlined climate change legislation that would eschew market mechanisms for a combination of regulatory standards.
Executive Branch
- President Obama Urges Passage of Climate Bill, Calls Offshore Drilling Part of a "Broader Strategy." At a speech announcing the Administration's decision to open new areas of the Outer Continental Shelf to offshore oil and gas exploration, President Obama called the new policy part of a "broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy." The President also voiced confidence that Congress would "pass comprehensive energy and climate legislation that's going to foster new energy -- new industries, create millions of new jobs, protect our planet, and help us become more energy independent." A transcript of the remarks is available at http://www.nytimes.com/2010/04/01/science/earth/01energy-text.html?pagewanted=1 .
- EPA and NHTSA Finalize Joint GHG and Fuel Economy Standards. The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) finalized new Corporate Average Fuel Economy (CAFE) standards and the first-ever Clean Air Act (CAA) greenhouse gas (GHG) standards for passenger vehicles and light duty trucks in model years 2012 through 2016. The standards are designed to cause the average fuel economy of new vehicles to increase to 35.5 miles per gallon by 2016, and reduce the average GHG emissions of the new vehicle fleet by about 5% each year from 2012 through 2016. EPA and NHTSA also project that the new standards will save 1.8 billion barrels of oil and about 960 million metric tons CO2-equivalent emissions over the lifetime of the vehicles. This unique joint rulemaking fulfills an agreement reached in May 2009 between the Obama Administration, the state of California, and the major automakers. Under the agreement, California agreed to abstain from enforcing its own vehicle GHG standards, and the automakers agreed to abandon legal challenges to the standards, in exchange for the joint rulemaking finalized last week. At a conference call announcing the new standards, Transportation Secretary Ray LaHood said that the Administration had already begun planning for a new set of joint standards to cover model years 2017 and later. The 2012-2016 standards are available at http://www.epa.gov/otaq/climate/regulations/ldv-ghg-final-rule.pdf .
- EPA Issues Final Reconsideration of the "Johnson Memorandum." EPA finalized its reconsideration of a December 2008 memorandum signed by then-EPA Administrator Stephen Johnson (known as the "Johnson Memorandum"), which addresses the circumstances that would cause GHGs to become regulated pollutants for purposes of the CAA Prevention of Significant Deterioration (PSD) program. Under the PSD program, new and modified stationary sources of all pollutants that are "subject to regulation" under the CAA must obtain preconstruction permits; such permits require, among other things, the use of "best available control technology". EPA's final reconsideration concludes that GHGs will become "subject to regulation" as soon as the first CAA mandatory emission controls for GHGs become binding on regulated entities. Since EPA's GHG standards for vehicles in model year 2012 (see above) are the first such requirements, the reconsideration means that PSD would apply to GHG emissions beginning on January 2, 2011 – the earliest day that model year 2012 vehicles may be certified with EPA. Originally, EPA had proposed that GHGs would be deemed "subject to regulation" upon the effective date of the motor vehicle regulations, which will occur 60 days after the regulations are published in the Federal Register. In addition, EPA announced in the reconsideration that there would be no "grandfathering" of PSD permit applications that are submitted before GHGs become "subject to regulation"; permit applications that are still pending on that date would have to be revised or resubmitted to account for GHG emissions. The final reconsideration is available at http://edocket.access.gpo.gov/2010/pdf/2010-7536.pdf .
- Administrator Jackson Defends Economic Impact of GHG Regulation. Responding to written questions from Sen. Lisa Murkowski (R-AK), EPA Administrator Lisa Jackson sent a letter arguing that EPA's proposed regulation of GHG emissions from stationary sources under the PSD program would not harm the economy. Jackson wrote that past predictions that Clean Air Act regulations would cause economic hardship had not been substantiated, and that "it is appropriate to greet with some skepticism the recent, unsupported claims that economic harm will result from the measured steps EPA is taking now to comply with the Supreme Court's conclusion that greenhouse gas pollution falls within the Clean Air Act's scope." In answer to Sen. Murkowski's question regarding the long-term impacts of PSD regulation of GHGs, Jackson estimated that at the "very high end" approximately 3,000 PSD applications would be processed in 2013, and that "there is every reason to expect" that Congress would pass a comprehensive climate change bill by 2016. In addition, Jackson wrote that she had not encountered "any credible analysis" demonstrating that EPA's proposed GHG regulations would cause manufacturing facilities to relocate overseas, and said that EPA was required under the CAA to consider cost, energy impacts, and available technologies in setting requirements for programs such as PSD. Sen. Murkowski responded to the letter by requesting a personal meeting with the Administrator. The Administrator's letter is available at http://energytopic.nationaljournal.com/100326_jackson_to_murkowski.pdf .
Congress
- Group of Senators Resists Preemption. Fourteen Senators wrote to Senators John Kerry (D-MA), Lindsey Graham (R-SC), and Joe Lieberman (I-CT) to express their opposition to federal preemption of state-based climate programs unless federal climate legislation provides states with revenue streams to continue state investments in climate change mitigation. The letter was signed by Democratic Senators Jeanne Shaheen (NH), Sheldon Whitehouse (RI), Ben Cardin (MD), Jack Reed (RI), Barbara Mikulski (MD), Robert Menendez (NJ), Frank Lautenberg (NJ), Ron Wyden (OR), Barbara Boxer (CA), Jeffrey Merkley (OR), Kirsten Gillibrand (NY), Patrick Leahy (VT), and Chris Dodd (CT), and Independent Bernie Sanders (VT). Sen. Kerry reportedly told industry officials that he has discussed grandfathering the California program with California Senators Barbara Boxer and Dianne Feinstein (D). However, clean energy advocates briefed on the draft legislation said they were told that efforts to auction more allowances (and presumably return the revenues to households) may mean that few, if any, allowances would be distributed to states to fund renewable energy and energy efficiency programs, a change from the Waxman-Markey bill. The letter is available online here .
- Lugar Circulates "Practical" Climate Plan. Senator Richard Lugar (R-IN) has released a draft plan of energy and climate legislation that would avoid market-based mechanisms, and instead rely on a set of regulatory standards. The Lugar plan would reduce GHG emissions by tightening vehicle fuel efficiency standards by an average of 4% a year from 2016 through 2030 and by requiring electric utilities to derive half of their electricity from low-carbon sources by 2050. The low-carbon energy sources would include waste-to-energy plants, new nuclear reactors, and coal-fired power plants with capture and storage of 80% of CO2 emissions. The proposal would also require increasing percentages of vehicles to be flex-fuel capable, provide rebates for the purchase of relatively more efficient vehicles by class, establish mandatory targets for improved building energy efficiency for new construction, create financial incentives for energy efficiency building retrofits, establish more stringent appliance and equipment efficiency standards, and provide loan guarantees for nuclear plants and financial incentives for retirement of the most polluting coal plants. Senator Lugar projected that his proposal would reduce emissions by 25% below a business-as-usual trajectory by 2030, equivalent to approximately half of President Obama's goal of a 17% reduction below 2005 emission levels by 2020. An outline of Sen. Lugar's proposal is available at http://lugar.senate.gov/energy/ .
- House Democrats Reject Energy-Only Legislation. Forty-five Democratic Representatives wrote to Speaker of the House Nancy Pelosi (D-CA) urging her to reject any effort to pass energy legislation without constraints on GHG emissions. The signatories are members of the Sustainable Energy and Environment Coalition.
- Collins Suggests Adding CLEAR Act to Senate Energy Bill. Senator Susan Collins (R-ME), co-sponsor of the Carbon Limits and Energy for America's Renewal (CLEAR) Act with Senator Maria Cantwell (D-WA), suggested that one way forward on climate legislation in the Senate would be to add the CLEAR Act to the energy bill previously passed out of the Senate Energy and Natural Resources Committee. Sen. Collins also said that she will "wait with great interest" to see the legislative language produced by Senators Kerry, Graham, and Lieberman.
Judicial
- Oil Industry Files Challenge to RFS Deadline. The American Petroleum Institute (API) and the National Petrochemical and Refiners Association filed a petition for review of EPA's Renewable Fuel Standard (RFS) in the United States Court of Appeals for the District of Columbia Circuit, claiming that the RFS deadlines for compliance are unlawful. The RFS was finalized in February of this year and requires U.S. refiners to blend almost 13 billion gallons of renewable fuels into the U.S. fuel supply in 2010. The 2010 RFS also approximately doubles the volume of biodiesel that must be purchased relative to the 2009 standard, and requires compliance beginning January 1, 2010 – before the final standard was promulgated. The petitioners argue that the time allowed by EPA for compliance with the RFS is insufficient, especially in light of the increased biodiesel requirement.
States and Cities
- State Environmental Heads Argue Against Preemption of State GHG Rules. In a letter to Senators John Kerry (D-MA), Lindsey Graham (R-SC) and Joseph Lieberman (I-CN), the heads of fourteen state environmental agencies argued that the Senators' forthcoming climate legislation should not preempt state rights to regulate GHG emissions. The signatories noted that federal environmental laws have traditionally enabled states to develop innovative regulatory solutions to environmental problems by preserving the right of states to implement concurrent regulation and suggested that a similar approach should be taken with climate change.
- CARB Cancels "Clean Cars" Rulemaking. The California Air Resources Board (CARB) cancelled a June 2009 rulemaking that would have required light-absorbing or reflecting windshields on new passenger cars and trucks beginning in 2012. The rule was intended to reduce vehicle GHG emissions by keeping vehicle interiors cool, thereby decreasing the need for air conditioning. The CARB action comes in response to heated complaints from some stakeholders, including law enforcement officials, who argued that the new windshields would have blocked signals from a variety of electronic devices, including cell phones, global position systems, garage door openers and others. CARB intends to replace the rule with performance-based standards for vehicle internal temperatures.
Industry and NGOs
- Duke CEO Says Senate Bill Must Avoid Disturbing "Fragile Consensus" Among Utilities on Climate Policy. The CEO of Duke Energy Corp., Jim Rogers, said that the climate change bill being developed by Senators Kerry, Graham, and Lieberman has "a lot of promise" in that it "couples traditional Republican issues with traditional Democratic issues." Nevertheless, Rogers cautioned that a "fragile consensus" had been forged among electric utilities around the Waxman-Markey bill passed by the House last June, and said that a Senate bill that varies dramatically from Waxman-Markey would put a "great deal of pressure" on that consensus. Rogers also critiqued the "cap-and-dividend" approach advocated by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME), under which all allowances in a cap-and-trade system would be auctioned and 75% of the revenues would be returned to consumers in the form of an equal per capita rebate. Rogers said that such an approach would disadvantage ratepayers in coal-dependent states, who would see their electricity bills increase disproportionately yet would receive rebates no greater than those given to citizens in other parts of the country.
- Pew Center Analyzes Proposal for Carbon Fee on Petroleum Sector. The Pew Center for Global Climate Change released a report analyzing a new method of addressing GHG emissions resulting from petroleum use, under which all petroleum products that are now subject to federal excise taxes would bear an additional carbon fee. The new regulatory approach resembles a fee concept for the transportation sector that Senators Kerry, Graham, and Lieberman are expected to propose in their forthcoming climate change bill. The report argues that a carbon fee would cover fewer emissions than an economy-wide cap-and-trade program, failing to cover about 25% of emissions from petroleum uses not subject to the federal excise tax (mostly attributable to small residential and commercial users of oil). However, the report also claims that a carbon fee would be easier to administer than an emissions cap because the new fee could simply be layered on the existing federal fuel tax. The report is available at http://www.pewclimate.org/docUploads/coverage-petroleum-sector-emissions.pdf .
- NGOs to Launch Project for Climate Science. The Natural Resources Defense Council, the World Wildlife Fund, and the United Nations Foundation are collaborating to build a new website to educate the public on climate science, according to former Rep. Sherwood Boehlert (R-NY), who is affiliated with the effort. The effort, called the Project for Climate Science, will present scientific journal articles and studies, along with descriptions of key research findings.
Studies and Reports
- California Projects Climate-Related Water Management Crisis. California's Department of Water Resources has released an updated Water Plan. The report notes that over the past century temperatures in California have risen, especially at higher elevations; average early spring snowpack in the Sierra Nevada has decreased by about 10% (a reduction of 1.5 million acre-feet of water in storage); sea levels have risen 7 inches; and flood peaks in the state's rivers have increased. The Department projects that all of these trends will continue, with 25-40 percent reductions in snowpack water storage by mid-century; decreased spring runoff; increased drought and flooding; and higher sea levels. These changes, the report concludes, will compromise water supply reliability and threaten agriculture, aquatic ecosystems, and coastal communities and infrastructure. The report's highlights are available online here .
- CBO Releases Report on Federal Climate Spending. The Congressional Budget Office (CBO) has issued a report detailing funding for federal climate change related activities from 1998 through 2009. The report notes that most of the $99 billion in climate spending has been channeled through the Department of Energy and the National Aeronautics and Space Administration. A third of the total funds were provided under the American Recovery and Reinvestment Act of 2009 (ARRA). The ARRA climate funding was dedicated almost exclusively to technology development and deployment, including funding for energy efficiency, weatherization, advanced batteries, smart grid programs, loan guarantees for innovative technologies, carbon capture and sequestration, and renewable energy technologies. The report is available at http://cboblog.cbo.gov/?p=487 .
International
- U.S., China Launch $150M Clean Energy Research Center. The U.S. and China launched a joint research center, called the U.S.-China Clean Energy Research Center (CERC), to study energy efficiency technologies. CERC will focus on buildings, clean coal and clean vehicles. Each nation will provide half the funding for the $150 million venture, with $37.5 million of the U.S. share provided by the U.S. Department of Energy and remainder coming from U.S. companies, national labs, university and others. The DOE share of CERC funding will be distributed over five years through competitive awards to consortia (defined as any entity with multiple players working collaboratively) in each of the three research focus areas.
- U.K. Offers Kyoto Signature in Exchange for Binding Commitments from Developing Nations. In an action plan issued by United Kingdom Climate Secretary Ed Miliband, the U.K. offered to sign a new treaty under the Kyoto Protocol-track of the international climate change negotiations in exchange for commitments from developing nations to accept legally binding GHG reduction targets. The move, which would accede to developing country demands that developed nations abide by their commitments under the existing Kyoto Protocol, is designed to bridge a gap between developed and developing nations that has been an obstacle to the development of an international climate change treaty.
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