Article by Kyle Danish, Shelley Fidler, Kevin Gallagher, Megan Ceronsky and Tomás Carbonell
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COMMENTARY
March Madness arrives in Washington as Senators Kerry, Lieberman, and Graham invite environmentalists and businesses to the "dance" . . . The rough draft of the KGL entry in the climate bracket includes a 2012 utility cap with a 2016 industrial phase-in, energy intensive industry-friendly allowance allocation, incentives for coal, gas, and nuclear as well as consumers . . . Talk of the tournament: state preemption . . . GHGs in transportation to take the court "very soon" as the auto industry weighs in to oppose scuttling their GHG deal with Administration and states . . . And regulators announce intention for joint GHG plans for the auto industry post-2016 . . . States grab RGGI climate revenues to fill budget gaps.
Executive Branch
- Plans for Post-2016 Vehicle GHG Standards to be Announced "Very Soon." Transportation Secretary Ray LaHood announced that the Obama Administration is outlining a plan for regulating greenhouse gas (GHG) emissions and fuel economy for vehicles in model years 2017 and later, and would announce those plans "very soon." The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) are expected to issue joint GHG and fuel economy regulations later this month that will cover vehicles in model years 2012 through 2016.
- Vilsack Tells Farmers Climate Bill Will Help Agriculture Community. Speaking to members of the National Farmers Union (NFU), Agriculture Secretary Tom Vilsack said that a "properly structured" federal climate change program would provide "enormous benefits to our agricultural economy" in the form of offset credits for biological sequestration activities. Vilsack said this conclusion was supported by recent analyses by the Department of Agriculture as well as the Department's own conservation efforts. In addition, Vilsack pledged that the Administration would work with Congress to ensure that pending climate change legislation will create significant income opportunities for farmers and ranchers. In contrast to the American Farm Bureau, the NFU offered tentative support for the Waxman-Markey climate change bill passed by the House last summer.
- Adaptation Task Force Releases Interim Report. An interagency task force studying the efforts of over 20 federal agencies to adapt to climate change released an interim report concluding that the government's response contains "significant gaps." The task force was convened pursuant to an executive order signed by President Obama last fall, and will submit its final recommendations to the President in October of this year. The report did commend EPA's efforts to assist water utilities and estuaries in preparing for climate change, and the Department of Transportation's study of the risks climate change poses to Gulf Coast infrastructure. The report also recommended that the Administration prepare a national adaptation strategy focusing on using science to shape adaptation policy; effectively informing the public; prioritizing needs; providing guidance tailored to the individual needs of agencies; learning from earlier efforts; and coordinating adaptation efforts at all levels of government as well as with the private sector. The report is available at http://www.whitehouse.gov/sites/default/files/microsites/ceq/20100315-interagency-adaptation-progress-report.pdf .
Congress
- Kerry, Graham, & Lieberman Discuss Bill Outline. Senators John Kerry (D-MA), Lindsey Graham (R-SC), and Joe Lieberman (I-CT) discussed major elements of their legislation with industry and environmental groups. According to trade press reports, their proposal will place a cap on utility emissions in 2012 with a 2016 phase-in of industrial sources. There will be a hard "price collar" on allowance prices, starting at $10 and $30 and rising over time, as well as a strategic reserve of allowances that could be released to control price volatility. Over half of the revenue from carbon allowances would be returned to consumers. Covered entities would be able to use offsets from domestic and international emission-reduction projects for compliance. A fee will be imposed on transportation fuels. The legislation will also include titles on coal, natural gas, and nuclear energy. The overall emission targets include a 17% reduction in emissions below 2005 levels by 2020 and an 80% reduction by 2050. Regulation of GHG emissions by states and regional programs, and by the EPA under the Clean Air Act, would be preempted. The Senators hope to send a draft to EPA and to the Congressional Budget Office by the end of next week for economic analysis, which will take 1-2 months to complete. A full outline will be presented to Senators and industry groups the week of March 22, with a draft bill to be made public by April 15.
States and Cities
- New Jersey Diverts RGGI Funds to Ease Budget Deficit. New Jersey Governor Chris Christie (R) announced that proceeds from the auction of emission allowances under the Regional Greenhouse Gas Initiative (RGGI) will be used to help offset the state's projected $10.7 billion budget deficit for fiscal 2011. To date, New Jersey has raised a total of $64.5 million through 7 RGGI auctions. The funds were originally intended to be used to promote the development of state energy efficiency, renewable energy and other clean energy programs. New Jersey follows New York as the second state to divert RGGI funds away from their original purpose to address a budget shortfall.
- New Mexico Environmental Agency Seeks Approval of State Cap-and-Trade Program. The New Mexico Environment Department delivered the outline of a cap-and-trade program to the state Environmental Improvement Board (EIB) for approval. The program would allow the state to participate in the Western Climate Initiative (WCI), a regional cap-and-trade program comprised of seven Western states and four Canadian provinces. Unlike most other WCI participants, New Mexico does not need express legislative approval to participate in the regional trading program due to laws already on the books that require GHG reductions from stationary sources. An EIB decision on the program is expected later this year.
- WCI Releases Recommendations For Implementing Offset Limit. WCI members released their recommendations for implementing the regional cap-and-trade program's limit on the use of offset credits. In the release, the WCI members recommend: a limit on the percentage of a covered entity's compliance obligation that can be met using allowances; that the offset limit be the same across all member jurisdictions; a higher limit on offset use during early compliance periods; no prohibition on carrying-over offset credits from earlier compliance periods to later periods; and that the offset limit remain fixed regardless of changes in WCI membership, unless those changes result in an increase to the offset limit equal to or greater than one half of a percentage point. Under the WCI's Design Recommendations, WCI members imposed the limit on the use of offset credits in the trading program in an effort to ensure that the majority of emission reductions occur at covered entities. The offset limit applies to offset credits generated with the WCI system as well as to allowances issued by other recognized emission trading programs. The recommendations are available at http://www.westernclimateinitiative.org/component/remository/func-startdown/224/ .
Industry and NGOs
- Natural Gas Industry Seeks to be Included in Clean Energy Standard. The presidents of the Natural Gas Supply Association, the Independent Petroleum Association of America, the Interstate Natural Gas Association of America, and the American Gas Association sent a letter to Senators John Kerry (D-MA), Joe Lieberman (I-CT), and Lindsey Graham (R-SC) asking for the role of natural gas to be recognized in the climate change bill that the senators are currently developing. The letter said that "energy and climate change legislation has, to date, largely overlooked natural gas and its vital role." The letter also called for the bill to allow natural gas generators to be included in a "clean energy standard" that would require electric utilities to purchase a certain proportion of electricity from zero or low-carbon sources.
- Automakers, UAW Oppose Murkowski Resolution. The major automobile manufacturers and the principal auto workers' union both sent letters to Congress opposing a "disapproval resolution" sponsored by Sen. Lisa Murkowski (R-AK) that would overturn the EPA's finding that GHGs from automobiles contribute to endangerment of public health and welfare. The Alliance of Automobile Manufacturers (Alliance) – which represents 11 automakers including Chrysler, Ford, General Motors and Toyota – warned that the resolution would interfere with EPA's plans to issue tailpipe GHG standards for passenger vehicles, which would in turn prompt California and other states to use their own authority to set GHG standards at the state level. Last May, California agreed not to enforce its own tailpipe GHG standards in exchange for a promise by EPA and NHTSA to promulgate new and more stringent GHG and fuel economy standards. The United Auto Workers (UAW) sounded a similar note in its letter, calling the Murkowski resolution a "misguided effort" that would "unravel the historic agreement on one national standard for fuel economy and greenhouse gas emissions for light duty vehicles that was negotiated by the Obama administration last year." The UAW letter is available at http://www.usclimatenetwork.org/resource-database/uaw-disapproval-resolution-letter ; the Alliance letter is available at http://www.usclimatenetwork.org/resource-database/alliance-of-auto-manufacturers-oppose-murkowski-daa .
- Chamber Files Petition for Reconsideration of Endangerment Finding. The U.S. Chamber of Commerce (Chamber), the influential business lobby, petitioned EPA to reconsider its December 2009 endangerment finding – the legal predicate for the regulation of GHG emissions from automobiles and stationary sources under the Clean Air Act. The Chamber has already filed a petition for review of the endangerment finding with the United States Court of Appeals for the District of Columbia Circuit. Unlike that challenge, the Chamber's latest petition does not focus on the science of climate change. Instead, the petition is based on what the Chamber characterizes as public admissions by EPA officials that Clean Air Act regulation of GHGs would "paralyze" permitting authorities and lead to delays in approving environmental permits. The petition is available here .
- Environmental NGOs Offer Tentative Praise for Early Outlines of Kerry-Graham-Lieberman Bill. A statement signed by twenty major environmental organizations - including the Alliance for Climate Protection, the Center for American Progress Action Fund, the Environmental Defense Fund, the Natural Resources Defense Council (NRDC), and the Sierra Club - said the organizations were "encouraged" by recent progress on the Kerry-Graham-Lieberman climate change bill, and offered qualified praise for the bill's reported commitment to achieving national GHG reductions of 17% below 2005 levels by 2020, and 80% reductions by 2050. According to the organizations, the emission reduction targets "represents the leadership needed by the U.S. Senate to create jobs, increase energy security, reduce carbon pollution and protect public health." However, the statement noted that "legislative details are important, and are not settled yet." This positive assessment was not shared by the Center for Biological Diversity (CBD), whose Executive Director, Kieran Suckling, criticized the bill for preempting EPA's authority to regulate GHG emissions from stationary sources under its existing Clean Air Act authority. CBD did not sign the statement. The statement is available at http://www.cleanenergyworks.us/press/03-19-10-groups-kgl.html
- Union-Environmentalist Report Finds Vehicle Climate Policies Can Create 150,000 American Jobs. A report sponsored by the UAW, the NRDC, and the Center for American Progress found that a combination of stronger vehicle GHG standards and comprehensive climate change and clean energy legislation could create up to 150,000 jobs by 2020 in the American automobile sector. These economic benefits would result mainly from the additional labor content and demand for manufactured vehicle components (such as new controls, transmissions, and drive trains) that would result from aggressive climate policies. However, the report noted that the magnitude of the domestic economic benefits would depend greatly on supportive policies, such as manufacturing incentives financed by allowance proceeds. NRDC Executive Director Peter Lehner said: "By building cleaner cars, we can tackle some of our most dire problems at the same time. We want to reduce carbon pollution and many unemployed people want to return to work: building better cars can help with both." The report is available at http://www.nrdc.org/energy/files/drivinggrowth.pdf .
Studies and Reports
- New Research Confirms Corn Ethanol Emissions Impact. A new analysis of corn-based ethanol published in the journal Bioscience found that its use as a transportation fuel does not reduce net GHG emissions because it triggers an increase in grain production in other regions, which leads to the conversion of forest and pastureland to agricultural land and carbon releases. The study's estimate of indirect GHG emissions due to land-use change is 75 percent lower than the only prior peer-reviewed study, but is still large enough to outweigh the emission-reducing effects of the ethanol. The study's abstract is available at http://caliber.ucpress.net/doi/abs/10.1525/bio.2010.60.3.8 .
- Study Finds Control Burns Could Lower Fire Emissions. Research published in Environmental Science & Technology found that prescribed burns in the dry, temperate forests of the U.S. could have reduced total CO2 emissions from forest fires by 18-25% between 2001 and 2008, and by as much as 60% in specific forest systems. Prescribed burns can reduce wildfires by eliminating underbrush; wildfires create more emissions because they burn hotter and kill older trees that store more carbon. The study did not consider the cumulative emissions from repeated prescribed burns. The study's abstract is available at http://pubs.acs.org/doi/full/10.1021/es902455e .
International
- Taiwan Pledges to Cut Emissions 30 Percent Below BAU by 2020. Taiwan committed to cut its emissions to 30 percent below business-as-usual (BAU) by 2020. Although Taiwan is not a member of the United Nations, Taiwan expressed its support for the Copenhagen Accord.
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