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Article by Kyle Danish, Shelley Fidler, Kevin Gallagher, Megan Ceronsky and Tomás Carbonell
Commentary
Extraordinary activity on the climate front last week while most were focused on basketball brackets, health care, and taking the temperature of voters . . . Plans for release this week of long awaited EPA rules along with expansion of EPA interest to natural gas, sequestration and fluorinated gases . . . Senators weigh in (in print) on considering climate legislation this year and on what they want to see in the Kerry/Graham/Lieberman (KGL) proposal . . . Coalition requests KGL consider deforestation . . . Others ask Cantwell/Collins to include offsets to encourage less costly GHG reductions.
Executive Branch
- White House Officials Meet With Senate Leadership to Plan for Climate Bill. Carol Browner, Director of the White House Office of Energy and Climate Change Policy, and Phil Schiliro, Assistant to the President for Legislative Affairs, met with Senate Majority Leader Harry Reid (D-NV) and Democratic committee chairmen to discuss plans for passing a climate change bill in the Senate this year. According to the trade press, the White House officials promised to cooperate with the committee chairmen once text of the bill being developed by Senators John Kerry (D-MA), Joe Lieberman (I-CT), and Lindsey Graham (R-SC) is available.
- EPA Proposes Expansion of Reporting Rule to New Industry Sectors. Building on the mandatory greenhouse gas (GHG) reporting rule it finalized last December, the Environmental Protection Agency (EPA) proposed to require reporting of GHG emissions from three additional source categories: fugitive and vented GHG emissions from oil and natural gas systems; GHG emissions from underground carbon dioxide injection and geologic sequestration facilities; and emissions of fluorinated GHGs from electronics manufacturing and other facilities. In a departure from an earlier version of the rule for oil and gas systems (proposed last year but never finalized), EPA proposed to require reporting of emissions from onshore natural gas production facilities (including wells and gathering pipelines), as well as local natural gas distribution companies. EPA also proposed to expand the geographic scope of the rule to include facilities on or under the Outer Continental Shelf and in U.S. territorial waters. The rules are expected to be finalized by September of this year; a sixty-day public comment period will commence once the proposed rules are published in the Federal Register. The rules are available at http://www.epa.gov/climatechange/emissions/proposedrule.html .
- EPA Clarifies Timing of GHG Rulemakings. EPA provided further details on the timing of three imminent Clean Air Act rulemakings on GHGs. The agency said it expects to complete work on its reconsideration of the "Johnson Memorandum" – which will determine when GHGs are "subject to regulation" for purposes of the Clean Air Act's Prevention of Significant Deterioration (PSD) and Title V programs – by April 1. In a recent letter to Sen. Jay Rockefeller (D-WV), EPA Administrator Lisa Jackson suggested that the Agency might delay the effectiveness of the PSD and Title V requirements for GHGs until 2011; that decision may be announced in the reconsideration of the Johnson Memorandum. Also expected to be released April 1 are the agency's first-ever GHG standards for passenger vehicles and light duty trucks, which will take effect beginning in model year 2012. Finally, EPA's "tailoring rule" – which will alter for a limited period of time the emission thresholds for application of the PSD and Title V programs, once GHGs become "subject to regulation" for those programs – is expected to be released shortly after April 1.
- EPA Transportation Study Finds Potential for 1 Billion Ton Reduction by 2030. At a hearing before the Senate Environment and Public Works Committee, EPA Assistant Administrator for Air and Radiation Gina McCarthy reported on the results of an EPA study of potential GHG emission reductions from the U.S. transportation sector. The study concluded that the economy-wide cap and trade program contemplated in the Waxman-Markey bill would cause gasoline prices to increase by only 25 cents per gallon by 2030, an amount that would cause minimal reductions in GHG emissions from transportation. However, two sets of complementary policies considered in the study – increased fuel efficiency standards, and deployment of alternative fuel vehicles – would result in GHG emission reductions of between 600 million and 1 billion tons CO2-equivalent per year by 2030 (total current U.S. GHG emissions are approximately 7 billion tons CO2-e per year), and save 4 to 7 million barrels per day in oil consumption. The report, which was requested by Sen. John Kerry, did not consider the economic costs of these measures or analyze EPA's authority to carry them out. The report is available at http://www.epa.gov/otaq/climate/kerry-analysis-02-18-2010.pdf .
- Three Agencies to Develop Local/Regional Climate Models. The National Science Foundation (NSF) agreed to work with the U.S. Department of Agriculture (USDA) and the U.S. Department of Energy (DOE) to develop computer models for long-term predictions of local and regional climate change impacts. The effort will cost $250 million over five years, and will draw on the expertise of each agency. In particular, NSF will seek to incorporate the responses of living systems to climate change, including modeling of water and nutrient cycling; USDA will seek to model the impacts of climate change on farming practices; and DOE will develop information on the role of aerosols and clouds in influencing the climate. The effort is expected to inform adaptation efforts at the local and regional level.
Congress
- Climate Bill Negotiations Continue—With Senator Graham. Senator Lindsey Graham (R-SC) told reporters that he will continue his efforts with Sens. John Kerry (D-MA) and Joe Lieberman (I-CT) to develop a consensus climate-energy legislative package, despite Democrats' use of the reconciliation process to pass health care legislation. The trio held additional meetings with fellow Senators and industry groups to discuss an outline of their climate bill. Senators Kerry and Lieberman told reporters that they hope to finish drafting the bill over the Easter recess. Majority Leader Harry Reid (D-NV) met with Sen. Kerry and the other committee chairmen with jurisdiction over climate and energy legislation to discuss a strategy for moving the compromise bill forward.
- Cantwell and Collins Market Their Climate Bill. Senators Maria Cantwell (D-WA) and Susan Collins (R-ME), authors of the Carbon Limits and Energy for America's Renewal (CLEAR) Act, continue to advocate for their legislation as an alternative to the legislation being drafted by Senators Kerry, Graham, and Lieberman, although they have not yet signed on any additional co-sponsors. In response to the suggestion that Senators Kerry, Graham, and Lieberman could incorporate components of the CLEAR Act into their legislation, Senator Collins said that Senators Kerry, Graham, and Lieberman should "take a look" at supporting the CLEAR Act instead of "cannibalizing" it and adding portions to the compromise legislation. Sen. Collins did tell reporters that she was encouraged by the changes that Senators Kerry, Graham, and Lieberman were making to their proposal.
- Senators Put Asks in the Mail. A number of Senators broadcast their preferences for climate legislation through letters.
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- Twenty-two Democratic Senators wrote to Majority Leader Harry Reid (D-NV) to ask that the Senate consider comprehensive energy and climate legislation during 2010 to create jobs and reduce dependence on foreign oil. The letter was signed by a number of moderate Senators whose support would be critical to passing such legislation. Signatories included: Sens. Tom Udall (NM), Jeanne Shaheen (NH), Michael Bennet (CO), Kay Hagan (NC), Ron Wyden (OR), Mark Begich (AK), Sherrod Brown (OH), Tom Harkin (IA), Thomas Carper (DE), Mark Udall (CO), Al Franken (MN), Debbie Stabenow (MI), Jeff Merkley (OR), Patty Murray (WA), Ted Kaufman (DE), Roland Burris (IL), Robert Casey (PA), Mark Warner (VA), Maria Cantwell (WA), Arlen Specter (PA), Jon Tester (MT) and Amy Klobuchar (MN). A PDF of the letter is available at http://www.vnf.com/assets/attachments/3.19.2010%20letter%20from%20Senate%20Democrats%20to%20Reid%20urging%20energy%20climate%20vote%20in%202010.pdf .
- Ten Democrats from coastal states wrote to Sens. Kerry, Graham, and Lieberman to express concerns about the impacts of offshore drilling and oil spills on coastal environments, economies, and military training zones. The letter argues against sharing offshore drilling tax revenues with States, and that leasing should be reformed to incentivize oil companies to produce oil from already-held leases before opening up environmentally-sensitive areas to drilling. Signatories included Sens. Bill Nelson (FL), Robert Menendez (NJ), Frank Lautenberg (NJ), Sheldon Whitehouse (RI), Jack Reed (RI), Barbara Mikulski (MD), Ben Cardin (MD), Ted Kaufman (DE), Ron Wyden (OR), and Jeff Merkley (OR). Sen. Nelson told reporters that he believed the issues raised in the letter would be resolved. A PDF of the letter is available at http://www.vnf.com/assets/attachments/3.23.2010%20letter%20from%20coastal%20Democrats%20to%20KGL.pdf .
- Sen. Dianne Feinstein (D-CA) wrote to Sen. Kerry to express her preferences, including: preservation of California's ability to set its own tailpipe emission standards; allocation of allowances to utilities based on both emissions and sales (as in the Waxman-Markey bill); requiring states to pass legislation to allow any offshore drilling; a fee on transportation fuels linked to the sector's emissions; and expiration of any spending authorization ten years after enactment. The letter also thanks Sen. Kerry for his support of the Feinstein-Snowe Carbon Market Oversight Act. A PDF of the letter is available at http://www.vnf.com/assets/attachments/3.18.2010%20letter%20from%20Feinstein%20to%20Reid%20on%20climate%20bill.pdf .
- Sen. Mark Begich (D-AK) wrote to Majority Leader Reid arguing that Alaska is in a unique position because of its exposure to climate change effects, high energy costs, and economic reliance on natural resource development. Sen. Begich advocated greater incentives for natural gas development; giving Alaska a share in any government revenues from oil drilling in federal waters off the Alaska coast; adaptation funding for affected communities; and funding for federal research on the implications of a warming Arctic for new trade routes, oil and gas development, fishing grounds, and the strategic importance of the Bering Strait. The letter is available at http://begich.senate.gov/public/?a=Files.Serve&File_id=2189d752-c067-4942-a75d-1576202d9e4e .
- Sen. Kent Conrad (D-ND) told reporters that he has drafted a letter asking Majority Leader Reid to go forward with an energy-only bill—but will not circulate it widely until the future of the Kerry-Graham-Lieberman bill becomes more clear.
- Rockefeller and Voinovich Release CCS Language. Senators Jay Rockefeller (D-WV) and George Voinovich (R-OH) have released draft legislative language to develop carbon capture and sequester technologies. The bill would authorize $850 million over 15 years for public-private R&D partnerships; provide incentives for rapid deployment of 20 gigawatts of coal-fired power with CCS technology; provide tax credits based on the amount of CO2 captured; and create technology standards for power plants. The draft also contains a placeholder for addressing legal liability issues.
States and Cities
- Colorado Increases Renewables Standard to 30 Percent by 2030. Colorado Governor Bill Ritter (D) signed a bill that increases the state's renewable energy standard to 30 percent by 2020. The state's previous standard required that 20 percent of the state's electricity be generated from renewable sources by the same year.
Industry and NGOs
- Farm Groups, Forestry Groups, Utilities, and Environmental Groups Urge Senators to Incentivize Farm and Forest Carbon Sequestration in Climate Bill. An ad-hoc coalition of thirty-one utilities, agricultural associations, and environmental organizations sent a letter to Senators John Kerry (D-MA), Joe Lieberman (I-CT), and Lindsey Graham (R-SC), urging the trio to provide public and private incentives, such as offsets, to encourage emission sequestration in farms and forests at home and abroad. Signatories included the National Farmers Union, the National Alliance of Forest Owners, the Society of American Foresters, the Coalition for Emission Reduction Projects, AEP, Duke Energy, PG&E, the Sierra Club, and the Union of Concerned Scientists. The letter argued that American farms and forests can play a major role in sequestering carbon, and that rewarding sequestration will bring revenue and jobs to rural America. The letter also argued that providing public and private incentives to reduce emissions from deforestation and forest degradation in tropical forests (REDD) will reduce emissions while lowering the costs of climate mitigation in the U.S. and helping to "level the playing field" for U.S. agricultural enterprises that compete internationally with firms that benefit from unrestrained deforestation. The letter is available at http://thehill.com/images/stories/blogs/agforests.pdf .
- IETA Calls for Cantwell-Collins Bill to Relax Restrictions on Offsets, Trading. In a letter to Senators Maria Cantwell (D-WA) and Susan Collins (R-ME), the International Emissions Trading Association (IETA) called on the two Senators to remove restrictions on offset credits and allowance trading in their climate change bill. The Cantwell-Collins bill, also known as the "CLEAR" Act, would provide a cap-and-trade program for fossil fuel producers, but would not allow those producers to use offset credits to meet their allowance obligations. Instead, an indeterminate share of revenues from allowance sales would be appropriated to finance offset projects along with other pubic programs. Moreover, the CLEAR Act would limit trading only to firms subject to the cap, and would not permit trading of allowance derivatives. The letter argued that leaving the financing of offsets to the appropriations process would create too much investment uncertainty for offset project investors, "threaten[ing] the development of offset projects and U.S. offset supply." Further, the letter stated that the CLEAR Act's restrictions on participation in trading would increase price volatility, and send "unreliable price signals to covered entities who are forced to shoulder the financial burden of carbon market price risk internally." The letter is available at http://www.ieta.org/ieta/www/pages/getfile.php?docID=3417 .
Studies and Reports
- International Emissions Could Be Independently Verified in Five Years. A new report by the National Academy of Sciences found that countries are currently capable of producing fossil-fuel CO2 emissions estimates sufficiently accurate to support monitoring of an international climate treaty. According to the report, strategic investments and redeployment of existing monitoring devices could enable independent verification of self-reported estimates with less than 10 percent uncertainty within 5 years. Satellite-based estimates of deforestation and afforestation could be made with similar accuracy. Self-reported estimates of non-CO2 GHGs are predicted to continue to be uncertain and difficult to verify in the near-term. The report is available at http://books.nap.edu/openbook.php?record_id=12883&page=1 .
International
- IMF Report Details $100 Billion Climate Fund Proposal. The International Monetary Fund released a staff report that provided details on how the $100 billion in climate change funding called for by the Copenhagen Accord could be raised. Called the "Green Fund", the financing mechanism would provide funding for climate change mitigation and adaptation projects in developing nations. As detailed in the report, the Green Fund would initially be funded with $60 billion provided by developed nations. The remaining $40 billion would be raised from the private sector through the issuance of "green bonds" in global capital markets. The report is available at http://www.imf.org/external/pubs/ft/spn/2010/spn1006.pdf .
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