Weekly Climate Change Policy Update - November 9, 2007

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Commentary

Presidential politics are starting to complicate Chairman Boxer's goal of passing a version of the Lieberman-Warner bill out of her Senate Environment & Public Works (EPW) Committee before the Bali negotiating conference in mid-December.  Already, she has had to move her full committee mark-up to the eve of the conference (Dec. 5) to accommodate restive Republicans who requested more time to digest the 200+ page legislation.  Now, Senator Hillary Clinton, the Democratic frontrunner for President, has outlined her preferences for a cap-and-trade bill and her preferences add up to something far more aggressive than Lieberman-Warner.  Sen. Clinton's statements have emboldened activists on the left to call for rejection of the Lieberman-Warner bill as too weak.  With the middle ground eroding, and Senators continuing to struggle through the complexities of allowance allocations and other issues, reporting the bill out of the EPW Committee will be a major challenge. 

• Date Set for Mark-up of Lieberman-Warner Climate Bill in Environment Committee.  Responding to Republican complaints that Sens. Lieberman and Warner’s climate bill (S. 2191) was moving too quickly, Senate Environment and Public Works Committee Chairwoman Barbara Boxer pushed back a mark-up date to December 5 at a committee hearing on the bill on Thursday.  Chairwoman Boxer originally planned to hold the mark-up on November 15.  Led by Sen. Voinovich (R-OH), Republicans said that more time was needed so that the Environmental Protection Agency (EPA) and the Energy Information Administration could analyze the bill’s costs and benefits.  The Committee will hold two additional oversight hearings on Tuesday, November 13 and Thursday, November 15.  A subcommittee approved the bill on November 1 with a vote of 4-3.
• Rep. Waxman Floats Proposal to Limit Coal-Based Emissions.  At a hearing this week, House Oversight and Government Reform Committee Chairman Henry Waxman (D-CA) announced his intent to introduce legislation that would limit EPA's ability to issue permits for new coal-fired power plants.  Chairman Waxman did not provide any further details on the plan.  EPA Administrator Stephen Johnson said at the hearing that the agency would issue CO₂ regulations for automobiles by the end of the year, but did not indicate whether the Administration is planning to apply CO₂ emission controls to coal-fired plants and other stationary sources of greenhouse gas (GHG) emissions.
• House Purchases Credits to Offset U.S. Capitol GHG Emissions.  Daniel Beard, the Chief Administrative Officer for the House of Representatives, purchased $89,000 worth of “carbon financial instruments” from the Chicago Climate Exchange (CCX) to offset the 30,000 tons of CO₂ emitted each year by the coal-fired plant that powers the U.S. Capitol building.  Earlier this year, House Speaker Nancy Pelosi (D-CA) pledged to make the Capitol “green” by the end of 2008.
• Senator Kerry Introduces Carbon Capture and Sequestration Legislation.  Senate Commerce, Science and Transportation Subcommittee on Science, Technology and Innovation Chairman John Kerry (D-MA) introduced legislation (S. 2323) at a hearing Wednesday that would increase research and development funding for the construction of large-scale carbon capture and sequestration (CCS) pilot projects at coal-fired power plants.  Specifically, the legislation calls for the Department of Energy (DOE) to establish a competitive grant program to spur the construction of three-to-five commercial-scale sequestration facilities as well as three-to-five “first-of-a-kind” demonstration projects equipped with CCS technology.  Priority in determining grant recipients would be given to those facilities that combine capture at the stack with sequestration in geologic formations.  The bill also calls for the U.S. Geological Survey to compile a national assessment of CO₂ storage capacity in the U.S.
• Democrats Hopeful for Pre-Recess Agreement on Energy Bill.  House Speaker Nancy Pelosi (D-CA) said that she is still pushing for a floor vote on the energy package before Congress leaves for its Thanksgiving recess on November 16.  It is also possible that the Democrats will unveil a new strategy on Tuesday.  House and Senate staffs are continuing to work out a compromise on several controversial provisions in the different bills, including increased fuel efficiency standards for automobiles, a renewable portfolio standard, and an energy tax package.
• Selected Committee Hearings From the Past Week:
  • The House Select Energy Independence and Global Warming Committee held a hearing on youth leadership and climate change ( November 5, 2007).
  • The Senate Commerce, Science, and Transportation Subcommittee on Science, Technology and Innovation held an oversight hearing on carbon sequestration ( November 7, 2007) (discussed above).
  • The House Oversight and Government Reform Committee held a full committee oversight hearing on EPA power plant approval and global warming pollutants (November 8, 2007) (discussed above).
  • The Senate Environment and Public Works Committee held a full committee hearing on S.2191, America’s Climate Security Act ( November 8, 2007) (discussed above).

Presidential Politics

• Sen. Clinton Promises Strict Climate Program, Proposal is More Stringent Than Lieberman-Warner Bill.  At a campaign stop in Iowa, Sen. Hillary Rodham Clinton (D-NY) outlined plans for a climate change program that would reduce U.S. GHG emissions to 1990 levels by 2020 and to 80 percent below 1990 levels by 2050.  She also said she supported an auction of 100 percent of emission allowances.  The reductions are more stringent than would be required under the Lieberman-Warner climate change legislation, which also would allocate, free of charge, a percentage of emission allowances.  Sen. Clinton’s pledge may put her in a difficult position when the Senate Environment and Public Works Committee, of which she is a member, considers the Lieberman-Warner bill.  Friends of the Earth, an environmental group, called on Sen. Clinton to vote against the bill and hold out for a more stringent measure.  Sen. Barbara Boxer (D-CA), Chair of the Environment Committee, criticized the group, noting that Congress should not “make the perfect the enemy of the very good.”

States and Cities

• California Sues EPA Over Vehicle GHG Emissions Waiver.  California Governor Arnold Schwarzenegger and the California Air Resources Board (CARB) filed a lawsuit on October 8 to force EPA to make a decision regarding California’s request for a waiver to enforce its CO₂ emissions standards for motor vehicles.  The lawsuit alleges that EPA has “unreasonably delayed” its decision on the state’s petition and seeks a court order compelling the agency to take action.  The regulations, which 14 other states also have committed to adopt, would require manufacturers to reduce CO₂ emissions from new vehicles by 30 percent by 2016.  Under the Federal Rules of Civil Procedure, EPA will have 90 days to respond to the suit.  However, EPA Administrator Stephen Johnson has said EPA will decide on California’s petition before the end of this year anyway.
• RGGI Members Review Recommendations for Allowance Auction Design.  Members of the Regional Greenhouse Gas Initiative (RGGI) held a stakeholders conference on November 7 to review an October report on the allowance auction element of the RGGI program.  The October report made a number of auction design recommendations, including setting a minimum price for selling emission allowances, using a sealed bid format, and having a uniform clearing price for bidders.  RGGI members are expected to finalize the auction design at a meeting in December, and the first allowance auction under the program is expected to be held in June 2008.  Several RGGI states have proposed auctioning off all of their allowances.
• NYC Mayor Bloomberg Argues for GHG Emission Tax.  At a meeting of the U.S. Conference of Mayors in Seattle on November 2, New York City Mayor Michael Bloomberg (R) proposed a tax on GHG emissions as an alternative to a cap-and-trade system.  Mr. Bloomberg argued that while a cap-and-trade program is more politically acceptable, a tax is preferable because it avoids the price volatility of a cap-and-trade system, is easier to implement and enforce, and lowers overall costs by avoiding the need to rely on traders.  As proposed by Mr. Bloomberg, the tax would be revenue-neutral, with revenue from the tax used to offset reductions in personal income taxes and to fund corporate tax credits for firms that reduce their GHG emissions.  Mr. Bloomberg stated that a tax of $15 per ton of GHG emissions could fund a $500 annual income tax refund for the average U.S. taxpayer.  He also said that using the tax to fund corporate tax credits would give companies incentives to make long-term investments in clean technology. 
• Florida Governor’s Action Team Issues Recommendations for State’s Energy and Climate Change Action Plan.  In a November 1 report, the Florida Governor’s Action Team issued 30 recommendations for developing a comprehensive state strategy to achieve targets for statewide greenhouse gas reductions.  Created by Governor Charlie Crist (R), the Action Team is a 21-member panel.  The Action Team’s recommendations included implementing a cap-and-trade program to meet a utility-sector emissions cap, requiring electric utilities to report GHG emissions to The Climate Registry (the multi-state registry being developed by over 40 states), and increasing energy efficiency and conservation. 
• Colorado Climate Action Plan Establishes Long-Term Emission Reduction Goals.  On November 5, Colorado Governor Bill Ritter (D) introduced the Colorado Climate Action Plan, which establishes two emission reduction goals for the state.  The first seeks to reduce 2020 emissions to 20 percent below 2005 emissions.  The second aims for an 80 percent reduction from 2005 emissions by 2050.  To meet these goals, the Action Plan contains an agricultural program aimed at enlisting the state’s farmers and ranchers in a regional consortium to sequester carbon and reduce emissions on agricultural lands.  The plan also directs the Colorado Air Quality Control Division to propose GHG emissions standards for motor vehicles by 2009.

Studies and Reports

• UN Report Finds Slight Decline in Industrialized Nation Emissions from 1990-2005.  The United Nations Climate Change Secretariat released a report, National Greenhouse Gas Inventory for the Period 1990-2005, which found that total GHG emissions from industrialized nations have declined by 2.8 percent over the 15-year time period.  The report examined emissions from 40 developed nations and the European Community.  Reductions in former Soviet bloc countries and other European nations were offset by emissions increases in Turkey, Spain, Australia, the United States, and Japan.
• Pew Center on Global Climate Change Circulates Plan for Carbon Capture and Storage Demonstrations.  The Pew Center on Global Climate Change released a report entitled, “A Program to Accelerate the Deployment of CO₂ Capture and Storage (CCS): Rationale, Objectives, and Costs,” which outlines policy options for the development of CCS technology.  The Pew Center report is part of a series investigating ways to reduce CO₂ emissions from the coal-fired portion of the electricity sector and is intended to be used by policymakers in developing a CCS demonstration program.  The report outlines two programs of different sizes, both of which would consist of commercial scale demonstrations of CCS technology at coal-fired power plants and other industrial sources of CO₂.  The report proposes funding either program with a surcharge on electricity from coal-fired power plants, and a charge per metric ton of CO₂ emitted from industrial sources.
• Brookings Institution Releases Reports on Different Approaches to GHG Emissions Reductions.  The Brookings Institution released three reports that offer differing viewpoints and assessments of the best federal policy choice for reducing U.S. GHG emissions.  One report argues for a carbon tax in lieu of a cap-and-trade approach.  A second report argues for a cap-and-trade program as "the best approach in the short to medium term," while a third report does not advocate either approach, and instead argues for a broad economic approach that would involve: (1) pricing carbon and oil so that the private sector has an incentive to reduce their use; and (2) increasing and refocusing public investment on basic research and on long-run speculative energy technologies.  
• Group of Scientists Ask Intergovernmental Panel on Climate Change to Reconsider Evaluation of Biofuels.  Five scientists from the United States, Spain, Austria, and Germany wrote a letter to the Chairman of the United Nations Intergovernmental Panel on Climate Change (IPCC) asking for a reevaluation of the GHG emissions impact of biofuels.  The letter comes as the IPCC is close to releasing its fourth report on climate change impacts, known as the Synthesis Report, which will summarize the three previous reports from the IPCC.  The scientists assert that the IPCC’s previous work does not properly address increased CO₂ emissions and other environmental harms that can result from increased biofuels production and use.  The scientists expressed concern that portions of the forthcoming IPCC report will be used to expand biofuels production before the environmental effects of biofuels are fully understood. 

International

• European Parliament Reports that China Will Not Accept Binding Reduction Targets.  After discussions with Chinese officials in advance of next month’s United Nations meeting in Bali, members of the European Parliament’s Climate Change Committee said that China indicated that it will not accept any binding emission limitations.  According to European Parliament officials, Chinese negotiators said that development is the nation’s priority and that the developed nations are responsible for current atmospheric GHG concentrations and should bear the responsibility for reducing emissions and accelerating technology transfer to developing nations.  The European officials also said that China had not clearly rejected voluntary steps toward reducing emissions.  In a pointed comment directed at the U.S. and Australia, Guido Sacconi, Chair of the Climate Change Committee, noted that “the problem is rather that of other superpowers – other areas of the world – who may not wish to join in.”
• India to Release National Strategy on Climate Adaptation, Will Not Agree to Binding Reductions.  Prodipto Ghosh, a member of the newly-formed Prime Minister’s Council on Climate Change in India, said that the government plans to release a national strategy to address the effects of climate change.  Mr. Ghosh also said that the climate change plan will emphasize that India needs economic growth in order to address the poverty that is widespread in the country.  As a result, he said that India cannot accept binding emission reduction targets that could harm the nation’s economy.