Weekly Climate Change Policy Update - July 7, 2008

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Commentary

The White House and the EPA are still going back and forth about the contents of the Advance Notice of Proposed Rulemaking on the regulation of GHG emissions and the reported release date now has slipped a week.  The document will be important in several respects, including how it could frame – and possibly constrain – the options available to the EPA under the next Administration . . . At the same time, there continue to be lawsuits claiming that EPA has and must exercise regulatory authority over GHG emissions from power plants right now.  A Georgia state court held this week that a state agency erred in providing a permit for a new 1200 MW coal-fired power plant without first requiring a Best Available Control Technology determination for CO₂ emissions . . . Is the Bush Administration close to making a deal for mid-term global emission targets with some other large countries?  We might learn at the next Major Economies meeting later this month. 

Administration

• EPA Prepares to Release ANPR on Regulation of GHG Emissions.  During the week of July 7, EPA is expected to issue an advance notice of proposed rulemaking (ANPR) that will outline the legal and economic issues of regulating GHG emissions from both mobile and stationary sources.  It is expected that the ANPR also will include a finding that GHG emissions “endanger public health and welfare”; under the Clean Air Act, such an “endangerment” finding triggers certain obligations for EPA to regulate sources of emissions.  The White House Office of Management and Budget (OMB), which has been reviewing the proposal since mid-June, must approve the ANPR before EPA can release it.

• Climate Change to be Discussed at G8 Summit.  President Bush will take part in the Group of Eight annual summit next week.  Japan is pushing for G8 leaders to agree to a goal of cutting global CO₂ emissions in half by 2050.  According to The Washington Post, “The Bush administration is also conducting negotiations with countries on including more specific targets for each [country] to meet by 2020 or 2025.”  The Bush Administration has expressed interest in waiting for the next session of the Major Economies Process on Energy Security and Climate Change, which will occur later this month, to announce the results of these negotiations.  The Major Economies Process involves 17 countries responsible for most of the world’s GHG emissions. 

Judicial

• Federal Judge Denies Motion to Delay Implementation of Vehicle GHG Rules in California.  In the case of Central Valley Chrysler-Jeep, Inc. et al. v. James Goldstene, Judge Anthony Ishii of the U.S. District Court for the Eastern District of California denied a motion by automakers to delay implementation of the state’s GHG emissions regulations for vehicles.  The automakers argued that they will need many more years of lead time to comply with the new vehicle GHG emissions regulations.  The California regulations apply to 2009 model year vehicles.

• Georgia Court Rules Power Plant Permit Must Include CO₂ BACT Analysis.  A Georgia Superior Court judge overruled an administrative court’s approval of a Georgia Environmental Protection Division (EPD) decision granting a Clean Air Act (CAA) permit for a power plant.  The Superior Court decision denied the permit for failing to require a determination of the Best Available Control Technology (BACT) for CO₂ emissions.  The decision cited the U.S. Supreme Court’s holding last year in Massachusetts v. EPA that CO₂ is an air pollutant under the CAA; the Georgia court also held that CO₂ is a pollutant that is already “subject to regulation” under the CAA in light of the CO₂ monitoring requirements for power plants under the 1990 amendments.  The 1,200 MW coal-fired power plant proposed by Longleaf Energy Associates (Longleaf), a subsidiary of Dynegy, would emit between 8 and 9 million tons of CO₂ annually.  Longleaf is expected to appeal the Superior Court decision.

States and Cities   

• Delaware Finalizes RGGI Legislation.  Delaware became the 10^th state to pass legislation ratifying its participation in the Northeast Regional Greenhouse Gas Initiative (RGGI), a regional cap-and-trade program.  Delaware Governor Ann Minner (D) signed the legislation that caps the state’s emissions at 2009 levels and reduces them to 10 percent below 2009 levels by 2019.  Under the legislation, Delaware will auction its share of emissions allowances and use the proceeds to fund a variety of emission reduction, conservation and financial assistance programs. 
• Washington State Establishes CO₂ Limit for New Power Plants.  Regulators at the Washington State Department of Ecology (DE) and the Energy Facility Site Evaluation Council (EFSEC) issued new rules limiting CO₂ emissions from power plants to 1,100 lbs per megawatt hour (lbs/MWh).  The rules go into effect in late July and will apply to new power plants and existing power plants entering into long-term contracts.  The 1,100 lbs/MWh limit is equivalent to the CO₂ emissions from a natural gas-fired power plant.  The DE has jurisdiction over all power plants with a capacity of less than 350 MW and EFSEC has jurisdiction over plants with a capacity greater than 350 MW.  In addition, the DE established standard for underground injection of CO_2.
• Wisconsin Climate Task Force Issues Final Recommendations.  A climate change task force appointed by Wisconsin Governor Jim Doyle (D) finalized its recommendations for reducing the state’s GHG emissions.  To meet the state’s goal of reducing emissions to 60-80 percent below 1990 levels by 2050, the task force proposal recommends participation in either a federal cap-and-trade program or the Midwestern Greenhouse Gas Accord (MGGA); establishing an escalating renewable portfolio standard (RPS); adopting California’s vehicle CO₂ emission regulations; and creating a low-carbon fuel standard.  The cap-and-trade recommendation called for the state to auction 90 percent of allowances during the first 10 years of the program.  The recommended RPS would require that utilities in the state obtain 10, 20, and 25 percent of their electricity from renewable sources in 2010, 2020, and 2025, respectively.  
• Mayors Group Adopts Residential Energy Efficiency Policy.  At its annual meeting, the U.S Conference of Mayors adopted a resolution supporting the “30% Solution,” which is a proposal by the Energy Efficient Codes Coalition to require new homes to be 30% more efficient in their use of energy.  The Conference is hoping to influence the International Code Council (ICC) to adopt a similar standard.  The ICC is a group of state building code officials whose recommendations are often implemented at the local level.  Implementation of the standards by states and municipalities could substantially reduce energy and natural gas usage in buildings, which account for 40 percent of nationwide energy use and GHG emissions.  Environmentalists and utilities support the mayors’ proposal, calling it the “most significant climate policy vote of 2008.”  However, some groups say the reduction in GHG emissions from increased efficiency under the new standards is not worth the higher costs to homeowners.

Studies and Reports

• Group Issues Draft Revised Standards for Voluntary Emission Reduction Projects.  The Climate, Community, and Biodiversity Alliance (CCBA) released draft revised standards for voluntary emission reductions resulting from land-based projects that would require such projects to generate enhanced benefits for communities in the area surrounding the project.  The group originally issued standards for voluntary projects in 2005, but decided to revise them after the December 2007 United Nations Climate Change Conference in Bali focused on forestry projects.  The draft standards will be open for comment until August 11, 2008.  Click here for full report: Climate Standards 
• Consulting Group Study Finds Potential for Significant Emission Reductions Using CCS.  The Boston Consulting Group issued a study entitled “Carbon Capture and Storage: A Solution to the Problem of Carbon Emissions,” which concludes that carbon capture and sequestration (CCS) could reduce CO₂ emissions from stationary sources by up to one-third.  Further, the study found that if the 1,000 largest stationary sources of CO₂ in the world implemented CCS, total emissions from the facilities could decrease by up to 50 percent.  The BCG report also estimated that up to €100 billion (US$157 billion) in government subsidies could be required in order to make the use of CCS cost effective.  The study is available at: Carbon Capture and Storage Report. 

International

• World Bank Executive Board Approves Climate Funds.  The World Bank adopted two new funds aimed at addressing climate change in developing countries.  The two Climate Investment Funds are directed at accelerating deployment of clean energy technologies and aiding adaptation to climate change impacts.  The funds, called the Clean Technology Fund and the Strategic Climate Fund, will be funded through $5 billion in donations from Japan, the United Kingdom and the United States.
• Indian Climate Action Plan Avoids Emissions Caps, Calls for Increased Solar.  Indian Prime Minister Manmohan Singh introduced the nation’s action plan aimed at reducing its GHG emissions.  The new plan addresses climate change in eight focus areas, but does not include a commitment to cap national GHG emissions.  The plan’s focus areas include National Missions on solar energy, enhanced energy efficiency, development of a “strategic knowledge platform” for climate change, promotion of sustainable habitat, working for a green India, ensuring sustainable agriculture, sustaining the Himalayan ecosystem, and water conservation. 
• British Columbia Issues Plan to Achieve Emissions Goal, Implements Carbon Tax.  British Columbia released a “Climate Action Plan” that it says will help the Canadian province achieve its goal of reducing emissions 33 percent below 2007 levels by 2020.  The plan includes interim emissions targets, an energy efficiency program, new tax incentives to help retire high emission vehicles, and tax exemptions for alternative energy sources.  In other efforts to reduce its emissions, British Columbia began implementing a carbon tax on high carbon fuels.  The tax imposes a C$0.0234 per liter (US$0.0875 per gallon) tax on gasoline, diesel, natural gas and home heating fuel.  The tax will increase to C$0.07 per liter (US$0.26 per gallon) by 2012.