Weekly Climate Change Policy Update - July 21, 2008

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Commentary

This week brought repercussions from last Friday’s issuance of the EPA Advance Notice of Proposed Rulemaking, and the D.C. Circuit’s decision vacating the Clean Air Interstate Rule (CAIR).  The invalidation of the CAIR, coupled with the invalidation of the Clean Air Mercury Rule last year, has created turmoil for air quality regulations at the state and federal level.  The demise of the CAIR and the CAMR has given rise to speculation that Congress might give a second look to legislation that would create a comprehensive program for regulation of power plant emissions of carbon dioxide, sulfur dioxide, nitrogen oxide, and mercury – a so-called four pollutant, or “4-P,” approach . . . EPA issued a proposed rule for regulating injection of carbon dioxide . . . Al Gore gave a speech advocating that the U.S. electricity system be carbon-free by 2018 . . . Australia’s Climate Change Ministry released a cap-and-trade plan for the country . . . The RGGI took another step closer to its September auction of allowances . . . Exelon plans to spend $10 billion to reduce its GHG emissions by 25 percent.

Congress

• Senators Leahy and Boxer Ask EPA Administrator Johnson to Testify About Alleged White House Interference on GHG Emissions Rulemaking.  Senate Judiciary Committee Chairman Patrick Leahy (D-VT) and Environment and Public Works Chairwoman Barbara Boxer (D-CA) sent a joint letter requesting that Environmental Protection Agency (EPA) Administrator Stephen Johnson testify at a Judiciary Committee hearing.  The letter asks EPA Administrator Johnson to testify as to whether EPA's scientific findings and decisions on possible regulation of GHG emissions were made in accordance with the technical and legal conclusions of EPA's own staff, and whether the White House improperly interfered with EPA decision making or the information provided to Congress.
• Senate Subcommittee on Energy & Air Quality Holds a Hearing on Energy Efficient Buildings.  The hearing focused on ways to reduce GHG emissions from residential and commercial buildings.  Witnesses stated that buildings are responsible for approximately 40% of CO₂ emissions, mainly through the use of electricity.  The main topic of debate was whether Congress should mandate energy efficiency standards or if state and local governments should continue to establish such standards.  Provisions to encourage greater energy efficiency in building codes were included in the House version of the Energy Independence and Security Act of 2007 (H.R. 6), but the provisions were dropped from the final version of the bill that was signed by President Bush last December. 
• Senate Appropriations Committee Approves Funding for Clean Technology Fund Initiative, but House Subcommittee Does Not.  The fiscal 2009 State and Foreign Operations appropriations bill includes $200 million for a World Bank clean technology fund provided that the clean technology fund initiative only finances zero-carbon emissions technology.  The World Bank created the fund in order to develop and deploy technology to developing countries to reduce GHG emissions.  However, some members of Congress and environmental groups have expressed concerns that the initiative focuses too much on clean coal technology.  The House Appropriations Subcommittee on State & Foreign Operations did not include funding for the World Bank's clean technology fund; subcommittee members asserted that they lacked information on which clean energy programs would receive funding. 

Administration

• EPA Releases Proposed Rule on Geologic Sequestration of CO₂.  The Environmental Protection Agency’s (EPA) proposed rule under the Safe Drinking Water Act would regulate underground storage of CO₂ generated by power plants or other industrial sources.  The aim of the rule is to protect underground sources of drinking water from contamination by injected CO₂.  EPA’s proposal explains that it builds on current regulations governing the underground injection of waste, and addresses the following areas: proper siting of geologic sequestration wells; construction of wells to prevent fluid movement into unintended zones; periodic re-evaluation of the area around the well; testing the mechanical integrity of the injection well; groundwater monitoring; and financial responsibility requirements. 

States and Cities   

• Pennsylvania Commits to Tracking, Reducing GHG Emissions.  Pennsylvania Governor Edward G. Rendell (D) signed into law a bill requiring the state to develop an inventory of its GHG emissions and prepare an action plan for reducing those emissions.  The Pennsylvania Climate Change Act (S.B. 266) requires the Pennsylvania Department of Environmental Protection (DEP) to issue within nine months a report on potential impacts of climate change on the state and the economic opportunities presented by action to reduce emissions.  DEP must also prepare an annual inventory of GHG sources in the state.  In addition, the law creates a task force to: (i) help DEP create an action plan that identifies GHG emissions trends, (ii) develop recommendations for reducing emissions, and (iii) draft legislation necessary to implement those recommendations.  The bill is effective immediately and the DEP’s climate plan must submitted to the governor in 15 months.
• RGGI States Announce First Auction Date, Release Technical Documents.  The 10 member states of the Northeast Regional Greenhouse Gas Initiative (RGGI) released technical documents providing information about the regional trading program’s auction this fall.  The documents provide for a September 25 initial auction of 12.6 million 2009 emission allowances.  The documents also describe eligibility criteria for bidders, contain auction format information, and provide details on procedures bidders must use to participate in the auction.  The RGGI states will release their formal auction notice containing additional auction information on July 24.  Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont will participate in the initial auction as the remaining RGGI members – Delaware, New Hampshire, New Jersey,  New York – continue to finalize their RGGI implementation guidelines.
• Nation’s Governors Call For Extension of Renewable Energy Tax Credits.  At a four-day meeting of the National Governors Association, the nation’s governors called for an extension of the federal renewable energy production tax credits, which are set to expire at the end of this year.  The governors will send to the U.S. Congress a letter signed by all 50 governors seeking a five-year extension of the credits.
• Florida, U.K. Sign Technology Sharing Agreement.  Florida Governor Charlie Crist (R) signed an agreement with the U.K.-based Carbon Trust aimed at promoting the development of low-carbon technologies.  Under the agreement, Florida and Carbon Trust commit to engaging in technology transfer and sharing experience with energy efficiency, alternative fuels, and other GHG reducing projects.  The Carbon Trust is a company established by the British Government to facilitate the nation’s transition to a low-carbon economy.

Speeches, Studies, and Reports

• Al Gore Calls for 100 Percent Use of Renewable Energy Within 10 Years.  In a speech sponsored by the Alliance for Climate Protection in Washington, DC, former Vice President Al Gore called on the U.S. to obtain all of its electricity from renewable sources by 2018.  He likened the challenge to President John F. Kennedy’s goal of landing a man on the moon within 10 years, stating that the ambitious goal is a necessary and plausible objective that should form the basis of a new U.S. energy strategy.  Mr. Gore called the existing electricity grid antiquated, fragile, and vulnerable to failure, adding that the absence of a modern, nationally unified grid is a major obstacle to achieving the 100 percent renewable goal.  In addition to electricity grid improvements, he called for a carbon tax to reduce CO₂ emissions and protections for workers in industries such as coal mining, which would be dramatically affected by the renewable energy target. 
• EPA Reports Predict Increase in Mortality, Disease, Ambient Pollution Concentrations as a Result of Climate Change.  The Global Change Research Program in EPA’s Office of Research and Development issued one report, SAP 4.6: Analyses and Effects of Global Change on Human Health and Welfare and Human Systems (Final Report), which concluded that the health of the elderly and very young, along with those with compromised immune systems, could be particularly affected by rising temperatures.  The report said that poor and minority populations could be disproportionately affected due to degraded air quality in many urban areas.  The agency also predicted increases in food- and water-borne pathogens.  In a separate document issued as part of EPA’s Advance Notice of Proposed Rulemaking (ANOPR), the agency’s “Technical Support Document for Endangerment Analysis for Greenhouse Gas Emissions under the Clean Air Act” concludes that climate change would result in increased mortality from higher ground-level ozone concentrations, heat waves, and other severe weather.  An earlier draft EPA report predicted an increase in ozone concentrations of 2 to 8 parts per billion, equivalent to an increase in ground-level ozone measurements of up to 10 percent.  
• Including Emissions Associated with Imports, Overall U.K. GHG Emissions Higher than Government Data Show.  A study commissioned by the United Kingdom Department for Environment, Food, and Rural Affairs concluded that total CO₂ emissions associated with the consumption of goods and services in the U.K. increased by 115 million metric tons between 1992 and 2004, an 18 percent increase.  Over the same time period, domestic emissions declined by 5 percent.  Environment Secretary Hilary Benn said that while the U.K. only has direct influence over domestic emissions, the nation also must begin to address the GHG emissions associated with products and services regardless of where they are manufactured.  In March 2008, the National Audit Office issued a similar report, concluding that official government data on GHG emissions failed to account for items imported into the country.   

Industry

• Exelon Corp. Plans to Spend $10 Billion to Reduce GHG Emissions by 25 Percent.  The company announced it would replace existing coal-fired generation with a new 600-megawatt natural gas fired facility, as well as expand its renewable power portfolio.  Exelon also intends to reduce energy usage at its company buildings and will spend more than $250 million to reduce GHG emissions through commercial and residential energy efficiency improvements, in coordination with the Illinois Department of Commerce and Economic Opportunity.  The company plans to obtain 1.5 million tons reductions annually from offset projects.  Exelon expects the efforts will reduce total emissions from its plants, suppliers, offset projects, and customers by 15 million metric tons a year by 2020.

International

• Australia Climate Ministry Releases Cap-and-Trade Plan.  Australian Climate Change Minister Penny Wong released for public comment a plan for a national cap-and-trade scheme intended to help reduce Australia’s emissions to 60 percent below 2000 levels by 2050.  The proposed emissions trading program would go into effect in 2010 and would apply to entities in covered sectors that emit greater than 25,000 tonnes of CO₂ annually.  The planned program would cover stationary energy sources, transportation, fugitive emissions, industrial processes, and waste.  The forestry sector would be covered on a voluntary basis, and agriculture, which is excluded from coverage during the first five-year compliance period, may be covered beginning in 2015.  The trading program would initially allocate 30 percent of allowances to emissions-intensive industries with the remaining 70 percent distributed through a public auction.  The auctioned percentage gradually would increase to 100 percent.  The plan would not allow domestic offset credits, but would permit an unspecified number of international credits generated under the Kyoto Protocol or European Union Emissions Trading Scheme.
• Ports Officials Sign GHG Reduction Declaration.  At the three-day C40 World Ports Climate Conference in Rotterdam, officials from 55 ports around the world signed a declaration to reduce CO₂ emissions and improve air quality.  The World Ports Climate Declaration encourages ports to use renewable energy and provide better shore-side electrical connections.  The Declaration also provides guidelines on such issues as ship design; ship speed; and environmental indexing, which is a tool used to reward or penalize ships based on their environmental impact.  The ports will use a GHG tracking program to be developed by the International Association for Ports and Harbors to measure and track their carbon footprint.