Weekly Climate Change Policy Update - February 1, 2010

To receive the Weekly Update via email, visit our Sign Up/Subscribe page.

Commentary 

A group of major economies met the January 31^st deadline for inscribing their non-binding emission mitigation commitments in the schedule at the back of the Copenhagen Accord.  The commitments more or less tracked commitments floated before the December talks.  The United States submitted a commitment to reduce the country’s emissions “in the range of” 17% below 2005 levels by 2020 – conditioned on enactment of legislation.  Brazil, China, India, South Africa, and the European Union also submitted commitments . . . In his State of the Union address, the President pledged to work with the Senate on bipartisan climate and energy legislation.  Senator Lindsey Graham (R-SC) expressed confidence about the chances for action in 2010 . . . Senator Lisa Murkowski (R-AK) has targeted March for a vote on her joint resolution for disapproval of EPA’s endangerment finding . . . The Securities and Exchange Commission issued guidelines for disclosures on the impacts of climate change and climate change policies . . . Federal agencies have developed targets that would reduce the government’s emissions by 28% in 2020.

Executive Branch

• U.S. Submits GHG Reduction Commitment to UNFCCC Secretariat.  Special Envoy for Climate Change Todd Stern sent a letter to the secretariat of the United Nations Framework Convention on Climate Change (UNFCCC) on January 28, formally associating the United States with the Copenhagen Accord.  In the letter, the United States committed to reduce emissions of greenhouse gases (GHGs) “in the range of” 17 percent below 2005 levels by 2020, “recognizing that the final target will be reported to the Secretariat in light of enacted legislation.”  Under paragraphs 4 and 5 of the Copenhagen Accord, developed countries (so-called “Annex I Parties”) were asked to submit specific GHG reduction targets and developing countries were asked to submit “mitigation actions” by January 31, 2010.  The letter is available at http://www.usclimatenetwork.org/resource-database/us-inscription-to-the-unfccc-on-the-copenhagen-accord.
• President Obama Affirms Commitment to Climate and Energy Bill in State of the Union Address.  Explicitly linking the issues of climate change and job creation in his first State of the Union speech, President Barack Obama reaffirmed his commitment to enacting a comprehensive climate and energy bill this year.  The President said that such a bill “will finally make clean energy the profitable kind of energy in America” and that “even if you doubt the evidence [on climate change], providing incentives for energy-efficiency and clean energy are the right thing to do for our future – because the nation that leads the clean energy economy will be the nation that leads the global economy.”  The President also complimented the House of Representatives for passing the Waxman-Markey climate change bill last June, and said he was “eager to help the bipartisan effort in the Senate.”  In an apparent effort to reach out to potential new votes for climate change legislation, the President emphasized the role of nuclear power, offshore oil and gas exploration, and carbon capture and sequestration in a clean energy economy.  A transcript of the President’s remarks is available at http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address.
• Federal Agencies to Reduce GHG Emissions 28% by 2020.  President Obama announced that 35 federal agencies have crafted GHG emission reduction targets that would collectively reduce the federal government’s direct emissions by 28% below 2008 levels by 2020.  Executive Order 13514, signed in October 2009, required federal agencies to develop such targets and submit them to the White House by January 4, 2010.  According to the Administration, the agency targets will reduce emissions by a cumulative total of 88 million metric tons CO₂-equivalent and are expected to save the government about $8 to 11 billion in energy costs through 2020.  Agencies subject to the order must now develop sustainability plans for implementing these targets, and submit them to the White House by June of this year.  A press release describing the initiative is available at  http://www.whitehouse.gov/the-press-office/president-obama-sets-greenhouse-gas-emissions-reduction-target-federal-operations.
• SEC Votes to Require Disclosure of Climate-Related Business Risks.  At an open meeting on January 27, the Securities and Exchange Commission (SEC) approved interpretive guidance that instructs public companies on the proper disclosure of climate-related business risks.  The measure passed by a vote of 3-2, with the Republican members of the five-member SEC voting in opposition.  SEC Chairman Mary Schapiro emphasized at the meeting that the guidance does not create new legal obligations, but is instead intended to “provide clarity and enhance consistency” in existing risk disclosure requirements.  The guidance, which will be published in the Federal Register in a matter of days, calls for disclosure of at least four categories of climate-related risks: (a) the anticipated impact of climate change on physical and business assets; (b) financial risks associated with the costs of compliance with existing and pending regulations; (c) the effects of international climate change accords and treaties; and (d) indirect consequences of climate change, such as impacts of policies on demand for GHG-intensive products.  Before the vote, Reps. Joe Barton (R-TX) and Greg Walden (R-OR) sent a letter to the SEC criticizing the Commission’s attention to the issue as “transparently political and . . . a breathtaking waste of the Commission’s resources.”  In addition, the representatives requested that the SEC Chairman respond to a series of questions, including questions related to the Commission’s statutory authority for the guidance; the link between corporation actions on global warming and investor protection; and whether companies would face civil or criminal penalties for failing to comply with the guidance.  For more information on the SEC action, see February 1, 2010 Issue Alert, "SEC Issues Guidance for Disclosing Material Climate Change Risks."  The Republicans’ letter is available here.  A press release announcing the guidance is available at http://www.sec.gov/news/press/2010/2010-15.htm.

Congress

• Graham Thinks Window for 2010 Passage Still Open.  Senator Lindsey Graham (R-SC), who along with Senators John Kerry (D-MA) and Joe Lieberman (I-CT) is trying to develop a filibuster-proof climate-energy legislative package, said that he is “more optimistic than ever” about passing a bill in 2010.  Sen. Graham observed that failure to pass a health care bill would put pressure on Republicans and Democrats to “do something meaningful this session.”  Sen. Graham stated that “meaningful emission controls” must be part of an energy and climate bill, as well as: revenue sharing for states that allow expanded natural gas and oil drilling off of their coasts; parity between nuclear energy, wind, and solar (apparently in the context of a renewable electricity standard); a reformed permitting process for nuclear reactors; and expanded loan guarantees for nuclear energy.  Sen. Graham told reporters that putting a price on carbon was the only way to achieve energy independence and clean up the air.  Sen. Kerry said in a speech that the trio is not scaling back their efforts to create an economy-wide cap-and-trade program, and that the climate and energy bill would be “the biggest single stimulus package in the United States of America.”  The three senators met with other Senators, including Sens. Maria Cantwell (D-WA) and Susan Collins (R-ME), who introduced a “cap and dividend” climate bill that would auction 100% of allowances, return a large proportion of the proceeds to U.S. residents through per capita dividends, and severely restrict allowance trading.  Sen. Graham described the meeting as eye-opening.
• Endangerment Finding Vote Likely in March.  Sen. Lisa Murkowski (R-AK), who has introduced a joint resolution of disapproval of EPA’s finding that greenhouse gas emissions endanger public health and welfare, said that the resolution will most likely be voted on in March, although her staffers have said that a vote could be held in February.  Joint resolutions of disapproval that are passed by both houses of Congress and signed by the President nullify the regulation, and prevent a federal agency from promulgating the same or a similar regulation unless and until Congress passes a law authorizing the regulation.
• House Forms Coal Caucus.  Six House lawmakers – Republicans Shelley Moore Capito (WV), John Shimkus (IL), and Dennis Rehberg (MT) and Democrats John Salazar (CO), Jason Altmire (PA), and Tim Holden (PA) – have formed the Congressional Coal Caucus to provide a forum for coal-state lawmakers in expected debates on climate and energy policy.  They have sent a letter to colleagues inviting others to join the group.

Industry and NGOs

• USCAP Plans Major Push for Climate Change Legislation.  The U.S. Climate Action Partnership (USCAP) – a large coalition of environmental organizations and businesses that played a significant role in shaping the pending climate change bills – has begun a major media and lobbying campaign in support of climate change legislation.  According to USCAP, executives representing about a dozen of the organization’s business members, including General Electric and NRG Energy, will visit with key lawmakers and Cabinet secretaries on February 9.  In addition, USCAP has begun running print advertisements in Politico and will continue to do so over the next month.  Although USCAP has not endorsed a particular climate change bill, the organization favors a cap-and-trade approach that would reduce GHG emissions by 14 to 20% below 2005 levels by 2020. 
• Organizations Representing Businesses Press for Climate Change Action.  Six international organizations have issued an open letter calling for aggressive action on climate change; the letter is directed at world leaders gathered at the World Economic Forum in Davos, Switzerland.  The letter calls on governments to: set medium- and long-term GHG targets that are stringent enough to cause global emissions to peak within a decade; agree on a binding international treaty on climate change by the end of this year; and establish financial incentives and market mechanisms to encourage the private sector to invest in GHG reduction activities.  Stating that the Copenhagen Accord “fell far short of what many businesses need to catalyze investment in low carbon solutions,” the letter said that “business is ready to act but needs clear and strong policy signals to affect investment decisions towards a sustainable and low carbon economy.”  Organizations signing the letter included The Climate Group, Business for Innovative Climate & Energy Policy (BICEP), Carbon Markets & Investors Association (CMIA), Clean Economy Network, Combat Climate Change (3C) and Copenhagen Climate Council.  The statement is available at http://www.theclimategroup.org/_assets/files/Copenhagen-Accord-Business-Statement.pdf.  For more news on Davos, see “International” section below.

Studies and Reports

• RFF Report Finds Price Collar Important for Cost, Offset Uncertainty.  The results of a modeling effort by researchers at Resources for the Future suggests that placing a ceiling and floor on carbon allowance prices in the context of a cap-and-trade bill (a “price collar”) as done in the Kerry-Boxer bill reduces the costs of a GHG control program and increases cost predictability while producing slightly fewer or about the same quantity of emission reductions over time.  The researchers found that the price collar would slightly reduce the use of emission offsets (emission reductions from uncapped sectors), and that reduced offset reliance was important to reduce costs and volatility in situations where offset demand was high and supply was low.  Such a situation could occur in a time of high economic growth when demand for emission-generating activities is high in both capped and uncapped sectors.  The study is available at http://www.rff.org/Publications/Pages/PublicationDetails.aspx?PublicationID=21003.
• Study Projects Smart Grid Emission Savings.  An analysis conducted by the Pacific Northwest National Laboratory for the Department of Energy found that full deployment of smart grid technologies could reduce annual GHG emissions from the U.S. electricity sector by 18% by 2030.  The study found that the greatest effects on emissions would result from smart grid technologies dealing with: demand response programs for consumers; deploying diagnostics in residences and buildings occupied by small businesses; supporting additional electric vehicles, and supporting the integration of wind and solar energy into the grid.  The study is available at http://energyenvironment.pnl.gov/news/pdf/PNNL-19112_Revision_1_Final.pdf .

International

• Nations Submit National Targets to UN In Advance of January 31 Deadline.  Nations submitted their national GHG emission reduction targets to the United Nations as the January 31 “soft deadline” for submissions agreed to under the Copenhagen Accord approached.  The group of over twenty nations submitting targets includes such major emitters as the U.S., EU, China, and India.  The U.S. submission is described above.  The EU proposed a conditional target that would start at a 20 percent reduction from 1990 levels by 2020, but would increase to 30 percent from the same levels if, as part of a comprehensive international agreement for the post-2012 period, other developed nations adopt comparably stringent national targets and developing nations make adequate contributions according to their capabilities.  The so-called “BASIC Nations” – Brazil, South Africa, India and China – issued a variety of less-stringent proposals, with China and India agreeing to reduce the growth of their carbon intensity per unit of gross domestic product (GDP) by 40-45 percent and 20-25, respectively, from business-as-usual levels.  Meeting in New Delhi, India, the BASIC Nations also issued a joint statement in which they emphasized the non-binding political nature of the Copenhagen Accord and any related emission targets; the statement also stressed the importance of continuing the two-track UN negotiating process.   Based on agreement reached at the 2007 climate negotiations in Bali, Indonesia, the international climate change negotiations have followed two tracks – one based on the Kyoto Protocol and the other based on a broader framework for long-term action.    
• World Economic Forum Sees Increased Focus on Climate Issues.  After the sputtering global economy and financial crisis dominated last year’s meeting, climate change and related issues were major focus of this year’s World Economic Forum (Forum) in Davos, Switzerland.  The 30 heads of state and global world economic leaders attending the Forum discussed financing mechanisms for clean energy development in developing nations; energy efficiency, carbon capture and sequestration; and prospects for linking between carbon markets. 
• Mexico Announces Cancun as Site for 2010 Climate Negotiations.  Mexican Climate Change Ambassador Luis Alfoso de Alba announced that Cancun will be the site for the 16^th Conference of the Parties to the UNFCCC.  The meeting, originally scheduled to be sited in Mexico City, will be held from Nov. 30-Dec. 10.