Weekly Climate Change Policy Update - June 1, 2009

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Commentary

The Memorial Day Congressional recess brought a bit of a respite in legislative activity on climate change in the House, leaving speculation and questions about what roles other House Committees will play on the Waxman-Markey bill and when the bill might reach the House floor . . . Agriculture state Members of Congress continue to target EPA’s determination on calculating the indirect greenhouse gas emissions associated with corn ethanol.  Senator Grassley now has a companion bill in the Senate to Representative Peterson’s bill in the House   . . . The World Bank found that the global carbon market nearly doubled in value in 2008 to $126 billion with approximately three-quarters of that value in the European Union Emissions Trading Scheme and about a quarter in the Clean Development Mechanism . . . A World Resources Institute study of emission reductions achieved by the Waxman-Markey bill shows that much of the work is done by the bill’s command-and-control standards and supplemental funding for reducing tropical deforestation.   

Executive Branch

• Presidential Nominations and Appointments.
  • James Markowsky was nominated to serve as Assistant Secretary for Fossil Energy at the Department of Energy.  Currently a consultant who chairs a committee on energy and power systems at the National Academy of Engineering, Markowsky was an executive vice president at American Electric Power from 1993 to 2000.   
  • Polly Trottenberg, current executive director of the transportation advocacy organization Building America’s Future, was nominated for Assistant Secretary for Transportation Policy at the Department of Transportation (DOT).  Trottenberg has extensive experience on Capitol Hill, having previously served as deputy chief of staff for Sen. Barbara Boxer (D-CA), legislative director for Sen. Charles Schumer (D-NY), and a legislative assistant for late Sen. Daniel Patrick Moynihan (D-NY).   
  • Paul Anasta was nominated to serve as Assistant Administrator of the Office of Research & Development at the Environmental Protection Agency (EPA).  Widely known as a pioneer in the field of “green chemistry,” Anasta is currently director of the Center for Green Chemistry and Green Engineering at Yale University. 
• President Announces Significant Funding for Geothermal and Solar Projects.  In a speech last week, President Obama announced that the Department of Energy (DOE) will invest $467 million from the American Recovery and Reinvestment Act of 2009 (the “stimulus package”) on geothermal energy research and solar energy deployment.  Of this total, $140 million is designated for geothermal demonstration projects in new areas such as oil and natural gas fields; $80 million will support development of engineered reservoirs for geothermal energy; and $100 million will be used to explore for new geothermal resources.  In addition, DOE will spend $25.6 million on concentrating solar power R&D; $40.5 million on solar grid connection and training for solar energy installers; and $51.5 million on photovoltaic technology development.

Congress

• Casey Introduces Bill to Accelerate CCS.  Just before Congress recessed for the Memorial Day holiday, Sen. Robert Casey (D-PA) introduced the Responsible Use of Coal Act.  The bill would authorize funding for the Department of Energy to promote the commercial demonstration and early deployment of carbon capture and sequestration (CCS) technology, as well as to support continued R&D on CCS and advanced coal-based power generation technologies.  Sen. Casey’s staff said that the Senator hopes his bill will be included in or will influence the comprehensive energy legislation being marked up by the Energy and Natural Resources Committee.  The Committee has announced that it will mark up Committee Chairman Jeff Bingaman’s CCS legislation on June 2^nd.
• Grassley Introduces Bill to Repeal Analysis of Indirect Emissions from Ethanol.  Sen. Charles Grassley (R-IA) has introduced legislation that would repeal a provision in the Energy Independence and Security Act of 2007 that instructs EPA to consider the greenhouse gas emissions generated by any land-use changes triggered by the use of food grains to produce ethanol in the U.S. when EPA is analyzing the greenhouse gas emission intensity of ethanol.  The bill is a companion to legislation introduced in the House by Rep. Collin Peterson (D-MN). 

States and Cities   

• Washington Governor Issues Order Directing Participation in WCI.  Washington state Governor Christine Gregoire signed an executive order that continues the state’s participation in the Western Climate Initiative (WCI).  The order, which directs the state Department of Ecology to prepare the state to implement the regional cap-and-trade program, follows the passage of energy legislation that omitted language to require participation in the WCI.  Legislation authorizing participation in the WCI is required before the state can implement the program.
• California Forms Cap-and-Trade Advisory Group.  California has formed an economic, financial, and policy advisory group to assist the state in developing a cap-and-trade program.  Called the Economic and Allocation Advisory Committee (“Committee”), the group will analyze emission allowance allocation options and assess the economic impact of the cap-and-trade program.  The Committee will submit a report to the state at the end of 2009.

Industry

• World Bank Reports Strong Growth in Carbon Markets.  Global transactions involving GHG allowances and offset credits almost doubled in value to $126 billion in 2008, according to a World Bank report entitled “State and Trends of the Carbon Market 2009.”  Approximately $92 billion of these transactions took place within the European Union’s European Trading Scheme; trading of Clean Development Mechanism offset credits accounted for an additional $33.4 billion.
• IMO Claims Shipping Industry Can Achieve 75% Emission Reduction.  In a report made public last week, the International Maritime Organization concluded that the shipping industry could reduce its current GHG emissions by as much as 75% through a combination of operational measures and efficiency investments.  Specific measures advocated include the use of more efficient engines, advanced hull and propeller designs, careful planning of routes, use of biofuels and low-carbon fuels, and slower operating speeds.  The shipping industry accounted for approximately 3.3% of global GHG emissions in 2007.

Studies and Reports

• NRC Advocates Life-Cycle Energy Efficiency Standards for Appliances.  A report released by the National Research Council, part of the National Academy of Sciences, advises the Department of Energy to update its criteria for setting appliance energy-efficiency standards to include all life-cycle and upstream energy costs.  The recommended energy efficiency analyses would incorporate the energy consumed in producing and distributing different fossil fuels (“full-fuel-cycle measurements”) so that consumers could compare the full energy impacts of appliances that use different types of fossil fuel energy.  The report is available at http://www.nap.edu/catalog.php?record_id=12670#toc.
• EIA Projects 39% BAU Growth in GHG Emissions by 2030.  The Energy Information Administration’s International Energy Outlook 2009 projects that global carbon dioxide emissions will rise by 39% between 2006 and 2030 if current policies continue.  The report also predicts that renewable energy, primarily wind and hydropower, will reach only 21% market penetration by 2030.  Energy demand is projected to increase by 44% by 2030, with energy demand in developing countries increasing by 73%.  The report is available at http://www.eia.doe.gov/oiaf/ieo/index.html.  Data released by the European Commission indicates that anthropogenic GHG emissions increased by 15% between 2000 and 2005, a striking increase in the emissions growth rate, with the largest increases in emissions from industrializing countries.  The data is available at http://edgar.jrc.ec.europa.eu/index.php.
• WRI Analysis of ACES Shows High Near-Term Emission Reduction Potential.  A World Resources Institute (WRI) analysis of the American Clean Energy and Security Act (ACES) reported out of the House Energy and Commerce Committee last week indicates that the legislation should achieve significant emission reductions beyond its emissions cap in the program’s early years.  According to WRI’s analysis, the bill’s emissions cap would reduce U.S. greenhouse gas emissions by 15% below 2005 levels by 2020 and by 73% below 2005 levels by 2050.  Including the legislation’s industrial performance standards, performance standards for uncapped sources, energy efficiency improvements in uncapped sectors, and allocation of allowances to reduce tropical deforestation in the analysis increased the emission reduction projections to 28% below 2005 levels by 2020 and 75% below 2005 levels by 2050.  The analysis is available at http://pdf.wri.org/usclimatetargets_2009-05-19.pdf.

International

• Major Economies Forum Finds Agreement on Funding Proposal.  Meeting in Paris, France, negotiators at the Major Economies Forum on Energy and Climate agreed to a proposal that would have developed nations provide funds to developing nations to support climate change adaptation and clean technology deployment.  The proposal, introduced by the Mexican delegation, would create a global “green fund” using contributions from developed nations to finance major adaptation and technology deployment projects.  The proposal only addressed the basic structure of the fund and many details will need to be filled in during future negotiations.